<SUBMISSION>
<ACCESSION-NUMBER>0000950123-09-065920
<TYPE>S-11/A
<PUBLIC-DOCUMENT-COUNT>16
<FILING-DATE>20091125
<DATE-OF-FILING-DATE-CHANGE>20091125
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>Pebblebrook Hotel Trust
<CIK>0001474098
<ASSIGNED-SIC>6798
<IRS-NUMBER>271055421
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-11/A
<ACT>33
<FILE-NUMBER>333-162412
<FILM-NUMBER>091206309
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>10319 WESTLAKE DRIVE
<STREET2>SUITE 112
<CITY>BETHESDA
<STATE>MD
<ZIP>20817
<PHONE>301.765.6045
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>10319 WESTLAKE DRIVE
<STREET2>SUITE 112
<CITY>BETHESDA
<STATE>MD
<ZIP>20817
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-11/A
<SEQUENCE>1
<FILENAME>w75877a2sv11za.htm
<DESCRIPTION>S-11/A
<TEXT>
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B> As filed with the Securities and Exchange Commission on
    November&#160;25, 2009</B>
</DIV>

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</FONT></DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B> Registration No.&#160;333-162412</B>
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    <B><FONT style="font-size: 13pt">UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION</FONT></B>
</DIV>

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    <B><FONT style="font-size: 12pt">Washington,&#160;D.C.
    20549</FONT></B>
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    <B><FONT style="font-size: 12pt">Amendment No.&#160;2</FONT></B>
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    <B><FONT style="font-size: 12pt"> to</FONT></B>
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    <B><FONT style="font-size: 16pt"><FONT style="white-space: nowrap">Form&#160;S-11</FONT></FONT></B>
</DIV>

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    <B><FONT style="font-size: 11pt">FOR REGISTRATION</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">UNDER</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">THE SECURITIES ACT OF
    1933</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">OF SECURITIES</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">OF CERTAIN REAL ESTATE
    COMPANIES</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 22pt">PEBBLEBROOK HOTEL
    TRUST</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 7pt">(Exact name of registrant as
    specified in governing instruments)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">10319&#160;Westlake Drive,
    Suite&#160;112</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Bethesda, MD 20817</FONT></B>
</DIV>

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    <B><FONT style="font-size: 9pt">(301)&#160;765-6045</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 7pt">(Address, including zip code,
    and telephone number, including area code, of registrant&#146;s
    principal executive offices)</FONT></I>
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Jon E. Bortz</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt"> Chairman, President and Chief
    Executive Officer</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt"> 10319&#160;Westlake Drive,
    Suite&#160;112</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Bethesda, MD 20817</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">(301)&#160;765-6045</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 7pt">(Name, address, including zip
    code, and telephone number, including area code, of agent for
    service)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

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    <B><I><FONT style="font-size: 9pt">Copies to:</FONT></I></B>
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

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<TD align="center" valign="top">
    <B>David C. Wright<BR>
    Hunton &#038; Williams LLP<BR>
    Riverfront Plaza, East Tower<BR>
    951&#160;E.&#160;Byrd Street<BR>
    Richmond, Virginia 23219-4074<BR>
    (804)&#160;788-8200<BR>
    (804)&#160;788-8218 (Telecopy)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <B>James O&#146;Connor<BR>
    Bartholomew A. Sheehan<BR>
    Sidley Austin LLP<BR>
    787 Seventh Avenue<BR>
    New York, New York 10019<BR>
    (212) 839-5300<BR>
    (212) 839-5599 (Telecopy) </B>
</TD>
</TR>
</TABLE>

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</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Approximate date of commencement of proposed sale to the
    public:</B>&#160;&#160;As soon as practicable after the
    effective date of this Registration Statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any of the Securities registered on this Form are to be
    offered on a delayed or continuous basis pursuant to
    Rule&#160;415 under the Securities Act, check the following
    box:&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is filed to register additional securities for an
    offering pursuant to Rule&#160;462(b) under the Securities Act,
    check the following box and list the Securities Act registration
    statement number of the earlier effective registration statement
    for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(c) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(d) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If delivery of the prospectus is expected to be made pursuant to
    Rule&#160;434, please check the following
    box.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    &#147;large accelerated filer,&#148; &#147;accelerated
    filer&#148; and &#147;smaller reporting company&#148; in Rule
    12b-2 of the Exchange Act. (Check one):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
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    <TD width="12%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="5%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="31%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
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    <TD width="21%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
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<DIV style="text-indent: -9pt; margin-left: 9pt">
    Large&#160;accelerated&#160;filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Accelerated&#160;filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <FONT style="white-space: nowrap">Non-accelerated&#160;filer&#160;</FONT><FONT style="font-family: Wingdings; font-variant: normal">&#254;
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Smaller&#160;Reporting&#160;company&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="center" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    (Do&#160;not&#160;check&#160;if&#160;a&#160;smaller&#160;reporting&#160;company)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 6%; font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the Registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section&#160;8(a)
    of the Securities Act of 1933 or until the Registration
    Statement shall become effective on such date as the Commission,
    acting pursuant to said Section&#160;8(a), may determine.</B>
</DIV>

<DIV style="margin-top: 5pt; font-size: 1pt">&nbsp;</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

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<TABLE style="color: #FF0000" width="100%" border="1" cellpadding="5"><TR><TD style=text-align:justify>
<FONT style="font-size: 10pt; color: #E8112D">The information in
this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and it is
not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.<BR>
</FONT>
</TD></TR></TABLE>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 91%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="color: #E8112D">Subject to Completion</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="color: #E8112D"> Preliminary Prospectus dated
    November&#160;25, 2009</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><U>PROSPECTUS</U></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">
    17,500,000&#160;Shares</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587711.gif" alt="(PEBBLE BROOK HOTEL TRUST LOGO)"><FONT style="font-size: 18pt">
    </FONT>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt"> Common Shares</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pebblebrook Hotel Trust is an internally managed hotel
    investment company recently organized to opportunistically
    acquire and invest in hotel properties.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This is the initial public offering of our common shares of
    beneficial interest, $0.01&#160;par value per share, or common
    shares. We expect the initial public offering price of our
    common shares to be $20.00 per share. Prior to this offering,
    there has been no public market for our common shares. We intend
    to apply to list our common shares on the New York Stock
    Exchange under the symbol &#147;PEB.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Concurrently with this offering, in a separate private
    placement, we will sell an aggregate of 135,000 common shares to
    Jon E. Bortz, our Chairman, President and Chief Executive
    Officer, and Raymond D. Martz, our Executive Vice President and
    Chief Financial Officer, at the public offering price per share
    shown below.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to elect and qualify to be taxed as a real estate
    investment trust, or REIT, for federal income tax purposes. To
    assist us in qualifying as a REIT, among other reasons,
    ownership of our outstanding common shares by any person is
    limited to 9.8%, subject to certain exceptions. In addition, our
    declaration of trust contains various other restrictions on the
    ownership and transfer of our common shares.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in our common shares involves risks. You should
    read the section entitled &#147;Risk Factors&#148; beginning on
    page&#160;11 of this prospectus for a discussion of the
    following and other risks that you should consider before
    investing in our common shares:</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We have no operating history and have no agreements to acquire
    any hotel properties. We have not identified any specific hotel
    properties to acquire or committed the net proceeds of this
    offering and the concurrent private placement to any specific
    hotel property investment. Investors will not be able to
    evaluate the economic merits of any investments we make with the
    net proceeds prior to purchasing common shares in this offering.
    We may be unable to invest the proceeds on acceptable terms, or
    at all.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Our success will depend upon the efforts and expertise of our
    existing and future management team. The loss of their services
    could have an adverse impact on our business.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Failure of lodging industry fundamentals to improve may
    adversely affect our ability to execute our business strategy.
</TD>
</TR>





<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    In order to qualify as a REIT, we will not be able to operate
    our hotels, and our returns will depend on the management of our
    hotels by third-party hotel management companies.
</TD>
</TR>





<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Our failure to qualify as a REIT would result in higher taxes
    and reduced cash available for distribution to our shareholders
    and may have significant adverse consequences on the market
    price of our common shares.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=504 length=90 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="78%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="10%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Per Share</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Total</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Underwriting discount(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Proceeds, before expenses, to us
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<DIV style="font-size: 12pt; margin-left: 0%; width: 9%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=504 length=48 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">At the closing of this offering,
    the underwriters will be entitled to receive
    $&#160;&#160;&#160;&#160;&#160; from us for each share sold in
    this offering. The underwriters will forego the receipt of
    payment of $&#160;&#160;&#160;&#160;&#160; per share, until such
    time as we purchase assets in accordance with our investment
    strategy as described in this prospectus with an aggregate
    purchase price (including the amount of any outstanding
    indebtedness assumed or incurred by us) at least equal to the
    net proceeds from this offering (after deducting the full
    underwriting discount and other estimated offering expenses
    payable by us), at which time, we have agreed to pay the
    underwriters an amount equal to $&#160;&#160;&#160;&#160;&#160;
    per share sold in this offering. See &#147;Underwriting.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters may also purchase up to an additional 2,625,000
    common shares from us, at the public offering price, less the
    underwriting discount, within 30&#160;days from the date of this
    prospectus to cover overallotments, if any.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The common shares will be ready for delivery on or about
    December&#160;&#160;&#160;, 2009.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=504 length=90 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">BofA
    Merrill Lynch</FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">
    Raymond James</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 18pt; font-family: 'Times New Roman', Times">
    Wells Fargo Securities</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=504 length=90 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 16pt; font-family: 'Times New Roman', Times">
    Calyon Securities (USA) Inc.</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 16pt; font-family: 'Times New Roman', Times">
    RBC Capital Markets</FONT></B></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=504 length=90 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus is December&#160;&#160;&#160;, 2009.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
  <!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 91%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="95%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>PROSPECTUS SUMMARY</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>RISK FACTORS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>CAUTIONARY NOTE&#160;REGARDING FORWARD-LOOKING
    STATEMENTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>USE OF PROCEEDS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>CAPITALIZATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    36
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>OUR DISTRIBUTION POLICY</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>OUR BUSINESS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>OUR MANAGEMENT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>INVESTMENT POLICIES AND POLICIES WITH RESPECT TO
    CERTAIN ACTIVITIES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>OUR PRINCIPAL SHAREHOLDERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    68
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    69
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>DESCRIPTION OF SHARES OF BENEFICIAL INTEREST</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>SHARES ELIGIBLE FOR FUTURE SALE</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR
    DECLARATION OF TRUST&#160;AND BYLAWS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    76
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>OUR OPERATING PARTNERSHIP AND THE PARTNERSHIP
    AGREEMENT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'>MATERIAL FEDERAL INCOME TAX CONSIDERATIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'>ERISA CONSIDERATIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    111
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'>UNDERWRITING</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    112
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'>LEGAL MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    117
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'>EXPERTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    117
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'>WHERE YOU CAN FIND MORE INFORMATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    117
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'>REPORTS TO SHAREHOLDERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    118
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'>INDEX TO FINANCIAL STATEMENTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="w75877a2exv3w3.htm">EX-3.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="w75877a2exv10w5.htm">EX-10.5</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="w75877a2exv10w6.htm">EX-10.6</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="w75877a2exv23w1.htm">Ex-23.1</A></FONT></TD></TR>
</TABLE>

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</DIV>

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<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in this
    prospectus, any free writing prospectus prepared by us or
    information to which we have referred you. We have not, and the
    underwriters have not, authorized any other person to provide
    you with different information. If anyone provides you with
    different or inconsistent information, you should not rely on
    it. We are not, and the underwriters are not, making an offer to
    sell these securities in any jurisdiction where the offer or
    sale is not permitted. You should assume that the information
    appearing in this prospectus is accurate only as of the date on
    the front cover of this prospectus or another date specified
    herein. Our business, financial condition and prospects may have
    changed since such dates.
</DIV>
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<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUMMARY</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following summary highlights information contained
    elsewhere in this prospectus. This summary is not complete and
    does not contain all of the information that you should consider
    before investing in our common shares. You should read the
    entire prospectus, including &#147;Risk Factors,&#148; before
    making a decision to invest in our common shares. In this
    prospectus, references to &#147;our company,&#148;
    &#147;we,&#148; &#147;us&#148; and &#147;our&#148; mean
    Pebblebrook Hotel Trust, a Maryland real estate investment
    trust, and our consolidated subsidiaries, including Pebblebrook
    Hotel, L.P., a Delaware limited partnership, the subsidiary
    through which we will conduct our business and which we refer to
    as our operating partnership, except where it is clear from the
    context that the term means only the issuer of the common
    shares, Pebblebrook Hotel Trust. References to the
    &#147;concurrent private placement&#148; mean the private
    placement, concurrent with this offering, in which we will sell
    an aggregate of 135,000 common shares to Jon E. Bortz, our
    Chairman, President and Chief Executive Officer, and Raymond D.
    Martz, our Executive Vice President and Chief Financial Officer,
    at the public offering price per share shown on the cover page
    of this prospectus. Unless otherwise indicated, the information
    contained in this prospectus assumes that the underwriters&#146;
    overallotment option is not exercised.</I>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are an internally managed hotel investment company recently
    organized by our Chairman, President and Chief Executive
    Officer, Jon&#160;E. Bortz, to opportunistically acquire and
    invest in hotel properties located primarily in major United
    States cities, with an emphasis on the major coastal markets. As
    a result of construction costs and density, these markets have
    significant barriers to entry and, as shown in historical
    industry data, we believe these markets will experience the most
    robust recovery in meeting and room-night demand as the U.S.
    economy improves. In addition, we may invest in resort
    properties located near our primary urban target markets, as
    well as in select destination markets such as Hawaii, south
    Florida and southern California. We will seek geographic
    diversity in our investments, although attractive opportunities
    will be more important than geographic mix in our investment
    activity. We intend to focus on full-service hotel properties in
    the &#147;upper upscale&#148; segment of the lodging industry as
    defined by Smith Travel Research, Inc., or Smith Travel
    Research. In addition, we may seek to acquire branded, upscale,
    select-service properties in our primary urban target markets.
    We believe that these investments can produce attractive
    risk-adjusted returns because we expect (i)&#160;to acquire
    properties at cyclically low prices in the current economic and
    financing environment and (ii)&#160;the properties we purchase
    will benefit from increasing business and leisure travel as the
    economy improves. We currently do not own any hotel properties
    and have no properties under contract. We intend to elect and
    qualify to be taxed as a real estate investment trust, or REIT,
    for federal income tax purposes.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that the current market environment will present a
    significant number of attractive investment opportunities and
    that our management team will have the experience and expertise
    necessary to acquire a high-quality portfolio of hotel
    properties. Our management team will be led by Mr.&#160;Bortz,
    the founder and former Chairman of the Board of Trustees and
    Chief Executive Officer of LaSalle Hotel Properties, a
    NYSE-listed hotel REIT. Prior to that, he founded and led Jones
    Lang LaSalle&#146;s Hotel Investment Group. Mr.&#160;Bortz has
    28&#160;years of lodging and real estate experience, having
    overseen more than $2.5&#160;billion of lodging-related
    transactions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering and the concurrent private
    placement to Messrs. Bortz and Martz, we will have approximately
    $330&#160;million to invest in hotel properties and we will have
    no outstanding indebtedness. Accordingly, we believe we will be
    well-positioned to take advantage of attractive investment
    opportunities that we expect will be available in the lodging
    industry.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Market
    Opportunity</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S.&#160;hotel industry has experienced substantial
    declines in fundamentals as a result of the global economic
    recession and its adverse impact on business and leisure travel.
    We believe that the significant number of hotel properties
    experiencing substantial declines in operating cash flow,
    coupled with the challenged credit markets, near-term debt
    maturities and, in some instances, covenant defaults relating to
</DIV>
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    1
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    outstanding indebtedness, will present attractive investment
    opportunities in the lodging industry. Accordingly, we believe
    the following factors will provide well-capitalized investors,
    such as our company, the opportunity to acquire high-quality
    hotel properties at prices significantly below replacement cost,
    with substantial appreciation potential as the U.S.&#160;economy
    recovers from the current recession:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Significant Debt Defaults.</I>&#160;&#160;Cash flow at many
    hotel properties has declined or will likely decline to levels
    that are inadequate to support required debt service payments or
    that violate applicable covenants. Real Capital Analytics
    estimates that, as of September&#160;30, 2009, there are over
    1,100 hotel properties in distress (which includes default,
    <FONT style="white-space: nowrap">deed-in-lieu,</FONT>
    forced sales, foreclosure or bankruptcy), having an estimated
    aggregate value of approximately $29&#160;billion. We believe
    many of these hotel properties will be sold by lenders after
    foreclosure, while in receivership or in cooperation with the
    borrower.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Maturity Defaults and Lack of Available
    Financing.</I>&#160;&#160;According to Standard&#160;&#038;
    Poor&#146;s, hotel-related commercial mortgage-backed
    securities, or CMBS, with an aggregate principal amount of
    approximately $21&#160;billion are scheduled to mature over the
    next three years. In the current recessionary environment,
    traditional lending sources, such as banks, insurance companies
    and pension funds have adopted more conservative lending
    policies and have materially decreased new lending commitments
    to hotel properties. We believe the current and projected cash
    flows at many hotel properties, when coupled with more
    conservative lending policies, will only support mortgage
    financing that is significantly less than the amounts currently
    borrowed against such properties. As a result, we expect many
    owners of hotel properties will be unable to refinance maturing
    debt without significant additional equity investment, which may
    result in sales or foreclosures.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Under-Capitalized Owners.</I>&#160;&#160;Maintaining a
    hotel&#146;s physical condition at the levels required by major
    hotel brands often requires significant capital investment. This
    is particularly true for hotels in urban markets and in the
    upper upscale segment of the lodging industry, where we intend
    to focus our investment activity. We believe cash flow after
    debt service at many hotel properties may be insufficient to
    fund necessary capital expenditures and their owners may face
    capital investment demands that could require additional equity
    investments. We believe some hotel owners will be unable or
    unwilling to make the required equity investments and may choose
    or be compelled to sell their hotels.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Competitive
    Strengths</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect the following factors will benefit our company as we
    implement our business strategy:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Experienced Leadership.</I>&#160;&#160;Our senior executive
    management team will be led by our Chairman, President and Chief
    Executive Officer, Mr.&#160;Bortz, who has a proven track record
    and substantial experience in the hotel industry. Mr.&#160;Bortz
    has 28&#160;years of lodging and real estate experience,
    including expertise in hotel and resort property acquisitions,
    divestitures, repositioning, redevelopment, asset management,
    branding and financing. Our company represents
    Mr.&#160;Bortz&#146;s third lodging investment vehicle and his
    second publicly listed venture. He most recently served as Chief
    Executive Officer of LaSalle Hotel Properties, an internally
    managed, NYSE-listed hotel REIT, from its inception in April
    1998 and as the Chairman of its Board of Trustees from January
    2001 until his retirement in September 2009. Prior to LaSalle
    Hotel Properties, Mr.&#160;Bortz founded and led Jones Lang
    LaSalle&#146;s Hotel Investment Group, which acquired 15 hotels
    over his four-year tenure as its President. Through his past
    professional experiences, Mr.&#160;Bortz has developed strong
    relationships with hotel owners, management companies, brand
    companies, brokers, lenders and institutional investors. Our
    Executive Vice President and Chief Financial Officer,
    Raymond&#160;D. Martz, has over 15&#160;years&#146; experience
    in the hotel and real estate industries, including having served
    as Chief Financial Officer in his last two positions and in
    senior finance positions at two NYSE-listed hotel REITs.
</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Proven Acquirer with Strong Track Record of
    Growth.</I>&#160;&#160;Throughout his career, Mr.&#160;Bortz has
    demonstrated the ability to acquire, redevelop and reposition
    hotel properties. During Mr.&#160;Bortz&#146;s tenure as Chief
    Executive Officer of LaSalle Hotel Properties, he led
    transactions totaling $2.5&#160;billion in asset value. During
    this period, LaSalle Hotel Properties&#146; portfolio increased
    from 10 hotel properties at the time of its initial public
    offering in April 1998 to 31 properties with over 8,400 rooms at
    the time of Mr.&#160;Bortz&#146;s retirement in September 2009.
    In aggregate, Mr.&#160;Bortz oversaw the acquisition of 42 hotel
    and resort properties during his leadership tenure at LaSalle
    Hotel Properties and Jones Lang LaSalle&#146;s Hotel Investment
    Group. Mr.&#160;Bortz also established a strong capital sourcing
    network while at LaSalle Hotel Properties, overseeing that
    company&#146;s raising of more than $3.0&#160;billion of debt
    and equity capital to finance its significant growth over the
    past 11&#160;years. During Mr. Bortz&#146;s tenure at LaSalle
    Hotel Properties, that company experienced significant
    challenges resulting from severe industry downturns, such as the
    periods following September&#160;11, 2001 and the global
    recession beginning in August 2008, during which LaSalle Hotel
    Properties and other hotel companies reduced dividend
    distributions and capital investments due to substantial
    declines in revenues and earnings.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Focused Property Investment Strategy.</I>&#160;&#160;Industry
    analysts project that growth in revenue per available room, or
    RevPAR, will turn positive in 2011, thereby improving
    profitability. In accordance with such forecasts, we believe
    that when the U.S. economy begins to stabilize and generate
    positive growth in U.S.&#160;gross domestic product, or GDP,
    transient and group travel is likely to rebound, allowing hotel
    owners to grow occupancy as demand growth exceeds diminishing
    supply growth, leading to increasing average daily rates. We
    intend to invest primarily in upper upscale, full-service,
    branded and independent hotels in major U.S.&#160;cities, with
    an emphasis on the major coastal markets, where we believe there
    are significant barriers to entry for new hotel supply and
    meeting and room-night demand will experience the most robust
    recovery as the U.S.&#160;economy improves. In addition, we
    expect to acquire resort properties located near our primary
    urban target markets as well as in select, unique destination
    markets. We may also invest in branded, upscale, select-service
    hotels in premium urban locations in these major cities. Within
    these markets, we intend to establish a diversified customer
    base by investing in urban, resort and convention hotels, each
    of which typically has a different mix of business transient,
    leisure transient and group and convention customers, all of
    which follow different demand trends.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Flexible and Diversified Operating Strategy with No Legacy
    Issues.</I>&#160;&#160;Upon completion of this offering and the
    concurrent private placement, we will have no outstanding
    indebtedness and approximately $330&#160;million available for
    investment. While we expect our capital structure to ultimately
    include indebtedness as described in this prospectus, we do not
    intend to use significant leverage until after we have invested
    substantially all of the net proceeds of this offering and the
    concurrent private placement. As a newly formed company with no
    properties or operating history, we do not have the burden and
    distraction of legacy operating or legacy leverage issues that
    have adversely affected many existing hotel companies during the
    recent industry downturn, such as properties suffering from
    significant declines in cash flows or mortgage loan defaults.
    Since we are not affiliated with any hotel management company
    and have no contractual obligations to any particular hotel
    manager, we plan to retain multiple branded and independent
    third-party hotel management companies to operate our hotels,
    based on our assessment of the operator most beneficial for each
    property. We believe this strategy of retaining multiple hotel
    managers will assist us in identifying best practices that we
    will implement across our portfolio, as appropriate. We intend
    to enter into management contracts with third-party hotel
    management companies for the operation of our hotels. We expect
    that, in general, these contracts will have initial terms of
    five to ten years and require us to pay each management company
    a base management fee, typically in a range of 3% to 4% of total
    hotel revenues, and may provide for
    <FONT style="white-space: nowrap">agreed-upon</FONT>
    performance-based compensation to the management company. We
    expect that performance-based compensation will be negotiated on
    a hotel by hotel basis, but will typically range from 10% to 20%
    of hotel operating income or adjusted
</TD>
</TR>

</TABLE>
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    <BR>
    3
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<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
     hotel operating income, with either a fixed negotiated nominal
    threshold or nominal thresholds that vary or increase by year
    based on third-party hotel manager forecasts or
    <FONT style="white-space: nowrap">agreed-upon</FONT>
    projections of hotel performance. Further, we will seek
    management contracts that provide us with the ability to
    (i)&#160;terminate the management contract and replace an
    operator if specified levels of operating performance are not
    satisfied, or at will; (ii)&#160;reposition a hotel if we
    determine to do so; and (iii)&#160;terminate the management
    contract in connection with a sale of the hotel, which we
    believe may facilitate the sale of a hotel. Periodically, we may
    sell a hotel on an opportunistic basis if we believe sales
    proceeds may be invested in hotel properties that offer more
    attractive risk-return profiles. We expect to negotiate the
    termination fees payable to the hotel manager on a hotel by
    hotel basis, but would expect the termination fees to range from
    a relatively nominal fee to up to the sum of three years&#146;
    annual base management fees plus performance-based compensation.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Intensive Asset Management.</I>&#160;&#160;We intend to
    employ a dedicated and experienced asset management team to
    proactively manage our third-party hotel management companies in
    order to improve operational performance and maximize our return
    on investment. Although we will not operate our hotel
    properties, both our asset managers and our executive management
    team will actively participate with our hotel managers in all
    aspects of our hotels&#146; operations, including property
    positioning and repositioning, operations analysis, physical
    design, renovation and capital improvements, guest experience
    and overall strategic direction. Through these initiatives, we
    will seek to improve property efficiencies, lower costs,
    maximize revenues, and enhance property operating margins. We
    also anticipate implementing certain value-added strategies,
    such as changing operators, re-branding and de-flagging, when
    appropriate.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Prudent Capital Structure.</I>&#160;&#160;We expect to
    maintain a low-leverage capital structure and intend to limit
    the sum of the outstanding principal amount of our consolidated
    indebtedness and the liquidation preference of any outstanding
    preferred shares to not more than 4.5x our earnings before
    interest, taxes, depreciation and amortization, or EBITDA, for
    the <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Our board of trustees may modify or
    eliminate this limitation at any time without the approval of
    our shareholders.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Business
    Strategy and Investment Criteria</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to invest in hotel properties located primarily in
    major U.S.&#160;cities, such as Boston, New York, Washington,
    D.C., Chicago, Los Angeles and San Francisco, with an emphasis
    on the major coastal markets. We believe these markets have
    significant barriers to entry and will experience the most
    robust recovery in meeting and room-night demand as the U.S.
    economy improves. In addition, we may invest in resort
    properties located near our primary urban target markets, as
    well as in select destination markets such as Hawaii, south
    Florida and southern California. We intend to focus on both
    branded and independent full-service hotels in the &#147;upper
    upscale&#148; segment of the lodging industry as defined by
    Smith Travel Research based on average daily rates. In addition,
    we may seek to acquire branded, upscale, select-service hotels
    in our primary urban target markets. The full-service hotels on
    which we intend to focus our investment activity generally will
    have restaurant, lounge and meeting facilities and other
    amenities, as well as high service levels. The select-service
    hotels in which we may invest generally will not have
    comprehensive business meeting or banquet facilities and will
    have limited food and beverage outlets. We believe our target
    markets, including the coastal cities and resort markets, are
    characterized by significant barriers to entry and that
    long-term room-night demand and rate growth of these types of
    hotels will likely continue to outperform the national average,
    as they have historically.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will utilize extensive research to evaluate any target market
    and property, including a detailed review of the long-term
    economic outlook, trends in local demand generators, competitive
    environment, property systems and physical condition, and
    property financial performance. Specific acquisition criteria
    may include, but are not limited to, the following:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    premier locations, facilities and other competitive advantages
    not easily replicated;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    significant barriers to entry in the market, such as scarcity of
    development sites, regulatory hurdles, high per room development
    costs and long lead times for new development;
</TD>
</TR>

</TABLE>
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    <BR>
    4
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    acquisition price at a significant discount to replacement cost;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    properties not subject to long-term management contracts with
    hotel management companies;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    potential return on investment initiatives, including
    redevelopment, rebranding, redesign, expansion and change of
    management;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    opportunities to implement value-added operational
    improvements;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    strong demand growth characteristics supported by favorable
    demographic indicators.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that as the U.S.&#160;economy begins to stabilize and
    generate positive GDP growth, upper upscale full-service hotels
    and resorts and upscale select-service hotels located in major
    U.S.&#160;urban, convention and drive-to and destination resort
    markets are likely to generate the most favorable returns on
    investment in the lodging industry. Hotel developers&#146;
    inability to source construction financing over the past 18 to
    24&#160;months, and likely for the foreseeable future, creates
    an environment in which minimal new lodging supply is expected
    to be added through at least 2012. We believe that as transient
    and group travel rebounds, existing supply will accommodate
    incremental room-night demand allowing hotel owners to grow
    occupancy and ultimately increase rates, thereby improving
    profitability. We believe that portfolio diversification will
    allow us to capitalize from growth in various customer segments
    including business transient, leisure transient, and group and
    convention room-night demand.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We generally intend to enter into flexible management contracts
    with third-party hotel management companies for the operation of
    our hotels that will provide us with the ability to replace
    operators
    <FONT style="white-space: nowrap">and/or</FONT>
    reposition properties, to the extent that we determine to do so,
    and will align our operators with our objective of generating
    the highest return on investment. In addition, we believe that
    flexible management contracts facilitate the sale of hotels, and
    we may seek to opportunistically sell hotels if we believe sales
    proceeds may be invested in hotel properties that offer more
    attractive risk-adjusted returns.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Initially, we do not intend to engage in significant development
    or redevelopment of hotel properties. However, we do expect to
    engage in partial redevelopment and repositioning of certain
    properties, as we seek to maximize the financial performance of
    the hotels that we acquire. In addition, we may acquire
    properties that require significant capital improvement,
    renovation or refurbishment. Over the long-term, we may acquire
    hotel and resort properties that we believe would benefit from
    significant redevelopment or expansion, including, for example,
    adding rooms, meeting facilities or other amenities.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may consider acquiring outstanding debt secured by a hotel or
    resort property from lenders and investors if we believe we can
    foreclose on or acquire ownership of the property in the
    near-term. We do not intend to originate any debt financing or
    purchase any debt where we do not expect to gain ownership of
    the underlying property.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Financing
    Strategies</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to maintain a low-leverage capital structure and
    intend to limit the sum of the outstanding principal amount of
    our consolidated indebtedness and the liquidation preference of
    any outstanding preferred shares to not more than 4.5x our
    EBITDA for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Over time, we intend to finance our
    long-term growth with common and preferred equity issuances and
    debt financing having staggered maturities. Our debt may include
    mortgage debt secured by our hotel properties and unsecured debt.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate arranging and utilizing a revolving credit
    facility to fund future acquisitions (following investment of
    the net proceeds of this offering and the concurrent private
    placement), as well as for property redevelopments, return on
    investment initiatives and working capital requirements. We
    intend to repay amounts outstanding under any such credit
    facility from time to time with periodic common and preferred
    equity issuances, long-term debt financings and cash flows from
    operations. No assurance can be given that we will be able to
    obtain a credit facility.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When purchasing hotel properties, we may issue limited
    partnership interests in our operating partnership as full or
    partial consideration to sellers who may desire to take
    advantage of tax deferral on the sale of a hotel or participate
    in the potential appreciation in value of our common shares.
</DIV>
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    <BR>
    5
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<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Management Team</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our management team will be led by our Chairman, President and
    Chief Executive Officer, Mr. Bortz, who has 28&#160;years of
    lodging and real estate experience, including expertise in hotel
    property acquisitions, divestitures, repositioning,
    redevelopment, asset management, branding, re-branding and
    financing. Mr.&#160;Bortz founded and led two prior lodging
    entities, where he oversaw:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    more than $2.5&#160;billion in hotel investments, including
    acquisitions, dispositions, mergers and joint ventures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    more than $3.0&#160;billion in financings, including mortgage
    financings, common and preferred equity financings and secured
    and unsecured credit facilities;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the establishment of strong relationships within the lodging
    industry, including with hotel owners, management companies,
    brand companies and brokers;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the development of strong relationships within the financial
    community, including with leading institutional investors,
    investment banks, professional service firms and lenders.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Executive Vice President and Chief Financial Officer, Mr.
    Martz, has over 15 years&#146; experience in the hotel and real
    estate industries, including having served as Chief Financial
    Officer in his last two positions and in senior finance
    positions at two NYSE-listed hotel REITs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following completion of this offering, we intend to expand our
    team to include a Chief Investment Officer. Thereafter, we
    intend to hire additional experienced professionals as required
    by our operations, such as asset managers, analysts, accountants
    and administrative staff.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    Risk Factors</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An investment in our common shares involves various risks. You
    should carefully consider the matters discussed in &#147;Risk
    Factors&#148; beginning on page&#160;11 of this prospectus
    before you decide whether to invest in our common shares. Some
    of the risks include the following:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We were organized in October 2009 and have no operating history.
    We may be unable to successfully implement our business strategy
    or generate sufficient operating cash flows to make or sustain
    distributions to our shareholders.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We currently do not own, and have no agreements to acquire, any
    hotel properties. We have not identified any specific hotel
    properties to acquire or committed any portion of the net
    proceeds of this offering or the concurrent private placement to
    any specific hotel property investment. Accordingly, you will
    not be able to evaluate the merits of any investments we make
    with the net proceeds. We may be unable to invest the net
    proceeds on acceptable terms, or at all.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Our success will depend upon the efforts and expertise of our
    existing and future management team. The loss of their services,
    and our inability to find suitable replacements, could delay the
    implementation of our investment strategy.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    A substantial part of our business strategy is based on our
    expectation that lodging industry fundamentals will improve as
    forecast by industry analysts, such as Jones Lang LaSalle
    Hotels, or JLLH. If lodging industry fundamentals do not improve
    when or as we expect, or deteriorate, the operating results of
    hotels that we acquire and our ability to execute our business
    strategy may be impaired.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    The performance of the lodging industry has historically been
    linked to the performance of the general economy and U.S. GDP.
    Declines in corporate travel budgets and consumer demand due to
    adverse general economic conditions such as declines in U.S. GDP
    can lower the revenues and profitability of our hotel properties.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will rely on third-party hotel management companies to
    operate our hotel properties under the terms of hotel management
    contracts. Even if we believe our hotel properties are being
    operated inefficiently or in a manner that does not result in
    satisfactory RevPar or profits we may not be able to force the
    hotel management company to change its method of operating our
    hotels.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>
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    <BR>
    6
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Our hotel management contracts will require us, through our
    taxable REIT subsidiaries, or TRS lessees, to bear the risks of
    decreased revenues or increased expenses at our hotel
    properties. Any increases in operating expenses, such as wages
    and benefits, repair and maintenance, energy, taxes and
    insurance, or decreases in revenues resulting from decreased
    demand or competition from new supply, will be borne entirely by
    us and may have a significant adverse impact on our earnings and
    cash flow.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    To qualify for taxation as a REIT, we generally will be required
    to distribute at least 90% of our REIT taxable income,
    determined without regard to the deduction for dividends paid
    and excluding any net capital gain, each year to our
    shareholders. As a result, our ability to fund capital
    expenditures, acquisitions, hotel redevelopment and development
    through retained earnings will be very limited. We may not be
    able to fund capital improvements or acquisitions solely from
    cash provided from our operating activities. Consequently, after
    investing the net proceeds of this offering, we will rely upon
    the availability of debt or equity capital to fund investments
    in hotel properties and capital improvements. There can be no
    assurance that we will be able to obtain such financing on
    favorable terms or at all. We also may not generate sufficient
    cash flow to fund distributions required to maintain our
    qualification as a REIT.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    If we fail to qualify, or lose our qualification, as a REIT, we
    will be subject to federal income tax on our taxable income. Our
    hotel properties leased by TRS lessees must be operated by
    &#147;eligible independent contractors,&#148; as defined in the
    Internal Revenue Code of 1986, as amended, or the Code, in order
    for our TRS lessees to qualify as such and for the rental income
    from our TRS leases to qualify as rents from real property under
    the applicable REIT income tests. Complex constructive ownership
    rules under the Code apply in determining whether a person
    qualifies as an eligible independent contractor.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will incur a 100% excise tax on transactions with taxable
    REIT subsidiaries, or TRSs, including our TRS lessees, that are
    not conducted on an arm&#146;s-length basis.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Subject to certain exceptions, our declaration of trust provides
    that no person may beneficially own more than 9.8% in value or
    in number of shares, whichever is more restrictive, of the
    outstanding shares of any class or series of our shares of
    beneficial interest. In addition, our declaration of trust and
    bylaws contain other provisions that may delay, defer or prevent
    an acquisition of control of our company by a third party
    without our board of trustees&#146; approval, even if our
    shareholders believe the change of control is in their best
    interests.
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Because real estate investments are relatively illiquid, our
    ability to promptly sell one or more hotel properties for
    reasonable prices in response to changing economic, financial
    and investment conditions will be limited. In addition, because
    some of our hotel management contracts may be long-term and may
    not terminate in the event of a sale, our ability to sell hotel
    properties may be further limited.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Organizational Structure</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We were formed as a Maryland real estate investment trust on
    October&#160;2, 2009. We will be the sole general partner of
    Pebblebrook Hotel, L.P., the subsidiary through which we will
    conduct substantially all of our operations and make
    substantially all of our investments and which we refer to as
    our operating partnership. Upon completion of this offering, we
    will contribute to our operating partnership the net proceeds of
    this offering and the concurrent private placement as our
    initial capital contribution in exchange for substantially all
    of the limited partnership interests in our operating
    partnership. In the future we may issue limited partnership
    interests in our operating partnership as consideration for the
    purchase of hotel properties or in connection with our equity
    incentive plan.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order for the income from our hotel operations to constitute
    &#147;rents from real property&#148; for purposes of the gross
    income tests required for REIT qualification under the Code, we
    cannot directly operate any of our hotel properties. Instead, we
    must lease our hotel properties. Accordingly, we will lease each
    of our hotel properties to one of our TRS lessees, which will be
    wholly owned by our operating partnership. Our TRS lessees will
    pay rent to us that can qualify as &#147;rents from real
    property,&#148; provided that the TRS lessees engage
</DIV>
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    <BR>
    7
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#147;eligible independent contractors&#148; to manage our
    hotels. A TRS is a corporate subsidiary of a REIT that jointly
    elects with the REIT to be treated as a TRS of the REIT and that
    pays federal income tax at regular corporate rates on its
    taxable income. We expect that all of our hotel properties will
    be leased to one of our wholly owned TRS lessees, which will be
    able to pay us rent out of the revenue of the hotels, and will
    engage multiple eligible independent contractors to manage our
    hotels.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following chart shows the structure of our company following
    completion of this offering and the concurrent private placement:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587701.gif" alt="(FLOW CHART)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes an aggregate of 135,000
    common shares purchased by Messrs. Bortz and Martz in the
    concurrent private placement and an aggregate of 15,000
    restricted common shares that will be granted to our initial
    independent trustees upon completion of this offering under our
    2009&#160;Equity Incentive Plan. Does not reflect
    (i)&#160;881,750&#160;common shares underlying an aggregate of
    881,750&#160;LTIP units that will be granted to Messrs. Bortz,
    Martz and Andrew&#160;H. Dittamo, our Vice President and
    Controller, upon completion of this offering pursuant to our
    2009 Equity Incentive Plan or (ii)&#160;grants of an aggregate
    of 48,000&#160;restricted common shares to Messrs.&#160;Bortz,
    Martz and Dittamo that are expected to be approved at the first
    meeting of our board of trustees following completion of this
    offering pursuant to our 2009 Equity Incentive Plan as part of
    our 2010&#160;compensation program.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Upon completion of this offering,
    we will issue an aggregate of 881,750 LTIP units to
    Messrs.&#160;Bortz, Martz and Dittamo. See &#147;Our
    Management&#160;&#151; 2009 Equity Incentive Plan.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">To be formed.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Status</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to elect to be taxed as a REIT for federal income tax
    purposes commencing with our short taxable year ending on
    December&#160;31, 2009. Our qualification as a REIT will depend
    upon our ability to meet, on a continuing basis, through actual
    investment and operating results, various complex requirements
    under the Code relating to, among other things, the sources of
    our gross income, the composition and values of our assets, our
    distribution levels and the diversity of ownership of our shares
    of beneficial interest. We believe that we will be organized in
    conformity with the requirements for qualification as a REIT
    under the Code and that our intended manner of operation will
    enable us to meet the requirements for qualification and
    taxation as a REIT for federal income tax purposes commencing
    with our short taxable year ending December&#160;31, 2009 and
    continuing thereafter.
</DIV>
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    <BR>
    8
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a REIT, we generally will not be subject to federal income
    tax on our REIT taxable income that we distribute currently to
    our shareholders. Under the Code, REITs are subject to numerous
    organizational and operational requirements, including a
    requirement that they distribute each year at least 90% of their
    taxable income, determined without regard to the deduction for
    dividends paid and excluding any net capital gains. If we fail
    to qualify for taxation as a REIT in any taxable year and do not
    qualify for certain statutory relief provisions, our income for
    that year will be taxed at regular corporate rates, and we will
    be disqualified from taxation as a REIT for the four taxable
    years following the year during which we ceased to qualify as a
    REIT. Even if we qualify as a REIT for federal income tax
    purposes, we may still be subject to state and local taxes on
    our income and assets and to federal income and excise taxes on
    our undistributed income. Additionally, any income earned by our
    TRS lessees will be fully subject to federal, state and local
    corporate income tax.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Distribution
    Policy</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to make distributions consistent with our intent to be
    taxed as a REIT under the Code. We intend to make regular
    quarterly distributions to our shareholders beginning at such
    time as our board of trustees determines that we have acquired
    hotels generating sufficient cash flow to do so. Until we invest
    a substantial portion of the net proceeds of this offering and
    the concurrent private placement in hotels, we expect our
    distributions will be nominal. We cannot predict the timing of
    our hotel investments or when we will commence paying quarterly
    distributions.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to qualify for taxation as a REIT, we intend to make
    annual distributions to our shareholders of at least 90% of our
    taxable income, determined without regard to the deduction for
    dividends paid and excluding any net capital gains. We cannot
    assure you as to when we will begin to generate sufficient cash
    flow to make distributions to our shareholders or our ability to
    sustain those distributions. Distributions will be authorized by
    our board of trustees and declared by us based upon a variety of
    factors deemed relevant by our trustees. Distributions to our
    shareholders generally will be taxable to our shareholders as
    ordinary income; however, because a significant portion of our
    investments will be equity ownership interests in hotel
    properties, which will generate depreciation and other non-cash
    charges against our income, a portion of our distributions may
    constitute a tax-free return of capital. To the extent not
    inconsistent with maintaining our qualification as a REIT, we
    may retain any earnings that accumulate in our TRSs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Restrictions
    on Ownership of Our Common Shares</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to help us qualify as a REIT, among other reasons, our
    declaration of trust, subject to certain exceptions, restricts
    the amount of our shares of beneficial interest that a person
    may beneficially or constructively own. Our declaration of trust
    provides that, subject to certain exceptions, no person may
    beneficially or constructively own more than 9.8% in value or in
    number of shares, whichever is more restrictive, of the
    outstanding shares of any class or series of our shares of
    beneficial interest. Our declaration of trust also prohibits any
    person from (i)&#160;beneficially owning shares of beneficial
    interest to the extent that such beneficial ownership would
    result in our being &#147;closely held&#148; within the meaning
    of Section&#160;856(h) of the Code (without regard to whether
    the ownership interest is held during the last half of the
    taxable year), (ii)&#160;transferring our shares of beneficial
    interest to the extent that such transfer would result in our
    shares of beneficial interest being beneficially owned by less
    than 100&#160;persons (determined under the principles of
    Section&#160;856(a)(5) of the Code), (iii)&#160;beneficially or
    constructively owning our shares of beneficial interest to the
    extent such beneficial or constructive ownership would cause us
    to constructively own ten percent or more of the ownership
    interests in a tenant (other than a TRS) of our real property
    within the meaning of Section&#160;856(d)(2)(B) of the Code or
    (iv)&#160;beneficially or constructively owning or transferring
    our shares of beneficial interest if such ownership or transfer
    would otherwise cause us to fail to qualify as a REIT under the
    Code, including but not limited to, as a result of any hotel
    management companies failing to qualify as &#147;eligible
    independent contractors&#148; under the REIT rules. Our board of
    trustees, in its sole discretion, may prospectively or
    retroactively exempt a person from certain of these limits and
    may establish or increase an excepted holder percentage limit
    for such person. The person seeking an exemption must provide to
    our board of trustees such representations, covenants and
    undertakings as our board of trustees may deem appropriate in
    order to conclude that granting the exemption will not cause us
    to lose our status as a REIT.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>
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    <BR>
    9
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<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Offering</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Common shares offered</TD>
    <TD></TD>
    <TD valign="bottom">
    17,500,000 common shares (plus up to an additional 2,625,000
    common shares that we may issue and sell upon the exercise of
    the underwriters&#146; overallotment option).</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Common shares to be outstanding upon completion of this offering</TD>
    <TD></TD>
    <TD valign="bottom">
    17,650,000 common
    shares<SUP style="font-size: 85%; vertical-align: top">(1)</SUP></TD>

</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="bottom">
    We will contribute the net proceeds of this offering and the
    concurrent private placement to our operating partnership. Our
    operating partnership will invest these net proceeds in hotel
    properties in accordance with our investment strategy described
    in this prospectus and for general business purposes. Prior to
    the full investment of the net offering proceeds in hotel
    properties, we intend to invest the net proceeds in
    interest-bearing short-term investment grade securities or
    money-market accounts which are consistent with our intention to
    qualify as a REIT. These initial investments are expected to
    provide a lower net return than we will seek to achieve from
    investments in hotel properties. We will use approximately
    $100,000 of the proceeds to reimburse Mr.&#160;Bortz for
    out-of-pocket expenses he incurred in connection with the
    formation of our company and this offering and $1,000 to
    repurchase the shares he acquired in connection with the
    formation and initial capitalization of our company. See
    &#147;Use of Proceeds.&#148;</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Proposed New York Stock Exchange symbol</TD>
    <TD></TD>
    <TD valign="bottom">
    &#147;PEB&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    Ownership and transfer restrictions</TD>
    <TD></TD>
    <TD valign="bottom">
    Our declaration of trust, subject to certain exceptions,
    prohibits any person from directly or indirectly owning more
    than 9.8% by value or number of shares, whichever is more
    restrictive, of the outstanding shares of any class or series of
    our shares of beneficial interest. See &#147;Description of
    Shares of Beneficial Interest&#160;&#151; Restrictions on
    Ownership and Transfer.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    Risk factors</TD>
    <TD></TD>
    <TD valign="bottom">
    Investing in our common shares involves risks. You should
    carefully read and consider the information set forth under
    &#147;Risk Factors&#148; and all other information in this
    prospectus before investing in our common shares.</TD>
</TR>

</TABLE>



<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes an aggregate of 135,000
    common shares that we will sell to Messrs. Bortz and Martz in
    the concurrent private placement and an aggregate of 15,000
    restricted common shares that will be granted to our initial
    independent trustees upon completion of this offering pursuant
    to our 2009 Equity Incentive Plan. Does not include
    (i)&#160;881,750 common shares underlying an aggregate of
    881,750 LTIP units that will be granted to Messrs.&#160;Bortz,
    Martz and Dittamo upon completion of this offering pursuant to
    our 2009 Equity Incentive Plan, (ii)&#160;grants of an aggregate
    of 48,000 restricted common shares to Messrs.&#160;Bortz, Martz
    and Dittamo pursuant to our 2009 Equity Incentive Plan that are
    expected to be approved at the first meeting of our board of
    trustees following completion of this offering as part of our
    2010 compensation program, (iii)&#160;377,875 common shares
    reserved for issuance under our 2009 Equity Incentive Plan and
    (iv)&#160;2,625,000 common shares issuable upon exercise of the
    underwriters&#146; overallotment option. Our 2009 Equity
    Incentive Plan provides for the issuance of aggregate share
    awards equal to 7.5% of the number of common shares issued in
    this offering (excluding any shares issued pursuant to the
    underwriters&#146; overallotment option) and in the concurrent
    private placement. Based on an offering of
    17,500,000&#160;shares and 135,000&#160;shares sold pursuant to
    the concurrent private placement, 1,322,625 common shares will
    be available for issuance under the 2009 Equity Incentive Plan.
    After the grant of an aggregate of 881,750 LTIP units to
    Messrs.&#160;Bortz, Martz and Dittamo, an aggregate of 15,000
    restricted common shares to our initial independent trustees and
    an aggregate of 48,000 restricted common shares to
    Messrs.&#160;Bortz, Martz and Dittamo that are expected to be
    approved at the first meeting of our board of trustees following
    completion of this offering as part of our 2010 compensation
    program, 377,875 common shares will remain available for grants
    under the 2009 Equity Incentive Plan. If the size of this
    offering changes, the aggregate number of LTIP units to be
    granted to Messrs.&#160;Bortz, Martz and Dittamo will change so
    as to equal 5% of the common shares issued in this offering
    (excluding any shares issued pursuant to the underwriters&#146;
    overallotment option) and in the concurrent private placement
    and the aggregate number of shares and the remaining number of
    shares reserved for issuance under the 2009 Equity Incentive
    Plan will change accordingly.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Information</FONT></B>
</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our principal executive offices are located at
    10319&#160;Westlake Drive, Suite&#160;112, Bethesda, MD 20817.
    Our telephone number is
    <FONT style="white-space: nowrap">(301)&#160;765-6045.</FONT>
    We expect to maintain a website at www.pebblebrookhotels.com
    upon completion of this offering. The contents of our website
    are not a part of this prospectus. We have included our website
    address only as an inactive textual reference and do not intend
    it to be an active link to our website.
</DIV>
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    <BR>
    10
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<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An investment in our common shares involves risks. In addition
    to other information in this prospectus, you should carefully
    consider the following risks before investing in our common
    shares offered by this prospectus. The occurrence of any of the
    following risks could materially and adversely affect our
    business, prospects, financial condition, results of operations
    and our ability to make cash distributions to our shareholders,
    which could cause you to lose all or a significant portion of
    your investment in our common shares. Some statements in this
    prospectus, including statements in the following risk factors,
    constitute forward-looking statements. See &#147;Cautionary Note
    Regarding Forward-Looking Statements.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Business and Properties</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have no operating history and may not be able to successfully
    operate our business or generate sufficient operating cash flows
    to make or sustain distributions to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We were organized in October 2009, have no operating history and
    have no agreements to acquire any hotel properties. We will only
    commence operations upon completion of this offering. Our
    ability to make or sustain distributions to our shareholders
    will depend on many factors, including our availability to
    identify attractive acquisition opportunities that satisfy our
    investment strategy, our success in consummating acquisitions on
    favorable terms, the level and volatility of interest rates,
    readily accessible short-term and long-term financing on
    favorable terms, and conditions in the financial markets, the
    real estate market and the economy. We will face competition in
    acquiring attractive hotel properties. The value of the hotel
    properties that we acquire may decline substantially after we
    purchase them. We may not be able to successfully operate our
    business or implement our operating policies and investment
    strategy successfully. Furthermore, we may not be able to
    generate sufficient operating cash flow to pay our operating
    expenses and make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a newly formed company, we are subject to the risks of any
    newly established business enterprise, including risks that we
    will be unable to attract and retain qualified personnel, create
    effective operating and financial controls and systems or
    effectively mange our anticipated growth, any of which could
    have a material adverse effect on our business and our operating
    results.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have not yet identified any specific hotel properties to acquire
    and you will be unable to evaluate the allocation of net
    proceeds of this offering and the concurrent private placement
    or the economic merits of our investments prior to making your
    investment decision.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently do not own any properties and have no agreements to
    acquire any properties. Since we have not yet identified any
    specific hotel properties to acquire or committed the net
    proceeds of this offering or the concurrent private placement to
    any specific hotel property investment, you will be unable to
    evaluate the allocation of the net proceeds or the economic
    merits of our acquisitions before making an investment decision
    to purchase our common shares. As a result, we will have broad
    authority to invest the net proceeds in any real estate
    investments that we may identify in the future and we may use
    those proceeds to make investments with which you may not agree.
    In addition, our investment policies may be amended or revised
    from time to time at the discretion of our board of trustees,
    without a vote of our shareholders. These factors will increase
    the uncertainty, and thus the risk, of investing in our common
    shares. Our failure to apply the net proceeds effectively or
    find suitable hotel properties to acquire in a timely manner or
    on acceptable terms could result in returns that are
    substantially below expectations or result in losses.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prior to the full investment of the net offering proceeds in
    hotel properties, we intend to invest the net proceeds in
    interest-bearing short-term, investment grade securities or
    money-market accounts which are consistent with our intention to
    qualify as a REIT. These investments are expected to provide a
    lower net return than we will seek to achieve from our
    investments in hotel properties. We may not be able to identify
    hotel investments that meet our investment criteria, we may not
    be successful in completing any investment we identify and our
    investments may not produce acceptable, or any, returns. We may
    be unable to invest the proceeds on acceptable terms, or at all.
</DIV>
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    depend on the efforts and expertise of our key executive
    officers and would be adversely affected by the loss of their
    services.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We depend on the efforts and expertise of our President and
    Chief Executive Officer, as well as our other executive
    officers, to execute our business strategy. The loss of their
    services, and our inability to find suitable replacements, would
    have an adverse effect on our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Because
    our senior executive officers will have broad discretion to
    invest the net proceeds of this offering and the concurrent
    private placement, they may make investments where the returns
    are substantially below expectations or which result in net
    operating losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our senior executive officers will have broad discretion, within
    the general investment criteria established by our board of
    trustees, to invest the net proceeds of this offering and the
    concurrent private placement and to determine the timing of such
    investments. In addition, our investment policies may be revised
    from time to time at the discretion of our board of trustees,
    without a vote of our shareholders. Such discretion could result
    in investments that may not yield returns consistent with
    expectations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    intend to invest in the upper upscale segment of the lodging
    market which is highly competitive and generally subject to
    greater volatility than most other market segments and could
    negatively affect our profitability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The upper upscale segment of the hotel business is highly
    competitive. Our hotel properties will compete on the basis of
    location, room rates, quality, service levels, reputation and
    reservations systems, among many factors. There are many
    competitors in the upper upscale segment, and many of these
    competitors may have substantially greater marketing and
    financial resources than we have. This competition could reduce
    occupancy levels and room revenue at our hotels. Over-building
    in the lodging industry may increase the number of rooms
    available and may decrease occupancy and room rates. In
    addition, in periods of weak demand, as may occur during a
    general economic recession, profitability is negatively affected
    by the relatively high fixed costs of operating upper upscale
    hotels.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Failure
    of the lodging industry to exhibit improvement may adversely
    affect the operating results of the hotels we acquire and our
    ability to execute our business strategy.</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A substantial part of our business strategy is based on our
    expectation that lodging industry fundamentals will improve as
    forecast by industry analysts, such as JLLH, which projects that
    RevPAR growth will turn positive in 2011, thereby improving
    profitability. In accordance with such forecasts, we believe
    that when the U.S.&#160;economy begins to stabilize and generate
    positive GDP growth, transient and group travel is likely to
    rebound, allowing hotel owners to grow occupancy as demand
    growth exceeds diminishing supply growth, leading to increasing
    average daily rates. There can be no assurance as to whether, or
    when, lodging industry fundamentals will in fact improve or to
    what extent they will improve. In the event conditions in the
    industry do not improve when and as we expect, or deteriorate,
    the operating results of hotels we acquire and our ability to
    execute our business strategy may be impaired.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    returns could be negatively impacted if the third-party
    management companies that will operate our hotels do not manage
    our hotel properties effectively.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since federal income tax laws restrict REITs and their
    subsidiaries from operating or managing a hotel, we will not
    operate any hotel properties we acquire. Instead, we will lease
    substantially all of our hotel properties to subsidiaries that
    qualify as TRSs, under applicable REIT laws, and our TRS lessees
    will retain third-party managers to operate our hotels pursuant
    to management contracts. Our cash flow from the hotels may be
    adversely affected if our managers fail to provide quality
    services and amenities or if they or their affiliates fail to
    maintain a quality brand name. In addition, our managers or
    their affiliates may manage, and in some cases may own, invest
    in or provide credit support or operating guarantees to hotels
    that compete with hotel properties that we acquire, which may
    result in conflicts of interest and decisions regarding the
    operation of our hotels that are not in our best interests.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not have the authority to require any hotel property to
    be operated in a particular manner or to govern any particular
    aspect of the daily operations of any hotel property (for
    example, setting room rates). Thus, even if we believe our
    hotels are being operated inefficiently or in a manner that does
    not result in satisfactory occupancy rates, RevPAR and average
    daily rates, or ADR, we may not be able to force the management
    company to change its method of operating our hotels. We
    generally will attempt to resolve issues with our managers
    through discussions and negotiations. However, if we are unable
    to reach satisfactory results through discussions and
    negotiations, we may choose to litigate the dispute or submit
    the matter to third-party dispute resolution. We can only seek
    redress if a management company violates the terms of the
    applicable management contract with a TRS lessee, and then only
    to the extent of the remedies provided for under the terms of
    the management contract. Additionally, in the event that we need
    to replace any management company, we may be required by the
    terms of the management contract to pay substantial termination
    fees and may experience significant disruptions at the affected
    hotels.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Restrictive
    covenants in our management contracts could preclude us from
    taking actions with respect to the sale or refinancing of a
    hotel property that would otherwise be in our best
    interest.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we currently intend to enter into flexible management
    contracts that will provide us with the ability to replace our
    hotel managers on relatively short notice, we may enter into
    management contracts that contain some restrictive covenants or
    acquire properties subject to existing management contracts that
    do not allow such flexibility. For example, the terms of some
    management contracts may restrict our ability to sell a property
    unless the purchaser is not a competitor of the manager and
    assumes the related management contract and meets specified
    other conditions. If we enter into any such management
    contracts, or acquire properties with such terms, we may be
    precluded from taking actions that would otherwise be in our
    best interest or could cause us to incur substantial expense.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    TRS lessee structure subjects us to the risk of increased hotel
    operating expenses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our leases with our TRS lessees will require our TRS lessees to
    pay us rent based in part on revenues from our hotels. Our
    operating risks include decreases in hotel revenues and
    increases in hotel operating expenses, which would adversely
    affect our TRS lessees&#146; ability to pay us rent due under
    the leases, including but not limited to the increases in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    wage and benefit costs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    repair and maintenance expenses;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    energy costs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    property taxes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    insurance costs;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    other operating expenses.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Increases in these operating expenses can have a significant
    adverse impact on our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    hotels operated under franchise agreements will be subject to
    risks arising from adverse developments with respect to the
    franchise brand and to costs associated with maintaining the
    franchise license.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that many of our hotel properties will operate under
    franchise agreements, and that we will be subject to the risks
    associated with concentrating hotel investments in several
    franchise brands. These risks include reductions in business
    following negative publicity related to one of the brands or the
    general decline of a brand.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maintenance of the franchise licenses for branded hotel
    properties will be subject to the franchisors&#146; operating
    standards and other terms and conditions. Franchisors will
    periodically inspect hotel properties to ensure that we and our
    lessees and management companies follow their standards. Failure
    by us,
</DIV>
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    <BR>
    13
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    one of our TRS lessees or one of our third-party management
    companies to maintain these standards or other terms and
    conditions could result in a franchise license being canceled.
    If a franchise license is cancelled due to our failure to make
    required improvements or to otherwise comply with its terms, we
    also may be liable to the franchisor for a termination payment,
    which varies by franchisor and by hotel property. As a condition
    of maintaining a franchise license, a franchisor could require
    us to make capital expenditures, even if we do not believe the
    capital improvements are necessary or desirable or will result
    in an acceptable return on our investment. We may risk losing a
    franchise license if we do not make franchisor-required capital
    expenditures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a franchisor terminates the franchise license or the license
    expires, we may try either to obtain a suitable replacement
    franchise or to operate the hotel without a franchise license.
    The loss of a franchise license could materially and adversely
    affect the operations and the underlying value of the hotel
    property because of the loss of associated name recognition,
    marketing support and centralized reservation system provided by
    the franchisor and adversely affect our revenues. This loss of
    revenue could in turn adversely affect our financial condition,
    results of operations, the market price of our common shares and
    our ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    ability to make distributions to our shareholders is subject to
    fluctuations in our financial performance, operating results and
    capital improvements requirements.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify for taxation as a REIT, we will be required to
    distribute at least 90% of our taxable income (determined before
    the deduction for dividends paid and excluding any net capital
    gains) each year to our shareholders and we generally expect to
    make distributions in excess of such amount. In the event of
    downturns in our operating results, unanticipated capital
    improvements to our hotel properties or other factors we may be
    unable to declare or pay distributions to our shareholders. The
    timing and amount of distributions are in the sole discretion of
    our board of trustees which will consider, among other factors,
    our financial performance, any debt service obligations, any
    debt covenants, and capital expenditure requirements. We cannot
    assure you that we will generate sufficient cash in order to
    fund distributions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    use a portion of the net proceeds from this offering and the
    concurrent private placement to make distributions to our
    shareholders, which would, among other things, reduce our cash
    available to invest in hotel properties and may reduce the
    returns on your investment in our common shares.</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prior to the time we have fully invested the net proceeds of
    this offering and the concurrent private placement, we may fund
    distributions to our shareholders out of the net proceeds of
    these offerings, which would reduce the amount of cash we have
    available to invest in hotel properties and may reduce the
    returns on your investment in our common shares. The use of
    these net proceeds for distributions to shareholders could
    adversely affect our financial results. In addition, funding
    distributions from the net proceeds of this offering may
    constitute a return of capital to our shareholders, which would
    have the effect of reducing each shareholder&#146;s tax basis in
    our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    cannot obtain financing, our growth will be
    limited.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify for taxation as a REIT, we will be required to
    distribute at least 90% of our taxable income (determined before
    the deduction for dividends paid and excluding any net capital
    gains) each year to our shareholders and we generally expect to
    make distributions in excess of such amount. As a result, our
    ability to retain earnings to fund acquisitions, redevelopment
    and development or other capital expenditures will be limited.
    After investing the net proceeds of this offering and the
    concurrent private placement, we do not expect to have a
    significant amount of debt, including debt that may be assumed
    in connection with a hotel acquisition. Although our business
    strategy contemplates future access to debt financing (including
    an anticipated revolving credit facility) to fund acquisitions,
    redevelopment, development, return on investment initiatives and
    working capital requirements, we have not yet initiated
    discussions with lenders and there can be no assurance that we
    will be able to obtain such financing on favorable terms or at
    all. Recent events in the financial markets have had an adverse
    impact on the credit markets and, as a result, credit has become
    significantly more expensive and difficult to obtain, if
    available at all. Some lenders are imposing more stringent
    credit terms, there has been and may continue to be a general
    reduction in the amount of credit available, and many banks are
    either unable or unwilling to provide new asset based lending.
    Tightening credit
</DIV>
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    <BR>
    14
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    markets may have an adverse effect on our ability to obtain
    financing on favorable terms, if at all, thereby increasing
    financing costs
    <FONT style="white-space: nowrap">and/or</FONT>
    requiring us to accept financing with increasing restrictions.
    If adverse conditions in the credit markets&#160;&#151; in
    particular with respect to real estate or lodging industry
    finance&#160;&#151; materially deteriorate, our business could
    be materially and adversely affected. Our long-term ability to
    grow through investments in hotel properties will be limited if
    we cannot obtain additional financing. Market conditions may
    make it difficult to obtain financing, and we cannot assure you
    that we will be able to obtain additional debt or equity
    financing or that we will be able to obtain it on favorable
    terms.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Future
    debt service obligations could adversely affect our overall
    operating results, may require us to sell hotel properties, may
    jeopardize our qualification as a REIT and could adversely
    affect our ability to make distributions to our shareholders and
    the market price of our common shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our business strategy contemplates the use of both secured and
    unsecured debt to finance long-term growth. Although we intend
    to limit the sum of the outstanding principal amount of our
    consolidated indebtedness and the liquidation preference of any
    outstanding preferred shares to not more than 4.5x our EBITDA
    for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of new debt or the issuance of
    preferred shares, our board of trustees may modify or eliminate
    this limitation at any time without the approval of our
    shareholders. As a result, we may be able to incur substantial
    additional debt, including secured debt, in the future.
    Incurring debt could subject us to many risks, including the
    risks that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our cash flow from operations will be insufficient to make
    required payments of principal and interest;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our debt may increase our vulnerability to adverse economic and
    industry conditions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we may be required to dedicate a substantial portion of our cash
    flow from operations to payments on our debt, thereby reducing
    cash available for distribution to our shareholders, funds
    available for operations and capital expenditures, future
    business opportunities or other purposes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the terms of any refinancing will not be as favorable as the
    terms of the debt being refinanced;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the use of leverage could adversely affect our ability to make
    distributions to our shareholders and the market price of our
    common shares.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we violate covenants in future agreements relating to
    indebtedness that we may incur, we could be required to repay
    all or a portion of our indebtedness before maturity at a time
    when we might be unable to arrange financing for such repayment
    on attractive terms, if at all. In addition, future indebtedness
    agreements may require that we meet certain covenant tests in
    order to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we incur debt in the future and do not have sufficient funds
    to repay such debt at maturity, it may be necessary to refinance
    the debt through additional debt or additional equity
    financings. If, at the time of any refinancing, prevailing
    interest rates or other factors result in higher interest rates
    on refinancings, increases in interest expense could adversely
    affect our cash flow, and, consequently, cash available for
    distribution to our shareholders. If we are unable to refinance
    our debt on acceptable terms, we may be forced to dispose of
    hotel properties on disadvantageous terms, potentially resulting
    in losses. We may place mortgages on hotel properties that we
    acquire to secure a revolving credit facility or other debt. To
    the extent we cannot meet any future debt service obligations,
    we will risk losing some or all of our hotel properties that may
    be pledged to secure our obligations to foreclosure. Also,
    covenants applicable to any future debt could impair our planned
    investment strategy and, if violated, result in a default.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Higher interest rates could increase debt service requirements
    on any floating rate debt that we incur and could reduce the
    amounts available for distribution to our shareholders, as well
    as reduce funds available for our operations, future business
    opportunities, or other purposes. We may obtain in the future
    one or more forms of interest rate protection&#160;&#151; in the
    form of swap agreements, interest rate cap contracts or similar
    agreements&#160;&#151; to &#147;hedge&#148; against the possible
    negative effects of interest rate fluctuations. However, such
    hedging implies costs and we cannot assure you that any hedging
    will adequately relieve the adverse effects of
</DIV>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    interest rate increases or that counterparties under these
    agreement will honor their obligations thereunder. Adverse
    economic conditions could also cause the terms on which we
    borrow to be unfavorable. We could be required to liquidate one
    or more of our hotel properties in order to meet our debt
    service obligations at times which may not permit us to receive
    an attractive return on our investments.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Any
    joint venture investments that we make could be adversely
    affected by our lack of sole decision-making authority, our
    reliance on co-venturers&#146; financial condition and disputes
    between us and our co-venturers.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may co-invest in hotels in the future with third parties
    through partnerships, joint ventures or other entities,
    acquiring non-controlling interests in or sharing responsibility
    for a property, partnership, joint venture or other entity. In
    this event, we would not be in a position to exercise sole
    decision-making authority regarding the property, partnership,
    joint venture or other entity. Investments through partnerships,
    joint ventures, or other entities may, under certain
    circumstances, involve risks not present were a third party not
    involved, including the possibility that partners or
    co-venturers might become bankrupt, fail to fund their share of
    required capital contributions, make dubious business decisions
    or block or delay necessary decisions. Partners or co-venturers
    may have economic or other business interests or goals which are
    inconsistent with our business interests or goals, and may be in
    a position to take actions contrary to our policies or
    objectives. Such investments may also have the potential risk of
    impasses on decisions, such as a sale, because neither we nor
    the partner or co-venturer would have full control over the
    partnership or joint venture. Disputes between us and partners
    or co-venturers may result in litigation or arbitration that
    would increase our expenses and prevent our officers
    <FONT style="white-space: nowrap">and/or</FONT>
    trustees from focusing their time and effort on our business.
    Consequently, action by, or disputes with, partners or
    co-venturers might result in subjecting properties owned by the
    partnership or joint venture to additional risk. In addition, we
    may in certain circumstances be liable for the actions of our
    third-party partners or co-venturers.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Unanticipated
    expenses and insufficient demand for hotels in new geographic
    markets could adversely affect our profitability and our ability
    to make distributions to our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As part of our business strategy, we may acquire or develop
    hotel properties in geographic areas in which our management may
    have little or no operating experience and in which potential
    customers may not be familiar with the brand of that particular
    hotel. As a result, we may have to incur costs relating to the
    opening, operation and promotion of such hotel properties that
    are substantially greater than those incurred in other areas.
    These hotels may attract fewer customers than other hotel
    properties we may acquire, while at the same time, we may incur
    substantial additional costs with such hotel properties. As a
    result, the results of operations at any hotel properties that
    we may acquire in unfamiliar markets may be less than those of
    other hotels that we may acquire. Unanticipated expenses and
    insufficient demand at a new hotel property, therefore, could
    adversely affect our financial condition and results of
    operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    conflicts of interest policy we will adopt may not adequately
    address all of the conflicts of interest that may arise with
    respect to our activities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to avoid any actual or perceived conflicts of interest
    with our trustees, officers or employees, we intend to adopt a
    conflicts of interest policy to specifically address some of the
    conflicts relating to our activities. Although under this policy
    the approval of a majority of our disinterested trustees will be
    required to approve any transaction, agreement or relationship
    in which any of our trustees, officers or employees has an
    interest, there is no assurance that this policy will be
    adequate to address all of the conflicts that may arise or will
    address such conflicts in a manner that is favorable to us. In
    addition, our current board of trustees consists only of
    Mr.&#160;Bortz, and as a result, the transactions and agreements
    entered into in connection with our formation prior to this
    offering have not been approved by any independent or
    disinterested trustees.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    from time to time make distributions to our shareholders in the
    form of our common shares which could give rise to non-cash
    taxable income to our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent that, in respect of any calendar year, cash
    available for distribution is less than our net taxable income,
    we could make distributions or a portion of the required
    distributions in the form of a taxable
</DIV>
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    <BR>
    16
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    share distribution or distribution of debt securities and
    shareholders may recognize non-cash taxable income. In addition,
    we might be required to sell assets or borrow funds to make
    distributions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Investments in Mortgage Loans</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    strategy of acquiring outstanding debt secured by a hotel or
    resort property may expose us to risks of costs and delays in
    acquiring the underlying property.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may consider acquiring outstanding debt secured by a hotel or
    resort property from lenders and investors if we believe we can
    ultimately foreclose or otherwise acquire ownership of the
    underlying property in the near-term through foreclosure,
    <FONT style="white-space: nowrap">deed-in-lieu</FONT>
    of foreclosure or other means. However, if we do acquire such
    debt, borrowers may seek to assert various defenses to our
    foreclosure or other actions and we may not be successful in
    acquiring the underlying property on a timely basis, or at all,
    in which event we could incur significant costs and experience
    significant delays in acquiring such properties, all of which
    could adversely affect our financial performance and reduce our
    expected returns from such investments. In addition, we may not
    earn a current return on such investments particularly if the
    loan that we acquire is in default.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to the Lodging Industry</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Current
    economic conditions may reduce demand for hotel properties and
    adversely affect hotel profitability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The performance of the lodging industry has historically been
    closely linked to the performance of the general economy and,
    specifically, growth in U.S.&#160;GDP. It is also sensitive to
    business and personal discretionary spending levels. Declines in
    corporate travel budgets and consumer demand due to adverse
    general economic conditions, such as declines in U.S. GDP, risks
    affecting or reducing travel patterns, lower consumer confidence
    or adverse political conditions can lower the revenues and
    profitability of hotel properties and therefore the net
    operating profits of our TRS lessees to whom we intend to lease
    the hotel properties that we expect to acquire. The current
    global economic downturn has led to a significant decline in
    demand for products and services provided by the lodging
    industry, lower occupancy levels and significantly reduced room
    rates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate that recovery of demand for products and services
    provided by the lodging industry will lag improvement in
    economic conditions. We cannot predict how severe or prolonged
    the global economic downturn will be or how severe or prolonged
    the lodging industry downturn will be. A further extended period
    of economic weakness would likely have an adverse impact on our
    revenues and negatively affect our financial condition, results
    of operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    operating results and ability to make distributions to our
    shareholders may be adversely affected by various operating
    risks common to the lodging industry.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We plan to own hotel properties which have different economic
    characteristics than many other real estate assets and a hotel
    REIT is structured differently than many other types of REITs. A
    typical office property owner, for example, has long-term leases
    with third-party tenants, which provides a relatively stable
    long-term stream of revenue. Our TRS lessees, on the other hand,
    will not enter into a lease with a hotel manager. Instead, our
    TRS lessees will engage the hotel manager pursuant to a
    management contract and will pay the manager a fee for managing
    the hotel. The TRS lessees will receive all the operating profit
    or losses at the hotel. Moreover, virtually all hotel guests
    stay at the hotel for only a few nights, so the rate and
    occupancy at each of our hotels changes every day. As a result,
    we may have highly volatile earnings.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, our hotel properties will be subject to various
    operating risks common to the lodging industry, many of which
    are beyond our control, including the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    competition from other hotel properties in our markets;
</TD>
</TR>

</TABLE>
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    <BR>
    17
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    over-building of hotels in our markets, which could adversely
    affect occupancy and revenues at the hotel properties we acquire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    dependence on business and commercial travelers and tourism;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    increases in energy costs and other expenses affecting travel,
    which may affect travel patterns and reduce the number of
    business and commercial travelers and tourists;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    increases in operating costs due to inflation and other factors
    that may not be offset by increased room rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in interest rates and in the availability, cost and
    terms of debt financing;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in governmental laws and regulations, fiscal policies
    and zoning ordinances and the related costs of compliance with
    laws and regulations, fiscal policies and ordinances;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    adverse effects of international, national, regional and local
    economic and market conditions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    unforeseen events beyond our control, such as terrorist attacks,
    travel related health concerns including pandemics and epidemics
    such as H1N1 influenza (swine flu), avian bird flu and SARS,
    political instability, regional hostilities, imposition of taxes
    or surcharges by regulatory authorities, travel related
    accidents and unusual weather patterns, including natural
    disasters such as hurricanes, tsunamis or earthquakes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    adverse effects of a downturn in the lodging industry;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    risks generally associated with the ownership of hotel
    properties and real estate, as we discuss in more detail below.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These factors could reduce the net operating profits of our TRS
    lessees, which in turn could adversely affect our financial
    condition, results of operations, the market price of our common
    shares and our ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Competition
    for acquisitions may reduce the number of properties we can
    acquire.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to compete for investment opportunities with entities
    that may have substantially greater financial resources than we
    have. These entities generally may be able to accept more risk
    than we can prudently manage. This competition may generally
    limit the number of suitable investment opportunities offered to
    us or the number of properties that we are able to acquire. This
    competition may also increase the bargaining power of property
    owners seeking to sell to us, making it more difficult for us to
    acquire new properties on attractive terms.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    seasonality of the lodging industry may cause fluctuations in
    our quarterly revenues that cause us to borrow money to fund
    distributions to our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The lodging industry is seasonal in nature. This seasonality can
    be expected to cause quarterly fluctuations in our revenues. Our
    quarterly earnings may be adversely affected by factors outside
    our control, including weather conditions and poor economic
    factors. As a result, we may have to enter into short-term
    borrowings in certain quarters in order to offset these
    fluctuations in revenues and to make distributions to our
    shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    cyclical nature of the lodging industry may cause the returns
    from our investments to be less than we expect.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The lodging industry is highly cyclical in nature. Fluctuations
    in lodging demand and, therefore, hotel operating performance,
    are caused largely by general economic and local market
    conditions, which subsequently affect levels of business and
    leisure travel. In addition to general economic conditions, new
    hotel room supply is an important factor that can affect lodging
    industry fundamentals, and overbuilding has the potential to
    further exacerbate the negative impact of an economic recession.
    Room rates and occupancy, and thus
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    RevPAR, tend to increase when demand growth exceeds supply
    growth. Although we believe that cyclical supply growth peaked
    in late 2008 to early 2009, and that lodging demand will begin
    to rebound in late 2010 to early 2011, no assurances can be
    given that this will prove to be the case. The continued decline
    in lodging demand beyond late 2010 to early 2011, or a continued
    growth in lodging supply, could result in continued
    deterioration in lodging industry fundamentals and returns that
    are substantially below expectations, or result in losses, which
    could adversely affect our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Due to
    our concentration in hotel investments, a downturn in the
    lodging industry would adversely affect our operations and
    financial condition.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our entire business will be hotel-related. Therefore, a downturn
    in the lodging industry, in general, and the segments and
    markets in which we operate, in particular, would have a
    material adverse effect on our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Capital
    expenditure requirements at our properties may be costly and
    require us to incur debt, postpone improvements, reduce
    distributions or otherwise adversely affect the results of our
    operations and the market price of our common
    shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of the hotel properties we acquire may have a need for
    renovations and capital improvements at the time of acquisition
    and all the hotel properties we acquire will have an ongoing
    need for renovations and other capital improvements, including
    replacement, from time to time, of furniture, fixtures and
    equipment. The franchisors of hotel properties that we acquire
    will also require periodic capital improvements as a condition
    to our maintaining the franchise licenses. In addition, if we
    incur indebtedness, as we intend to do in the future, our
    lenders will likely require that we set aside annual amounts for
    capital improvements to our hotel properties. These capital
    improvements may give rise to the following risks:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    possible environmental problems;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    construction cost overruns and delays;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the possibility that revenues will be reduced while rooms or
    restaurants are out of service due to capital improvement
    projects;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a possible shortage of available cash to fund capital
    improvements and the related possibility that financing for
    these capital improvements may not be available to us on
    attractive terms;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    uncertainties as to market demand or a loss of market demand
    after capital improvements have begun.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The costs of renovations and capital improvements could
    adversely affect our financial condition, results of operations,
    the market price of our common shares and our ability to make
    distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Hotel
    and resort development and redevelopment is subject to timing,
    budgeting and other risks that may adversely affect our
    financial condition, results of operations, the market price of
    our common shares and our ability to make distributions to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Though not currently intended to be a primary focus of our
    initial investment strategy, we may engage in hotel development
    and redevelopment if suitable opportunities arise. Hotel
    development and redevelopment involves a number of risks,
    including risks associated with:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    construction delays or cost overruns that may increase project
    costs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the receipt of zoning, occupancy and other required governmental
    permits and authorizations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    development costs incurred for projects that are not pursued to
    completion;
</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
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    <TD align="left">
    acts of God such as earthquakes, hurricanes, floods or fires
    that could adversely impact a project;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the negative impact of construction on operating performance
    during and soon after the construction period;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the ability to raise capital;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    governmental restrictions on the nature or size of a project.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot assure you that any development or redevelopment
    project will be completed on time or within budget. Our
    inability to complete a project on time or within budget could
    adversely affect our financial condition, results of operations,
    the market price of our common shares and our ability to make
    distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    increasing use of Internet travel intermediaries by consumers
    may reduce our revenues.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect that some of our hotel rooms will be booked through
    Internet travel intermediaries, such as Travelocity.com,
    Expedia.com and Priceline.com. As these Internet bookings
    increase, these intermediaries may be able to obtain higher
    commissions, reduced room rates or other significant contract
    concessions from the management companies that will operate the
    hotels we acquire. Moreover, some of these Internet travel
    intermediaries are attempting to offer hotel rooms as a
    commodity, by increasing the importance of price and general
    indicators of quality (such as &#147;three-star downtown
    hotel&#148;), at the expense of brand identification or quality
    of product or service. These intermediaries hope that consumers
    will eventually develop brand loyalties to their reservations
    system rather than to lodging brands or properties. If the
    amount of bookings made through Internet travel intermediaries
    proves to be more significant than we expect, room revenues may
    be lower than expected, and our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders may be
    adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be adversely affected by increased use of business related
    technology which may reduce the need for business related
    travel.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The increased use of teleconference and video-conference
    technology by businesses could result in decreased business
    travel as companies increase the use of technologies that allow
    multiple parties from different locations to participate at
    meetings without traveling to a centralized meeting location. To
    the extent that such technologies play an increased role in
    day-to-day business and the necessity for business related
    travel decreases, hotel room demand may decrease and our
    financial condition, results of operations, the market price of
    our common shares and our ability to make distributions to our
    shareholders may be adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Future
    terrorist attacks or changes in terror alert levels could
    adversely affect travel and hotel demand.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Previous terrorist attacks and subsequent terrorist alerts have
    adversely affected the U.S.&#160;travel and hospitality
    industries over the past several years, often disproportionately
    to the effect on the overall economy. The impact that terrorist
    attacks in the U.S.&#160;or elsewhere could have on domestic and
    international travel and our business in particular cannot be
    determined but any such attacks or the threat of such attacks
    could have a material adverse effect on our business, our
    ability to finance our business, our ability to insure our
    properties and our results of operations and financial condition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    outbreak of influenza or other widespread contagious disease
    could reduce travel and adversely affect hotel
    demand.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The widespread outbreak of infectious or contagious disease in
    the U.S., such as the H1N1 virus, could reduce travel and
    adversely affect the hotel industry generally and our business
    in particular.
</DIV>
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Uninsured
    and underinsured losses could result in a loss of
    capital.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to maintain comprehensive insurance on each of our
    hotel properties, including liability, fire and extended
    coverage, of the type and amount we believe are customarily
    obtained for or by hotel owners. There are no assurances that
    coverage will be available at reasonable rates. Various types of
    catastrophic losses, like earthquakes and floods, and losses
    from terrorist activities may not be insurable or may not be
    economically insurable. Initially, we do not expect to obtain
    terrorism insurance on the hotel properties we acquire because
    it is too costly. However, lenders may require such insurance
    and our failure to obtain such insurance could constitute a
    default under loan agreements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event of a substantial loss, our insurance coverage may
    not be sufficient to cover the full current market value or
    replacement cost of our lost investment. Should an uninsured
    loss or a loss in excess of insured limits occur, we could lose
    all or a portion of the capital we have invested in a hotel
    property, as well as the anticipated future revenue from the
    property. In that event, we might nevertheless remain obligated
    for any mortgage debt or other financial obligations related to
    the property. Inflation, changes in building codes and
    ordinances, environmental considerations and other factors might
    also keep us from using insurance proceeds to replace or
    renovate a hotel after it has been damaged or destroyed. Under
    those circumstances, the insurance proceeds we receive might be
    inadequate to restore our economic position on the damaged or
    destroyed property.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    hotels may be subject to unknown or contingent liabilities which
    could cause us to incur substantial costs.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The hotel properties that we acquire may be subject to unknown
    or contingent liabilities for which we may have no recourse, or
    only limited recourse, against the sellers. In general, the
    representations and warranties provided under the transaction
    agreements related to the sales of the hotel properties may not
    survive the closing of the transactions. While we will likely
    seek to require the sellers to indemnify us with respect to
    breaches of representations and warranties that survive, such
    indemnification may be limited and subject to various
    materiality thresholds, a significant deductible or an aggregate
    cap on losses. As a result, there is no guarantee that we will
    recover any amounts with respect to losses due to breaches by
    the sellers of their representations and warranties. In
    addition, the total amount of costs and expenses that may be
    incurred with respect to liabilities associated with these
    hotels may exceed our expectations, and we may experience other
    unanticipated adverse effects, all of which may adversely affect
    our financial condition, results of operations, the market price
    of our common shares and our ability to make distributions to
    our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Noncompliance
    with environmental laws and regulations could subject us to
    fines and liabilities which could adversely affect our operating
    results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our hotel properties will be subject to various federal, state
    and local environmental laws. Under these laws, courts and
    government agencies have the authority to require us, as owner
    of a contaminated property, to clean up the property, even if we
    did not know of or were not responsible for the contamination.
    These laws also apply to persons who owned a property at the
    time it became contaminated, and therefore it is possible we
    could incur cleanup costs even after we sell some of the
    properties we acquire. In addition to the costs of cleanup,
    environmental contamination can affect the value of a property
    and, therefore, an owner&#146;s ability to borrow funds using
    the property as collateral or to sell the property. Under the
    environmental laws, courts and government agencies also have the
    authority to require that a person who sent waste to a waste
    disposal facility, such as a landfill or an incinerator, pay for
    the <FONT style="white-space: nowrap">clean-up</FONT>
    of that facility if it becomes contaminated and threatens human
    health or the environment. A person that arranges for the
    disposal or transports for disposal or treatment of a hazardous
    substance at a property owned by another may be liable for the
    costs of removal or remediation of hazardous substances released
    into the environment at that property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Furthermore, various court decisions have established that third
    parties may recover damages for injury caused by property
    contamination. For instance, a person exposed to asbestos while
    staying in a hotel may seek to recover damages if he or she
    suffers injury from the asbestos. Lastly, some of these
    environmental laws restrict the use of a property or place
    conditions on various activities. An example would be laws that
</DIV>
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    require a business using chemicals (such as swimming pool
    chemicals at a hotel property) to manage them carefully and to
    notify local officials that the chemicals are being used.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We could be responsible for any of the costs discussed above.
    The costs to clean up a contaminated property, to defend against
    a claim, or to comply with environmental laws could be material
    and could adversely affect our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result, we may become subject to material environmental
    liabilities. We can make no assurances that future laws or
    regulations will not impose material environmental liabilities
    or that the current environmental condition of our hotel
    properties will not be affected by the condition of the
    properties in the vicinity of our hotel properties (such as the
    presence of leaking underground storage tanks) or by third
    parties unrelated to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Compliance
    with the Americans with Disabilities Act could require us to
    incur substantial costs.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the Americans with Disabilities Act of 1990, or the ADA,
    all public accommodations must meet various federal requirements
    related to access and use by disabled persons. Compliance with
    the ADA&#146;s requirements could require removal of access
    barriers, and non-compliance could result in the
    U.S.&#160;government imposing fines or in private litigants
    winning damages.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2008, the Department of Justice proposed a substantial
    number of changes to the Accessibility Guidelines under the ADA.
    In January 2009, President Obama suspended final publication and
    implementation of these regulations, pending a comprehensive
    review by his administration. If implemented as proposed, the
    new guidelines could cause some of our hotel properties to incur
    costly measures to become fully compliant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we are required to make substantial modifications to our
    hotel properties, whether to comply with the ADA or other
    changes in governmental rules and regulations, our financial
    condition, results of operations, the market price of our common
    shares and our ability to make distributions to our shareholders
    could be adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    Employee Free Choice Act could substantially increase the cost
    of doing business by increasing wage and benefit
    costs.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A number of members of the U.S.&#160;Congress and President
    Obama have stated that they support the Employee Free Choice
    Act, which, if enacted, would discontinue the current practice
    of having an open process where both the union and the employer
    are permitted to educate employees regarding the pros and cons
    of joining a union before having an election by secret ballot.
    Under the Employee Free Choice Act, the employees would only
    hear the union&#146;s side of the argument before making a
    commitment to join the union. The Employee Free Choice Act would
    permit unions to quietly collect employee signatures supporting
    the union without notifying the employer and permitting the
    employer to explain its views before a final decision is made by
    the employees. Once a union has collected signatures from a
    majority of the employees, the employer would have to recognize,
    and bargain with, the union. If the employer and the union fail
    to reach agreement on a collective bargaining contract within a
    certain number of days, both sides would be forced to submit
    their respective proposals to binding arbitration and a federal
    arbitrator would be permitted to create an employment contract
    binding on the employer. If the Employee Free Choice Act is
    enacted, a number of the hotel properties we will own or seek to
    acquire could become unionized.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, unionized hotel employees are subject to a number of
    work rules which increase expenses and decrease operating
    margins at unionized hotels. We believe that the unionization of
    hotel employees at hotels that we acquire may result in a
    significant decline in hotel profitability and value, which
    could adversely affect our financial condition, results of
    operations, the market price of our common shares and our
    ability to make distributions to our shareholders.
</DIV>
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    <B><FONT style="font-family: 'Times New Roman', Times">General
    Risks Related to the Real Estate Industry</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Illiquidity
    of real estate investments could significantly impede our
    ability to sell hotels or otherwise respond to adverse changes
    in the performance of our hotel properties.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because real estate investments are relatively illiquid, our
    ability to promptly sell one or more hotel properties for
    reasonable prices in response to changing economic, financial
    and investment conditions will be limited. The real estate
    market is affected by many factors beyond our control, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    adverse changes in international, national, regional and local
    economic and market conditions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in interest rates and in the availability, cost and
    terms of debt financing;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in governmental laws and regulations, fiscal policies
    and zoning ordinances and the related costs of compliance with
    laws and regulations, fiscal policies and ordinances;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the ongoing need for capital improvements, particularly in older
    structures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in operating expenses;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    civil unrest, acts of God, including earthquakes, floods and
    other natural disasters, which may result in uninsured losses,
    and acts of war or terrorism.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may decide to sell hotel properties in the future. We cannot
    predict whether we will be able to sell any hotel property for
    the price or on the terms set by us, or whether any price or
    other terms offered by a prospective purchaser would be
    acceptable to us. We also cannot predict the length of time
    needed to find a willing purchaser and to close the sale of a
    hotel property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may be required to expend funds to correct defects or to make
    improvements before a hotel property can be sold. We cannot
    assure you that we will have funds available to correct those
    defects or to make those improvements. In acquiring a hotel
    property, we may agree to lock-out provisions that materially
    restrict us from selling that property for a period of time or
    impose other restrictions, such as a limitation on the amount of
    debt that can be placed or repaid on that property. These
    factors and any others that would impede our ability to respond
    to adverse changes in the performance of the hotel properties or
    a need for liquidity could adversely affect our financial
    condition, results of operations, the market price of our common
    shares and our ability to make distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Increases
    in property taxes would increase our operating costs, reduce our
    income and adversely affect our ability to make distributions to
    our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of our hotel properties will be subject to real and
    personal property taxes. These taxes may increase as tax rates
    change and as the properties are assessed or reassessed by
    taxing authorities. If property taxes increase, our financial
    condition, results of operations and our ability to make
    distributions to our shareholders could be materially and
    adversely affected and the market price of our common shares
    could decline.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    costs of compliance with or liabilities under environmental laws
    could significantly reduce our profitability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Operating expenses at our hotels could be higher than
    anticipated due to the cost of complying with existing or future
    environmental laws and regulations. In addition, an owner of
    real property can face liability for environmental contamination
    created by the presence or discharge of hazardous substances on
    the property. We may face liability regardless of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="2%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our lack of knowledge of the contamination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing of the contamination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cause of the contamination;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the party responsible for the contamination of the property.
</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Environmental laws also impose ongoing compliance requirements
    on owners and operators of real property. Environmental laws
    potentially affecting us address a wide variety of matters,
    including, but not limited to, asbestos-containing building
    materials, storage tanks, storm water and wastewater discharges,
    lead-based paint, mold/mildew and hazardous wastes. Failure to
    comply with these laws could result in fines and penalties
    <FONT style="white-space: nowrap">and/or</FONT>
    expose us to third-party liability. Some of our properties may
    have conditions that are subject to these requirements, and we
    could be liable for such fines or penalties
    <FONT style="white-space: nowrap">and/or</FONT>
    liable to third parties, as described below in &#147;Our
    Business&#160;&#151; Environmental Matters.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain hotel properties we may own in the future may contain,
    or may have contained, asbestos-containing building materials,
    or ACBMs. Environmental laws require that ACBMs be properly
    managed and maintained, and may impose fines and penalties on
    building owners and operators for failure to comply with these
    requirements. Also, certain properties may be adjacent or near
    other properties that have contained or currently contain
    storage tanks for the storage of petroleum products or other
    hazardous or toxic substances. These operations create a
    potential for the release of petroleum products or other
    hazardous or toxic substances. Third parties may be permitted by
    law to seek recovery from owners or operators for property
    damage
    <FONT style="white-space: nowrap">and/or</FONT>
    personal injury associated with exposure to contaminants,
    including, but not limited to, petroleum products, hazardous or
    toxic substances and asbestos fibers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we expect to obtain Phase I environmental site
    assessments on hotel properties we acquire in the future, Phase
    I environmental site assessments are intended to evaluate
    information regarding the environmental condition of the
    surveyed property and surrounding properties based generally on
    visual observations, interviews and certain publicly available
    databases. These assessments do not typically take into account
    all environmental issues including, but not limited to, testing
    of soil or groundwater or the possible presence of asbestos,
    lead-based paint, radon, wetlands or mold. As a result, these
    assessments may fail to reveal all environmental conditions,
    liabilities or compliance concerns. Material environmental
    conditions, liabilities or compliance concerns may arise after
    the Phase I assessments; and future laws, ordinances or
    regulations may impose material additional environmental
    liability. We cannot assure you that costs of future
    environmental compliance will not affect our ability to make
    distributions to our shareholders or that such costs or other
    remedial measures will not be material to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The presence of hazardous substances on a property may limit our
    ability to sell the property on favorable terms or at all, and
    we may incur substantial remediation costs. The discovery of
    material environmental liabilities at our properties could
    subject us to unanticipated significant costs, which could
    significantly reduce our profitability and the cash available
    for distribution to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    properties may contain or develop harmful mold, which could lead
    to liability for adverse health effects and costs of remediating
    the problem.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When excessive moisture accumulates in buildings or on building
    materials, mold growth may occur, particularly if the moisture
    problem remains undiscovered or is not addressed over a period
    of time. Some molds may produce airborne toxins or irritants.
    Concern about indoor exposure to mold has been increasing as
    exposure to mold may cause a variety of adverse health effects
    and symptoms, including allergic or other reactions. Some of the
    properties in our portfolio may contain microbial matter such as
    mold and mildew. The presence of significant mold at any of our
    properties could require us to undertake a costly remediation
    program to contain or remove the mold from the affected
    property. The presence of significant mold could expose us to
    liability from hotel guests, hotel employees and others if
    property damage or health concerns arise.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Any
    mortgage debt obligations we incur will expose us to increased
    risk of property losses to foreclosure, which could adversely
    affect our financial condition, cash flow and ability to satisfy
    our other debt obligations and make distributions to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Incurring mortgage debt increases our risk of property losses,
    because any defaults on indebtedness secured by properties may
    result in foreclosure actions initiated by lenders and
    ultimately our loss of the property securing the loan for which
    we are in default. For tax purposes, a foreclosure of any of our
    properties
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    would be treated as a sale of the property for a purchase price
    equal to the outstanding balance of the debt secured by the
    mortgage. If the outstanding balance of the debt secured by the
    mortgage exceeds our tax basis in the property, we would
    recognize taxable income on foreclosure but would not receive
    any cash proceeds. As a result, we may be required to identify
    and utilize other sources of cash for distributions to our
    shareholders of that income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, any default under our mortgage debt obligations may
    increase the risk of our default on other indebtedness. If this
    occurs, our financial condition, results of operations, the
    market price of our common shares and our ability to make
    distributions to our shareholders may be adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Organization and Structure</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Provisions
    of our declaration of trust may limit the ability of a third
    party to acquire control of us by authorizing our board of
    trustees to authorize issuances of additional
    securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, our declaration of trust will
    authorize our board of trustees to issue up to
    500,000,000&#160;common shares and up to
    100,000,000&#160;preferred shares. In addition, our board of
    trustees may, without shareholder approval, amend our
    declaration of trust to increase the aggregate number of our
    shares or the number of shares of any class or series that we
    have the authority to issue and to classify or reclassify any
    unissued common shares or preferred shares and to set the
    preferences, rights and other terms of the classified or
    reclassified shares. As a result, our board of trustees may
    authorize the issuance of additional shares or establish a
    series of common or preferred shares that may have the effect of
    delaying or preventing a change in control of our company,
    including transactions at a premium over the market price of our
    shares, even if shareholders believe that a change of control is
    in their interest.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Provisions
    of Maryland law may limit the ability of a third party to
    acquire control of us by requiring our board of trustees or
    shareholders to approve proposals to acquire our company or
    effect a change of control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain provisions of the Maryland General Corporation Law, or
    the MGCL, applicable to Maryland real estate investment trusts
    may have the effect of inhibiting a third party from making a
    proposal to acquire us or of impeding a change of control under
    circumstances that otherwise could provide our common
    shareholders with the opportunity to realize a premium over the
    then-prevailing market price of such shares, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>&#147;business combination&#148; </I>provisions that, subject
    to limitations, prohibit certain business combinations between
    us and an &#147;interested shareholder&#148; (defined generally
    as any person who beneficially owns 10% or more of the voting
    power of our shares) or an affiliate of any interested
    shareholder for five years after the most recent date on which
    the shareholder becomes an interested shareholder, and
    thereafter imposes special appraisal rights and special
    shareholder voting requirements on these combinations;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>&#147;control share&#148; </I>provisions that provide that
    our &#147;control shares&#148; (defined as shares which, when
    aggregated with other shares controlled by the shareholder,
    entitle the shareholder to exercise one of three increasing
    ranges of voting power in electing trustees) acquired in a
    &#147;control share acquisition&#148; (defined as the direct or
    indirect acquisition of ownership or control of &#147;control
    shares&#148;) have no voting rights except to the extent
    approved by our shareholders by the affirmative vote of at least
    two-thirds of all the votes entitled to be cast on the matter,
    excluding all interested shares.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By resolution of our board of trustees, we have opted out of the
    business combination provisions of the MGCL and provided that
    any business combination between us and any other person is
    exempt from the business combination provisions of the MGCL,
    provided that the business combination is first approved by our
    board of trustees (including a majority of trustees who are not
    affiliates or associates of such persons). Pursuant to a
    provision in our bylaws, we have opted out of the control share
    provisions of the MGCL. However, our board of trustees may by
    resolution elect to opt in to the business combination
    provisions of the
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    MGCL and we may, by amendment to our bylaws, opt in to the
    control share provisions of the MGCL in the future.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, Title&#160;8, Subtitle 3 of the MGCL permits our
    board of trustees, without shareholder approval and regardless
    of what is currently provided in our declaration of trust or
    bylaws, to implement certain takeover defenses, such as a
    classified board, some of which we do not yet have. These
    provisions may have the effect of inhibiting a third party from
    making an acquisition proposal for us or of delaying, deferring
    or preventing a change in control of us under the circumstances
    that otherwise could provide our common shareholders with the
    opportunity to realize a premium over the then current market
    price.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    ownership limitations in our declaration of trust may restrict
    or prevent you from engaging in certain transfers of our common
    shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order for us to qualify as a REIT for each taxable year after
    2009, no more than 50% in value of our outstanding shares of
    beneficial interest may be owned, directly or indirectly, by
    five or fewer individuals (as defined in the federal income tax
    laws to include various kinds of entities) during the last half
    of any taxable year. To assist us in qualifying as a REIT, our
    declaration of trust contains a share ownership limit.
    Generally, any of our shares owned by affiliated owners will be
    added together for purposes of the share ownership limit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If anyone transfers shares in a way that would violate the share
    ownership limit or prevent us from qualifying as a REIT under
    the federal income tax laws, those shares instead will be
    transferred to a trust for the benefit of a charitable
    beneficiary and will be either redeemed by us or sold to a
    person whose ownership of the shares will not violate the share
    ownership limit or we will consider the transfer to be null and
    void from the outset, and the intended transferee of those
    shares will be deemed never to have owned the shares. Anyone who
    acquires shares in violation of the share ownership limit or the
    other restrictions on transfer in our declaration of trust bears
    the risk of suffering a financial loss when the shares are
    redeemed or sold if the market price of our shares falls between
    the date of purchase and the date of redemption or sale.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, these ownership limitations may prevent an
    acquisition of control of us by a third party without our board
    of trustees&#146; approval, even if our shareholders believe the
    change of control is in their interest.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    rights and the rights of our shareholders to take action against
    our trustees and officers are limited, which could limit your
    recourse in the event of actions not in your best
    interests.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under Maryland law, generally, a trustee&#146;s actions will be
    upheld if he or she performs his or her duties in good faith, in
    a manner he or she reasonably believes to be in our best
    interests and with the care that an ordinarily prudent person in
    a like position would use under similar circumstances. In
    addition, our declaration of trust limits the liability of our
    trustees and officers to us and our shareholders for money
    damages, except for liability resulting from:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    actual receipt of an improper benefit or profit in money,
    property or services;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    active and deliberate dishonesty by the trustee or officer that
    was established by a final judgment as being material to the
    cause of action adjudicated.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust authorizes us to indemnify our trustees
    and officers for actions taken by them in those capacities to
    the maximum extent permitted by Maryland law. Our bylaws require
    us to indemnify each trustee or officer, to the maximum extent
    permitted by Maryland law, in the defense of any proceeding to
    which he or she is made, or threatened to be made, a party by
    reason of his or her service to us. In addition, we may be
    obligated to fund the defense costs incurred by our trustees and
    officers. As a result, we and our shareholders may have more
    limited rights against our trustees and officers than might
    otherwise exist absent the current provisions in our declaration
    of trust and bylaws or that might exist with other companies.
</DIV>
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    <BR>
    26
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    declaration of trust contains provisions that make removal of
    our trustees difficult, which could make it difficult for our
    shareholders to effect changes to our management.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides that a trustee may be removed
    only for cause (as defined in our declaration of trust) and then
    only by the affirmative vote of at least two-thirds of the votes
    entitled to be cast generally in the election of trustees. Our
    declaration of trust also provides that vacancies on our board
    of trustees may be filled only by a majority of the remaining
    trustees in office, even if less than a quorum. These
    requirements prevent shareholders from removing trustees except
    for cause and with a substantial affirmative vote and from
    replacing trustees with their own nominees and may prevent a
    change in control of our company that is in the best interests
    of our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    ability of our board of trustees to change our major policies
    without the consent of shareholders may not be in your
    interest.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees determines our major policies, including
    policies and guidelines relating to our acquisitions, leverage,
    financing, growth, operations and distributions to shareholders.
    Our board may amend or revise these and other policies and
    guidelines from time to time without the vote or consent of our
    shareholders. Accordingly, our shareholders will have limited
    control over changes in our policies and those changes could
    adversely affect our financial condition, results of operations,
    the market price of our common shares and our ability to make
    distributions to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will enter into an agreement with each of our executive officers
    that will require us to make payments in the event the
    officer&#146;s employment is terminated by us without cause, by
    the officer for good reason or under certain circumstances
    following a change of control of our company.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The agreements that we will enter into with our executive
    officers upon completion of this offering provide benefits under
    certain circumstances that could make it more difficult for us
    to terminate these officers and may prevent or deter a change of
    control of our company that would otherwise be in the interest
    of our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    fail to implement and maintain an effective system of internal
    controls, we may not be able to accurately determine our
    financial results or prevent fraud. As a result, our
    shareholders could lose confidence in our financial results,
    which could harm our business and the value of our common
    shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective internal controls are necessary for us to provide
    reliable financial reports and effectively prevent fraud. We are
    a newly formed company that will develop financial and
    operational reporting and control systems. We may in the future
    discover areas of our internal controls that need improvement.
    Section&#160;404 of the Sarbanes-Oxley Act of 2002 will require
    us to evaluate and report on our internal controls over
    financial reporting and have our independent auditors annually
    issue their own opinion on our internal controls over financial
    reporting. While we intend to undertake substantial work to
    prepare for compliance with Section&#160;404, we cannot be
    certain that we will be successful in implementing or
    maintaining adequate internal controls over our financial
    reporting and financial processes. Furthermore, as we grow our
    business, our internal controls will become more complex, and we
    will require significantly more resources to ensure our internal
    controls remain effective. If we or our independent auditors
    discover a material weakness, the disclosure of that fact, even
    if quickly remedied, could reduce the market value of our common
    shares. Additionally, the existence of any material weakness or
    significant deficiency would require management to devote
    significant time and incur significant expense to remediate any
    such material weaknesses or significant deficiencies and
    management may not be able to remediate any such material
    weaknesses or significant deficiencies in a timely manner.
</DIV>
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    <BR>
    27
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to This Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have not established a minimum distribution payment level and we
    may be unable to generate sufficient cash flows from our
    operations to make distributions to our shareholders at any time
    in the future.</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify for taxation as a REIT, we will be required to
    distribute to our shareholders at least 90% of our taxable
    income each year for us to qualify as a REIT under the Code. To
    the extent we satisfy the 90% distribution requirement but
    distribute less than 100% of our taxable income, we will be
    subject to a U.S.&#160;federal corporate income tax and a
    U.S.&#160;federal excise tax on our undistributed taxable
    income. We have not established a minimum distribution payment
    level, and our ability to make distributions to our shareholders
    may be adversely affected by the risk factors described in this
    prospectus. Because we currently have no hotel properties and
    will commence operations only upon completion of this offering,
    we may not generate sufficient income to make distributions to
    our shareholders and cannot predict when distributions
    consisting, in part, of cash flow from the hotels we expect to
    acquire will commence. We currently do not expect to use the net
    proceeds from this offering or the concurrent private placement
    to make distributions to our shareholders. However, to the
    extent we do so, the amount of cash we have available to invest
    in hotel properties or for other purposes would be reduced. Our
    board of trustees has the sole discretion to determine the
    timing, form and amount of any distributions to our
    shareholders. The amount of such distributions may be limited
    until we have a portfolio of income-generating hotel properties.
    Our board of trustees will make determinations regarding
    distributions based upon, among other factors, our financial
    performance, any debt service obligations, any debt covenants,
    and capital expenditure requirements. Among the factors that
    could impair our ability to make distributions to our
    shareholders are:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our inability to invest the net proceeds of this offering and
    the concurrent private placement;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our inability to realize attractive risk-adjusted returns on our
    investments;
</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    unanticipated expenses or reduced revenues that reduce our cash
    flow or non-cash earnings;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    decreases in the value of our hotel properties.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result, no assurance can be given that we will be able to
    make distributions to our shareholders at any time in the future
    or that the level of any distributions we do make to our
    shareholders will increase or even be maintained over time, any
    of which could materially and adversely affect the market price
    of our common shares.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, distributions that we make to our shareholders
    generally will be taxable to our shareholders as ordinary
    income. However, a portion of our distributions may be
    designated by us as long-term capital gains to the extent that
    they are attributable to capital gain income recognized by us or
    may constitute a return of capital to the extent that they
    exceed our accumulated earnings and profits as determined for
    tax purposes. A return of capital is not taxable, but has the
    effect of reducing the basis of a shareholder&#146;s investment
    in our common shares.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    cannot assure you that a public market for our common shares
    will develop and your ability to sell our common shares may be
    limited.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prior to this offering, there has not been a public market for
    our common shares. We intend to apply to have our common shares
    listed on the New York Stock Exchange, or the NYSE. However, we
    cannot assure you that a regular trading market for our common
    shares will develop or, if one does develop, that any such
    market will be sustained. In the absence of a public trading
    market, an investor may be unable to liquidate an investment in
    our common shares. The initial public offering price has been
    determined by us and the representatives of the underwriters. We
    cannot assure you that the price at which the common shares will
    sell in the public market after the closing of this offering
    will not be lower than the price at which they are sold by the
    underwriters.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Common
    shares eligible for future sale may adversely affect the
    prevailing market prices for our common shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot predict the effect, if any, of future sales of common
    shares, or the availability of common shares for future sale, on
    the market price of our common shares. Sales of substantial
    amounts of common
</DIV>
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    <BR>
    28
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    shares (including shares issued to our trustees and officers),
    or the perception that these sales could occur, may adversely
    affect prevailing market prices for our common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of our trustees and officers who has received share grants
    has entered into
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements with respect to their common shares, restricting the
    sale of such person&#146;s shares, for 180&#160;days. The
    representatives, at any time, may release all or a portion of
    the common shares subject to the foregoing
    <FONT style="white-space: nowrap">lock-up</FONT>
    provisions. If the restrictions under such agreements are
    waived, the affected common shares may be available for sale
    into the market, which could reduce the market price for our
    common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also may issue from time to time additional common shares or
    limited partnership interests in our operating partnership in
    connection with the acquisition of properties and we may grant
    demand or piggyback registration rights in connection with these
    issuances. Sales of substantial amounts of our common shares or
    the perception that these sales could occur may adversely affect
    the prevailing market price for our common shares or may impair
    our ability to raise capital through a sale of additional equity
    securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    market price of our common shares may be volatile due to
    numerous circumstances beyond our control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The trading prices of equity securities issued by REITs
    historically have been affected by changes in market interest
    rates. One of the factors that may influence the price of our
    common shares is the annual yield from distributions on our
    common shares as compared to yields on other financial
    instruments. An increase in market interest rates, or a decrease
    in our distributions to shareholders, may lead prospective
    purchasers of our common shares to demand a higher annual yield,
    which could reduce the market price of our common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Other factors that could affect the market price of our common
    shares include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    actual or anticipated variations in our quarterly results of
    operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in market valuations of companies in the hotel or real
    estate industries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in expectations of future financial performance or
    changes in estimates of securities analysts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    fluctuations in stock market prices and volumes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our issuances of common shares or other securities in the future;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the addition or departure of key personnel;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    announcements by us or our competitors of acquisitions,
    investments or strategic alliances;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    unforeseen events beyond our control, such as terrorist attacks,
    travel related health concerns including pandemics and epidemics
    such as H1N1 influenza (swine flu), avian bird flu and SARS,
    political instability, regional hostilities, increases in fuel
    prices, imposition of taxes or surcharges by regulatory
    authorities and travel related accidents and unusual weather
    patterns, including natural disasters such as hurricanes,
    tsunamis or earthquakes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Future
    offerings of debt or equity securities ranking senior to our
    common shares may limit our operating and financial flexibility
    and may adversely affect the market price of our common
    shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we decide to issue debt or equity securities in the future
    ranking senior to our common shares or otherwise incur
    indebtedness, it is possible that these securities or
    indebtedness will be governed by an indenture or other
    instrument containing covenants restricting our operating
    flexibility and limiting our ability to make distributions to
    our shareholders. Additionally, any convertible or exchangeable
    securities that we issue in the future may have rights,
    preferences and privileges, including with respect to
    distributions, more favorable than those of our common shares
    and may result in dilution to owners of our common shares.
    Because our decision to issue debt or equity securities in any
    future offering or otherwise incur indebtedness will depend on
    market conditions and other factors beyond our control, we
    cannot predict or estimate the amount, timing or nature of our
    future offerings or financings, any of which could reduce the
    market price of our common shares and dilute the value of our
    common shares.
</DIV>
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    <BR>
    29
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Federal
    Income Tax Risk Factors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    failure to qualify, or our failure to remain qualified, as a
    REIT would result in higher taxes and reduced cash available for
    distribution to our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to elect to be taxed as a REIT for federal income tax
    purposes, commencing with our short taxable year beginning on
    the business day prior to the closing of this offering and
    ending December&#160;31, 2009. However, qualification as a REIT
    involves the application of highly technical and complex
    provisions of the Code, for which only a limited number of
    judicial and administrative interpretations exist. Even an
    inadvertent or technical mistake could jeopardize our REIT
    qualification. Our qualification as a REIT will depend on our
    satisfaction of certain asset, income, organizational,
    distribution, shareholder ownership and other requirements on a
    continuing basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Moreover, new tax legislation, administrative guidance or court
    decisions, in each instance potentially applicable with
    retroactive effect, could make it more difficult or impossible
    for us to qualify as a REIT. If we were to fail to qualify as a
    REIT in any taxable year, we would be subject to federal income
    tax, including any applicable alternative minimum tax, on our
    taxable income at regular corporate rates, and distributions to
    shareholders would not be deductible by us in computing our
    taxable income. Any such corporate tax liability could be
    substantial and would reduce the amount of cash available for
    distribution to our shareholders, which in turn could have an
    adverse impact on the value of our shares of beneficial
    interest. If, for any reason, we failed to qualify as a REIT and
    we were not entitled to relief under certain Code provisions, we
    would be unable to elect REIT status for the four taxable years
    following the year during which we ceased to so qualify which
    would negatively impact the value of our common shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Failure
    to make required distributions would subject us to tax, which
    would reduce the cash available for distribution to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify as a REIT, we must distribute to our shareholders
    each calendar year at least 90% of our REIT taxable income
    (including certain items of non-cash income), determined before
    the deduction for dividends paid and excluding any net capital
    gain. To the extent that we satisfy the 90% distribution
    requirement, but distribute less than 100% of our taxable
    income, we will be subject to federal corporate income tax on
    our undistributed income. In addition, we will incur a 4%
    nondeductible excise tax on the amount, if any, by which our
    distributions in any calendar year are less than the sum of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    85% of our REIT ordinary income for that year;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    95% of our REIT capital gain net income for that year;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any undistributed taxable income from prior years.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to distribute our net taxable income to our
    shareholders in a manner intended to satisfy the 90%
    distribution requirement and to avoid both corporate income tax
    and the 4% nondeductible excise tax. However, there is no
    requirement that TRSs distribute their after tax net income to
    their parent REIT or their shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our taxable income may substantially exceed our net income as
    determined based on GAAP, because, for example, realized capital
    losses will be deducted in determining our GAAP net income, but
    may not be deductible in computing our taxable income.
    Differences in timing between the recognition of income and the
    related cash receipts or the effect of required debt
    amortization payments could require us to borrow money or sell
    properties at prices or at times that we regard as unfavorable
    in order to pay out enough of our taxable income to satisfy the
    distribution requirement and to avoid corporate income tax and
    the 4% nondeductible excise tax in a particular year.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    formation of our TRS lessees increases our overall tax
    liability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The TRS lessees will be subject to federal and state income tax
    on their taxable income, which will consist of the revenues from
    the hotel properties leased by the TRS lessees, net of the
    operating expenses for such hotel properties and rent payments
    to us. Accordingly, although our ownership of the TRS lessees
    will
</DIV>
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    <BR>
    30
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    allow us to participate in the operating income from our hotel
    properties in addition to receiving rent, that operating income
    will be fully subject to income tax. The after-tax net income of
    the TRS lessees is available for distribution to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    ownership of our TRS lessees will be limited and our
    transactions with our TRS lessees will cause us to be subject to
    a 100% penalty tax on certain income or deductions if those
    transactions are not conducted on arm&#146;s-length
    terms.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A REIT may own up to 100% of the stock of one or more TRSs. A
    TRS may hold assets and earn income that would not be qualifying
    assets or income if held or earned directly by a REIT, including
    gross operating income from hotel operations pursuant to hotel
    management contracts. Both the subsidiary and the REIT must
    jointly elect to treat the subsidiary as a TRS. A corporation of
    which a TRS directly or indirectly owns more than 35% of the
    voting power or value of the stock will automatically be treated
    as a TRS. Overall, no more than 25% of the value of a
    REIT&#146;s assets may consist of stock or securities of one or
    more TRSs. In addition, the TRS rules limit the deductibility of
    interest paid or accrued by a TRS to its parent REIT to assure
    that the TRS is subject to an appropriate level of corporate
    taxation. The rules also impose a 100% excise tax on certain
    transactions between a TRS and its parent REIT that are not
    conducted on an arm&#146;s-length basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our TRS lessees will pay applicable federal, foreign, state and
    local income tax on their taxable income, and their after-tax
    net income will be available for distribution to us but is not
    required to be distributed by such domestic TRS lessee to us. We
    anticipate that the aggregate value of the stock and securities
    of our TRS lessees will be less than 25% of the value of our
    total assets (including our TRS lessees&#146; stock and
    securities). Furthermore, we will monitor the value of our
    respective investments in our TRS lessees for the purpose of
    ensuring compliance with TRS ownership limitations. In addition,
    we will scrutinize all of our transactions with our TRS lessees
    to ensure that they are entered into on arm&#146;s-length terms
    to avoid incurring the 100% excise tax described above. There
    can be no assurance, however, that we will be able to comply
    with the 25% limitation discussed above or to avoid application
    of the 100% excise tax discussed above.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If the
    leases of our hotel properties to our TRS lessees are not
    respected as true leases for federal income tax purposes, we
    would fail to qualify as a REIT and would be subject to higher
    taxes and have less cash available for distribution to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify as a REIT, we must satisfy two gross income tests,
    under which specified percentages of our gross income must be
    derived from certain sources, such as &#147;rents from real
    property.&#148; Rents paid to our operating partnership by our
    TRS lessees pursuant to the lease of our hotel properties will
    constitute substantially all of our gross income. In order for
    such rent to qualify as &#147;rents from real property&#148; for
    purposes of the gross income tests, the leases must be respected
    as true leases for federal income tax purposes and not be
    treated as service contracts, joint ventures or some other type
    of arrangement. If our leases are not respected as true leases
    for federal income tax purposes, we would fail to qualify as a
    REIT.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If our
    operating partnership failed to qualify as a partnership for
    federal income tax purposes, we would cease to qualify as a REIT
    and would be subject to higher taxes and have less cash
    available for distribution to our shareholders and suffer other
    adverse consequences.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that our operating partnership will qualify to be
    treated as a partnership for federal income tax purposes. As a
    partnership, our operating partnership will not be subject to
    federal income tax on its income. Instead, each of its partners,
    including us, will be required to pay tax on its allocable share
    of the operating partnership&#146;s income. No assurance can be
    provided, however, that the Internal Revenue Service, or IRS,
    will not challenge its status as a partnership for federal
    income tax purposes, or that a court would not sustain such a
    challenge. If the IRS were successful in treating our operating
    partnership as a corporation for tax purposes, we would fail to
    meet the gross income tests and certain of the asset tests
    applicable to REITs and, accordingly, cease to qualify as a
    REIT. Also, the failure of our operating partnership to qualify
    as a partnership would cause it to become subject to federal and
    state corporate income tax, which would reduce significantly the
    amount of cash available for debt service and for distribution
    to its partners, including us.
</DIV>
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    <BR>
    31
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If our
    hotel managers do not qualify as &#147;eligible independent
    contractors,&#148; we would fail to qualify as a REIT and would
    be subject to higher taxes and have less cash available for
    distribution to our shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Rent paid by a lessee that is a &#147;related party tenant&#148;
    of ours will not be qualifying income for purposes of the two
    gross income tests applicable to REITs. We expect to lease
    substantially all of our hotels to our TRS lessees. So long as
    any TRS lessee qualifies as a TRS, it will not be treated as a
    &#147;related party tenant&#148; with respect to our properties
    that are managed by an independent hotel management company that
    qualifies as an &#147;eligible independent contractor.&#148; We
    believe that our TRSs will qualify to be treated as TRSs for
    federal income tax purposes, but there can be no assurance that
    the IRS will not challenge the status of a TRS for federal
    income tax purposes or that a court would not sustain such a
    challenge. If the IRS were successful in disqualifying any of
    our TRSs lessees from treatment as a TRS, it is possible that we
    would fail to meet the asset tests applicable to REITs and
    substantially all of our income would fail to qualify for the
    gross income tests. If we failed to meet either the asset or
    gross income tests, we would likely lose our REIT qualification
    for federal income tax purposes.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, if our hotel managers do not qualify as
    &#147;eligible independent contractors,&#148; we would fail to
    qualify as a REIT. Each of the hotel management companies that
    enters into a management contract with our TRS lessees must
    qualify as an &#147;eligible independent contractor&#148; under
    the REIT rules in order for the rent paid to us by our TRS
    lessees to be qualifying income for purposes of the REIT gross
    income tests. Among other requirements, in order to qualify as
    an eligible independent contractor a manager must not own,
    directly or through its shareholders, more than 35% of our
    outstanding shares, taking into account certain ownership
    attribution rules. The ownership attribution rules that apply
    for purposes of these 35% thresholds are complex. Although we
    intend to monitor ownership of our shares by our hotel managers
    and their owners, there can be no assurance that these ownership
    levels will not be exceeded.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Dividends
    payable by REITs do not qualify for the reduced tax rates
    available for some dividends.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maximum tax rate applicable to income from &#147;qualified
    dividends&#148; payable to U.S.&#160;shareholders that are
    individuals, trusts and estates has been reduced by legislation
    to 15% (through the end of 2010). Dividends payable by REITs,
    however, generally are not eligible for the reduced rates.
    Although this legislation does not adversely affect the taxation
    of REITs or dividends payable by REITs, the more favorable rates
    applicable to regular corporate qualified dividends could cause
    investors who are individuals, trusts and estates to perceive
    investments in REITs to be relatively less attractive than
    investments in the stocks of non-REIT corporations that pay
    dividends, which could adversely affect the value of the shares
    of REITs, including our common shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Complying
    with REIT requirements may limit our ability to hedge our
    liabilities effectively and may cause us to incur tax
    liabilities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The REIT provisions of the Code substantially limit our ability
    to hedge our liabilities. Any income from a hedging transaction
    we enter into to manage risk of interest rate changes, price
    changes or currency fluctuations with respect to borrowings made
    or to be made to acquire or carry real estate assets does not
    constitute &#147;gross income&#148; for purposes of the 75% or
    95% gross income tests. To the extent that we enter into other
    types of hedging transactions, the income from those
    transactions is likely to be treated as non-qualifying income
    for purposes of both of the gross income tests. See
    &#147;Material Federal Income Tax Considerations&#160;&#151;
    Gross Income Tests&#160;&#151; Hedging Transactions.&#148; As a
    result of these rules, we may need to limit our use of
    advantageous hedging techniques or implement those hedges
    through a TRS. This could increase the cost of our hedging
    activities because our TRS would be subject to tax on gains or
    expose us to greater risks associated with changes in interest
    rates than we would otherwise want to bear. In addition, losses
    in our TRSs will generally not provide any tax benefit, except
    for being carried forward against future taxable income in the
    TRSs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Complying
    with REIT requirements may cause us to forego otherwise
    attractive business opportunities or liquidate otherwise
    attractive investments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify as a REIT for federal income tax purposes, we must
    continually satisfy tests concerning, among other things, the
    sources of our income, the nature and diversification of our
    assets, the amounts we distribute to our shareholders and the
    ownership of our shares of beneficial interest. In order to meet
    these tests, we may be required to forego investments we might
    otherwise make. Thus, compliance with the REIT requirements may
    hinder our performance.
</DIV>
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    32
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In particular, we must ensure that at the end of each calendar
    quarter, at least 75% of the value of our assets consists of
    cash, cash items, government securities and qualified real
    estate assets. The remainder of our investment in securities
    (other than government securities and qualified real estate
    assets) generally cannot include more than 10% of the
    outstanding voting securities of any one issuer or more than 10%
    of the total value of the outstanding securities of any one
    issuer. In addition, in general, no more than 5% of the value of
    our assets (other than government securities and qualified real
    estate assets) can consist of the securities of any one issuer,
    and no more than 25% of the value of our total assets can be
    represented by the securities of one or more TRSs. If we fail to
    comply with these requirements at the end of any calendar
    quarter, we must correct the failure within 30&#160;days after
    the end of the calendar quarter or qualify for certain statutory
    relief provisions to avoid losing our REIT qualification and
    suffering adverse tax consequences. As a result, we may be
    required to liquidate otherwise attractive investments. These
    actions could have the effect of reducing our income and amounts
    available for distribution to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    ability of our board of trustees to revoke our REIT
    qualification without shareholder approval may subject us to
    federal income tax and reduce distributions to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides that our board of trustees may
    revoke or otherwise terminate our REIT election, without the
    approval of our shareholders, if it determines that it is no
    longer in our best interest to continue to qualify as a REIT. If
    we cease to be a REIT, we would become subject to federal income
    tax on our taxable income and would no longer be required to
    distribute most of our taxable income to our shareholders, which
    may have adverse consequences on our total return to our
    shareholders and on the market price of our common shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be subject to adverse legislative or regulatory tax changes that
    could increase our tax liability, reduce our operating
    flexibility and reduce the market price of our common
    shares.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time, the federal income tax laws governing REITs or the
    administrative and judicial interpretations of those laws may be
    amended. We cannot predict when or if any new federal income tax
    law, regulation, or administrative and judicial interpretation,
    or any amendment to any existing federal income tax law,
    regulation or administrative or judicial interpretation, will be
    adopted, promulgated or become effective and any such law,
    regulation, or interpretation may take effect retroactively. We
    and our shareholders could be adversely affected by any such
    change in, or any new, federal income tax law, regulation or
    administrative and judicial interpretation.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    share ownership restrictions of the Code for REITs and the 9.8%
    share ownership limit in our declaration of trust may inhibit
    market activity in our shares of beneficial interest and
    restrict our business combination opportunities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to qualify as a REIT for each taxable year after 2009,
    five or fewer individuals, as defined in the Code, may not own,
    actually or constructively, more than 50% in value of our issued
    and outstanding shares of beneficial interest at any time during
    the last half of a taxable year. Attribution rules in the Code
    determine if any individual or entity actually or constructively
    owns our shares of beneficial interest under this requirement.
    Additionally, at least 100&#160;persons must beneficially own
    our shares of beneficial interest during at least 335&#160;days
    of a taxable year for each taxable year after 2009. To help
    insure that we meet these tests, our declaration of trust
    restricts the acquisition and ownership of our shares of
    beneficial interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust, with certain exceptions, authorizes
    our trustees to take such actions as are necessary and desirable
    to preserve our qualification as a REIT. Unless exempted by our
    board of trustees, our declaration of trust prohibits any person
    from beneficially or constructively owning more than 9.8%
    (measured by value or number of shares, whichever is more
    restrictive) of any class or series of our shares of beneficial
    interest. Our board of trustees may not grant an exemption from
    these restrictions to any proposed transferee whose ownership in
    excess of 9.8% of the value of our outstanding shares would
    result in the termination of our qualification as a REIT. These
    restrictions on transferability and ownership will not apply,
    however, if our board of trustees determines that it is no
    longer in our best interest to continue to qualify as a REIT.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These ownership limits could delay or prevent a transaction or a
    change in control that might involve a premium price for our
    common shares or otherwise be in the best interest of the
    shareholders.
</DIV>
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    <BR>
    33
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAUTIONARY
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We make forward-looking statements in this prospectus that are
    subject to risks and uncertainties. These forward-looking
    statements include information about possible or assumed future
    results of our business, financial condition, liquidity, results
    of operations, plans and objectives. Statements regarding the
    following subjects are forward-looking by their nature.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our business and investment strategy;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our forecasted operating results;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    completion of hotel acquisitions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our ability to obtain future financing arrangements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our expected leverage levels;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our understanding of our competition;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    market and lodging industry trends and expectations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    anticipated capital expenditures;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    use of the net proceeds of this offering and the concurrent
    private placement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The forward-looking statements are based on our beliefs,
    assumptions and expectations of our future performance, taking
    into account all information currently available to us. These
    beliefs, assumptions and expectations can change as a result of
    many possible events or factors, not all of which are known to
    us. If a change occurs, our business, prospects, financial
    condition, liquidity and results of operations may vary
    materially from those expressed in our forward-looking
    statements. You should carefully consider this risk when you
    make an investment decision concerning our common shares.
    Additionally, the following factors could cause actual results
    to vary from our forward-looking statements:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the factors discussed in this prospectus, including those set
    forth under the sections titled &#147;Risk Factors,&#148;
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; and &#147;Our
    Business&#148;;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    general volatility of the capital markets and the market price
    of our common shares;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    performance of the lodging industry in general;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in our business or investment strategy;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    availability, terms and deployment of capital;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    availability of and our ability to attract and retain qualified
    personnel;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our leverage levels;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our capital expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    changes in our industry and the market in which we operate,
    interest rates or the general U.S.&#160;or international
    economy;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the degree and nature of our competition.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When we use the words &#147;will,&#148; &#147;will likely
    result,&#148; &#147;may,&#148; &#147;anticipate,&#148;
    &#147;estimate,&#148; &#147;should,&#148; &#147;expect,&#148;
    &#147;believe,&#148; &#147;intend&#148; or similar expressions,
    we intend to identify forward-looking statements. You should not
    place undue reliance on these forward-looking statements. We are
    not obligated to publicly update or revise any forward-looking
    statements, whether as a result of new information, future
    events or otherwise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We obtained certain data provided in this prospectus from
    publicly available materials published by JLLH. The data was not
    prepared in connection with this offering.
</DIV>
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    <BR>
    34
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We estimate that the net proceeds of this offering will be
    approximately $327.6&#160;million after deducting the full
    underwriting discount and other estimated offering expenses. If
    the underwriters&#146; overallotment option is exercised in
    full, our net proceeds will be approximately
    $376.9&#160;million. Concurrently with the completion of this
    offering, we will sell to Messrs.&#160;Bortz and Martz an
    aggregate of 135,000 common shares in the concurrent private
    placement at a price per share equal to the public offering
    price per share in this offering shown on the cover of this
    prospectus, without payment of any underwriting discount,
    yielding $2.7&#160;million of net proceeds to us.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters will forego the receipt of payment of
    $&#160;&#160;&#160;&#160;&#160; per share, until such time as we
    purchase assets in accordance with our investment strategy as
    described in this prospectus with an aggregate purchase price
    (including the amount of any outstanding indebtedness assumed or
    incurred by us) at least equal to the net proceeds from this
    offering (after deducting the full underwriting discount and
    other estimated offering expenses payable by us), at which time,
    we have agreed to pay the underwriters an amount equal to
    $&#160;&#160;&#160;&#160;&#160; per share sold in this offering.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will contribute the net proceeds of this offering and the
    concurrent private placement to our operating partnership. Our
    operating partnership will invest these net proceeds in hotel
    properties in accordance with our investment strategy described
    in this prospectus and for general business purposes. Prior to
    the full investment of the net proceeds in hotel properties, we
    intend to invest the net proceeds in interest-bearing short-term
    investment grade securities or money-market accounts which are
    consistent with our intention to qualify as a REIT. Such
    investments may include, for example, government and government
    agency certificates, certificates of deposit, interest-bearing
    bank deposits and mortgage loan participations. These initial
    investments are expected to provide a lower net return than we
    will seek to achieve from investments in hotel properties. We
    will use approximately $100,000 of the proceeds of this offering
    to reimburse Mr.&#160;Bortz for out-of-pocket expenses he
    incurred in connection with our formation and this offering and
    $1,000 to repurchase the shares he acquired in connection with
    the formation and initial capitalization of our company.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
  <!-- XBRL Pagebreak Begin -->

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    <BR>
    35
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our actual capitalization as of October&#160;7, 2009;
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our pro forma capitalization, as adjusted to give effect to the
    sale of our common shares in this offering and the concurrent
    private placement, at an offering price of $20.00 per share, not
    including shares subject to the underwriters&#146; overallotment
    option, and, in the case of the common shares sold in this
    offering, net of the underwriting discount and expenses payable
    by us in connection with this offering;&#160;and
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the issuance of 15,000 common shares pursuant to restricted
    share awards to our independent trustees.
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This table should be read in conjunction with the section
    captioned &#147;Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="74%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of October&#160;7, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pro Forma<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As
    Adjusted<SUP style="font-size: 85%; vertical-align: top">(1)</SUP></B>

</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(Unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shareholders&#146; equity:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Preferred shares, $0.01&#160;par value per share,
    100,000,000&#160;shares authorized, no shares issued and
    outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Common shares, $0.01&#160;par value, 1,000&#160;shares
    authorized, 1,000&#160;shares issued and outstanding;
    500,000,000&#160;shares authorized, 17,650,000&#160;shares
    issued and outstanding, as
    adjusted<SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    176,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Additional paid-in capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    990
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    330,123,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total shareholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    330,300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    330,300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The as adjusted amounts include
    15,000 restricted common shares that will be granted to our
    initial independent trustees upon the completion of this
    offering pursuant to our 2009 Equity Incentive Plan. The as
    adjusted amounts do not include (i) up to 2,625,000 common
    shares issuable upon exercise of the underwriters&#146;
    overallotment option at the public offering price less the
    underwriting discount within 30&#160;days after the date of this
    prospectus, (ii)&#160;881,750&#160;common shares issuable upon
    conversion of an aggregate of 881,750&#160;LTIP units to be
    granted to Messrs.&#160;Bortz, Martz and Dittamo upon completion
    of this offering pursuant to our 2009 Equity Incentive Plan,
    (iii)&#160;grants of an aggregate of 48,000&#160;restricted
    common shares to Messrs.&#160;Bortz, Martz and Dittamo pursuant
    to our 2009 Equity Incentive Plan that are expected to be
    approved at the first meeting of our board of trustees following
    completion of this offering as part of our 2010 compensation
    program, or (iv)&#160;377,875 common shares reserved for awards
    under our 2009 Equity Incentive Plan, but not yet granted. Our
    2009 Equity Incentive Plan provides for the issuance of
    aggregate share awards equal to 7.5% of the number of common
    shares issued in this offering (excluding any shares issued
    pursuant to the underwriters&#146; overallotment option) and in
    the concurrent private placement. Based on an offering of
    17,500,000&#160;shares and 135,000&#160;shares sold pursuant to
    the concurrent private placement, 1,322,625 common shares will
    be available for issuance under the 2009 Equity Incentive Plan.
    After the grant of an aggregate of 881,750 LTIP units and an
    aggregate of 63,000 restricted common shares to our trustees and
    officers under the 2009 Equity Incentive Plan, 377,875 common
    shares will remain available for grant under the 2009 Equity
    Incentive Plan. If the size of the offering changes, the
    aggregate number of LTIP units to be granted to
    Messrs.&#160;Bortz, Martz and Dittamo will change so as to equal
    5% of the common shares issued in this offering (excluding any
    shares issued pursuant to the underwriters&#146; overallotment
    option) and in the concurrent private placement, and the
    aggregate number of shares and the remaining number of shares
    reserved for issuance under the 2009 Equity Incentive Plan will
    change accordingly.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>
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    <BR>
    36
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    DISTRIBUTION POLICY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to distribute at least 90% of our taxable income each
    year (subject to certain adjustments as described below) to our
    shareholders in order to qualify as a REIT under the Code. We
    intend to make regular quarterly distributions to our common
    shareholders beginning at such time as our board of trustees
    determines that we have acquired hotels generating sufficient
    cash flow to do so. Until we invest a substantial portion of the
    net proceeds of this offering and the concurrent private
    placement in hotels, we expect our distributions will be
    nominal. We cannot predict the timing of our hotel investments
    or when we will commence paying quarterly distributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to qualify for taxation as a REIT, we intend to make
    annual distributions to our shareholders of an amount at least
    equal to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;90% of our REIT taxable income (determined before the
    deduction for dividends paid and excluding any net capital
    gain); plus
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;90% of the excess of our after-tax net income, if any,
    from foreclosure property over the tax imposed on such income by
    the Code; less
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;the sum of certain items of non-cash income.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, we expect to distribute 100% of our REIT taxable
    income so as to avoid the excise tax on undistributed REIT
    taxable income. However, we cannot assure you as to when we will
    begin to generate sufficient cash flow to make distributions to
    our shareholders or our ability to sustain those distributions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    See the section entitled &#147;Material Federal Income Tax
    Considerations&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Distributions will be authorized by our board of trustees and
    declared by us based upon a variety of factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    actual results of operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the timing of the investment of the net proceeds of this
    offering;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any debt service requirements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    capital expenditure requirements for our properties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our taxable income;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the annual distribution requirement under the REIT provisions of
    the Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our operating expenses;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    other factors that our board of trustees may deem relevant.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent that, in respect of any calendar year, cash
    available for distribution is less than our REIT taxable income,
    we could be required to sell assets or borrow funds to make cash
    distributions or make a portion of the required distribution in
    the form of a taxable share distribution or distribution of debt
    securities. In addition, prior to the time we have fully
    invested the net proceeds of this offering and our concurrent
    private placement we may fund our quarterly distributions out of
    such net proceeds. The use of our net proceeds for distributions
    could be dilutive to our financial results. In addition, funding
    our distributions from our net proceeds may constitute a return
    of capital to our investors, which would have the effect of
    reducing each shareholder&#146;s basis in its common shares.
    Income as computed for purposes of the tax rules described above
    will not necessarily correspond to our income as determined for
    financial reporting purposes.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    37
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    BUSINESS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are an internally managed hotel investment company recently
    organized by our Chairman, President and Chief Executive
    Officer, Mr.&#160;Bortz, to opportunistically acquire and invest
    in hotel properties located primarily in major United States
    cities, with an emphasis on the major coastal markets. As a
    result of construction costs and density, these markets have
    significant barriers to entry and, as shown in historical
    industry data, we believe these markets will experience the most
    robust recovery in meeting and room-night demand as the U.S.
    economy improves. In addition, we may invest in resort
    properties located near our primary urban target markets, as
    well as in select destination markets such as Hawaii, South
    Florida and Southern California. We will seek geographic
    diversity in our investments, although attractive opportunities
    will be more important than geographic mix in our investment
    activity. We intend to focus on full-service hotel properties in
    the &#147;upper upscale&#148; segment of the lodging industry as
    defined by Smith Travel Research. In addition, we may seek to
    acquire branded, upscale, select-service properties in our
    primary urban target markets. We believe that investments in
    these hotel properties can produce attractive risk-adjusted
    returns because we expect (i)&#160;to acquire properties at
    cyclically low prices in the current economic and financing
    environment and (ii)&#160;the properties we purchase will
    benefit from increasing business and leisure travel as the
    economy improves. We currently do not own any hotel properties
    and have no properties under contract. We intend to elect and
    qualify to be taxed as a real estate investment trust, or REIT,
    for federal income tax purposes.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that the current market environment will present a
    significant number of attractive investment opportunities and
    that our management team will have the experience and expertise
    necessary to acquire a
    <FONT style="white-space: nowrap">high-quality</FONT>
    portfolio of hotel properties. Our management team will be led
    by Mr.&#160;Bortz, the founder and former Chairman of the Board
    of Trustees and Chief Executive Officer of LaSalle Hotel
    Properties, a NYSE-listed hotel REIT. Prior to that, he founded
    and led Jones Lang LaSalle&#146;s Hotel Investment Group.
    Mr.&#160;Bortz has 28&#160;years of lodging and real estate
    experience, having overseen more than $2.5&#160;billion of
    lodging-related transactions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering and the concurrent private
    placement, we will have approximately $330&#160;million to
    invest in hotel properties and we will have no outstanding
    indebtedness. Accordingly, we believe we will be well-positioned
    to take advantage of attractive investment opportunities that we
    expect will be available in the lodging industry.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Market
    Opportunity</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S.&#160;hotel industry has experienced substantial
    declines in fundamentals as a result of the global economic
    recession and its adverse impact on business and leisure travel.
    We believe that the significant number of hotel properties
    experiencing substantial declines in operating cash flow,
    coupled with the challenged credit markets, near-term debt
    maturities and, in some instances, covenant defaults relating to
    outstanding indebtedness, will present attractive investment
    opportunities in the lodging industry. Accordingly, we believe
    the following factors will provide well-capitalized investors,
    such as our company, the opportunity to acquire high-quality
    hotel properties at prices significantly below replacement cost,
    with substantial appreciation potential as the U.S.&#160;economy
    recovers from the current recession:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Significant Debt Defaults.</I>&#160;&#160;Cash flow at many
    hotel properties has declined or will likely decline to levels
    that are inadequate to support required debt service payments or
    that violate applicable covenants. Real Capital Analytics
    estimates that, as of September&#160;30, 2009, there are over
    1,100 hotel properties in distress (which includes default,
    <FONT style="white-space: nowrap">deed-in-lieu,</FONT>
    forced sales, foreclosure or bankruptcy) having an aggregate
    value of approximately $29&#160;billion. We believe many of
    these hotel properties will be sold by lenders after
    foreclosure, while in receivership or in cooperation with the
    borrower. The following chart shows the increasing delinquency
    rates and amounts of hotel CMBS since November 2008.
</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Hotel
    CMBS Delinquency Rates and Amounts</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587702.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Standard&#160;&#038; Poor&#146;s North American
    CMBS Monthly Snapshot
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Maturity Defaults and Lack of Available
    Financing.</I>&#160;&#160;According to Standard&#160;&#038;
    Poor&#146;s, hotel-related CMBS with an aggregate principal
    amount of approximately $21&#160;billion are scheduled to mature
    over the next three years, as shown in the chart below. In the
    current recessionary environment, traditional lending sources,
    such as banks, insurance companies and pension funds have
    adopted more conservative lending policies and have materially
    decreased new lending commitments to hotel properties. We
    believe the current and projected cash flows at many hotel
    properties, when coupled with more conservative lending
    policies, will only support mortgage financing that is
    significantly less than the amounts currently borrowed against
    such properties. As a result, we expect many owners of hotel
    properties will be unable to refinance maturing debt without
    significant additional equity investment, which may result in
    sales or foreclosures.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Hotel
    CMBS Fixed-Rate and Floating-Rate Final Maturities</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587703.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Standard&#160;&#038; Poor&#146;s &#147;CMBS Lodging
    Performance Will Reflect Segments And Markets&#148;
</DIV>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Under-Capitalized Owners.</I>&#160;&#160;Maintaining a
    hotel&#146;s physical condition at the levels required by major
    hotel brands often requires significant capital investment. This
    is particularly true for hotels in urban markets and in the
    upper upscale segment of the lodging industry, where we intend
    to focus our investment activity. We believe cash flow after
    debt service at many hotel properties may be insufficient to
    fund necessary capital expenditures and their owners may face
    capital investment demands that could require additional equity
    investments. We believe some hotel owners will be unable or
    unwilling to make the required equity investments and may choose
    or be compelled to sell their hotels.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transaction
    Landscape</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The aggregate value of sale transactions involving
    U.S.&#160;hotels with a purchase price of $10&#160;million or
    more decreased by approximately 81%, from approximately
    $45&#160;billion in 2007 to approximately $8.5&#160;billion in
    2008, and declined further to approximately $2.0&#160;billion in
    the first nine months of 2009, as shown in the chart below. This
    decrease followed a dramatic increase in transaction volume from
    2004 through 2007, during which period attractive financing was
    widely available and lodging industry fundamentals were
    generally favorable. In 2008, as the capital markets collapsed
    and the economy declined significantly, availability of
    commercial real estate financing generally, and financing for
    hotel properties in particular, decreased dramatically.
    Traditional lending sources, such as banks, insurance companies
    and pension funds adopted more conservative lending policies and
    have materially decreased new lending commitments to hotel
    properties. The hotel CMBS market, once a large contributor to
    the availability of attractive debt financing, effectively
    closed in 2008 and has yet to reopen. Potential buyers of hotels
    have found it increasingly difficult to procure debt financing
    and thus both the number of bids for properties and the value of
    the bids themselves have decreased. As the price buyers are
    willing to pay for hotels has decreased, we believe many hotel
    owners have become reluctant to sell unless forced to do so.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe a number of factors, including significant debt
    defaults, maturity defaults and lack of available financing and
    under-capitalized owners, described above, will increase
    pressure on certain hotel owners to sell properties at prices
    that we believe are attractive and that transaction volumes will
    increase over the next several years. We expect that
    well-capitalized buyers, such as our company, with access to
    equity capital and the ability to use low leverage, will have
    opportunities to acquire high-quality hotel properties at
    historically attractive prices.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Hotel Transaction Volume (1995&#160;&#151; September&#160;30,
    2009)<BR>
    (Transactions $10&#160;million and
    above)<SUP style="font-size: 85%; vertical-align: top">(1)</SUP></FONT></B>

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587704.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;JLLH (1995&#160;- 2008), Real Capital Analytics
    (2009 YTD)
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">2009 YTD amount includes
    transactions of $5&#160;million and above; data for
    $10&#160;million and above not available.
    </FONT></TD>
</TR>

</TABLE>
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    <B><FONT style="font-family: 'Times New Roman', Times">Industry
    Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since August 2008, the U.S.&#160;lodging industry has
    experienced substantial declines in fundamentals as a result of
    the global recession and its adverse impact on business and
    leisure travel. Lodging demand decreased on a year-over-year
    basis in 2008 and year-to-date in 2009, while supply has risen
    as hotel properties that were under development before the
    financial crisis continue to be completed. As a result of
    falling demand, increasing supply and deteriorating average
    rates, RevPAR decreased over the same periods and is expected to
    decrease by 17.4% in 2009 and 2.4% in 2010, according to JLLH.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result of the financial distress, lack of financing, severe
    recession and declining operating fundamentals over the past two
    years, many previously planned new hotel developments have been
    abandoned and the number of rooms under construction and in
    planning has declined and is expected to decline further over
    the next several years. Accordingly, new room supply growth is
    projected by JLLH to be just 1.0% in 2010, 0.5% in 2011 and 1.2%
    in 2012, significantly below the 2.1% annual average from 1988
    to 2008. We believe this below-average projected supply growth
    is due to scarcity of financing for hotel properties and
    operating fundamentals that do not generate adequate returns on
    the cost of new hotel construction. We believe that declining
    new room supply growth will create an environment favorable for
    future increases in hotel occupancy, ADR and RevPAR.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Industry
    Fundamentals</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S.&#160;hotel industry has experienced 15 consecutive
    months of RevPAR declines since August 2008, principally as a
    result of the declining economic environment, rising
    unemployment and an overall reduction in business and leisure
    travel. According to JLLH forecasts, the projected RevPAR
    decline in 2009 is expected to surpass the aggregate percentage
    declines for the periods following the
    <FONT style="white-space: nowrap">1990-91</FONT>
    recession and the recession surrounding the September&#160;11,
    2001 terrorist attacks, which are considered two of the worst
    periods in the modern history of the U.S.&#160;lodging industry.
    Specifically, JLLH projects RevPAR will decline 17.4% in 2009
    and an additional 2.4% in 2010. JLLH projects RevPAR growth will
    turn positive in 2011 through 2013, growing by 7.3%, 9.9%, and
    9.0%, respectively, similar to the above-average periods of
    RevPAR growth that followed the
    <FONT style="white-space: nowrap">1990-1991</FONT>
    and
    <FONT style="white-space: nowrap">2001-2002</FONT>
    industry downturns.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Hotel Industry&#160;&#151; Annual Historical and Projected<BR>
    Change in RevPAR, Room&#160;Demand and
    Room&#160;Supply</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587705.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Smith Travel Research (1988&#160;- 2008), JLLH
    (2009E&#160;- 2013E)
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Historically, RevPAR has experienced periods of above-average
    growth following industry downturns. In addition, as shown in
    the charts below, the urban and upper upscale sectors, in which
    we intend to focus our investments, have outperformed the
    broader U.S.&#160;hotel industry in RevPAR growth over the last
    21&#160;years, with average annual RevPAR growth of 4.3% and
    3.4%, respectively, as compared to the overall lodging industry
    average of 3.2%. During the four-year period following the
    <FONT style="white-space: nowrap">1990-1991</FONT>
    recession, the overall hotel industry achieved average annual
    RevPAR growth of 5.2%, while upper upscale and urban hotels each
    experienced average annual RevPAR growth of 7.1%. A similar
    trend followed the
    <FONT style="white-space: nowrap">2001-2002</FONT>
    downturn, when the overall lodging industry experienced average
    annual RevPAR growth of 7.5%, while upper upscale and urban
    sectors achieved average annual RevPAR growth of 7.6% and 10.2%,
    respectively. We believe that the recent lodging industry
    downturn will allow us to acquire hotels at attractive prices
    and that increases in RevPAR for urban and upper upscale hotel
    properties are likely to outperform the broader U.S.&#160;hotel
    industry as the industry recovers, as they have historically.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Hotels and U.S. Urban Hotels RevPAR Growth Comparison</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587706.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Smith Travel Research
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Hotels and U.S. Upper Upscale Hotels RevPAR Growth
    Comparison</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587707.gif" alt="(BAR GRAPH)"><B> </B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Smith Travel Research
</DIV>
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<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Demand
    Overview</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    According to Smith Travel Research, hotel occupancy in the
    United States was 56.7% year-to-date through October&#160;31,
    2009, the lowest annual level in the last 21&#160;years and well
    below the industry average of 62.7% for that period, as shown in
    the chart below.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Hotel Industry Annual Occupancy Rate</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587708.gif" alt="(BAR GRAPH)">
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Smith Travel Research (1988&#160;- 2008), JLLH
    (2009E&#160;- 2010E)
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Historical growth in hotel room demand, as measured by rooms
    sold, has trended with growth in U.S.&#160;GDP, as shown in the
    chart below. U.S.&#160;GDP is expected to stabilize and grow in
    2010, which we believe will drive growth in hotel room demand,
    as it has historically.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Annual
    Percentage Change in U.S. Hotel Room&#160;Demand Growth vs. U.S.
    GDP Growth</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587709.gif" alt="(LINE GRAPH)">
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
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<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>    Source:&#160;</TD>
    <TD align="left">
    Smith Travel Research and U.S.&#160;Department of Commerce
    (1988&#160;- 2008), JLLH and International Monetary Fund
    (2009E&#160;- 2010E)
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Supply
    Overview</FONT></I></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that while the recent decline in lodging fundamentals
    is primarily a result of a significant decline in demand, room
    supply also has been an important factor in lodging cycles.
    Historically, following economic and hotel industry downturns,
    increases in supply of hotel rooms typically lag increases in
    demand for hotel rooms for several years because of the lead
    time necessary to develop and construct new hotels. As
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    shown in the chart below, according to Smith Travel Research,
    average annual growth in supply of hotel rooms for the five-year
    period 1991 through 1995 and for the six-year period 2002
    through 2007 was significantly below the
    <FONT style="white-space: nowrap">21-year</FONT>
    historical average of 2.1%.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Lodging
    Supply vs. Demand</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587710.gif" alt="(LINE GRAPH)">
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Source:&#160;Smith Travel Research (through October&#160;31,
    2009)
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Given the significant declines in RevPAR over the last
    15&#160;months, hotel profit levels have decreased
    significantly. We believe that in most markets today, current
    hotel level profitability is significantly below levels that
    economically justify construction of new hotel rooms,
    particularly as development and construction debt and equity
    financing have become far less available. As a result,
    previously planned hotel developments have been abandoned and
    the number of rooms under construction and in planning has
    declined and is likely to continue to decline over the next
    several years. According to JLLH, new room supply growth is
    projected to be only 1.0% in 2010, 0.5% in 2011 and 1.2% in
    2012. We believe growth in new room supply will likely remain
    significantly below its historical annual average of 2.1%
    through at least 2012 due to the lack of economic feasibility of
    new construction, scarcity of financing and a reduced appetite
    for risk following the current recession.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Competitive
    Strengths</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect the following factors will benefit our company as we
    implement our business strategy:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    <TD width="87%"></TD>
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<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Experienced Leadership.</I>&#160;&#160;Our senior executive
    management team will be led by our Chairman, President and Chief
    Executive Officer, Mr.&#160;Bortz, who has a proven track record
    and substantial experience in the hotel industry. Mr.&#160;Bortz
    has 28&#160;years of lodging and real estate experience,
    including expertise in hotel and resort property acquisitions,
    divestitures, repositioning, redevelopment, asset management,
    branding and financing. Our company represents
    Mr.&#160;Bortz&#146;s third lodging investment vehicle and his
    second publicly listed venture. He most recently served as Chief
    Executive Officer of LaSalle Hotel Properties, an internally
    managed, NYSE-listed hotel REIT, from its inception in April
    1998 and as the Chairman of its Board of Trustees from January
    2001 until his retirement in September 2009. Prior to LaSalle
    Hotel Properties, Mr.&#160;Bortz founded and led Jones Lang
    LaSalle&#146;s Hotel Investment Group, which acquired 15 hotels
    over his four-year tenure as its President. Through his past
    professional experiences, Mr.&#160;Bortz has developed
</TD>
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<DIV align="left" style="margin-left: 13%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
     strong relationships with hotel owners, management companies,
    brand companies, brokers, lenders and institutional investors.
    Our Executive Vice President and Chief Financial Officer,
    Mr.&#160;Martz, has over 15&#160;years&#146; experience in the
    hotel and real estate industries, including having served as
    Chief Financial Officer in his last two positions and in senior
    finance positions at two NYSE-listed hotel REITs.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

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</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Proven Acquirer with Strong Track Record of
    Growth.</I>&#160;&#160;Throughout his career, Mr.&#160;Bortz has
    demonstrated the ability to acquire, redevelop and reposition
    hotel properties. During Mr.&#160;Bortz&#146;s tenure as Chief
    Executive Officer of LaSalle Hotel Properties, he led
    transactions totaling $2.5&#160;billion in asset value. During
    this period, LaSalle Hotel Properties&#146; portfolio increased
    from 10 hotel properties at the time of its initial public
    offering in April 1998 to 31 properties with over 8,400 rooms at
    the time of Mr.&#160;Bortz&#146;s retirement in September 2009.
    In aggregate, Mr.&#160;Bortz oversaw the acquisition of 42 hotel
    and resort properties during his leadership tenure at LaSalle
    Hotel Properties and Jones Lang LaSalle&#146;s Hotel Investment
    Group. Mr.&#160;Bortz also established a strong capital sourcing
    network while at LaSalle Hotel Properties, overseeing that
    company&#146;s raising of more than $3.0&#160;billion of debt
    and equity capital to finance its significant growth over the
    past 11&#160;years. During Mr.&#160;Bortz&#146;s tenure at
    LaSalle Hotel Properties, that company experienced significant
    challenges resulting from severe industry downturns, such as the
    periods following September&#160;11, 2001 and the global
    recession beginning in August 2008, during which LaSalle Hotel
    Properties and other hotel companies reduced dividend
    distributions and capital investments due to substantial
    declines in revenues and earnings.
</TD>
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</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    <TD width="87%"></TD>
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<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Focused Property Investment Strategy.</I>&#160;&#160;Industry
    analysts project that RevPar growth will turn positive in 2011,
    thereby improving profitability. In accordance with such
    forecasts, we believe that when the U.S. economy begins to
    stabilize and generate positive U.S. GDP growth, transient and
    group travel is likely to rebound, allowing hotel owners to grow
    occupancy as demand growth exceeds diminishing supply growth,
    leading to increasing average daily rates. We intend to invest
    primarily in upper upscale, full-service, branded and
    independent hotels in major U.S.&#160;cities, with an emphasis
    on the major coastal markets, where we believe there are
    significant barriers to entry for new hotel supply and meeting
    and room-night demand will experience the most robust recovery
    as the U.S.&#160;economy improves. In addition, we expect to
    acquire resort properties located near our primary urban target
    markets as well as in select, unique destination markets. We may
    also invest in branded, upscale, select-service hotels in
    premium urban locations in these major cities. Within these
    markets, we intend to establish a diversified customer base by
    investing in urban, resort and convention hotels, each of which
    typically has a different mix of business transient, leisure
    transient and group and convention customers, all of which
    follow different demand trends.
</TD>
</TR>

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<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    <TD width="7%"></TD>
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    <TD width="87%"></TD>
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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Flexible and Diversified Operating Strategy with No Legacy
    Issues.</I>&#160;&#160;Upon completion of this offering and the
    concurrent private placement we will have no outstanding
    indebtedness and approximately $330&#160;million available for
    investment. While we expect our capital structure to ultimately
    include indebtedness as described in this prospectus, we do not
    intend to use significant leverage until after we have invested
    substantially all of the net proceeds of this offering and the
    concurrent private placement. As a newly formed company with no
    properties or operating history, we will not have the burden and
    distraction of legacy operating or legacy leverage issues that
    have adversely affected many existing hotel companies during the
    recent industry downturn, such as properties suffering from
    significant declines in cash flows or mortgage loan defaults.
    Since we are not affiliated with any hotel management company
    and have no contractual obligations to any particular hotel
    manager, we plan to retain multiple branded and independent
    third-party hotel management companies to operate our hotels,
    based on our assessment of the operator most beneficial for each
    property. We believe this strategy of retaining multiple hotel
    managers will assist us in identifying best practices that we
    will implement across our portfolio, as appropriate. We intend
    to enter into management contracts with third-party hotel
    management companies for the operation of our hotels. We expect
    that, in general, these contracts will have initial terms of
    five to ten years and require us to pay each
</TD>
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    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
     management company a base management fee, typically in a range
    of 3% to 4% of total hotel revenues, and may provide for
    <FONT style="white-space: nowrap">agreed-upon</FONT>
    performance-based compensation to the management company. We
    expect that performance-based compensation will be negotiated on
    a hotel by hotel basis, but will typically range from 10% to 20%
    of hotel operating income or adjusted hotel operating income,
    with either a fixed negotiated nominal threshold or nominal
    thresholds that vary or increase by year based on third-party
    hotel manager forecasts or
    <FONT style="white-space: nowrap">agreed-upon</FONT>
    projections of hotel performance. Further, we will seek
    management contracts that provide us with the ability to
    (i)&#160;terminate the management contract and replace an
    operator if specified levels of operating performance are not
    satisfied, or at will; (ii)&#160;reposition a hotel if we
    determine to do so; and (iii)&#160;terminate the management
    contract in connection with a sale of the hotel, which we
    believe may facilitate the sale of a hotel. Periodically, we may
    sell a hotel on an opportunistic basis if we believe sales
    proceeds may be invested in hotel properties that offer more
    attractive risk-return profiles. We expect to negotiate the
    termination fees payable to the hotel manager on a hotel by
    hotel basis, but would expect the termination fees to range from
    a relatively nominal fee to up to the sum of three years&#146;
    annual base management fees plus performance-based compensation.
</TD>
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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Intensive Asset Management.</I>&#160;&#160;We intend to
    employ a dedicated and experienced asset management team to
    proactively manage our third-party hotel management companies in
    order to improve operational performance and maximize our return
    on investment. Although we will not operate our hotel
    properties, both our asset managers and our executive management
    team will actively participate with our hotel managers in all
    aspects of our hotels&#146; operations, including property
    positioning and repositioning, operations analysis, physical
    design, renovation and capital improvements, guest experience
    and overall strategic direction. Through these initiatives, we
    will seek to improve property efficiencies, lower costs,
    maximize revenues, and enhance property operating margins. We
    also anticipate implementing certain value-added strategies,
    such as changing operators, re-branding and de-flagging, when
    appropriate.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>Prudent Capital Structure.</I>&#160;&#160;We expect to
    maintain a low-leverage capital structure and intend to limit
    the sum of the outstanding principal amount of our consolidated
    indebtedness and the liquidation preference of any outstanding
    preferred shares to not more than 4.5x our EBITDA for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Our board of trustees may modify or
    eliminate this limitation at any time without the approval of
    our shareholders.
</TD>
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    <B><FONT style="font-family: 'Times New Roman', Times">Business
    Strategy and Investment Criteria</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to invest in hotel properties located primarily in
    major U.S.&#160;cities, such as Boston, New York,
    Washington,&#160;D.C., Chicago, Los Angeles, and San Francisco,
    with an emphasis on the major coastal markets. We believe these
    markets have significant barriers to entry and will experience
    the most robust recovery in meeting and room-night demand as the
    U.S. economy improves. In addition, we may invest in resort
    properties located near our primary urban target markets, as
    well as in select destination markets such as Hawaii, south
    Florida and southern California. We intend to focus on both
    branded and independent full-service hotels in the &#147;upper
    upscale&#148; segment of the lodging industry as defined by
    Smith Travel Research, based on average daily rates. In
    addition, we may seek to acquire branded, upscale,
    select-service hotels in our primary urban target markets. Smith
    Travel Research categorizes the hotel industry into six market
    classes, ranging from luxury to economy, based on average daily
    rate. In general, luxury hotels comprise the top 15% of average
    daily rates in a metropolitan market and upscale hotels comprise
    the next 15% of average daily rates, with upper upscale hotels
    comprising the top end of the upscale category. Examples of
    upper upscale brands include,
    Hilton<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    Hyatt<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and
    Westin<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

    examples of upscale brands include Hyatt
    Place<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and Hilton Garden
    Inn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    The full-service hotels on which we intend to focus our
    investment activity generally will have restaurant, lounge and
    meeting facilities and other amenities, as well as high service
    levels. The select-service hotels in which we may invest
    generally will not have comprehensive business meeting or
    banquet facilities and will have limited food and beverage
    outlets. We believe our target markets, including the coastal
    cities and resort markets, are characterized by significant
    barriers to entry and that long-term room-night demand
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    and rate growth of these types of hotels will likely continue to
    outperform the national average, as they have historically.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will utilize extensive research to evaluate any target market
    and property, including a detailed review of the long-term
    economic outlook, trends in local demand generators, competitive
    environment, property systems and physical condition, and
    property financial performance. Specific acquisition criteria
    may include, but are not limited to, the following:
</DIV>

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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    premier locations, facilities and other competitive advantages
    not easily replicated;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    significant barriers to entry in the market, such as scarcity of
    development sites, regulatory hurdles, high per room development
    costs and long lead times for new development;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    acquisition price at a significant discount to replacement cost;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    properties not subject to long-term management contracts with
    hotel management companies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    potential return on investment initiatives, including
    redevelopment, rebranding, redesign, expansion and change of
    management;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    opportunities to implement value-added operational
    improvements;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    strong demand growth characteristics supported by favorable
    demographic indicators.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although the upper upscale segment of the lodging industry has
    been more severely impacted in the recent recession, than in
    previous downturns, we believe that as the U.S.&#160;economy
    begins to stabilize and generate positive GDP growth, upper
    upscale full-service hotels and resorts and upscale
    select-service hotels located in major U.S.&#160;urban,
    convention and drive-to and destination resort markets are
    likely to generate the most favorable returns on investment in
    the lodging industry as historically RevPAR performance at these
    hotels has outperformed the broader U.S.&#160;hotel industry
    during periods of recovery. Hotel developers&#146; inability to
    source construction financing over the past 18 to
    24&#160;months, and likely for the foreseeable future, creates
    an environment in which minimal new lodging supply is expected
    to be added through at least 2012. We believe that as transient
    and group travel rebounds, existing supply will accommodate
    incremental room-night demand allowing hotel owners to grow
    occupancy and ultimately increase rates, thereby improving
    profitability. We believe that portfolio diversification will
    allow us to capitalize from growth in various customer segments
    including business transient, leisure transient, and group and
    convention room-night demand.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We generally intend to enter into flexible management contracts
    with third-party hotel management companies for the operation of
    our hotels that will provide us with the ability to replace
    operators
    <FONT style="white-space: nowrap">and/or</FONT>
    reposition properties, to the extent that we determine to do so,
    and will align our operators with our objective of generating
    the highest return on investment. In addition, we believe that
    flexible management contracts facilitate the sale of hotels, and
    we may seek to opportunistically sell hotels if we believe sales
    proceeds may be invested in hotel properties that offer more
    attractive risk-adjusted returns.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Initially, we do not intend to engage in significant development
    or redevelopment of hotel properties. However, we do expect to
    engage in partial redevelopment and repositioning of certain
    properties, as we seek to maximize the financial performance of
    the hotels that we acquire. In addition, we may acquire
    properties that require significant capital improvement,
    renovation or refurbishment. Over the long-term, we may acquire
    hotel and resort properties that we believe would benefit from
    significant redevelopment or expansion, including, for example,
    adding rooms, meeting facilities or other amenities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may consider acquiring outstanding debt secured by a hotel or
    resort property from lenders and investors if we believe we can
    foreclose on or acquire ownership of the property in the
    near-term. We do not intend to originate any debt financing or
    purchase any debt where we do not expect to gain ownership of
    the underlying property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Financing
    Strategies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While our declaration of trust does not limit the amount of
    indebtedness we may incur, we expect to maintain a low-leverage
    capital structure and intend to limit the sum of the outstanding
    principal amount of our consolidated indebtedness and the
    liquidation preference of any outstanding preferred shares to
    not more than 4.5x our EBITDA for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Over time, we intend to finance our
    long-term growth with common and preferred equity issuances and
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    debt financing having staggered maturities. Our debt may include
    mortgage debt secured by our hotel properties and unsecured debt.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate arranging and utilizing a revolving credit
    facility to fund future acquisitions (following investment of
    the net proceeds of this offering), as well as for property
    redevelopments, return on investment initiatives and working
    capital requirements. We intend to repay amounts outstanding
    under any such credit facility from time to time with periodic
    common and preferred equity issuances, long-term debt financings
    and cash flows from operations. No assurance can be given that
    we will be able to obtain a credit facility.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, we do not expect to incur debt, pursuant to a
    revolving credit facility or otherwise, until we have invested
    substantially all of the net proceeds of this offering and the
    concurrent private placement, other than possibly assuming debt
    in connection with a hotel acquisition. If we assume debt in
    connection with our initial hotel acquisitions, our debt level
    could temporarily exceed the general limitation described above.
    In measuring our debt for purposes of our general debt
    limitation, we will utilize &#147;net&#148; debt, which is the
    principal amount of our consolidated indebtedness and the
    liquidation preference of any outstanding preferred shares less
    the amount of our cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When purchasing hotel properties, we may issue limited
    partnership interests in our operating partnership as full or
    partial consideration to sellers who may desire to take
    advantage of tax deferral on the sale of a hotel or participate
    in the potential appreciation in value of our common shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Competition</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to compete for hotel investment opportunities with
    institutional investors, private equity investors, other REITs
    and numerous local, regional and national owners, including
    franchisors, in each of our target markets. Some of these
    entities may have substantially greater financial resources than
    we do and may be able and willing to accept more risk than we
    can prudently manage. Competition generally may increase the
    bargaining power of property owners seeking to sell and reduce
    the number of suitable investment opportunities offered to us or
    purchased by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The hotel industry is highly competitive. Hotels we acquire will
    compete with other hotels for guests in our markets. Competitive
    factors include location, convenience, brand affiliation, room
    rates, range of services, facilities and guest amenities or
    accommodations offered and quality of guest service. Competition
    in the markets in which our hotels will operate will include
    competition from existing, newly renovated and newly developed
    hotels in the relevant segments. Competition can adversely
    affect the occupancy, ADR and RevPAR of our hotels, and thus our
    financial results, and may require us to provide additional
    amenities, incur additional costs or make capital improvements
    that we otherwise might not choose to make, which may adversely
    affect our profitability.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Environmental
    Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The hotel properties that we acquire will be subject to various
    federal, state and local environmental laws. Under these laws,
    courts and government agencies have the authority to require us,
    as owner of a contaminated property, to clean up the property,
    even if we did not know of or were not responsible for the
    contamination. These laws also apply to persons who owned a
    property at the time it became contaminated, and therefore it is
    possible we could incur these costs even after we sell some of
    the properties we acquire. In addition to the costs of cleanup,
    environmental contamination can affect the value of a property
    and, therefore, an owner&#146;s ability to borrow using the
    property as collateral or to sell the property. Under the
    environmental laws, courts and government agencies also have the
    authority to require that a person who sent waste to a waste
    disposal facility, such as a landfill or an incinerator, pay for
    the <FONT style="white-space: nowrap">clean-up</FONT>
    of that facility if it becomes contaminated and threatens human
    health or the environment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Furthermore, various court decisions have established that third
    parties may recover damages for injury caused by property
    contamination. For instance, a person exposed to asbestos while
    staying in a hotel may seek to recover damages if he or she
    suffers injury from the asbestos. Lastly, some of these
    environmental laws restrict the use of a property or place
    conditions on various activities. An example would be laws that
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    require a business using chemicals (such as swimming pool
    chemicals at a hotel property) to manage them carefully and to
    notify local officials that the chemicals are being used.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We could be responsible for any of the costs discussed above.
    The costs to clean up a contaminated property, to defend against
    a claim, or to comply with environmental laws could be material
    and could adversely affect the funds available for distribution
    to our shareholders. We expect to obtain &#147;Phase I
    environmental site assessments,&#148; or ESAs, on each hotel
    property prior to acquiring it. However, these ESAs may not
    reveal all environmental costs that might have a material
    adverse effect on our business, assets, results of operations or
    liquidity and may not identify all potential environmental
    liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result, we may become subject to material environmental
    liabilities of which we are unaware. We can make no assurances
    that (1)&#160;future laws or regulations will not impose
    material environmental liabilities on us, or (2)&#160;the
    environmental condition of our hotel properties will not be
    affected by the condition of the properties in the vicinity of
    our hotel properties (such as the presence of leaking
    underground storage tanks) or by third parties unrelated to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Legal
    Proceedings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are not involved in any material litigation nor, to our
    knowledge, is any material litigation threatened against us.
</DIV>
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<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT&#146;S
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>
    AND RESULTS OF OPERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are an internally managed hotel investment company, recently
    organized to opportunistically acquire and invest in hotel
    properties located primarily in major U.S. cities, with an
    emphasis on the major coastal markets, which we believe present
    significant barriers to entry for new hotel supply and are
    likely to experience the most robust recovery in meeting and
    room-night demand as the U.S. economy improves. As a newly
    formed company with no business activity to date, we have no
    operating history and only nominal assets, consisting only of
    cash contributed in connection with our formation. See
    &#147;Capitalization.&#148; We intend to elect and qualify to be
    taxed as a REIT for federal income tax purposes, commencing with
    our short taxable year ending December&#160;31, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For us to qualify as a REIT under the Code, we cannot operate
    the hotels we acquire. Therefore, our operating partnership and
    its subsidiaries will lease our hotel properties to our TRS
    lessees, who will in turn engage eligible independent
    contractors to manage our hotels. Each of these lessees will be
    treated as a TRS for federal income tax purposes and will be
    consolidated into our financial statements for accounting
    purposes. However, since both our operating partnership and our
    TRS lessees are controlled by us, our principal source of funds
    on a consolidated basis will be from the operations of our
    hotels. The earnings of our TRS lessees will be subject to
    taxation like other regular C corporations, which will reduce
    our funds from operations and the cash otherwise available for
    distribution to our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Liquidity
    and Capital Resources</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to limit the sum of the outstanding principal amount
    of our consolidated indebtedness and the liquidation preference
    of any outstanding preferred shares to not more than 4.5x our
    EBITDA for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Compliance with this limitation will be
    judged at the time debt is incurred, and a subsequent decrease
    in EBITDA will not require us to repay debt. Our board of
    trustees may modify or eliminate this limitation at any time
    without the approval of our shareholders. In addition, if we
    assume or incur debt in connection with our initial hotel
    acquisitions, our debt level could exceed the general limitation
    described above. Upon completion of this offering and the
    concurrent private placement, we expect to have approximately
    $330&#160;million in cash available to fund investments in hotel
    properties. We have no agreement to invest in any hotel
    properties. There can be no assurance that we will make any
    investments in any other properties that meet our investment
    criteria.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to meet our short-term liquidity requirements
    generally through net cash provided by operations, existing cash
    balances and, if necessary, short-term borrowings under an
    anticipated revolving credit facility. We believe that our net
    cash provided by operations will be adequate to fund operating
    requirements, pay interest on any borrowings and fund dividends
    in accordance with the REIT requirements of the federal income
    tax laws. We expect to meet our long-term liquidity
    requirements, such as hotel property acquisitions through the
    cash we will have available upon completion of this offering and
    the concurrent private placement and borrowings and expect to
    fund other investments in hotel properties and scheduled debt
    maturities through long-term secured and unsecured borrowings
    and the issuance of additional equity or debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also anticipate arranging and utilizing a revolving credit
    facility to fund future acquisitions (following investment of
    the net proceeds of this offering and the concurrent private
    placement), as well as for property redevelopments, return on
    investment initiatives and working capital requirements. We
    intend to repay indebtedness incurred under our credit facility
    from time to time out of cash flow and from the net proceeds of
    issuances of additional equity and debt securities. No
    assurances can be given that we will obtain such credit facility
    or if we do what the amount and terms will be. Our failure to
    obtain such a facility on favorable terms could adversely impact
    our ability to execute our business strategy. In the future, we
    may seek to increase the amount of our credit facility,
    negotiate additional credit facilities or issue corporate debt
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    instruments. Any debt incurred or issued by us may be secured or
    unsecured, long-term or short-term, fixed or variable interest
    rate and may be subject to such other terms as we deem prudent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, we do not expect to incur debt, pursuant to a
    revolving credit facility or otherwise, until we have invested
    substantially all of the net proceeds of this offering and the
    concurrent private placement, other than possibly assuming debt
    in connection with a hotel acquisition. If we assume debt in
    connection with our initial hotel acquisitions, our debt level
    could temporarily exceed the general limitation described above.
    In measuring our debt for purposes of our general debt
    limitation, we will utilize &#147;net&#148; debt, which is the
    principal amount of our consolidated indebtedness and the
    liquidation preference of any outstanding preferred shares less
    the amount of our cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to invest in hotel properties only as suitable
    opportunities arise. In the near-term, we intend to fund future
    investments in properties with the net proceeds of this offering
    and the concurrent private placement. Longer term, we intend to
    finance our investments with the net proceeds from additional
    issuances of common shares, issuances of units of limited
    partnership interest in our operating partnership or other
    securities or borrowings. The success of our acquisition
    strategy may depend, in part, on our ability to access
    additional capital through issuances of equity securities. There
    can be no assurance that we will make any investments in any
    properties that meet our investment criteria.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we have no formal written agreement with Mr.&#160;Bortz
    to do so, we intend to use approximately $100,000 of the
    proceeds of this offering to reimburse Mr.&#160;Bortz for
    out-of-pocket costs he incurred in connection with our formation
    and this offering, if approved by the independent members of our
    board of trustees following completion of this offering. We
    expect to use approximately $1,300,000 of the net proceeds of
    this offering to pay directly other organizational and offering
    expenses.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Quantitative
    and Qualitative Disclosure About Market Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Inflation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Operators of hotels, in general, possess the ability to adjust
    room rates daily to reflect the effects of inflation. However,
    competitive pressures may limit the ability of our management
    companies to raise room rates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Seasonality</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Depending on a hotel&#146;s location and market, operations for
    the hotel may be seasonal in nature. In general, many hotels
    maintain higher occupancy and average daily rates during the
    second and third calendar quarters. Seasonality experienced by
    our hotels may cause fluctuations in our quarterly operating
    profits. To the extent that our cash flow from operations is
    insufficient during any quarter to fund distributions to our
    equity holders or meet other cash needs, due to temporary or
    seasonal fluctuations in revenue, we expect to use cash on hand
    or borrowings under our anticipated revolving credit facility to
    make distributions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Critical
    Accounting Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Below is a discussion of the accounting policies that we believe
    will be critical once we commence operations. We consider these
    policies critical because they require estimates about matters
    that are inherently uncertain, involve various assumptions and
    require significant management judgment, and because they are
    important for understanding and evaluating our reported
    financial results. These judgments will affect the reported
    amounts of assets and liabilities and our disclosure of
    contingent assets and liabilities at the dates of the financial
    statements and the reported amounts of revenue and expenses
    during the reporting periods. Applying different estimates or
    assumptions may result in materially different amounts reported
    in our financial statements.
</DIV>
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    <BR>
    51
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Hotel
    Properties</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Acquisitions
    and Property Improvements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon acquisition, we allocate the purchase price based on the
    fair value of the acquired land, building, furniture, fixtures
    and equipment, identifiable intangible assets, other assets and
    assumed liabilities. Identifiable intangible assets typically
    arise from contractual arrangements. We determine the
    acquisition-date fair values of all assets and assumed
    liabilities using methods similar to those used by independent
    appraisers (<I>e.g.</I>, discounted cash flow analysis) and that
    utilize appropriate discount
    <FONT style="white-space: nowrap">and/or</FONT>
    capitalization rates and available market information. Estimates
    of future cash flows are based on a number of factors including
    historical operating results, known and anticipated trends, and
    market and economic conditions. Acquisition costs are expensed
    as incurred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Hotel renovations
    <FONT style="white-space: nowrap">and/or</FONT>
    replacements of assets that improve or extend the life of the
    asset are capitalized and depreciated over their estimated
    useful lives. Furniture, fixtures and equipment under capital
    leases are carried at the present value of the minimum lease
    payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Repair and maintenance costs are charged to expense as incurred.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Depreciation
    and Amortization</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Hotel properties are carried at cost and depreciated using the
    straight-line method over an estimated useful life of 25 to
    40&#160;years for buildings and one to 10&#160;years for
    furniture, fixtures and equipment. Intangible assets arising
    from contractual arrangements are typically amortized over the
    life of the contract.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are required to make subjective assessments as to the useful
    lives and classification of its properties for purposes of
    determining the amount of depreciation expense to reflect each
    year with respect to the assets. These assessments may impact
    our results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Impairment</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We monitor events and changes in circumstances for indicators
    that the carrying value of the hotel and related assets may be
    impaired. We will prepare an estimate of the undiscounted future
    cash flows, without interest charges, of the specific hotel and
    determine if the investment in such hotel is recoverable based
    on the undiscounted future cash flows. If impairment is
    indicated, an adjustment is made to the carrying value of the
    hotel to reflect the hotel at fair value. These assessments may
    impact the results of our operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A hotel is considered held for sale when a contract for sale is
    entered into, a substantial, non-refundable deposit has been
    committed by the purchaser, and sale is expected to close.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Revenue
    Recognition</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Revenue consists of amounts derived from hotel operations,
    including the sales of rooms, food and beverage, and other
    ancillary amenities. Revenue is recognized when rooms are
    occupied and services have been rendered. These revenue sources
    are affected by conditions impacting the travel and hospitality
    industry as well as competition from other hotels and businesses
    in similar markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Share-Based
    Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have adopted an equity incentive plan that provides for the
    grant of common share options, share awards, share appreciation
    rights, performance units and other equity-based awards.
    Equity-based compensation is recognized as an expense in the
    financial statements and measured at the fair value of the award
    on the date of grant. The amount of the expense may be subject
    to adjustment in future periods depending on the specific
    characteristics of the equity-based award and the application of
    the accounting guidance.
</DIV>
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    <BR>
    52
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Income
    Taxes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to elect to be taxed as a REIT under the Code and
    intend to operate as such beginning with our taxable year ending
    December&#160;31, 2009. We expect to have little or no taxable
    income prior to electing REIT status. To qualify as a REIT, we
    must meet certain organizational and operational requirements,
    including a requirement to distribute at least 90% of our annual
    REIT taxable income to our shareholders (which is computed
    without regard to the dividends paid deduction or net capital
    gain and which does not necessarily equal net income as
    calculated in accordance with U.S.&#160;GAAP). As a REIT, we
    generally will not be subject to federal income tax to the
    extent we distribute qualifying dividends to our shareholders.
    If we fail to qualify as a REIT in any taxable year, we will be
    subject to federal income tax on our taxable income at regular
    corporate income tax rates and generally will not be permitted
    to qualify for treatment as a REIT for federal income tax
    purposes for the four taxable years following the year during
    which qualification is lost unless the IRS grants us relief
    under certain statutory provisions. Such an event could
    materially adversely affect our net income and net cash
    available for distribution to shareholders. However, we intend
    to organize and operate in such a manner as to qualify for
    treatment as a REIT.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Recently
    Issued Accounting Standards</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In May 2009, the Financial Accounting Standards Board
    (&#147;FASB&#148;) issued an accounting standard that
    establishes general standards of accounting for and disclosure
    of events that occur after the balance sheet date but before
    financial statements are issued or are available to be issued.
    It requires the disclosure of the date through which an entity
    has evaluated subsequent events and the basis for that date. It
    also requires public entities to evaluate subsequent events
    through the date that the financial statements are issued. While
    we are evaluating the effect of this accounting standard, the
    adoption of this standard did not have a material impact on our
    financial statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued an accounting standard that
    requires enterprises to perform a more qualitative approach to
    determining whether or not a variable interest entity will need
    to be consolidated. This evaluation will be based on an
    enterprise&#146;s ability to direct and influence the activities
    of a variable interest entity that most significantly impact its
    economic performance. It requires ongoing reassessments of
    whether an enterprise is the primary beneficiary of a variable
    interest entity. This accounting standard is effective for
    fiscal years beginning after November&#160;15, 2009. Early
    adoption is not permitted. While we are evaluating the effect of
    this accounting standard, we currently believe that the adoption
    of this standard will not have a material impact on our
    financial statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued an accounting standard that made
    the FASB Accounting Standards Codification (the
    &#147;Codification&#148;) the source of authoritative GAAP
    recognized by the FASB to be applied by nongovernmental
    entities. Rules and interpretive releases of the SEC under
    authority of federal securities laws are also sources of
    authoritative GAAP for SEC registrants. The Codification will
    supersede all then-existing non-SEC accounting and reporting
    standards. All other nongrandfathered non-SEC accounting
    literature not included in the Codification will become
    nonauthoritative. This accounting standard is effective for
    financial statements issued for interim and annual periods
    ending after September&#160;15, 2009. Following the issuance of
    this accounting standard, the FASB will not issue new standards
    in the form of Statements, FASB Staff Positions, or Emerging
    Issues Task Force Abstracts. Instead, it will issue Accounting
    Standards Updates. The Board will not consider Accounting
    Standards Updates as authoritative in their own right.
    Accounting Standards Updates will serve only to update the
    Codification, provide background information about the guidance,
    and provide the bases for conclusions on the change(s) in the
    Codification. While we are evaluating the effect of this
    accounting standard, we currently believe that the adoption of
    this standard will not have a material impact on our financial
    statements.
</DIV>
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    <BR>
    53
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<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    MANAGEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Trustees
    and Officers</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Currently, Mr.&#160;Bortz serves as our sole executive officer
    and trustee. Upon completion of this offering, our management
    team will consist of Messrs. Bortz, Martz and Dittamo, as shown
    below. Following completion of this offering, we intend to hire
    a Chief Investment Officer and professionals with experience in
    hotel acquisitions, hotel property asset management, including a
    Vice President of Asset Management, accounting and finance. Upon
    completion of this offering, our board of trustees will consist
    of seven members. Certain information regarding those persons
    who will serve as our officers and trustees upon completion of
    this offering is set forth below.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="45%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="50%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Jon E. Bortz
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chairman, President and Chief Executive Officer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Raymond D. Martz
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    39
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and Chief Financial Officer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Andrew H. Dittamo
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    35
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President and Controller
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cydney C. Donnell
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    49
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Independent Trustee
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ron E. Jackson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    66
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Independent Trustee
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Martin H. Nesbitt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    46
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Independent Trustee
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael J. Schall
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    52
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Independent Trustee
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Earl E. Webb
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    53
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    Independent Trustee
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    Laura H. Wright
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    Independent Trustee
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    <I>Jon E. Bortz.</I>&#160;&#160;Mr.&#160;Bortz serves as our
    Chairman, President and Chief Executive Officer and as our sole
    trustee. He served as President, Chief Executive Officer and a
    Trustee of LaSalle Hotel Properties from its formation in April
    1998 until his retirement in September 2009. In addition,
    Mr.&#160;Bortz served as Chairman of LaSalle Hotel
    Properties&#146; Board of Trustees from January&#160;1, 2001,
    until his retirement. Under his leadership, LaSalle Hotel
    Properties focused on investing in upscale and luxury
    full-service hotels located in urban, resort, and convention
    markets and grew to 31 upscale and luxury full-service hotels
    and resorts, with over 8,400 guestrooms in 14 markets in
    11&#160;states and the District of Columbia.
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    Prior to forming LaSalle Hotel Properties, Mr.&#160;Bortz
    founded the Hotel Investment Group of Jones Lang LaSalle
    Incorporated in January 1994 and as its President oversaw all of
    Jones Lang LaSalle&#146;s hotel investment and development
    activities. From January 1995 to April 1998, as Managing
    Director of Jones Lang LaSalle&#146;s Investment Advisory
    Division, he was also responsible for certain East Coast
    development projects, including the redevelopment of Grand
    Central Terminal in New York City. From January 1990 to 1995, he
    was a Senior Vice President of Jones Lang LaSalle&#146;s
    Investment Division, with responsibility for East Coast
    development projects and workouts, including the redevelopment
    of Union Station in Washington,&#160;D.C. Mr.&#160;Bortz joined
    Jones Lang LaSalle in 1981. He is a former member of the Board
    of Governors and the Executive Committee of the National
    Association of Real Estate Investment Trusts, or NAREIT, and
    serves on the board of trustees of Federal Realty Investment
    Trust and the board of directors of Metropark USA, Inc.
    Mr.&#160;Bortz holds a B.S. in Economics from The Wharton School
    of the University of Pennsylvania and is a Certified Public
    Accountant.
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    <I>Raymond D. Martz.</I>&#160;&#160;Mr.&#160;Martz will serve as
    our Executive Vice President and Chief Financial Officer
    effective upon closing of this offering. Mr.&#160;Martz most
    recently served as Chief Financial Officer for Phillips
    Edison&#160;&#038; Company, the largest private owner of
    community shopping centers in the U.S., from August 2007 until
    November 2009. Prior to joining Phillips Edison, Mr.&#160;Martz
    served as the Chief Financial Officer, Secretary and Treasurer
    of Eagle Hospitality Properties Trust, Inc., a NYSE-listed hotel
    REIT, from May 2005 until August 2007. Prior to that,
    Mr.&#160;Martz was employed by LaSalle Hotel Properties in a
    variety of finance functions from 1997 to 2005, including
    serving as its Treasurer from 2004 to 2005, Vice President of
    Finance from 2001 to 2004 and Director of Finance from 1998 to
    2001. Prior to joining LaSalle Hotel Properties, Mr.&#160;Martz
    was an associate with Tishman Hotel Corporation from 1995
    through 1997, focusing on
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    a variety of areas including asset management and development.
    From 1994 to 1995, he served in several hotel operations roles
    at Orient Hotel Group, a private owner and operator of hotels.
    Mr.&#160;Martz received his B.S. from the School of Hotel
    Administration at Cornell University in 1993 and a M.B.A. from
    Columbia University in 2002.
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    <I>Andrew H. Dittamo</I>.&#160;&#160;Mr.&#160;Dittamo will serve
    as our Vice President and Controller effective upon closing of
    this offering. Most recently, Mr.&#160;Dittamo served as Vice
    President and Assistant Controller for Interstate
    Hotels&#160;&#038; Resorts, Inc., a NYSE listed hotel company,
    where he managed its corporate accounting, construction
    accounting, joint venture and financial reporting departments
    from July 2007 until November 2009. Prior to that he served as
    Assistant Controller of LaSalle Hotel Properties, where he
    managed its corporate accounting office from April 2005 until
    July 2007. From July 1998 until April 2005, he held advancing
    positions to Manager at Grant Thornton, LLP, providing assurance
    services and business advisory support for clients across a
    range of industries. Mr.&#160;Dittamo received a Bachelor of
    Business Administration from James Madison University and is a
    member of the American Institute of Certified Public Accountants.
</DIV>

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    We intend to hire a Chief Investment Officer following
    completion of this offering. Thereafter, we intend to hire
    additional experienced professionals as required by our
    operations, such as asset managers, analysts, accountants and
    administrative staff.
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    <I>Cydney C. Donnell.</I>&#160;&#160;Ms.&#160;Donnell will serve
    on our board of trustees effective upon closing of this
    offering. She has been an Executive Professor at the Mays
    Business School of Texas A&#038;M University since August 2004,
    where she currently serves as Director of Real Estate Programs.
    Ms.&#160;Donnell joined the Mays School in January of 2004.
    Ms.&#160;Donnell was formerly a principal and Managing Director
    of European Investors/E.I.I. Realty Securities, Inc., or EII.
    Ms.&#160;Donnell served in various capacities at EII and was
    Chair of the Investment Committee from 2002 to 2003, the Head of
    the Real Estate Securities Group and Portfolio Manager from 1992
    to 2002 and Vice President and Analyst from 1986 to 1992. Prior
    to joining EII, she was a real estate lending officer at
    RepublicBanc Corporation in San&#160;Antonio from 1982 to 1986.
    She currently serves as a member of the Executive Committee and
    Nominating and Corporate Governance Committee of American Campus
    Communities, a publicly traded, student-housing REIT, as a
    member of the Valuation, Nominating and Compensation, and Audit
    Committee of Madison Harbor Balanced Strategies, Inc., a real
    estate fund of funds registered under the Investment Company Act
    of 1940, and as the Vice Chair of the Board of Trustees of the
    Employee Retirement System of Texas. Ms.&#160;Donnell has served
    on the Board and Institutional Advisory Committee of NAREIT.
    Ms.&#160;Donnell received a B.B.A. from Texas A&#038;M
    University and an M.B.A. from Southern Methodist University.
</DIV>

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    <I>Ron E. Jackson.</I>&#160;&#160;Mr.&#160;Jackson will serve on
    our board of trustees effective upon closing of this offering.
    Mr.&#160;Jackson is the President and Chief Executive Officer of
    Meadowbrook Golf, a multi-faceted golf company with divisions in
    golf turf equipment, golf maintenance and golf operations. Prior
    to joining Meadowbrook Golf in January 2001, Mr.&#160;Jackson
    was the President and Chief Operating Officer of Resort
    Condominiums International, or RCI, a Cendant Company with 2,600
    resorts in 109 countries. Prior to RCI, Mr.&#160;Jackson was the
    Chief Operating Officer of Chartwell Leisure, a hotel
    owner/operator and developer. Prior to Chartwell Leisure,
    Mr.&#160;Jackson was the founder, President and Chief Executive
    Officer of Sunbelt Hotels and Sunbelt Management Company, which
    was the largest franchisee of Hilton Hotels in the United
    States. Mr.&#160;Jackson received a B.S. in Finance and
    Marketing from Brigham Young University and an M.B.A. from the
    University of Utah.
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    <I>Martin H. Nesbitt.</I>&#160;&#160;Mr.&#160;Nesbitt will serve
    on our board of trustees effective upon closing of this
    offering. Mr.&#160;Nesbitt is the founder, President and Chief
    Executive Officer of PRG Parking Management (d/b/a The Parking
    Spot), an owner and operator of off-airport parking facilities.
    Prior to founding The Parking Spot in 1998, Mr.&#160;Nesbitt was
    a Vice President of the Pritzker Realty Group, L.P., or
    Pritzker, where he was responsible for procuring new real estate
    investment opportunities and managing retail investments and
    developments. Prior to Pritzker, from 1989 to 1996,
    Mr.&#160;Nesbitt was an equity partner and Investment Manager at
    LaSalle Partners, or LaSalle, with a variety of
    responsibilities, including investment management for retail
    properties, management and leasing for office projects and
    acquisition, financing and management of parking assets. While
    at LaSalle, he also managed several specialty
    fund&#160;portfolios of non-traditional real estate
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     investments. Prior to joining LaSalle, Mr.&#160;Nesbitt was
    employed by General Motors Corporation in the area of borrowing
    and financial planning. Mr.&#160;Nesbitt holds a B.S. from
    Albion College and an M.B.A. from the University of Chicago.
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    <I>Michael J. Schall.</I>&#160;&#160;Mr.&#160;Schall will serve
    on our board of trustees effective upon closing of this
    offering. He is a Senior Executive Vice President and the Chief
    Operating Officer of Essex Property Trust, Inc., or Essex, a
    publicly traded real estate investment trust, where he is
    responsible for the strategic planning and management of
    Essex&#146;s property operations, redevelopment and
    co-investment programs. From 1993 to 2005, Mr.&#160;Schall was
    Essex&#146;s Chief Financial Officer, responsible for the
    organization&#146;s financial and administrative matters. He
    joined The Marcus&#160;&#038; Millichap Company in 1986. He was
    also the Chief Financial Officer of Essex&#146;s predecessor,
    Essex Property Corporation. From 1982 to 1986, Mr.&#160;Schall
    was Director of Finance for Churchill International, a
    technology-oriented venture capital company. From 1979 to 1982,
    Mr.&#160;Schall was employed in the audit department of
    Ernst&#160;&#038; Young (then known as Ernst&#160;&#038;
    Whinney), where he specialized in the real estate and financial
    services industries. Mr.&#160;Schall received a B.S. from the
    University of San&#160;Francisco. Mr.&#160;Schall is a Certified
    Public Accountant (inactive) and is a member of NAREIT, the
    National Multi Housing Council and the American Institute of
    Certified Public Accountants.
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    <I>Earl E. Webb.</I>&#160;&#160;Mr.&#160;Webb will serve on our
    board of trustees effective upon closing of this offering.
    Mr.&#160;Webb is President of U.S.&#160;Operations for Avison
    Young, LLC, or Avison, a Canada-based commercial real estate
    company. Prior to joining Avison, from January 2003 to August
    2009, Mr.&#160;Webb was the Chief Executive Officer of Jones
    Lang LaSalle&#146;s Capital Markets Group in the Americas, where
    he was responsible for strategic direction and management of all
    capital markets activities throughout the region. From February
    1999 to December 2002, Mr.&#160;Webb served as Chief Executive
    Officer of Jones Lang LaSalle Americas, Inc., directing all of
    the firm&#146;s Corporate Solutions, Investors Services and
    Capital Markets businesses throughout the Americas, and from
    1985 to February 1999, he held other various positions with that
    company. From 1981 to 1985, Mr.&#160;Webb served as Second Vice
    President in the Capital Markets Group at Continental Illinois
    National Bank. Mr.&#160;Webb holds a B.S. from the University of
    Virginia and an M.B.A. from the J.L. Kellogg Graduate School of
    Management at Northwestern University. He is a Registered
    Securities Principal series&#160;7, 24 and 63, is an Associate
    Member of the Urban Land Institute and is a member of the
    International Council of Shopping Centers, the Real Estate
    Investment Advisory Council and the Real Estate Roundtable.
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Laura H. Wright.</I>&#160;&#160;Ms.&#160;Wright will serve on
    our board of trustees effective upon closing of this offering.
    Ms.&#160;Wright is Senior Vice President Finance and Chief
    Financial Officer of Southwest Airlines Co., or Southwest. From
    1998 to July 2004, Ms.&#160;Wright served as Southwest&#146;s
    Vice President Finance and Treasurer. From 1988 to 1998,
    Ms.&#160;Wright served as Assistant Treasurer, Director
    Corporate Finance and Director Corporate Tax of Southwest. Prior
    to joining Southwest, Ms.&#160;Wright was a Tax Manager with
    Arthur Young&#160;&#038; Company. Ms.&#160;Wright received a
    B.S.A. and an M.S.A. from the University of North Texas.
    Ms.&#160;Wright is a Certified Public Accountant and is a member
    of the Texas Society of Certified Public Accountants, the
    Financial Executives Institute and the North Texas CFO Forum.
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    <B><FONT style="font-family: 'Times New Roman', Times">Board
    Committees</FONT></B>
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, our board of trustees will
    appoint an Audit Committee, Compensation Committee and a
    Nominating and Corporate Governance Committee, and will adopt
    charters for each of these committees. Under these charters, the
    composition of each committee will be required to comply with
    the listing standards and other rules and regulations of the
    NYSE as amended or modified from time to time. Initially, each
    of these committees will have four trustees and will be composed
    exclusively of independent trustees, as defined by the listing
    standards of the NYSE then in effect.
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Audit
    Committee</FONT></I></B>
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees will establish an Audit Committee, which
    will consist of Ms. Wright (Chairman), Mr. Schall, Mr. Nesbitt
    and Ms. Donnell. The Audit Committee will make recommendations
    concerning the engagement of independent public accountants,
    review with the independent public accountants the plans and
    results of the audit engagement, approve professional services
    provided by the independent
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     public accountants, review the independence of the independent
    public accountants, consider the range of audit and non-audit
    fees and review the adequacy of our internal accounting
    controls. Ms. Wright, an independent trustee, will chair our
    Audit Committee and will be our audit committee financial expert
    as that term is defined by the Securities and Exchange
    Commission, or the SEC.
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Compensation
    Committee</FONT></I></B>
</DIV>

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</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees will establish a Compensation Committee,
    which will consist of Mr. Webb (Chairman), Mr. Jackson, Ms.
    Donnell and Mr. Nesbitt. The Compensation Committee will
    determine compensation for our executive officers, administer
    our 2009 Equity Incentive Plan, produce an annual report on
    executive compensation for inclusion in our annual meeting proxy
    statement and publish an annual committee report for our
    shareholders.
</DIV>

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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Nominating
    and Corporate Governance Committee</FONT></I></B>
</DIV>

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</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees will establish a Nominating and Corporate
    Governance Committee, which will consist of Mr. Schall
    (Chairman), Ms. Wright, Mr. Webb and Mr. Jackson. The Nominating
    and Corporate Governance Committee will be responsible for
    seeking, considering and recommending to the board qualified
    candidates for election as trustees and recommending a slate of
    nominees for election as trustees at the annual meeting. It also
    will periodically prepare and submit to the board for adoption
    the committee&#146;s selection criteria for trustee nominees. It
    will review and make recommendations on matters involving
    general operation of the board and our corporate governance, and
    it annually recommends to the board nominees for each committee
    of the board. In addition, the committee will annually
    facilitate the assessment of the board of trustees&#146;
    performance as a whole and of the committees and individual
    trustees and reports thereon to the board.
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Code of
    Ethics</FONT></B>
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have adopted a corporate code of ethics relating to the
    conduct of our business by our employees, officers and trustees.
    We intend to maintain the highest standards of ethical business
    practices and compliance with all laws and regulations
    applicable to our business, including those relating to doing
    business outside the U.S.&#160;Specifically, our code of ethics
    prohibits payments, directly or indirectly, to any foreign
    official seeking to influence such official or otherwise obtain
    an improper advantage for our business.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Committee Interlocks and Insider Participation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are no Compensation Committee interlocks and none of our
    employees participates on the Compensation Committee.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Trustee
    Compensation</FONT></B>
</DIV>

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</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of our independent trustees who does not serve as the
    chairman of one of our committees will be paid a trustee&#146;s
    fee of $50,000 per year. The trustee who serves as our
    Compensation Committee chairman will be paid an additional fee
    of $5,000. The trustee who serves as our Audit Committee
    chairman will be paid an additional fee of $10,000.
    Trustees&#146; fees will be paid one-half in cash and one-half
    in our common shares, although each trustee may elect to receive
    up to all of his or her trustee fees in the form of our common
    shares. Trustees who are employees will receive no additional
    compensation as trustees. In addition, we will reimburse all
    trustees for reasonable
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses incurred in connection with their services on the board
    of trustees.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of our trustees who is not an employee will receive an
    initial grant of 2,500 restricted common shares concurrent with
    completion of this offering.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    57
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Discussion and Analysis</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to pay base salaries and annual bonuses and make
    grants of awards under our 2009 Equity Incentive Plan to certain
    of our officers, effective upon completion of this offering. The
    initial awards under our 2009 Equity Incentive Plan will be
    granted to provide performance and retention incentives to these
    individuals and to recognize such individuals&#146; efforts on
    our behalf in connection with our formation and this offering.
    Our board of trustees and our Compensation Committee have not
    yet adopted compensation policies with respect to, among other
    things, setting base salaries, awarding bonuses or making future
    grants of equity awards to our executive officers. We anticipate
    that such determinations will be made by our Compensation
    Committee based on factors such as the desire to retain such
    officer&#146;s services over the long-term, aligning such
    officer&#146;s interest with those of our shareholders,
    incentivizing such officer over the near-, medium- and
    long-term, and rewarding such officer for exceptional
    performance. In addition, our Compensation Committee may
    determine to make awards to new executive officers to help
    attract them to our company.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Compensation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Set forth below are the initial annual cash compensation and
    equity awards to be granted to our Chairman, President and Chief
    Executive Officer and our Executive Vice President and Chief
    Financial Officer commencing upon completion of this offering:
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    Compensation Table</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="27%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=09 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=09 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=10 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=10 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=10 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=10 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Change in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pension<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Value and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Non-Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Nonqualified<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Incentive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Deferred<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>Name and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Base<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Share<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Plan<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Salary<SUP style="font-size: 85%; vertical-align: top">(1)</SUP></B>

</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Bonus</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Compensation</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Earnings</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Compensation</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Jon E. Bortz,<BR>
    Chairman, President and Chief Executive Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2010
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    300,000
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    300,000
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    $923,035<SUP style="font-size: 85%; vertical-align: top">(2</SUP>

</TD>
<TD nowrap align="left" valign="top">
    <SUP style="font-size: 85%; vertical-align: top">)(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#160;&#160;&#160;&#160;&#160;&#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    1,523,035
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Raymond D. Martz,<BR>
    Executive Vice President and Chief Financial Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2010
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    250,000
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    200,000
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    $232,260<SUP style="font-size: 85%; vertical-align: top">(2</SUP>

</TD>
<TD nowrap align="left" valign="top">
    <SUP style="font-size: 85%; vertical-align: top">)(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $
</TD>
<TD nowrap align="right" valign="top">
    682,260
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>



<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Each executive will receive a pro
    rata portion of his 2010 base salary for the period from the
    completion of this offering through December&#160;31, 2009.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Reflects restricted share awards of
    30,000&#160;common shares to Mr.&#160;Bortz and
    15,000&#160;common shares to Mr.&#160;Martz pursuant to our 2009
    Equity Incentive Plan that are expected to be approved at the
    first meeting of our board of trustees following the completion
    of this offering as part of our 2010 compensation program. The
    aggregate estimated value of the restricted share awards are
    $600,000 for Mr.&#160;Bortz and $300,000 for Mr.&#160;Martz
    assuming a share price on the date of grant of $20.00, the per
    share public offering price in this offering. In addition, we
    anticipate that a grant of 3,000 restricted common shares will
    be awarded to Mr. Dittamo at the first meeting of our board of
    trustees following completion of this offering. We expect that
    compensation expense for these awards will be recognized ratably
    over the restricted shares&#146; vesting period of three years.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Amounts also account for the grant
    of LTIP units to Mr.&#160;Bortz and Mr.&#160;Martz under our
    2009 Equity Incentive Plan. Upon completion of this offering,
    Mr.&#160;Bortz will be awarded 723,035&#160;LTIP units and
    Mr.&#160;Martz will be awarded 132,260&#160;LTIP units. In
    addition, 26,455&#160;LTIP units will be awarded to
    Mr.&#160;Dittamo. All LTIP unit awards are expected to have a
    five-year vesting period. For purposes of this table, we
    determined that the value for each LTIP unit is $5.00. The
    compensation reported in the table related to the LTIP grants is
    equal to the number of LTIP units awarded times the assumed
    <FONT style="white-space: nowrap">per-unit</FONT>
    value divided by five. To determine the value of each LTIP unit,
    we considered the inherent uncertainty that the LTIP units will
    reach parity with the other common partnership units,
    appropriateness of discounts for illiquidity, expectations for
    future dividends and various other data available to us as of
    the date of this prospectus.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">We will apply the share-based
    payment accounting guidance contained in U.S.&#160;GAAP to
    calculate the fair value of the LTIP units when preparing our
    financial statements for the period from commencement of
    operations through December&#160;31, 2009, and we will disclose
    the aggregate fair value of these LTIP units in the notes to our
    2009 financial statements. We anticipate that the fair value
    calculation on the date of grant will consider, in part, the
    various factors and conditions described in the paragraph above
    and other data that we deem relevant. However, the calculation
    of the fair value of our LTIP units for the purpose of preparing
    our 2009 financial statements may result in a different amount
    of compensation expense for 2010 than the approximate
    compensation amount calculated for 2010 and disclosed in the
    table above.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">If the size of this offering
    changes, the aggregate number of LTIP units to be granted to
    Messrs.&#160;Bortz, Martz and Dittamo will change so as to equal
    5% of the common shares issued in this offering (excluding and
    shares issued pursuant to the underwrites&#146; overallotment
    option) and in the concurrent private placement.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>
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    <BR>
    58
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">IPO
    Grants of Plan-Based Awards</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will cause our operating
    partnership to grant 723,035 LTIP units to Mr.&#160;Bortz,
    132,260 LTIP units to Mr.&#160;Martz and 3,000 LTIP units to
    Mr.&#160;Dittamo. If the size of this offering changes, the
    aggregate number of LTIP units to be granted to
    Messrs.&#160;Bortz, Martz and Mr.&#160;Dittamo will change so as
    to equal 5% of the common shares issued in this offering
    (excluding any shares issued pursuant to the underwriters&#146;
    overallotment option) and in the concurrent private placement.
    These LTIP units will vest ratably on each of the first five
    anniversaries of the date of grant. The LTIP units, whether
    vested or unvested, will receive the same
    <FONT style="white-space: nowrap">per-unit</FONT>
    distributions as common units of our operating partnership,
    which distributions generally will equal per share distributions
    on our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, at the first board of trustees meeting following
    completion of this offering, we expect our board of trustees
    will approve awards of 30,000 restricted common shares to
    Mr.&#160;Bortz, 15,000 restricted common shares to
    Mr.&#160;Martz and 3,000 restricted common shares to
    Mr.&#160;Dittamo as part of our 2010 compensation program
    pursuant to our 2009 Equity Incentive Plan. These restricted
    share awards will vest ratably on each of the first three
    anniversaries of the date of grant. Distributions will be paid
    on these restricted shares, whether vested or unvested, when
    declared and paid on our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">2009
    Equity Incentive Plan</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees has adopted, and our sole shareholder has
    approved, our 2009 Equity Incentive Plan to attract and retain
    independent trustees, executive officers and other key employees
    and service providers, including officers and employees of our
    affiliates. The 2009 Equity Incentive Plan provides for the
    grant of options to purchase common shares, share awards, share
    appreciation rights, performance units and other equity-based
    awards.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Administration
    of the 2009 Equity Incentive Plan</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 2009 Equity Incentive Plan will be administered by our
    Compensation Committee and the Compensation Committee will
    approve all terms of awards under the 2009 Equity Incentive
    Plan. Our Compensation Committee will also approve who will
    receive grants under the 2009 Equity Incentive Plan and the
    number of common shares subject to the grant.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Eligibility</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All of our employees and employees of our subsidiaries and
    affiliates, including our operating partnership, are eligible to
    receive grants under the 2009 Equity Incentive Plan. In
    addition, our independent trustees and consultants and advisors
    who perform services for us and our subsidiaries and affiliates
    may receive grants under the 2009 Equity Incentive Plan.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Share
    Authorization</FONT></I></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The number of common shares that may be issued under the 2009
    Equity Incentive Plan will equal 7.5% of the aggregate number of
    our common shares issued in this offering (excluding any shares
    issued pursuant to the underwriters&#146; overallotment option)
    and in the concurrent private placement.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with share splits, dividends, recapitalizations
    and certain other events, our board will make adjustments that
    it deems appropriate in the aggregate number of common shares
    that may be issued under the 2009 Equity Incentive Plan and the
    terms of outstanding awards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any options or share appreciation rights terminate, expire or
    are canceled, forfeited, exchanged or surrendered without having
    been exercised or paid or if any share awards, performance units
    or other equity-based awards are forfeited, the common shares
    subject to such awards will again be available for purposes of
    the 2009 Equity Incentive Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No awards under the 2009 Equity Incentive Plan were outstanding
    prior to completion of this offering. The initial grants
    described above will become effective upon completion of this
    offering.
</DIV>
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    <BR>
    59
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<P><HR noshade><P>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Options</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 2009 Equity Incentive Plan authorizes our Compensation
    Committee to grant incentive share options (under
    Section&#160;421 of the Code) and options that do not qualify as
    incentive share options. The exercise price of each option will
    be determined by the Compensation Committee, provided that the
    price cannot be less than 100% of the fair market value of the
    common shares on the date on which the option is granted (or
    110% of the shares&#146; fair market value on the grant date in
    the case of an incentive share option to an individual who is a
    &#147;ten percent shareholder&#148; under Sections&#160;422 and
    424 of the Code). The exercise price for any option is generally
    payable (i)&#160;in cash, (ii)&#160;by certified check,
    (iii)&#160;by the surrender of common shares (or attestation of
    ownership of common shares) with an aggregate fair market value
    on the date on which the option is exercised, of the exercise
    price, or (iv)&#160;by payment through a broker in accordance
    with procedures established by the Federal Reserve Board. The
    term of an option cannot exceed ten years from the date of grant
    (or five years in the case of an incentive share option granted
    to a &#147;ten percent shareholder&#148;).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Share
    Awards</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 2009 Equity Incentive Plan also provides for the grant of
    share awards. A share award is an award of common shares that
    may be subject to restrictions on transferability and other
    restrictions as our Compensation Committee determines in its
    sole discretion on the date of grant. The restrictions, if any,
    may lapse over a specified period of time or through the
    satisfaction of conditions, in installments or otherwise, as our
    Compensation Committee may determine. A participant who receives
    a share award will have all of the rights of a shareholder as to
    those shares, including, without limitation, the right to vote
    and the right to receive dividends or distributions on the
    shares. During the period, if any, when share awards are
    non-transferable or forfeitable, (i)&#160;a participant is
    prohibited from selling, transferring, pledging, exchanging,
    hypothecating or otherwise disposing of his or her share award
    shares, (ii)&#160;the company will retain custody of the
    certificates and (iii)&#160;a participant must deliver a share
    power to the company for each share award.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will issue an aggregate of
    15,000 restricted common shares to non-management persons who
    will become trustees upon completion of this offering. In
    addition, restricted share awards of 30,000&#160;shares to
    Mr.&#160;Bortz, 15,000&#160;shares to Mr.&#160;Martz and
    3,000&#160;shares to Mr.&#160;Dittamo are expected to be
    approved at the first meeting of our board of trustees following
    completion of this offering as part of our 2010 compensation
    program. These grants of restricted common shares to trustees
    and officers will vest ratably over the first three
    anniversaries of the date of the grant.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Share
    Appreciation Rights</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 2009 Equity Incentive Plan authorizes our Compensation
    Committee to grant share appreciation rights that provide the
    recipient with the right to receive, upon exercise of the share
    appreciation right, cash, common shares or a combination of the
    two. The amount that the recipient will receive upon exercise of
    the share appreciation right generally will equal the excess of
    the fair market value of the common shares on the date of
    exercise over the shares&#146; fair market value on the date of
    grant. Share appreciation rights will become exercisable in
    accordance with terms determined by our Compensation Committee.
    Share appreciation rights may be granted in tandem with an
    option grant or independently from an option grant. The term of
    a share appreciation right cannot exceed ten years from the date
    of grant or five years in the case of a share appreciation right
    granted in tandem with an incentive share option awarded to a
    &#147;ten percent shareholder&#148;.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Performance
    Units</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The 2009 Equity Incentive Plan also authorizes our Compensation
    Committee to grant performance units. Performance units
    represent the participant&#146;s right to receive an amount,
    based on the value of the common shares, if performance goals
    established by the Compensation Committee are met. Our
    Compensation Committee will determine the applicable performance
    period, the performance goals and such other conditions that
    apply to the performance unit. Performance goals may relate to
    our financial performance or the financial performance of our
    operating partnership, the participant&#146;s performance or
    such other criteria determined by
</DIV>
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    <BR>
    60
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    the Compensation Committee. If the performance goals are met,
    performance units will be paid in cash, our common shares or a
    combination thereof.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Other
    Equity-Based Awards</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Compensation Committee may grant other types of share-based
    awards as equity-based awards under the 2009 Equity Incentive
    Plan, including LTIP units. Other equity-based awards are
    payable in cash, our common shares or other equity, or a
    combination thereof, determined by the Compensation Committee.
    The terms and conditions of other equity-based awards are
    determined by the Compensation Committee.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    LTIP units are a special class of partnership interests in our
    operating partnership. Each LTIP unit awarded will be deemed
    equivalent to an award of one common share under the 2009 Equity
    Incentive Plan, reducing availability for other equity awards on
    a
    <FONT style="white-space: nowrap">one-for-one</FONT>
    basis. We will not receive a tax deduction for the value of any
    LTIP units granted to our employees. The vesting period for any
    LTIP units, if any, will be determined at the time of issuance.
    LTIP units, whether vested or not, or whether the LTIP units
    have reached full parity with the operating partnership units or
    not, will receive the same per-unit profit distributions as
    units of our operating partnership, which profit distribution
    will generally equal per&#160;share distributions on our common
    shares. This treatment with respect to distributions is similar
    to the expected treatment of our restricted share awards, which
    will generally receive full distributions whether vested or not.
    Initially, LTIP units will not have full parity with operating
    partnership units with respect to liquidating distributions.
    Under the terms of the LTIP units, our operating partnership
    will revalue its assets upon the occurrence of certain specified
    events, and any increase in valuation from the time of grant
    until such event will be allocated first to the holders of LTIP
    units to equalize the capital accounts of such holders with the
    capital accounts of operating partnership unit holders. Upon
    equalization of the capital accounts of the holders of LTIP
    units with the other holders of operating partnership units, the
    LTIP units will achieve full parity with operating partnership
    units for all purposes, including with respect to liquidating
    distributions. If such parity is reached, vested LTIP units may
    be converted into an equal number of operating partnership units
    at any time, and thereafter enjoy all the rights of operating
    partnership units, including exchange rights which includes the
    right to redeem the operating partnership units for common
    shares or cash, at our option. However, there are circumstances
    under which such parity would not be reached. Until and unless
    such parity is reached, the value that an officer will realize
    for a given number of vested LTIP units will be less than the
    value of an equal number of our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will cause our operating
    partnership to grant an aggregate of 881,750 LTIP units to
    Messrs.&#160;Bortz, Martz and Dittamo. If the size of this
    offering changes, the aggregate number of LTIP units to be
    granted to Messrs.&#160;Bortz, Martz and Dittamo will change so
    as to equal 5% of the common shares issued in this offering
    (excluding any shares issued pursuant to the underwriters&#146;
    overallotment option) and in the concurrent private placement.
    These LTIP units will vest ratably on each of the first five
    anniversaries of the date of grant. See &#147;Our Operating
    Partnership and the Partnership Agreement&#148; for a further
    description of the rights of limited partners in our operating
    partnership.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Dividend
    Equivalents</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Compensation Committee may grant dividend equivalents in
    connection with the grant of options, share appreciation rights
    and performance units. Dividend equivalents may be paid
    currently or accrued as contingent cash obligations (in which
    case they will be deemed to have been invested in common shares)
    and may be payable in cash, common shares or a combination of
    the two. Our Compensation Committee will determine the terms of
    any dividend equivalents.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Change
    in Control</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we experience a change in control, the Compensation Committee
    may, at its discretion, provide that all outstanding options,
    share appreciation rights, share awards, performance units, or
    other equity based awards that are not exercised prior to the
    change in control will be assumed by the surviving entity, or
    will be replaced by a comparable substitute award of
    substantially equal value granted by the surviving entity. The
    Compensation Committee may also provide that (i)&#160;all
    outstanding options and share appreciation rights will
</DIV>
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    <BR>
    61
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    be fully exercisable on the change in control,
    (ii)&#160;restrictions and conditions on outstanding share
    awards will lapse upon the change in control and
    (iii)&#160;performance units or equity-based awards will become
    earned in their entirety. The Compensation Committee may also
    provide that participants must surrender their outstanding
    options and share appreciation rights, share awards, performance
    units, and other equity based awards in exchange for a payment,
    in cash or our common shares or other securities or
    consideration received by shareholders in the change in control
    transaction, equal to the value received by shareholders in the
    change in control transaction (or, in the case of options and
    share appreciation rights, the amount by which that transaction
    value exceeds the exercise price).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In summary, a change of control under the 2009 Equity Incentive
    Plan occurs if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a person, entity or affiliated group (with certain exceptions)
    acquires, in a transaction or series of transactions, at least
    50% of our combined voting power or common shares;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we merge into another entity unless the holders of our voting
    shares immediately prior to the merger have more than 50% of the
    combined voting power of the securities in the merged entity or
    its parent;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we sell or dispose of all or substantially all of our assets; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    during any period of two consecutive years individuals who, at
    the beginning of such period, constitute our board of trustees
    together with any new trustees (other than individuals who
    become trustees in connection with certain transactions or
    election contests) cease for any reason to constitute a majority
    of our board of trustees.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Amendment;
    Termination</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees may amend or terminate the 2009 Equity
    Incentive Plan at any time; provided that no amendment may
    adversely impair the benefits of participants with outstanding
    awards. Our shareholders must approve any amendment if such
    approval is required under applicable law or stock exchange
    requirements. Our shareholders also must approve any amendment
    that materially increases the benefits accruing to participants
    under the 2009 Equity Incentive Plan, materially increases the
    aggregate number of common shares that may be issued under the
    2009 Equity Incentive Plan or materially modifies the
    requirements as to eligibility for participation in the 2009
    Equity Incentive Plan. Unless terminated sooner by our board of
    trustees or extended with shareholder approval, the 2009 Equity
    Incentive Plan will terminate on the day before the tenth
    anniversary of the date our board of trustees adopted the 2009
    Equity Incentive Plan.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Severance
    Agreements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will enter into agreements
    with Mr.&#160;Bortz, our Chairman, President and Chief Executive
    Officer, and Mr.&#160;Martz, our Executive Vice President, and
    we expect to enter into similar agreements with certain
    executive officers that we hire in the future, to provide
    benefits to each in the event his employment is terminated in
    certain circumstances. The Compensation Committee will review
    the terms of these severance agreements annually. As described
    in more detail below, because each officer&#146;s severance
    payment will be derived from his or her annual base salary and
    other annual incentive compensation, we expect that the effect
    on severance payments will be one of the factors considered by
    the Compensation Committee when annually reviewing the
    officer&#146;s total compensation and severance agreement terms.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Severance
    Agreements of Mr.&#160;Bortz and Mr.&#160;Martz</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of Mr.&#160;Bortz&#146;s and Mr.&#160;Martz&#146;s
    severance agreement will become effective upon closing of this
    offering and will have an initial term of three years; provided,
    however, that the term is automatically extended for an
    additional year on each anniversary date of the effective date
    of the severance agreement beginning on the third anniversary of
    the effective date of the severance agreement unless, not less
    than six months prior to the termination of the then existing
    term, our board of trustees provides notice to the executive of
    its intent not to extend the term further. Mr.&#160;Bortz or
    Mr.&#160;Martz may terminate his agreement prior to the
    expiration of the term as described below.
</DIV>
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    <BR>
    62
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Termination
    in Connection with a Change in Control</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon 30&#160;days&#146; prior written notice to us, each of
    Mr.&#160;Bortz or Mr.&#160;Martz may terminate his employment
    for &#147;good reason.&#148; The agreement provides that upon
    the termination of Mr.&#160;Bortz or Mr.&#160;Martz either by us
    without &#147;cause&#148; within one year of a change in control
    of our company or by Mr.&#160;Bortz or Mr.&#160;Martz for
    &#147;good reason,&#148; Mr.&#160;Bortz or Mr.&#160;Martz, as
    applicable, will be entitled to the following severance payments
    and benefits:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the sum of his annual base
    salary, annual cash incentive bonus and accrued vacation time
    earned but not paid to the date of termination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the product of three times (in
    the case of Mr.&#160;Bortz) or two times (in the case of
    Mr.&#160;Martz) the sum of (x)&#160;his
    <FONT style="white-space: nowrap">then-current</FONT>
    annual base salary plus (y)&#160;the greater of (i)&#160;the
    bonus most recently paid to him and (ii)&#160;the average of the
    annual cash incentive bonuses paid to him with respect to the
    three most recent fiscal years ending before the date of
    termination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to three times (in the case of Mr.
    Bortz) or two times (in the case of Mr.&#160;Martz) the annual
    premium or cost (including amounts paid by him) for his health,
    dental, disability and life insurance benefits;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    such other or additional benefits, if any, as are provided under
    applicable plans, programs
    <FONT style="white-space: nowrap">and/or</FONT>
    arrangements of ours (including accelerated vesting of equity
    awards as discussed below under &#147;&#151;&#160;Vesting of
    Long-Term Equity Incentive Awards&#148;).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Termination
    without Cause</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If either Mr.&#160;Bortz or Mr.&#160;Martz is terminated without
    &#147;cause&#148; and not in connection with or within one year
    of a change in control of our company, Mr.&#160;Bortz or
    Mr.&#160;Martz, as applicable, will be entitled to the following
    severance payments and benefits:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the sum of his annual base
    salary, annual cash incentive bonus and accrued vacation time
    earned but not paid to the date of termination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the sum of (x)&#160;his
    then-current annual base salary, plus (y)&#160;the greater of
    (i)&#160;the bonus most recently paid to him and (ii)&#160;the
    average of the annual cash incentive bonuses paid to him with
    respect to the three most recent fiscal years ending before the
    date of termination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the annual premium or cost
    (including amounts paid by him) for his health, dental,
    disability and life insurance benefits;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    such other or additional benefits, if any, as are provided under
    applicable plans, programs
    <FONT style="white-space: nowrap">and/or</FONT>
    arrangements of ours (including accelerated vesting of equity
    awards as discussed below under &#147;&#151;&#160;Vesting of
    Long-Term Equity Incentive Awards&#148;).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Termination
    without Good Reason</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If either Mr.&#160;Bortz or Mr.&#160;Martz voluntarily
    terminates his employment without &#147;good reason,&#148;
    Mr.&#160;Bortz or Mr.&#160;Martz, as applicable, will be
    entitled to the following severance payments and benefits:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lump sum cash payment equal to the sum of his annual base
    salary and accrued vacation time earned but not paid to the date
    of termination;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    such other or additional benefits, if any, as are provided under
    applicable plans, programs
    <FONT style="white-space: nowrap">and/or</FONT>
    arrangements of ours (including accelerated vesting of equity
    awards as discussed below under &#147;&#151;&#160;Vesting of
    Long-Term Equity Incentive Awards&#148;).
</TD>
</TR>

</TABLE>
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    <BR>
    63
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Vesting
    of Long-Term Equity Incentive Awards</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The terms of the time-based LTIP unit award agreements granted
    to each of Mr.&#160;Bortz and Mr.&#160;Martz will provide that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Upon a change in control of our company, the unvested units vest.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Upon termination of Mr.&#160;Bortz&#146;s or
    Mr.&#160;Martz&#146;s, as applicable, employment with our
    company without cause, the unvested units vest.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Upon termination of Mr.&#160;Bortz&#146;s or
    Mr.&#160;Martz&#146;s, as applicable, employment with our
    company because of his death or disability, the unvested units
    vest.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Upon termination of Mr.&#160;Bortz&#146;s or
    Mr.&#160;Martz&#146;s, as applicable, employment with our
    company for cause, the unvested units are forfeited.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The time-based LTIP unit award agreements do not provide, in the
    absence of a change in control of our company, for accelerated
    vesting of the unvested units in the event Mr.&#160;Bortz or
    Mr.&#160;Martz, as applicable, terminates his employment with
    our company, for any reason other than death, disability or,
    under certain conditions, retirement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of the time-based LTIP unit award agreements, the
    definitions of &#147;cause,&#148; &#147;good reason&#148; and
    &#147;change in control&#148; are similar but not identical to
    the definitions contained in Mr.&#160;Bortz&#146;s or
    Mr.&#160;Martz&#146;s, as applicable, severance agreement with
    our company. For example, the definition of &#147;good
    reason&#148; for purposes of the award agreements does not
    include any requirement of a change in control. In addition, the
    definition of &#147;change in control&#148; for purposes of the
    award agreements includes mergers and consolidations where the
    outstanding securities of our company represent less than 75% of
    the combined voting power of our company or surviving entity
    after the merger or consolidation and includes a sale of
    substantially all of our assets to an entity in which our
    shareholders own less than 75% of the combined voting power in
    substantially the same proportions as their ownership in our
    company before the sale.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">401(k)
    Plan</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may establish and maintain a retirement savings plan under
    section&#160;401(k) of the Code to cover our eligible employees.
    The Code allows eligible employees to defer a portion of their
    compensation, within prescribed limits, on a pre-tax basis
    through contributions to the 401(k) plan. We may match
    employees&#146; annual contributions, within prescribed limits.
</DIV>
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    <BR>
    64
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    POLICIES AND POLICIES WITH RESPECT TO CERTAIN
    ACTIVITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following is a discussion of our investment policies and our
    policies with respect to certain other activities, including
    financing matters and conflicts of interest. These policies may
    be amended or revised from time to time at the discretion of our
    board of trustees, without a vote of our shareholders. Any
    change to any of these policies by our board of trustees,
    however, would be made only after a thorough review and analysis
    of that change, in light of then-existing business and other
    circumstances, and then only if, in the exercise of its business
    judgment, our board of trustees believes that it is advisable to
    do so in our and our shareholders&#146; best interests. We
    cannot assure you that our investment objectives will be
    attained.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investments
    in Real Estate or Interests in Real Estate</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We plan to invest principally in hotel properties. At the
    completion of this offering, we will not have identified any
    specific hotel properties to acquire or committed the net
    proceeds of this offering or the concurrent private placement to
    any specific hotel property investment. Our senior executive
    officers will identify and negotiate acquisition opportunities.
    For information concerning the investing experience of these
    individuals, please see the sections entitled &#147;Our
    Business&#148; and &#147;Our Management.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to conduct substantially all of our investment
    activities through our operating partnership and its
    subsidiaries. Our primary investment objectives are to enhance
    shareholder value over time by generating strong returns on
    invested capital, consistently paying attractive distributions
    to our shareholders and achieving long-term appreciation in the
    value of our hotel properties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are no limitations on the amount or percentage of our
    total assets that may be invested in any one property.
    Additionally, no limits have been set on the concentration of
    investments in any one location or facility type.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additional criteria with respect to our hotel properties is
    described in &#147;Our Business&#160;&#151; Business Strategy
    and Investment Criteria.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investments
    in Mortgages, Structured Financings and Other Lending
    Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have no current intention of investing in loans secured by
    properties or making loans to persons other than in connection
    with the acquisition of mortgage loans through which we expect
    to achieve equity ownership of the underlying hotel property in
    the near-term.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investments
    in Securities of or Interests in Persons Primarily Engaged in
    Real Estate Activities and Other Issuers</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally speaking, we do not expect to engage in any
    significant investment activities with other entities, although
    we may consider joint venture investments with other investors.
    We may also invest in the securities of other issuers in
    connection with acquisitions of indirect interests in properties
    (normally general or limited partnership interests in special
    purpose partnerships owning properties). We may in the future
    acquire some, all or substantially all of the securities or
    assets of other REITs or similar entities where that investment
    would be consistent with our investment policies and the REIT
    qualification requirements. There are no limitations on the
    amount or percentage of our total assets that may be invested in
    any one issuer, other than those imposed by the gross income and
    asset tests that we must satisfy to qualify as a REIT. However,
    we do not anticipate investing in other issuers of securities
    for the purpose of exercising control or acquiring any
    investments primarily for sale in the ordinary course of
    business or holding any investments with a view to making
    short-term profits from their sale. In any event, we do not
    intend that our investments in securities will cause us to fall
    within the definition of &#147;investment company&#148; under
    the Investment Company Act of 1940, as amended. For this reason,
    we do not plan to register as an &#147;investment company&#148;
    under the Investment Company Act, and we intend to divest
    securities before any registration would be required.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not intend to engage in trading, underwriting, agency
    distribution or sales of securities of other issuers.
</DIV>
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    <BR>
    65
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Disposition
    Policy</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we have no current plans to dispose of any of the hotel
    properties we acquire, we will consider doing so, subject to
    REIT qualification and prohibited transaction rules under the
    Code, if our management determines that a sale of a property
    would be in our interests based on the price being offered for
    the hotel, the operating performance of the hotel, the tax
    consequences of the sale and other factors and circumstances
    surrounding the proposed sale. See &#147;Risk
    Factors&#160;&#151; Risks Related to Our Business and
    Properties.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Financing
    Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to maintain a low-leverage capital structure and
    intend to limit the sum of the outstanding principal amount of
    any consolidated indebtedness and the liquidation preference of
    any outstanding preferred shares to not more than 4.5x our
    EBITDA for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period preceding the incurrence of such debt or the issuance of
    such preferred shares. Compliance with this limitation will be
    judged at the time debt is incurred or preferred shares are
    issued, and a subsequent decrease in EBITDA will not require us
    to repay debt or redeem preferred shares. Our board of trustees
    will periodically review this limitation and may modify or
    eliminate it without the approval of our shareholders. For our
    initial debt financing, we intend to obtain a revolving credit
    facility for general business purposes, which may include the
    following:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    funding of investments (following investment of the net proceeds
    of this offering and the concurrent private placement);
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    payment of declared distributions to shareholders;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    working capital needs;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    payment of corporate taxes on our TRS lessees;&#160;or
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any other payments deemed necessary or desirable by senior
    management and approved by the lender.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to have discussions with several lending institutions
    and negotiate a revolving credit facility. In seeking to obtain
    such a facility, we will consider factors as we deem relevant,
    including interest rate pricing, recurring fees, flexibility of
    funding, security required, maturity, restrictions on prepayment
    and refinancing and restrictions impacting our daily operations.
    There can be no assurance that we will be able to obtain such a
    facility on favorable terms or at all.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, we do not expect to incur debt, pursuant to a
    revolving credit facility or otherwise, until we have invested
    substantially all of the net proceeds of this offering and the
    concurrent private placement, other than possibly assuming debt
    in connection with a hotel acquisition. If we assume debt in
    connection with our initial hotel acquisitions, our debt level
    could temporarily exceed the general limitation described above.
    In measuring our debt for purposes of our general debt
    limitation, we will utilize &#147;net&#148; debt, which is the
    principal amount of our consolidated indebtedness and the
    liquidation preference of any outstanding preferred shares less
    the amount of our cash.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Going forward, we will consider a number of factors when
    evaluating our level of indebtedness and making financial
    decisions, including, among others, the following:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the interest rate of the proposed financing;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the extent to which the financing impacts the flexibility with
    which we asset manage our properties;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    prepayment penalties and restrictions on refinancing;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the purchase price of properties we acquire with debt financing;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our long-term objectives with respect to the financing;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our target investment returns;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the ability of particular properties, and our company as a
    whole, to generate cash flow sufficient to cover expected debt
    service payments;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    overall level of consolidated indebtedness;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    timing of debt maturities;
</TD>
</TR>

</TABLE>
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    <BR>
    66
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    provisions that require recourse and cross-collateralization;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    corporate credit ratios, including debt service or fixed charge
    coverage, debt to EBITDA, debt to total market capitalization
    and debt to undepreciated assets;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the overall ratio of fixed- and variable-rate debt.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Equity
    Capital Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to applicable law and the requirements for listed
    companies on the NYSE, our board of trustees has the authority,
    without further shareholder approval, to issue additional
    authorized common shares and preferred shares or otherwise raise
    capital, including through the issuance of senior securities, in
    any manner and on the terms and for the consideration it deems
    appropriate, including in exchange for property. Existing
    shareholders will have no preemptive right to additional shares
    issued in any offering, and any offering might cause a dilution
    of investment. We may in the future issue common shares in
    connection with acquisitions. We also may issue limited
    partnership interests in our operating partnership in connection
    with acquisitions of property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees may authorize the issuance of preferred
    shares with terms and conditions that could have the effect of
    delaying, deterring or preventing a transaction or a change in
    control of our company that might involve a premium price for
    holders of our common shares or otherwise might be in their best
    interests. Additionally, preferred shares could have
    distribution, voting, liquidation and other rights and
    preferences that are senior to those of our common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, under certain circumstances, purchase common or
    preferred shares in the open market or in private transactions
    with our shareholders, if those purchases are approved by our
    board of trustees. Our board of trustees has no present
    intention of causing us to repurchase any shares, and any action
    would only be taken in conformity with applicable federal and
    state laws and the applicable requirements for qualifying as a
    REIT.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the future, we may institute a dividend reinvestment plan, or
    DRIP, which would allow our shareholders to acquire additional
    common shares by automatically reinvesting their cash dividends.
    Shares would be acquired pursuant to the plan at a price equal
    to the then prevailing market price, without payment of
    brokerage commissions or service charges. Shareholders who do
    not participate in the plan will continue to receive cash
    distributions as declared.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Conflict
    of Interest Policy</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our current board of trustees consists of Mr.&#160;Bortz and as
    a result, the transactions and agreements entered into in
    connection with our formation prior to this offering have not
    been approved by any independent trustees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective upon closing of this offering, we intend to adopt
    policies to reduce potential conflicts of interest. Generally,
    we expect that our policy will provide that any transaction,
    agreement or relationship in which any of our trustees, officers
    or employees has an interest must be approved by a majority of
    our disinterested trustees. However, we cannot assure you that
    these policies will be successful in eliminating the influence
    of these conflicts. See &#147;Risk Factors&#160;&#151; Risks
    Related to Our Business and Properties.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reporting
    Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally speaking, we intend to make available to our
    shareholders audited annual financial statements and annual
    reports. After this offering, we will become subject to the
    information reporting requirements of the Securities Exchange
    Act of 1934, as amended, or the Exchange Act. Pursuant to these
    requirements, we will file periodic reports, proxy statements
    and other information, including audited financial statements,
    with the SEC.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    67
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    PRINCIPAL SHAREHOLDERS</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth certain information regarding the
    beneficial ownership of common shares by (i)&#160;each of the
    persons who will become a trustee upon completion of this
    offering, (ii)&#160;each of our executive officers and
    (iii)&#160;all of our trustees and executive officers as a group
    upon completion of this offering and the concurrent private
    placement. Unless otherwise indicated, all shares are owned
    directly and the indicated person has sole voting and investment
    power.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="67%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Beneficial Owner</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Beneficially Owned</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent of Class</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Jon E. Bortz
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    125,000
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Raymond D. Martz
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(2)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cydney C. Donnell
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ron E. Jackson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Martin H. Nesbitt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael J. Schall
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Earl E. Webb
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Laura H. Wright
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500
</TD>
<TD nowrap align="left" valign="bottom">
    <SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    All executive officers and trustees as a group
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    150,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">*&#160;
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Represents less than 1% of the
    number of outstanding common shares upon completion of this
    offering.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">We will sell Mr.&#160;Bortz 125,000
    common shares in a private placement concurrent with the closing
    of this offering at a price per share equal to the public
    offering price in this offering. Mr.&#160;Bortz acquired 1,000
    common shares in connection with the formation and initial
    capitalization of our company at a cost of $1,000. We will
    repurchase these shares at his cost upon completion of this
    offering. Does not include 723,035 common shares issuable upon
    conversion of 723,035 LTIP units to be granted to Mr.&#160;Bortz
    upon completion of this offering. These LTIP units will vest
    ratably on each of the first five anniversaries of the date of
    grant. Also does not include 30,000 restricted common shares
    expected to be granted to Mr.&#160;Bortz at the first meeting of
    the board of trustees following completion of this offering
    pursuant to our 2009 Equity Incentive Plan as part of our 2010
    compensation program, which shares will vest ratably on each of
    the first three anniversaries of the date of grant.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">We will sell Mr.&#160;Martz 10,000
    common shares in a private placement concurrent with the closing
    of this offering at a price per share equal to the public
    offering price in this offering. Does not include
    132,260&#160;common shares issuable upon conversion of
    132,260&#160;LTIP units to be granted to Mr.&#160;Martz upon
    completion of this offering. These LTIP units will vest ratably
    on each of the first five anniversaries of the date of grant.
    Also does not include 15,000 restricted common shares expected
    to be granted to Mr.&#160;Martz at the first meeting of the
    board of trustees following completion of this offering pursuant
    to our 2009 Equity Incentive Plan as part of the 2010
    compensation program, which shares will vest ratably on each of
    the first three anniversaries of the date of grant.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">We will grant 2,500 common shares
    to each initial independent trustee upon completion of this
    offering, which shares will vest ratably on each of the first
    three anniversaries of the date of grant.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently have outstanding 1,000 common shares, all of which
    are owned by our Chairman, President and Chief Executive
    Officer, Mr.&#160;Bortz. Upon completion of this offering, we
    will repurchase all 1,000 common shares from Mr.&#160;Bortz at
    his cost of $1.00 per share.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
  <!-- XBRL Pagebreak Begin -->

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    <BR>
    68
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will use approximately $100,000 of the net proceeds to
    reimburse Mr.&#160;Bortz for
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses he incurred in connection with the formation of our
    company and this offering and $1,000 to repurchase the shares he
    acquired in connection with the formation and initial
    capitalization of our company.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will sell 125,000 and 10,000 common shares to Mr.&#160;Bortz
    and Mr.&#160;Martz, respectively, in a private placement
    concurrent with the closing of this offering at a price per
    share equal to the public offering price in this offering.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will cause our operating
    partnership to issue 723,035 LTIP units to Mr. Bortz, 132,260
    LTIP units to Mr. Martz and 26,455 LTIP units to
    Mr.&#160;Dittamo. If the size of this offering changes, the
    aggregate number of LTIP units to be granted to
    Messrs.&#160;Bortz, Martz and Dittamo will change so as to equal
    5% of the common shares issued in this offering (excluding any
    shares issued pursuant to the underwriters&#146; overallotment
    option) and in the concurrent private placement. These LTIP
    units will vest ratably on each of the first five anniversaries
    of the date of grant. LTIP units, whether vested or not, will
    receive the same
    <FONT style="white-space: nowrap">per-unit</FONT>
    profit distributions as units of our operating partnership,
    which distributions generally will equal per share distributions
    on our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to make grants of restricted common shares, following
    the approval thereof at the first meeting of our board of
    trustees following completion of this offering, of
    30,000&#160;shares to Mr.&#160;Bortz and 15,000&#160;shares to
    Mr.&#160;Martz, having aggregate values of $600,000 and
    $300,000, respectively, based upon the public offering price
    per&#160;share of $20.00. Distributions will be paid on these
    and any other restricted common shares, whether vested or not,
    when distributions are declared and paid on our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will enter into a Change in
    Control Severance Agreement with each of Mr.&#160;Bortz and
    Mr.&#160;Martz which agreement will provide for payments and
    other benefits to Mr.&#160;Bortz and Mr.&#160;Martz if their
    employment with us is terminated under certain circumstances.
    See &#147;Our Management&#151;Severance Agreements.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also expect to enter into indemnification agreements with our
    trustees and our executive officers providing for procedures for
    indemnification by us to the fullest extent permitted by law and
    advancements by us of certain expenses and costs relating to
    claims, suits or proceedings arising from their service to us.
</DIV>
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<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF SHARES&#160;OF BENEFICIAL INTEREST</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although the following summary describes the material terms of
    our shares of beneficial interest, it is not a complete
    description of the Maryland REIT Law, or the MRL, the MGCL
    provisions applicable to a Maryland real estate investment trust
    or our declaration of trust and bylaws, copies of which are
    filed as exhibits to the registration statement of which this
    prospectus is a part. See &#147;Where You Can Find More
    Information.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following describes the material terms of our declaration of
    trust upon completion of this offering. Our declaration of trust
    will provide that we may issue up to 500,000,000&#160;common
    shares, $0.01&#160;par value per share, and
    100,000,000&#160;preferred shares of beneficial interest,
    $0.01&#160;par value per share, or preferred shares. We issued
    1,000 common shares in connection with our initial
    capitalization. Upon completion of this offering, we will
    repurchase these shares. Our declaration of trust will authorize
    our board of trustees to amend our declaration of trust to
    increase or decrease the aggregate number of authorized shares
    or the number of shares of any class or series without
    shareholder approval. Upon completion of this offering,
    17,650,000&#160;common shares will be issued and outstanding on
    a fully diluted basis, including 15,000 restricted common shares
    to be granted to our initial independent trustees under our 2009
    Equity Incentive Plan upon completion of this offering and an
    aggregate of 135,000 shares sold to Messrs.&#160;Bortz and Martz
    in the concurrent private placement, or 20,275,000 common shares
    if the underwriters&#146; overallotment option is exercised in
    full, and no preferred shares will be issued and outstanding. In
    addition, we expect grants of an aggregate of 48,000 restricted
    common shares to Messrs.&#160;Bortz, Martz and Dittamo pursuant
    to our 2009 Equity Incentive Plan will be approved at the first
    meeting of our board of trustees following completion of this
    offering as part of our 2010 compensation program. Our 2009
    Equity Incentive Plan provides for the issuance of aggregate
    share awards equal to 7.5% of the number of common shares issued
    in this offering (excluding any shares issued pursuant to the
    underwriters&#146; overallotment option) and in the concurrent
    private placement. Based on an offering of
    17,500,000&#160;shares and 135,000&#160;shares sold pursuant to
    the concurrent private placement, 1,322,625 common shares will
    be available for issuance under the 2009 Equity Incentive Plan.
    After the grant of an aggregate of 881,750 LTIP units (which are
    ultimately exchangeable for our common shares on a one-for-one
    basis) to Messrs.&#160;Bortz, Martz and Dittamo, an aggregate of
    15,000 restricted common shares to our initial independent
    trustees and an aggregate of 48,000 restricted common shares to
    Messrs.&#160;Bortz, Martz and Dittamo at the first meeting of
    our board of trustees following completion of this offering,
    377,875 common shares will remain available for grant under the
    2009 Equity Incentive Plan. If the size of this offering
    changes, the aggregate number of LTIP units to be granted to
    Messrs. Bortz, Martz and Dittamo will change so as to equal 5%
    of the common shares issued in this offering (excluding any
    shares granted pursuant to the underwriters&#146; overallotment
    option) and in the concurrent private placement and the
    aggregate number of shares and the remaining number of shares
    reserved for issuance under the 2009 Equity Incentive Plan will
    change accordingly.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under Maryland law, shareholders are not personally liable for
    the obligations of a real estate investment trust solely as a
    result of their status as shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All of the common shares offered in this offering will be duly
    authorized, fully paid and nonassessable. Subject to the
    preferential rights, if any, of holders of any other class or
    series of shares of beneficial interest and to the provisions of
    our declaration of trust regarding the restrictions on ownership
    and transfer of shares of beneficial interest, holders of our
    common shares are entitled to receive distributions on such
    shares of beneficial interest out of assets legally available
    therefor if, as and when authorized by our board of trustees and
    declared by us, and the holders of our common shares are
    entitled to share ratably in our assets legally available for
    distribution to our shareholders in the event of our
    liquidation, dissolution or winding up after payment of or
    adequate provision for all of our known debts and liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to the provisions of our declaration of trust regarding
    the restrictions on ownership and transfer of common shares of
    beneficial interest and except as may otherwise be specified in
    the terms of any
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    class or series of common shares, each outstanding common share
    entitles the holder to one vote on all matters submitted to a
    vote of shareholders, including the election of trustees, and,
    except as provided with respect to any other class or series of
    shares of beneficial interest, the holders of such common shares
    will possess the exclusive voting power. There is no cumulative
    voting in the election of our trustees, which means that the
    shareholders entitled to cast a majority of the votes entitled
    to be cast in the election of trustees can elect all of the
    trustees then standing for election, and the remaining
    shareholders will not be able to elect any trustees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holders of common shares have no preference, conversion,
    exchange, sinking fund, redemption or appraisal rights and have
    no preemptive rights to subscribe for any of our securities.
    Subject to the restrictions on ownership and transfer of shares
    contained in our declaration of trust and the terms of any other
    class or series of common shares, all of our common shares will
    have equal dividend, liquidation and other rights.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Power to
    Reclassify Our Unissued Shares of Beneficial Interest</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust authorizes our board of trustees to
    classify and reclassify any unissued common or preferred shares
    into other classes or series of shares of beneficial interest.
    Prior to the issuance of shares of each class or series, our
    board of trustees is required by Maryland law and by our
    declaration of trust to set, subject to the provisions of our
    declaration of trust regarding the restrictions on ownership and
    transfer of shares of beneficial interest, the preferences,
    conversion or other rights, voting powers, restrictions,
    limitations as to dividends or other distributions,
    qualifications and terms or conditions of redemption for each
    class or series. Therefore, our board could authorize the
    issuance of common shares or preferred shares that have priority
    over our common shares as to voting rights, dividends or upon
    liquidation or with terms and conditions that could have the
    effect of delaying, deferring or preventing a change in control
    or other transaction that might involve a premium price for our
    common shares or otherwise be in the best interests of our
    shareholders. No preferred shares are presently outstanding, and
    we have no present plans to issue any preferred shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Power to
    Increase or Decrease Authorized Shares of Beneficial Interest
    and Issue Additional Common Shares and Preferred
    Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that the power of our board of trustees to amend our
    declaration of trust to increase or decrease the number of
    authorized shares of beneficial interest, to authorize us to
    issue additional authorized but unissued common shares or
    preferred shares and to classify or reclassify unissued common
    shares or preferred shares and thereafter to issue such
    classified or reclassified shares of beneficial interest will
    provide us with increased flexibility in structuring possible
    future financings and acquisitions and in meeting other needs
    that might arise. The additional classes or series, as well as
    the common shares, will be available for issuance without
    further action by our shareholders, unless such action is
    required by applicable law or the rules of any stock exchange or
    automated quotation system on which our securities may be listed
    or traded. Although our board of trustees does not intend to do
    so, it could authorize us to issue a class or series that could,
    depending upon the terms of the particular class or series,
    delay, defer or prevent a change in control or other transaction
    that might involve a premium price for our common shares or
    otherwise be in the best interests of our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Restrictions
    on Ownership and Transfer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For us to qualify as a REIT under the Code, our shares of
    beneficial interest must be beneficially owned by 100 or more
    persons during at least 335&#160;days of a taxable year of
    12&#160;months (other than the first year for which an election
    to be a REIT has been made) or during a proportionate part of a
    shorter taxable year. Also, not more than 50% of the value of
    our outstanding shares of beneficial interest may be owned,
    directly or indirectly, by five or fewer individuals (as defined
    in the Code to include certain entities) during the last half of
    a taxable year (other than the first year for which an election
    to be a REIT has been made).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Because our board of trustees believes it is at present
    essential for us to qualify as a REIT, our declaration of trust,
    subject to certain exceptions, restricts the amount of our
    shares of beneficial interest that a person may beneficially or
    constructively own. Our declaration of trust provides that,
    subject to certain
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    exceptions, no person may beneficially or constructively own
    more than 9.8% in value or in number of shares, whichever is
    more restrictive, of the outstanding shares of any class or
    series of our shares of beneficial interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust also prohibits any person from
    (i)&#160;beneficially owning shares of beneficial interest to
    the extent that such beneficial ownership would result in our
    being &#147;closely held&#148; within the meaning of
    Section&#160;856(h) of the Code (without regard to whether the
    ownership interest is held during the last half of the taxable
    year), (ii)&#160;transferring our shares of beneficial interest
    to the extent that such transfer would result in our shares of
    beneficial interest being beneficially owned by less than
    100&#160;persons (determined under the principles of
    Section&#160;856(a)(5) of the Code), (iii)&#160;beneficially or
    constructively owning our shares of beneficial interest to the
    extent such beneficial or constructive ownership would cause us
    to constructively own ten percent or more of the ownership
    interests in a tenant (other than a TRS) of our real property
    within the meaning of Section&#160;856(d)(2)(B) of the Code or
    (iv)&#160;beneficially or constructively owning or transferring
    our shares of beneficial interest if such ownership or transfer
    would otherwise cause us to fail to qualify as a REIT under the
    Code, including, but not limited to, as a result of any hotel
    management companies failing to qualify as &#147;eligible
    independent contractors&#148; under the REIT rules. Any person
    who acquires or attempts or intends to acquire beneficial or
    constructive ownership of our shares of beneficial interest that
    will or may violate any of the foregoing restrictions on
    transferability and ownership, or any person who would have
    owned our shares of beneficial interest that resulted in a
    transfer of shares to a charitable trust, is required to give
    written notice immediately to us, or in the case of a proposed
    or attempted transaction, to give at least 15&#160;days&#146;
    prior written notice, and provide us with such other information
    as we may request in order to determine the effect of such
    transfer on our status as a REIT. The foregoing restrictions on
    transferability and ownership will not apply if our board of
    trustees determines that it is no longer in our best interests
    to attempt to qualify, or to continue to qualify, as a REIT.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees, in its sole discretion, may prospectively
    or retroactively exempt a person from certain of the limits
    described in the paragraph above and may establish or increase
    an excepted holder percentage limit for such person. The person
    seeking an exemption must provide to our board of trustees such
    representations, covenants and undertakings as our board of
    trustees may deem appropriate in order to conclude that granting
    the exemption will not cause us to lose our status as a REIT.
    Our board of trustees may not grant such an exemption to any
    person if such exemption would result in our failing to qualify
    as a REIT. Our board of trustees may require a ruling from the
    IRS or an opinion of counsel, in either case in form and
    substance satisfactory to the board of trustees, in its sole
    discretion, in order to determine or ensure our status as a REIT.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any attempted transfer of our shares of beneficial interest
    which, if effective, would violate any of the restrictions
    described above will result in the number of shares causing the
    violation (rounded up to the nearest whole share) to be
    automatically transferred to a trust for the exclusive benefit
    of one or more charitable beneficiaries, except that any
    transfer that results in the violation of the restriction
    relating to our shares of beneficial interest being beneficially
    owned by fewer than 100&#160;persons will be void <I>ab
    initio</I>. In either case, the proposed transferee will not
    acquire any rights in such shares. The automatic transfer will
    be deemed to be effective as of the close of business on the
    business day prior to the date of the purported transfer or
    other event that results in the transfer to the trust. Shares
    held in the trust will be issued and outstanding shares. The
    proposed transferee will not benefit economically from ownership
    of any shares held in the trust, will have no rights to
    dividends or other distributions and will have no rights to vote
    or other rights attributable to the shares held in the trust.
    The trustee of the trust will have all voting rights and rights
    to dividends or other distributions with respect to shares held
    in the trust. These rights will be exercised for the exclusive
    benefit of the charitable beneficiary. Any dividend or other
    distribution paid prior to our discovery that shares have been
    transferred to the trust will be paid by the recipient to the
    trustee upon demand. Any distribution authorized but unpaid will
    be paid when due to the trustee. Any dividend or other
    distribution paid to the trustee will be held in trust for the
    charitable beneficiary. Subject to Maryland law, the trustee
    will have the authority (i)&#160;to rescind as void any vote
    cast by the proposed transferee prior to our discovery that the
    shares have been transferred to the trust and (ii)&#160;to
    recast the vote in accordance with the desires of the trustee
    acting for the benefit of the charitable beneficiary. However,
    if we have already taken irreversible corporate action, then the
    trustee will not have the authority to rescind and recast the
    vote.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Within 20&#160;days of receiving notice from us that shares of
    beneficial interest have been transferred to the trust, the
    trustee will sell the shares to a person designated by the
    trustee, whose ownership of the shares will not violate the
    above ownership and transfer limitations. Upon the sale, the
    interest of the charitable beneficiary in the shares sold will
    terminate and the trustee will distribute the net proceeds of
    the sale to the proposed transferee and to the charitable
    beneficiary as follows. The proposed transferee will receive the
    lesser of (i)&#160;the price paid by the proposed transferee for
    the shares or, if the proposed transferee did not give value for
    the shares in connection with the event causing the shares to be
    held in the trust (<I>e.g.</I>, a gift, devise or other similar
    transaction), the market price (as defined in our declaration of
    trust) of the shares on the trading day immediately preceding
    the day of the event causing the shares to be held in the trust
    and (ii)&#160;the price received by the trustee (net of any
    commission and other expenses of sale) from the sale or other
    disposition of the shares. The trustee may reduce the amount
    payable to the proposed transferee by the amount of dividends or
    other distributions paid to the proposed transferee and owed by
    the proposed transferee to the trustee. Any net sale proceeds in
    excess of the amount payable to the proposed transferee will be
    paid immediately to the charitable beneficiary. If, prior to our
    discovery that our shares have been transferred to the trust,
    the shares are sold by the proposed transferee, then
    (i)&#160;the shares shall be deemed to have been sold on behalf
    of the trust and (ii)&#160;to the extent that the proposed
    transferee received an amount for the shares that exceeds the
    amount he or she was entitled to receive, the excess shall be
    paid to the trustee upon demand.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, shares of beneficial interest held in the trust
    will be deemed to have been offered for sale to us, or our
    designee, at a price per share equal to the lesser of
    (i)&#160;the price per share in the transaction that resulted in
    the transfer to the trust (or, in the case of a devise, gift or
    similar transaction, the market price on the trading day
    immediately preceding the day of the event causing the shares to
    be held in the trust) and (ii)&#160;the market price on the date
    we, or our designee, accept the offer, which we may reduce by
    the amount of dividends and distributions paid to the proposed
    transferee and owed by the proposed transferee to the trustee.
    We will have the right to accept the offer until the trustee has
    sold the shares. Upon a sale to us, the interest of the
    charitable beneficiary in the shares sold will terminate and the
    trustee will distribute the net proceeds of the sale to the
    proposed transferee and the charitable beneficiary and any
    dividends or other distributions held by the trustee shall be
    paid to the charitable beneficiary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a transfer to a charitable trust, as described above, would
    be ineffective for any reason to prevent a violation of a
    restriction, the transfer that would have resulted in such
    violation will be void <I>ab initio</I>, and the proposed
    transferee shall acquire no rights in such shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Every owner of more than 5% (or such lower percentage as
    required by the Code or the regulations promulgated thereunder)
    of our shares of beneficial interest, within 30&#160;days after
    the end of each taxable year, is required to give us written
    notice, stating his or her name and address, the number of
    shares of each class and series of our shares of beneficial
    interest that he or she beneficially owns and a description of
    the manner in which the shares are held. Each such owner will
    provide us with such additional information as we may request in
    order to determine the effect, if any, of his or her beneficial
    ownership on our status as a REIT and to ensure compliance with
    the ownership limits. In addition, each shareholder will upon
    demand be required to provide us with such information as we may
    request in good faith in order to determine our status as a REIT
    and to comply with the requirements of any taxing authority or
    governmental authority or to determine such compliance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These ownership limitations could delay, defer or prevent a
    transaction or a change in control that might involve a premium
    price for our common shares or otherwise be in the best interest
    of our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Stock
    Exchange Listing</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to apply for listing of our common shares on the NYSE
    under the symbol &#147;PEB.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    Agent and Registrar</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect the transfer agent and registrar for our common shares
    to be Wells Fargo Bank, N.A.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
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<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SHARES&#160;ELIGIBLE
    FOR FUTURE SALE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prior to this offering, there has been no public market for our
    common shares. We cannot predict the effect, if any, that sales
    of common shares or the availability of shares for sale will
    have on the market price of our common shares prevailing from
    time to time. Sales of substantial amounts of our common shares
    in the public market, or the perception that such sales could
    occur, could adversely affect the prevailing market price of our
    common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will have 17,650,000 common
    shares outstanding, including the common shares sold in this
    offering, 15,000 restricted common shares to be granted to our
    initial independent trustees under our 2009 Equity Incentive
    Plan upon completion of this offering and an aggregate of
    135,000 shares sold to Messrs. Bortz and Martz in the concurrent
    private placement, or 20,275,000 common shares if the
    underwriters&#146; overallotment option is exercised in full. In
    addition, we expect grants of an aggregate of 48,000 restricted
    common shares to Messrs.&#160;Bortz, Martz and Dittamo pursuant
    to our 2009 Equity Incentive Plan will be approved at the first
    meeting of our board of trustees following completion of this
    offering as part of our 2010 compensation program. Our 2009
    Equity Incentive Plan provides for the issuance of aggregate
    share awards equal to 7.5% of the number of common shares issued
    in this offering (excluding any shares issued pursuant to the
    underwriters&#146; overallotment option) and in the concurrent
    private placement. Based on an offering of
    17,500,000&#160;shares and 135,000&#160;shares sold pursuant to
    the concurrent private placement, 1,322,625 common shares will
    be available for issuance under the 2009 Equity Incentive Plan.
    After the grant of an aggregate of 881,750 LTIP units (which are
    ultimately exchangeable for our common shares on a one-for-one
    basis) to Messrs.&#160;Bortz, Martz and Dittamo, an aggregate of
    15,000 restricted common shares to our initial independent
    trustees and an aggregate of 48,000 restricted common shares to
    Messrs.&#160;Bortz, Martz and Dittamo at the first meeting of
    our board of trustees following completion of this offering,
    377,875 common shares will remain available for grant under the
    2009 Equity Incentive Plan. If the size of this offering
    changes, the aggregate number of LTIP units to be granted to
    Messrs. Bortz, Martz and Dittamo will change so as to equal 5%
    of the outstanding common shares issued in this offering
    (excluding any shares issued pursuant to the underwriters&#146;
    overallotment option) and in the concurrent private placement
    and the aggregate number of shares and the remaining number of
    shares reserved for issuance under the 2009 Equity Incentive
    Plan will change accordingly.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No assurance can be given as to the likelihood that an active
    trading market for our common shares will develop or be
    maintained, that any such market will be liquid, that
    shareholders will be able to sell the common shares when issued
    or at all or the prices that shareholders may obtain for any of
    the common shares. No prediction can be made as to the effect,
    if any, that future issuances of common shares or the
    availability of common shares for future issuances will have on
    the market price of our common shares prevailing from time to
    time, issuances of substantial amounts of common shares, or the
    perception that such issuances could occur, may affect adversely
    the prevailing market price of our common shares. See &#147;Risk
    Factors&#160;&#151; Risks Related to This Offering.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The common shares sold in this offering will be freely tradable
    without restriction or further registration under the Securities
    Act of 1933, as amended, or the Securities Act, unless the
    shares are held by any of our &#147;affiliates,&#148; as that
    term is defined in Rule&#160;144 under the Securities Act. As
    defined in Rule&#160;144, an &#147;affiliate&#148; of an issuer
    is a person that directly, or indirectly through one or more
    intermediaries, controls, is controlled by or is under common
    control with the issuer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Rule&#160;144</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares sold to Messrs. Bortz and Martz in the concurrent
    private placement will be restricted shares as defined in
    Rule&#160;144.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In general, Rule&#160;144 provides that if (i)&#160;one year has
    elapsed since the date of acquisition of common shares from us
    or any of our affiliates and (ii)&#160;the holder is, and has
    not been, an affiliate of ours at any time during the three
    months preceding the proposed sale, such holder may sell such
    common shares in the public market under Rule&#160;144(b)(1)
    without regard to the volume limitations, manner of sale
    provisions, public information requirements or notice
    requirements under such rule. In general, Rule&#160;144 also
    provides that if
</DIV>
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    <BR>
    74
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;six months have elapsed since the date of acquisition
    of common shares from us or any of our affiliates, (ii)&#160;we
    have been a reporting company under the Exchange Act for at
    least 90&#160;days and (iii)&#160;the holder is not, and has not
    been, an affiliate of ours at any time during the three months
    preceding the proposed sale, such holder may sell such common
    shares in the public market under Rule&#160;144(b)(1) subject to
    satisfaction of Rule&#160;144&#146;s public information
    requirements, but without regard to the volume limitations,
    manner of sale provisions or notice requirements under such rule.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, under Rule&#160;144, if (i)&#160;one year (or,
    subject to us being a reporting company under the Exchange Act
    for at least the preceding 90&#160;days, six months) has elapsed
    since the date of acquisition of common shares from us or any of
    our affiliates and (ii)&#160;the holder is, or has been, an
    affiliate of ours at any time during the three months preceding
    the proposed sale, such holder may sell such common shares in
    the public market under Rule&#160;144(b)(1) subject to
    satisfaction of Rule&#160;144&#146;s volume limitations, manner
    of sale provisions, public information requirements and notice
    requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following completion of this offering, we intend to file a
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-8</FONT>
    to register the total number of common shares that may be issued
    under our 2009 Equity Incentive Plan.
</DIV>
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<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    PROVISIONS OF MARYLAND LAW AND OF OUR DECLARATION OF TRUST<BR>
    AND BYLAWS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although the following summary describes certain provisions of
    Maryland law and of our declaration of trust and bylaws, it is
    not a complete description of Maryland law and our declaration
    of trust and bylaws, copies of which are available from us upon
    request. See &#147;Where You Can Find More Information.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Number of
    Trustees; Vacancies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust and bylaws provide that the number of
    our trustees may be established by our board of trustees but may
    not be more than 15. Our declaration of trust also provides
    that, at such time as we have at least three independent
    trustees and a class of our common shares or preferred shares is
    registered under the Exchange Act, we elect to be subject to the
    provision of Subtitle 8 of Title&#160;3 of the MGCL regarding
    the filling of vacancies on our board of trustees. Accordingly,
    at such time, except as may be provided by our board of trustees
    in setting the terms of any class or series of shares, any and
    all vacancies on our board of trustees may be filled only by the
    affirmative vote of a majority of the remaining trustees in
    office, even if the remaining trustees do not constitute a
    quorum, and any individual elected to fill such vacancy will
    serve for the remainder of the full term of the class in which
    the vacancy occurred and until a successor is duly elected and
    qualifies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each of our trustees will be elected by our shareholders to
    serve for a one-year term and until his or her successor is duly
    elected and qualifies. A plurality of all votes cast on the
    matter at a meeting of shareholders at which a quorum is present
    is sufficient to elect a trustee. The presence in person or by
    proxy of shareholders entitled to cast a majority of all the
    votes entitled to be cast at a meeting constitutes a quorum.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Removal
    of Trustees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides that, subject to the rights of
    holders of any series of preferred shares, a trustee may be
    removed only for &#147;cause,&#148; and then only by the
    affirmative vote of at least two-thirds of the votes entitled to
    be cast generally in the election of trustees. For this purpose,
    &#147;cause&#148; means, with respect to any particular trustee,
    conviction of a felony or a final judgment of a court of
    competent jurisdiction holding that such trustee caused
    demonstrable, material harm to us through bad faith or active
    and deliberate dishonesty. These provisions, when coupled with
    the exclusive power of our board of trustees to fill vacancies
    on our board of trustees, generally precludes shareholders from
    (i)&#160;removing incumbent trustees except for
    &#147;cause&#148; and with a substantial affirmative vote and
    (ii)&#160;filling the vacancies created by such removal with
    their own nominees.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Policy on
    Majority Voting</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees will adopt a policy regarding the election
    of trustees in uncontested elections. Pursuant to such policy,
    in an uncontested election of trustees, any nominee who receives
    a greater number of votes affirmatively <I>withheld </I>from his
    or her election than votes <I>for</I> his or her election will,
    within two weeks following certification of the shareholder vote
    by our company, submit a written resignation offer to our board
    of trustees for consideration by our Nominating and Corporate
    Governance Committee. Our Nominating and Corporate Governance
    Committee will consider the resignation offer and, within
    60&#160;days following certification by our company of the
    shareholder vote with respect to such election, will make a
    recommendation to our board of trustees concerning the
    acceptance or rejection of the resignation offer. Our board of
    trustees will take formal action on the recommendation no later
    than 90&#160;days following certification of the shareholder
    vote by our company. We will publicly disclose, in a
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed with the SEC, the decision of our board of trustees. Our
    board of trustees will also provide an explanation of the
    process by which the decision was made and, if applicable, its
    reason or reasons for rejecting the tendered resignation.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Business
    Combinations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under certain provisions of the MGCL applicable to Maryland real
    estate investment trusts, certain &#147;business
    combinations,&#148; including a merger, consolidation, share
    exchange or, in certain circumstances, an
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    asset transfer or issuance or reclassification of equity
    securities, between a Maryland real estate investment trust and
    an &#147;interested shareholder&#148; or, generally, any person
    who beneficially owns 10% or more of the voting power of the
    real estate investment trust&#146;s outstanding voting shares or
    an affiliate or associate of the real estate investment trust
    who, at any time within the two-year period prior to the date in
    question, was the beneficial owner of 10% or more of the voting
    power of the then outstanding voting shares of beneficial
    interest of the real estate investment trust, or an affiliate of
    such an interested shareholder, are prohibited for five years
    after the most recent date on which the interested shareholder
    becomes an interested shareholder. Thereafter, any such business
    combination must be recommended by the board of trustees of such
    real estate investment trust and approved by the affirmative
    vote of at least (a)&#160;80% of the votes entitled to be cast
    by holders of outstanding voting shares of beneficial interest
    of the real estate investment trust and (b)&#160;two-thirds of
    the votes entitled to be cast by holders of voting shares of
    beneficial interest of the real estate investment trust other
    than shares held by the interested shareholder with whom (or
    with whose affiliate) the business combination is to be effected
    or held by an affiliate or associate of the interested
    shareholder, unless, among other conditions, the real estate
    investment trust&#146;s shareholders receive a minimum price (as
    defined in the MGCL) for their shares and the consideration is
    received in cash or in the same form as previously paid by the
    interested shareholder for its shares. Under the MGCL, a person
    is not an &#147;interested shareholder&#148; if the board of
    trustees approved in advance the transaction by which the person
    otherwise would have become an interested shareholder. A real
    estate investment trust&#146;s board of trustees may provide
    that its approval is subject to compliance with any terms and
    conditions determined by&#160;it.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These provisions of the MGCL do not apply, however, to business
    combinations that are approved or exempted by a board of
    trustees prior to the time that the interested shareholder
    becomes an interested shareholder. Pursuant to the statute, our
    board of trustees has by resolution exempted business
    combinations between us and any other person from these
    provisions of the MGCL, provided that the business combination
    is first approved by our board of trustees, including a majority
    of trustees who are not affiliates or associates of such person,
    and, consequently, the five year prohibition and the
    supermajority vote requirements will not apply to such business
    combinations. As a result, any person may be able to enter into
    business combinations with us that may not be in the best
    interests of our shareholders without compliance by us with the
    supermajority vote requirements and other provisions of the
    statute. This resolution, however, may be altered or repealed in
    whole or in part at any time. If this resolution is repealed, or
    our board of trustees does not otherwise approve a business
    combination, the statute may discourage others from trying to
    acquire control of us and increase the difficulty of
    consummating any offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Control
    Share Acquisitions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The MGCL provides that &#147;control shares&#148; of a Maryland
    real estate investment trust acquired in a &#147;control share
    acquisition&#148; have no voting rights except to the extent
    approved by the affirmative vote of two-thirds of the votes
    entitled to be cast on the matter, excluding shares of
    beneficial interest in a real estate investment trust in respect
    of which any of the following persons is entitled to exercise or
    direct the exercise of the voting power of such shares in the
    election of trustees: (1)&#160;a person who makes or proposes to
    make a control share acquisition, (2)&#160;an officer of the
    real estate investment trust or (3)&#160;an employee of the real
    estate investment trust who is also a trustee of the real estate
    investment trust. &#147;Control shares&#148; are voting shares
    which, if aggregated with all other such shares owned by the
    acquirer, or in respect of which the acquirer is able to
    exercise or direct the exercise of voting power (except solely
    by virtue of a revocable proxy), would entitle the acquirer to
    exercise voting power in electing trustees within one of the
    following ranges of voting power: (A)&#160;one-tenth or more but
    less than one-third, (B)&#160;one-third or more but less than a
    majority or (C)&#160;a majority or more of all voting power.
    Control shares do not include shares that the acquirer is then
    entitled to vote as a result of having previously obtained
    shareholder approval. A &#147;control share acquisition&#148;
    means the acquisition of control shares, subject to certain
    exceptions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A person who has made or proposes to make a control share
    acquisition, upon satisfaction of certain conditions (including
    an undertaking to pay expenses), may compel our board of
    trustees to call a special meeting of shareholders to be held
    within 50&#160;days of demand to consider the voting rights of
    the shares. If no request for a meeting is made, the real estate
    investment trust may itself present the question at any
    shareholders&#146; meeting.
</DIV>
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    <BR>
    77
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If voting rights are not approved at the meeting or if the
    acquirer does not deliver an acquiring person statement as
    required by the statute, then, subject to certain conditions and
    limitations, the real estate investment trust may redeem any or
    all of the control shares (except those for which voting rights
    have previously been approved) for fair value determined,
    without regard to the absence of voting rights for the control
    shares, as of the date of the last control share acquisition by
    the acquirer or of any meeting of shareholders at which the
    voting rights of such shares are considered and not approved. If
    voting rights for control shares are approved at a
    shareholders&#146; meeting and the acquirer becomes entitled to
    exercise or direct the exercise of a majority of all voting
    power, all other shareholders may exercise appraisal rights. The
    fair value of the shares as determined for purposes of such
    appraisal rights may not be less than the highest price per
    share paid by the acquirer in the control share acquisition.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The control share acquisition statute does not apply to
    (a)&#160;shares acquired in a merger, consolidation or share
    exchange if the real estate investment trust is a party to the
    transaction or (b)&#160;acquisitions approved or exempted by the
    declaration of trust or bylaws of the real estate investment
    trust.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our bylaws contain a provision exempting from the control share
    acquisition statute any and all acquisitions by any person of
    our shares. There is no assurance that such provision will not
    be amended or eliminated at any time in the future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Subtitle
    8</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subtitle 8 of Title&#160;3 of the MGCL permits a Maryland real
    estate investment trust with a class of equity securities
    registered under the Exchange Act and at least three independent
    trustees to elect to be subject, by provision in its declaration
    of trust or bylaws or a resolution of its board of trustees and
    notwithstanding any contrary provision in the declaration of
    trust or bylaws, to any or all of five provisions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a classified board;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a two-thirds vote requirement for removing a trustee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a requirement that the number of trustees be fixed only by vote
    of the trustees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a requirement that a vacancy on the board be filled only by the
    remaining trustees and for the remainder of the full term of the
    class of trustees in which the vacancy occurred; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a majority requirement for the calling of a special meeting of
    shareholders.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides that, at such time as we are
    eligible to make a Subtitle 8 election, we elect to be subject
    to the provision of Subtitle 8 that requires that vacancies on
    our board may be filled only by the remaining trustees and for
    the remainder of the full term of the trusteeship in which the
    vacancy occurred. Through provisions in our declaration of trust
    and bylaws unrelated to Subtitle 8, we already (1)&#160;require
    the affirmative vote of the holders of not less than two-thirds
    of all of the votes entitled to be cast on the matter for the
    removal of any trustee from the board, which removal will be
    allowed only for cause, (2)&#160;vest in the board the exclusive
    power to fix the number of trusteeships and (3)&#160;provide
    that special meetings of shareholders may only be called by our
    Chairman, President, Chief Executive Officer or the board of
    trustees.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Meetings
    of Shareholders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to our declaration of trust and bylaws, a meeting of
    our shareholders for the purpose of the election of trustees and
    the transaction of any business will be held annually on a date
    and at the time and place set by our board of trustees. In
    addition, our Chairman, President, Chief Executive Officer or
    the board of trustees may call a special meeting of our
    shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Mergers;
    Extraordinary Transactions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the MRL, a Maryland real estate investment trust generally
    cannot merge with another entity unless advised by its board of
    trustees and approved by the affirmative vote of at least
    two-thirds of the votes
</DIV>
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    <BR>
    78
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    entitled to be cast on the matter unless a lesser percentage
    (but not less than a majority of all of the votes entitled to be
    cast on the matter) is set forth in the trust&#146;s declaration
    of trust. Our declaration of trust provides that these mergers
    may be approved by a majority of all of the votes entitled to be
    cast on the matter. Our declaration of trust also provides that
    we may sell or transfer all or substantially all of our assets
    if approved by our board of trustees and by the affirmative vote
    of a majority of all the votes entitled to be cast on the
    matter. However, many of our operating assets will be held by
    our subsidiaries, and these subsidiaries may be able to sell all
    or substantially all of their assets or merge with another
    entity without the approval of our shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Amendment
    to Our Declaration of Trust and Bylaws</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the MRL, a Maryland real estate investment trust generally
    cannot amend its declaration of trust unless advised by its
    board of trustees and approved by the affirmative vote of at
    least two-thirds of the votes entitled to be cast on the matter
    unless a different percentage (but not less than a majority of
    all of the votes entitled to be cast on the matter) is set forth
    in the trust&#146;s declaration of trust.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except for amendments to the provisions of our declaration of
    trust related to the removal of trustees and the vote required
    to amend the provision regarding amendments to the removal
    provisions itself (each of which require the affirmative vote of
    at least two-thirds of all the votes entitled to be cast on the
    matter) and certain amendments described in our declaration of
    trust that require only approval by our board of trustees, our
    declaration of trust may be amended only with the approval of
    our board of trustees and the affirmative vote of at least a
    majority of all of the votes entitled to be cast on the matter.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our board of trustees has the exclusive power to adopt, alter or
    repeal any provision of our bylaws and to make new bylaws.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Termination</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides for us to have a perpetual
    existence. Our termination must be approved by a majority of our
    entire board of trustees and the affirmative vote of at least a
    majority of all of the votes entitled to be cast on the matter.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Advance
    Notice of Trustee Nominations and New Business</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our bylaws provide that, with respect to an annual meeting of
    shareholders, nominations of individuals for election to our
    board of trustees at an annual meeting and the proposal of
    business to be considered by shareholders may be made only
    (1)&#160;pursuant to our notice of the meeting, (2)&#160;by or
    at the direction of our board of trustees or (3)&#160;by a
    shareholder of record both at the time of giving notice and at
    the time of the annual meeting and who is entitled to vote at
    the meeting and has complied with the advance notice provisions
    set forth in our bylaws. Our bylaws currently require the
    shareholder generally to provide notice to the secretary
    containing the information required by our bylaws not less than
    120&#160;days nor more than 150&#160;days prior to the first
    anniversary of the date of our proxy statement for the preceding
    year&#146;s annual meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to special meetings of shareholders, only the
    business specified in our notice of meeting may be brought
    before the meeting. Nominations of individuals for election to
    our board of trustees at a special meeting may be made only
    (1)&#160;by or at the direction of our board of trustees or
    (2)&#160;provided that our board of trustees has determined that
    trustees will be elected at such meeting, by a shareholder of
    record at the time of giving notice and who is entitled to vote
    at the meeting in the election of each individual so nominated
    and has complied with the advance notice provisions set forth in
    our bylaws. Such shareholder may nominate one or more
    individuals, as the case may be, for election as a trustee if
    the shareholder&#146;s notice containing the information
    required by our bylaws is delivered to the secretary not earlier
    than the
    120<SUP style="font-size: 85%; vertical-align: top">th</SUP> day

    prior to such special meeting and not later than 5:00&#160;p.m.,
    eastern time, on the later of (1)&#160;the
    90<SUP style="font-size: 85%; vertical-align: top">th</SUP> day

    prior to such special meeting or (2)&#160;the tenth day
    following the day on which public announcement is first made of
    the date of the special meeting and the proposed nominees of our
    board of trustees to be elected at the meeting.
</DIV>
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    <BR>
    79
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Anti-takeover
    Effect of Certain Provisions of Maryland Law and of Our
    Declaration of Trust and Bylaws</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the applicable exemption in our bylaws is repealed and the
    applicable resolution of our board of trustees is repealed, the
    control share acquisition provisions and the business
    combination provisions of the MGCL, respectively, as well as the
    provisions in our declaration of trust and bylaws, as
    applicable, on removal of trustees and the filling of trustee
    vacancies and the restrictions on ownership and transfer of
    shares of beneficial interest, together with the advance notice
    and shareholder-requested special meeting provisions of our
    bylaws, alone or in combination, could serve to delay, deter or
    prevent a transaction or a change in our control that might
    involve a premium price for holders of our common shares or
    otherwise be in their best interests.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Indemnification
    and Limitation of Trustees&#146; and Officers&#146;
    Liability</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust authorizes us, and our bylaws require
    us, to the maximum extent permitted by Maryland law, to
    indemnify (i)&#160;any present or former trustee or officer or
    (ii)&#160;any individual who, while serving as our trustee or
    officer and at our request, serves or has served as a trustee,
    director, officer, partner, member, manager, employee or agent
    of another real estate investment trust, corporation,
    partnership, limited liability company, joint venture, trust,
    employee benefit plan or any other enterprise, from and against
    any claim or liability to which such person may become subject
    or which such person may incur by reason of his or her service
    in such capacity or capacities, and to pay or reimburse his or
    her reasonable expenses in advance of final disposition of such
    a proceeding. Upon completion of this offering, we expect to
    enter into indemnification agreements with each of our trustees
    and executive officers that provide for indemnification to the
    maximum extent permitted by Maryland law and advancements by us
    of certain expenses and costs relating to claims, suits or
    proceedings arising from their service to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Maryland law permits a Maryland real estate investment trust to
    include in its declaration of trust a provision limiting the
    liability of its trustees and officers to the real estate
    investment trust and its shareholders for money damages except
    for liability resulting from&#160;(a) actual receipt of an
    improper benefit or profit in money, property or services or (b)
    active or deliberate dishonesty established by a final judgment
    as being material to the cause of action. Our declaration of
    trust contains a provision which limits the liability of our
    trustees and officers to the maximum extent permitted by
    Maryland low.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REIT
    Qualification</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides that our board of trustees may
    revoke or otherwise terminate our REIT election, without
    approval of our shareholders, if it determines that it is no
    longer in our best interest to continue to qualify as a REIT.
</DIV>
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    <BR>
    80
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<A name='116'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will form our operating partnership prior to completion of
    this offering. The following summary of the terms of the
    agreement of limited partnership of our operating partnership
    does not purport to be complete and is subject to and qualified
    in its entirety by reference to the Agreement of Limited
    Partnership of Pebblebrook Hotel, L.P., a copy of which is an
    exhibit to the registration statement of which this prospectus
    is a part. See &#147;Where You Can Find More Information.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Management</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will be the sole general partner of our operating
    partnership, which we will organize as a Delaware limited
    partnership. We will conduct substantially all of our operations
    and make substantially all of our investments through the
    operating partnership. Pursuant to the partnership agreement, we
    will have full, exclusive and complete responsibility and
    discretion in the management and control of the operating
    partnership, including the ability to cause the operating
    partnership to enter into certain major transactions including
    acquisitions, dispositions, refinancings and selection of
    lessees, make distributions to partners, and to cause changes in
    the operating partnership&#146;s business activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transferability
    of Interests</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may not voluntarily withdraw from the operating partnership
    or transfer or assign our interest in the operating partnership
    or engage in any merger, consolidation or other combination, or
    sale of all or substantially all of our assets in a transaction
    which results in a change of control of our company unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we receive the consent of limited partners holding more than 50%
    of the partnership interests of the limited partners (other than
    those held by our company or its subsidiaries);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    as a result of such transaction, all limited partners (other
    than our company or its subsidiaries), will receive for each
    partnership unit an amount of cash, securities or other property
    equal in value to the greatest amount of cash, securities or
    other property paid in the transaction to a holder of one of our
    common shares, provided that if, in connection with the
    transaction, a purchase, tender or exchange offer shall have
    been made to and accepted by the holders of more than 50% of the
    outstanding common shares, each holder of partnership units
    (other than those held by our company or its subsidiaries) shall
    be given the option to exchange its partnership units for the
    greatest amount of cash, securities or other property that a
    limited partner would have received had it (A)&#160;exercised
    its redemption right (described below) and (B)&#160;sold,
    tendered or exchanged pursuant to the offer common shares
    received upon exercise of the redemption right immediately prior
    to the expiration of the offer; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we are the surviving entity in the transaction and either
    (A)&#160;our shareholders do not receive cash, securities or
    other property in the transaction or (B)&#160;all limited
    partners (other than our company or our subsidiaries) receive
    for each partnership unit an amount of cash, securities or other
    property having a value that is no less than the greatest amount
    of cash, securities or other property received in the
    transaction by our shareholders.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also may merge with or into or consolidate with another
    entity if immediately after such merger or consolidation
    (i)&#160;substantially all of the assets of the successor or
    surviving entity, other than partnership units held by us, are
    contributed, directly or indirectly, to the partnership as a
    capital contribution in exchange for partnership units with a
    fair market value equal to the value of the assets so
    contributed as determined by the survivor in good faith and
    (ii)&#160;the survivor expressly agrees to assume all of our
    obligations under the partnership agreement and the partnership
    agreement shall be amended after any such merger or
    consolidation so as to arrive at a new method of calculating the
    amounts payable upon exercise of the redemption right that
    approximates the existing method for such calculation as closely
    as reasonably possible.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also may (i)&#160;transfer all or any portion of our general
    partnership interest to (A)&#160;a wholly owned subsidiary or
    (B)&#160;a parent company, and following such transfer may
    withdraw as the general partner and (ii)&#160;engage in a
    transaction required by law or by the rules of any national
    securities exchange or OTC interdealer quotation system on which
    our common shares are listed.
</DIV>
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    <BR>
    81
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Capital
    Contribution</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will contribute, directly, to our operating partnership
    substantially all of the net proceeds of this offering and the
    concurrent private placement as our initial capital contribution
    in exchange for substantially all of the limited partnership
    interests in our operating partnership. The partnership
    agreement provides that if the operating partnership requires
    additional funds at any time in excess of funds available to the
    operating partnership from borrowing or capital contributions,
    we may borrow such funds from a financial institution or other
    lender and lend such funds to the operating partnership on the
    same terms and conditions as are applicable to our borrowing of
    such funds. Under the partnership agreement, we are obligated to
    contribute the net proceeds of any future offering of shares as
    additional capital to the operating partnership. If we
    contribute additional capital to the operating partnership, we
    will receive additional partnership units and our percentage
    interest will be increased on a proportionate basis based upon
    the amount of such additional capital contributions and the
    value of the operating partnership at the time of such
    contributions. Conversely, the percentage interests of the
    limited partners will be decreased on a proportionate basis in
    the event of additional capital contributions by us. In
    addition, if we contribute additional capital to the operating
    partnership, we will revalue the property of the operating
    partnership to its fair market value (as determined by us) and
    the capital accounts of the partners will be adjusted to reflect
    the manner in which the unrealized gain or loss inherent in such
    property (that has not been reflected in the capital accounts
    previously) would be allocated among the partners under the
    terms of the partnership agreement if there were a taxable
    disposition of such property for its fair market value (as
    determined by us) on the date of the revaluation. The operating
    partnership may issue preferred partnership interests, in
    connection with acquisitions of property or otherwise, which
    could have priority over common partnership interests with
    respect to distributions from the operating partnership,
    including the partnership interests we own as the general
    partner.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Redemption&#160;Rights</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the partnership agreement, any future limited
    partners, other than us, will receive redemption rights, which
    will enable them to cause the operating partnership to redeem
    their limited partnership interests in exchange for cash or, at
    our option, common shares on a
    <FONT style="white-space: nowrap">one-for-one</FONT>
    basis. The cash redemption amount per unit is based on the
    market price of our common shares at the time of redemption. The
    number of common shares issuable upon redemption of limited
    partnership interests held by limited partners may be adjusted
    upon the occurrence of certain events such as share dividends,
    share subdivisions or combinations. We expect to fund any cash
    redemptions out of available cash or borrowings. Notwithstanding
    the foregoing, a limited partner will not be entitled to
    exercise its redemption rights if the delivery of common shares
    to the redeeming limited partner would:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    result in any person owning, directly or indirectly, common
    shares in excess of the share ownership limit in our declaration
    of trust;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    result in our common shares being owned by fewer than
    100&#160;persons (determined without reference to any rules of
    attribution);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    result in our being &#147;closely held&#148; within the meaning
    of Section&#160;856(h) of the Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    cause us to own, actually or constructively, 10% or more of the
    ownership interests in a tenant (other than a TRS) of ours, the
    operating partnership&#146;s or a subsidiary partnership&#146;s
    real property, within the meaning of Section&#160;856(d)(2)(B)
    of the Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    cause us to fail to qualify as a REIT under the Code, including,
    but not limited to, as a result of any hotel management company
    failing to qualify as an eligible independent contractor under
    the Code; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    cause the acquisition of common shares by such redeeming limited
    partner to be &#147;integrated&#148; with any other distribution
    of common shares for purposes of complying with the registration
    provisions of the Securities Act.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, in our sole and absolute discretion, waive any of these
    restrictions.
</DIV>
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    <BR>
    82
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The partnership agreement will require that the operating
    partnership be operated in a manner that enables us to satisfy
    the requirements for being classified as a REIT, to avoid any
    federal income or excise tax liability imposed by the Code
    (other than any federal income tax liability associated with our
    retained capital gains) and to ensure that the partnership will
    not be classified as a &#147;publicly traded partnership&#148;
    taxable as a corporation under Section&#160;7704 of the Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the administrative and operating costs and
    expenses incurred by the operating partnership, the operating
    partnership generally will pay all of our administrative costs
    and expenses, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses relating to our continuity of existence and our
    subsidiaries&#146; operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses relating to offerings and registration of
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses associated with any repurchase by us of any
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses associated with the preparation and filing of any
    of our periodic or other reports and communications under
    federal, state or local laws or regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses associated with our compliance with laws, rules and
    regulations promulgated by any regulatory body;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses associated with any 401(k) plan, incentive plan,
    bonus plan or other plan providing compensation to our employees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all expenses incurred by us relating to any issuance or
    redemption of partnership interests; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    all of our other operating or administrative costs incurred in
    the ordinary course of business on behalf of the operating
    partnership.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These expenses, however, do not include any of our
    administrative and operating costs and expenses incurred that
    are attributable to hotel properties that are owned by us
    directly rather than by the operating partnership or its
    subsidiaries.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Fiduciary
    Responsibilities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our trustees and officers have duties under applicable Maryland
    law to manage us in a manner consistent with the best interests
    of our shareholders. At the same time, we, as the general
    partner of our operating partnership, will have fiduciary duties
    to manage our operating partnership in a manner beneficial to
    our operating partnership and its partners. Our duties, as
    general partner to our operating partnership and its limited
    partners, therefore, may come into conflict with the duties of
    our trustees and officers to our shareholders. We will be under
    no obligation to give priority to the separate interests of the
    limited partners of our operating partnership or our
    shareholders in deciding whether to cause the operating
    partnership to take or decline to take any actions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The limited partners of our operating partnership expressly will
    acknowledge that as the general partner of our operating
    partnership, we are acting for the benefit of the operating
    partnership, the limited partners and our shareholders
    collectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The partnership agreement will provide that the operating
    partnership will distribute cash from operations (including net
    sale or refinancing proceeds, but excluding net proceeds from
    the sale of the operating partnership&#146;s property in
    connection with the liquidation of the operating partnership) at
    such time and in such amounts as determined by us in our sole
    discretion, to us and the limited partners in accordance with
    their respective percentage interests in the operating
    partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon liquidation of the operating partnership, after payment of,
    or adequate provision for, debts and obligations of the
    partnership, including any partner loans, any remaining assets
    of the partnership will be
</DIV>
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    <BR>
    83
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    distributed to us and the limited partners with positive capital
    accounts in accordance with their respective positive capital
    account balances.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LTIP
    Units</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will cause our operating
    partnership to grant an aggregate of 881,750 LTIP units to
    Messrs.&#160;Bortz, Martz and Dittamo. If the size of this
    offering changes, the aggregate number of LTIP units to be
    granted to Messrs.&#160;Bortz, Martz and Dittamo will change so
    as to equal&#160;5% of the common shares issued in this offering
    (excluding any shares issued pursuant to the underwriters&#146;
    overallotment option) and in the concurrent private placement.
    These LTIP&#160;units will vest ratably on each of the first
    five anniversaries of the date of grant. In general, LTIP units
    are a class of partnership units in our operating partnership
    and will receive the same quarterly
    <FONT style="white-space: nowrap">per-unit</FONT>
    profit distributions as the other outstanding units in our
    operating partnership. Initially, LTIP units will not have full
    parity with other outstanding units with respect to liquidating
    distributions. We expect that under the terms of the LTIP units,
    our operating partnership will revalue its assets upon the
    occurrence of certain specified events, and any increase in
    valuation from the time of grant until such event will be
    allocated first to the LTIP unit holders to equalize the capital
    accounts of such holders with the capital accounts of holders of
    our other outstanding partnership units. Upon equalization of
    the capital accounts of the LTIP unit holders with the capital
    accounts of the other holders of our operating partnership
    units, the LTIP units will achieve full parity with our other
    operating partnership units for all purposes, including with
    respect to liquidating distributions. If such parity is reached,
    vested LTIP units may be converted into an equal number of
    operating partnership units at any time, and thereafter enjoy
    all the rights of such units, including redemption rights.
    However, there are circumstances under which such parity would
    not be reached. Until and unless such parity is reached, the
    value for a given number of vested LTIP units will be less than
    the value of an equal number of our common shares.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Allocations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Profits and losses of the partnership (including depreciation
    and amortization deductions) for each fiscal year generally will
    be allocated to us and the other limited partners in accordance
    with the respective percentage interests in the partnership. All
    of the foregoing allocations are subject to compliance with the
    provisions of Sections&#160;704(b) and 704(c) of the Code and
    Treasury regulations promulgated thereunder. To the extent
    Treasury regulations promulgated pursuant to Section&#160;704(c)
    of the Code permit, we, as the general partner, shall have the
    authority to elect the method to be used by the operating
    partnership for allocating items with respect to contributed
    property acquired in connection with this offering for which
    fair market value differs from the adjusted tax basis at the
    time of contribution, and such election shall be binding on all
    partners. Upon the occurrence of certain specified events, our
    operating partnership will revalue its assets and any net
    increase in valuation will be allocated first to the LTIP units
    to equalize the capital accounts of such holders with the
    capital accounts of the holders of the other outstanding units
    in our operating partnership.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Term</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The operating partnership will continue indefinitely, or until
    sooner dissolved upon:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our bankruptcy, dissolution, removal or withdrawal (unless the
    limited partners elect to continue the partnership);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the passage of 90&#160;days after the sale or other disposition
    of all or substantially all of the assets of the partnership;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the redemption of all partnership units (other than those held
    by us, if any) unless we decide to continue the partnership by
    the admission of one or more general partners; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an election by us in our capacity as the general partner.
</TD>
</TR>

</TABLE>
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    <BR>
    84
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Tax
    Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our partnership agreement will provide that we, as the sole
    general partner of the operating partnership, will be the tax
    matters partner of the operating partnership and, as such, will
    have authority to handle tax audits and to make tax elections
    under the Code on behalf of the operating partnership.
</DIV>
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    <BR>
    85
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MATERIAL
    FEDERAL INCOME TAX CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This section summarizes the material federal income tax
    considerations that you, as a shareholder, may consider
    relevant. Hunton&#160;&#038; Williams LLP has acted as our
    counsel, has reviewed this summary, and is of the opinion that
    the discussion contained herein is accurate in all material
    respects. Because this section is a summary, it does not address
    all aspects of taxation that may be relevant to particular
    shareholders in light of their personal investment or tax
    circumstances, or to certain types of shareholders that are
    subject to special treatment under the federal income tax laws,
    such as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    insurance companies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    tax-exempt organizations (except to the limited extent discussed
    in &#147;&#151;&#160;Taxation of Tax-Exempt Shareholders&#148;
    below);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    financial institutions or broker-dealers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <FONT style="white-space: nowrap">non-U.S.&#160;individuals</FONT>
    and foreign corporations (except to the limited extent discussed
    in &#147;&#151;&#160;Taxation of
    <FONT style="white-space: nowrap">Non-U.S.&#160;Shareholders&#148;</FONT>
    below);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    U.S.&#160;expatriates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    persons who
    <FONT style="white-space: nowrap">mark-to-market</FONT>
    our common shares;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    subchapter S&#160;corporations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    U.S.&#160;shareholders (as defined below) whose functional
    currency is not the U.S.&#160;dollar;
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    regulated investment companies and REITs;
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    trusts and estates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    holders who receive our common shares through the exercise of
    employee share options or otherwise as compensation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    persons holding our common shares as part of a
    &#147;straddle,&#148; &#147;hedge,&#148; &#147;conversion
    transaction,&#148; &#147;synthetic security&#148; or other
    integrated investment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    persons subject to the alternative minimum tax provisions of the
    Code;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    persons holding our common shares through a partnership or
    similar pass-through entity; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    persons holding a 10% or more (by vote or value) beneficial
    interest in our shares of beneficial interest.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This summary assumes that shareholders hold shares as capital
    assets for federal income tax purposes, which generally means
    property held for investment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The statements in this section are based on the current federal
    income tax laws, are for general information purposes only and
    are not tax advice. We cannot assure you that new laws,
    interpretations of law, or court decisions, any of which may
    take effect retroactively, will not cause any statement in this
    section to be inaccurate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
    SPECIFIC TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND
    SALE OF OUR COMMON SHARES&#160;AND OF OUR ELECTION TO BE TAXED
    AS A REIT. SPECIFICALLY, YOU ARE URGED TO CONSULT YOUR OWN TAX
    ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER
    TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION,
    AND REGARDING POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Our Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently have in effect an election to be taxed as a
    pass-through entity under subchapter S of the Code, but intend
    to revoke our S election on the business day prior to the
    closing date of this offering. We
</DIV>
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    <BR>
    86
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    intend to elect to be taxed as a REIT for federal income tax
    purposes commencing with our short taxable year beginning on the
    business day prior to the closing of this offering and ending
    December&#160;31, 2009. We believe that, commencing with such
    short taxable year, we will be organized and will operate in
    such a manner as to qualify for taxation as a REIT under the
    federal income tax laws, and we intend to continue to operate in
    such a manner, but no assurances can be given that we will
    operate in a manner so as to qualify or remain qualified as a
    REIT. This section discusses the laws governing the federal
    income tax treatment of a REIT and its shareholders. These laws
    are highly technical and complex.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with this offering, Hunton&#160;&#038; Williams
    LLP is rendering an opinion that, commencing with our short
    taxable year beginning on the business day prior to the closing
    of this offering and ending on December&#160;31, 2009, we will
    be organized in conformity with the requirements for
    qualification and taxation as a REIT under the federal income
    tax laws, and our proposed method of operations will enable us
    to satisfy the requirements for qualification and taxation as a
    REIT under the federal income tax laws for our taxable year
    ending December&#160;31, 2009 and thereafter. Investors should
    be aware that Hunton&#160;&#038; Williams LLP&#146;s opinion is
    based upon customary assumptions, is conditioned upon certain
    representations made by us as to factual matters, including
    representations regarding the nature of our assets and the
    conduct of our business, is not binding upon the IRS, or any
    court, and speaks as of the date issued. In addition,
    Hunton&#160;&#038; Williams LLP&#146;s opinion is based on
    existing federal income tax law governing qualification as a
    REIT, which is subject to change either prospectively or
    retroactively. Moreover, our qualification and taxation as a
    REIT depend upon our ability to meet on a continuing basis,
    through actual annual operating results, certain qualification
    tests set forth in the federal tax laws. Those qualification
    tests involve the percentage of income that we earn from
    specified sources, the percentage of our assets that falls
    within specified categories, the diversity of ownership of our
    shares of beneficial interest, and the percentage of our
    earnings that we distribute. Hunton&#160;&#038; Williams LLP
    will not review our compliance with those tests on a continuing
    basis. Accordingly, no assurance can be given that our actual
    results of operations for any particular taxable year will
    satisfy such requirements. For a discussion of the tax
    consequences of our failure to qualify as a REIT, see
    &#147;&#151;&#160;Failure to Qualify.&#148;
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we qualify as a REIT, we generally will not be subject to
    federal income tax on the taxable income that we distribute to
    our shareholders. The benefit of that tax treatment is that it
    avoids the &#147;double taxation,&#148; or taxation at both the
    corporate and shareholder levels, that generally results from
    owning stock in a corporation. However, we will be subject to
    federal tax in the following circumstances:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will pay federal income tax on any taxable income, including
    undistributed net capital gain, that we do not distribute to
    shareholders during, or within a specified time period after,
    the calendar year in which the income is earned.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We may be subject to the &#147;alternative minimum tax&#148; on
    any items of tax preference including any deductions of net
    operating losses.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will pay income tax at the highest corporate rate on:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    net income from the sale or other disposition of property
    acquired through foreclosure (&#147;foreclosure property&#148;)
    that we hold primarily for sale to customers in the ordinary
    course of business, and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    other non-qualifying income from foreclosure property.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will pay a 100% tax on net income from sales or other
    dispositions of property, other than foreclosure property, that
    we hold primarily for sale to customers in the ordinary course
    of business.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    If we fail to satisfy one or both of the 75% gross income test
    or the 95% gross income test, as described below under
    &#147;&#151;&#160;Gross Income Tests,&#148; and nonetheless
    continue to qualify as a REIT because we meet other
    requirements, we will pay a 100% tax on:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the gross income attributable to the greater of the amount by
    which we fail the 75% gross income test or the 95% gross income
    test, in either case, multiplied by
</TD>
</TR>

</TABLE>
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    <BR>
    87
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a fraction intended to reflect our profitability.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    If we fail to distribute during a calendar year at least the sum
    of (1)&#160;85% of our REIT ordinary income for the year,
    (2)&#160;95% of our REIT capital gain net income for the year,
    and (3)&#160;any undistributed taxable income required to be
    distributed from earlier periods, we will pay a 4% nondeductible
    excise tax on the excess of the required distribution over the
    amount we actually distributed.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We may elect to retain and pay income tax on our net long-term
    capital gain. In that case, a U.S.&#160;shareholder would be
    taxed on its proportionate share of our undistributed long-term
    capital gain (to the extent that we made a timely designation of
    such gain to the shareholders) and would receive a credit or
    refund for its proportionate share of the tax we paid.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We will be subject to a 100% excise tax on transactions with a
    TRS that are not conducted on an arm&#146;s-length basis.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    In the event of a failure of any of the asset tests, other than
    a <I>de minimis</I> failure of the 5% asset test or the 10% vote
    or value test, as described below under &#147;&#151;&#160;Asset
    Tests,&#148; as long as the failure was due to reasonable cause
    and not to willful neglect, we file a description of each asset
    that caused such failure with the IRS, and we dispose of the
    assets or otherwise comply with the asset tests within six
    months after the last day of the quarter in which we identify
    such failure, we will pay a tax equal to the greater of $50,000
    or the highest federal income tax rate then applicable to
    U.S.&#160;corporations (currently 35%) on the net income from
    the nonqualifying assets during the period in which we failed to
    satisfy the asset tests.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    In the event we fail to satisfy one or more requirements for
    REIT qualification, other than the gross income tests and the
    asset tests, and such failure is due to reasonable cause and not
    to willful neglect, we will be required to pay a penalty of
    $50,000 for each such failure.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    If we acquire any asset from a C corporation, or a corporation
    that generally is subject to full corporate-level tax, in a
    merger or other transaction in which we acquire a basis in the
    asset that is determined by reference either to the C
    corporation&#146;s basis in the asset or to another asset, we
    will pay tax at the highest regular corporate rate applicable if
    we recognize gain on the sale or disposition of the asset during
    the <FONT style="white-space: nowrap">10-year</FONT>
    period after we acquire the asset provided no election is made
    for the transaction to be taxable on a current basis. The amount
    of gain on which we will pay tax is the lesser of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the amount of gain that we recognize at the time of the sale or
    disposition, and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the amount of gain that we would have recognized if we had sold
    the asset at the time we acquired it.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    We may be required to pay monetary penalties to the IRS in
    certain circumstances, including if we fail to meet
    record-keeping requirements intended to monitor our compliance
    with rules relating to the composition of a REIT&#146;s
    shareholders, as described below in
    &#147;&#151;&#160;Recordkeeping Requirements.&#148;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    The earnings of our lower-tier entities that are subchapter C
    corporations, including TRSs, will be subject to federal
    corporate income tax.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, notwithstanding our status as a REIT, we may also
    have to pay certain state and local income taxes, because not
    all states and localities treat REITs in the same manner that
    they are treated for federal income tax purposes. Moreover, as
    further described below, TRSs will be subject to federal, state
    and local corporate income tax on their taxable income.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Requirements
    for Qualification</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A REIT is a corporation, trust, or association that meets each
    of the following requirements:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="15%"></TD>
    <TD width="3%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    1.&#160;
</TD>
    <TD align="left">
    It is managed by one or more directors or trustees.
</TD>
</TR>

</TABLE>
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    <BR>
    88
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<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="15%"></TD>
    <TD width="3%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    2.&#160;
</TD>
    <TD align="left">
    Its beneficial ownership is evidenced by transferable shares, or
    by transferable certificates of beneficial interest.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    3.&#160;
</TD>
    <TD align="left">
    It would be taxable as a domestic corporation, but for the REIT
    provisions of the federal income tax laws.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    4.&#160;
</TD>
    <TD align="left">
    It is neither a financial institution nor an insurance company
    subject to special provisions of the federal income tax laws.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    5.&#160;
</TD>
    <TD align="left">
    At least 100&#160;persons are beneficial owners of its shares or
    ownership certificates.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    6.&#160;
</TD>
    <TD align="left">
    Not more than 50% in value of its outstanding shares or
    ownership certificates is owned, directly or indirectly, by five
    or fewer individuals, which the Code defines to include certain
    entities, during the last half of any taxable year.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    7.&#160;
</TD>
    <TD align="left">
    It elects to be a REIT, or has made such election for a previous
    taxable year, and satisfies all relevant filing and other
    administrative requirements established by the IRS that must be
    met to elect and maintain REIT status.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    8.&#160;
</TD>
    <TD align="left">
    It meets certain other qualification tests, described below,
    regarding the nature of its income and assets and the amount of
    its distributions to shareholders.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    9.&#160;
</TD>
    <TD align="left">
    It uses a calendar year for federal income tax purposes and
    complies with the recordkeeping requirements of the federal
    income tax laws.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We must meet requirements 1 through 4, 7, 8 and 9 during our
    entire taxable year and must meet requirement 5 during at least
    335&#160;days of a taxable year of 12&#160;months, or during a
    proportionate part of a taxable year of less than
    12&#160;months. Requirements 5 and 6 will apply to us beginning
    with our 2010 taxable year. If we comply with all the
    requirements for ascertaining the ownership of our outstanding
    shares in a taxable year and have no reason to know that we
    violated requirement 6, we will be deemed to have satisfied
    requirement 6 for that taxable year. For purposes of determining
    share ownership under requirement 6, an &#147;individual&#148;
    generally includes a supplemental unemployment compensation
    benefits plan, a private foundation, or a portion of a trust
    permanently set aside or used exclusively for charitable
    purposes. An &#147;individual,&#148; however, generally does not
    include a trust that is a qualified employee pension or profit
    sharing trust under the federal income tax laws, and
    beneficiaries of such a trust will be treated as holding our
    shares in proportion to their actuarial interests in the trust
    for purposes of requirement 6.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust provides restrictions regarding the
    transfer and ownership of our shares of beneficial interest. See
    &#147;Description of Shares of Beneficial Interest&#160;&#151;
    Restrictions on Ownership and Transfer.&#148; We believe that we
    will issue sufficient shares of beneficial interest with
    sufficient diversity of ownership to allow us to satisfy
    requirements 5 and 6 above. If we do not issue common shares to
    at least 100&#160;shareholders by January 2010 pursuant to this
    or subsequent offerings, we anticipate that we would satisfy
    requirement 5 by issuing preferred shares with a nominal value
    and a low liquidation preference to a limited number of
    investors. The restrictions in our declaration of trust are
    intended (among other things) to assist us in continuing to
    satisfy requirements 5 and 6 described above. These
    restrictions, however, may not ensure that we will, in all
    cases, be able to satisfy such share ownership requirements. If
    we fail to satisfy these share ownership requirements, our
    qualification as a REIT may terminate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we must satisfy all relevant filing and other
    administrative requirements established by the IRS that must be
    met to elect and maintain REIT status and comply with the
    record-keeping requirements of the Code and regulations
    promulgated thereunder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Qualified REIT Subsidiaries.</I>&#160;&#160;A corporation
    that is a &#147;qualified REIT subsidiary&#148; is not treated
    as a corporation separate from its parent REIT. All assets,
    liabilities, and items of income, deduction, and credit of a
    &#147;qualified REIT subsidiary&#148; are treated as assets,
    liabilities, and items of income, deduction, and credit of the
    REIT. A &#147;qualified REIT subsidiary&#148; is a corporation,
    other than a TRS, all of the stock of which is owned by the
    REIT. Thus, in applying the requirements described herein, any
    &#147;qualified REIT subsidiary&#148; that we
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    own will be ignored, and all assets, liabilities, and items of
    income, deduction, and credit of such subsidiary will be treated
    as our assets, liabilities, and items of income, deduction, and
    credit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Other Disregarded Entities and
    Partnerships.</I>&#160;&#160;An unincorporated domestic entity,
    such as a partnership or limited liability company that has a
    single owner, generally is not treated as an entity separate
    from its parent for federal income tax purposes. An
    unincorporated domestic entity with two or more owners is
    generally treated as a partnership for federal income tax
    purposes. In the case of a REIT that is a partner in a
    partnership that has other partners, the REIT is treated as
    owning its proportionate share of the assets of the partnership
    and as earning its allocable share of the gross income of the
    partnership for purposes of the applicable REIT qualification
    tests. Our proportionate share for purposes of the 10% value
    test (see &#147;&#151;&#160;Asset Tests&#148;) will be based on
    our proportionate interest in the equity interests and certain
    debt securities issued by the partnership. For all of the other
    asset and income tests, our proportionate share will be based on
    our proportionate interest in the capital interests in the
    partnership. Our proportionate share of the assets, liabilities,
    and items of income of any partnership, joint venture, or
    limited liability company that is treated as a partnership for
    federal income tax purposes in which we acquire an equity
    interest, directly or indirectly, will be treated as our assets
    and gross income for purposes of applying the various REIT
    qualification requirements.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Taxable REIT Subsidiaries.</I>&#160;&#160;A REIT may own up
    to 100% of the capital stock of one or more TRSs. A TRS is a
    fully taxable corporation that may earn income that would not be
    qualifying income if earned directly by the parent REIT. The
    subsidiary and the REIT must jointly elect to treat the
    subsidiary as a TRS. A corporation of which a TRS directly or
    indirectly owns more than 35% of the voting power or value of
    the stock will automatically be treated as a TRS. However, an
    entity will not qualify as a TRS if it directly or indirectly
    operates or manages a lodging or health care facility or,
    generally, provides to another person under a franchise,
    license, or otherwise, rights to any brand name under which any
    lodging facility or health care facility is operated, unless
    such rights are provided to an &#147;eligible independent
    contractor&#148; (as defined below under &#147;&#151;&#160;Gross
    Income Tests&#160;&#151; Rents from Real Property&#148;) to
    operate or manage a lodging facility or health care facility and
    such lodging facility or health care facility is either owned by
    the TRS or leased to the TRS by its parent REIT. Additionally, a
    TRS that employs individuals working at a qualified lodging
    facility outside the United&#160;States will not be considered
    to operate or manage a qualified lodging facility as long as an
    &#147;eligible independent contractor&#148; is responsible for
    the daily supervision and direction of such individuals on
    behalf of the TRS pursuant to a management contract or similar
    service contract.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are not treated as holding the assets of a TRS or as
    receiving any income that the subsidiary earns. Rather, the
    stock issued by a TRS to us is an asset in our hands, and we
    treat the distributions paid to us from such taxable subsidiary,
    if any, as income. This treatment can affect our compliance with
    the gross income and asset tests. Because we do not include the
    assets and income of TRSs in determining our compliance with the
    REIT requirements, we may use such entities to undertake
    indirectly activities that the REIT rules might otherwise
    preclude us from doing directly or through pass-through
    subsidiaries. Overall, no more than 25% of the value of a
    REIT&#146;s assets may consist of stock or securities of one or
    more TRSs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A TRS will pay income tax at regular corporate rates on any
    income that it earns. In addition, the TRS rules limit the
    deductibility of interest paid or accrued by a TRS to its parent
    REIT to assure that the TRS is subject to an appropriate level
    of corporate taxation. Further, the rules impose a 100% excise
    tax on transactions between a TRS and its parent REIT or the
    REIT&#146;s tenants that are not conducted on an
    arm&#146;s-length basis. We intend to form several TRSs which
    will be the lessees of our hotel properties. See
    &#147;&#151;&#160;Taxable REIT Subsidiaries.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Gross
    Income Tests</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We must satisfy two gross income tests annually to maintain our
    qualification as a REIT. First, at least 75% of our gross income
    for each taxable year must consist of defined types of income
    that we derive, directly or indirectly, from investments
    relating to real property or mortgages on real property or
    qualified
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    temporary investment income. Qualifying income for purposes of
    that 75% gross income test generally includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    rents from real property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    interest on debt secured by mortgages on real property, or on
    interests in real property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    dividends or other distributions on, and gain from the sale of,
    shares in other REITs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    gain from the sale of real estate assets; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    income derived from the temporary investment of new capital that
    is attributable to the issuance of our shares of beneficial
    interest or a public offering of our debt with a maturity date
    of at least five years and that we receive during the one-year
    period beginning on the date on which we received such new
    capital.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Second, in general, at least 95% of our gross income for each
    taxable year must consist of income that is qualifying income
    for purposes of the 75% gross income test, other types of
    interest and dividends, gain from the sale or disposition of
    shares or securities, or any combination of these. Gross income
    from our sale of property that we hold primarily for sale to
    customers in the ordinary course of business is excluded from
    both the numerator and the denominator in both gross income
    tests. In addition, income and gain from &#147;hedging
    transactions&#148; that we enter into to hedge indebtedness
    incurred or to be incurred to acquire or carry real estate
    assets and that are clearly and timely identified as such will
    be excluded from both the numerator and the denominator for
    purposes of the 75% and 95% gross income tests. In addition,
    certain foreign currency gains will be excluded from gross
    income for purposes of one or both of the gross income tests.
    See &#147;&#151;&#160;Foreign Currency Gain&#148; below. The
    following paragraphs discuss the specific application of the
    gross income tests to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Rents from Real Property.</I>&#160;&#160;Rent that we receive
    from our real property will qualify as &#147;rents from real
    property,&#148; which is qualifying income for purposes of the
    75% and 95% gross income tests, only if the following conditions
    are met:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    First, the rent must not be based, in whole or in part, on the
    income or profits of any person, but may be based on a fixed
    percentage or percentages of receipts or sales.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Second, neither we nor a direct or indirect owner of 10% or more
    of our shares of beneficial interest may own, actually or
    constructively, 10% or more of a tenant from whom we receive
    rent, other than a TRS. If the tenant is a TRS, such TRS may not
    directly or indirectly operate or manage the related property.
    Instead, the property must be operated on behalf of the TRS by a
    person who qualifies as an &#147;independent contractor&#148;
    and who is, or is related to a person who is, actively engaged
    in the trade or business of operating lodging facilities for any
    person unrelated to us and the TRS. See
    &#147;&#151;&#160;Taxable REIT Subsidiaries.&#148;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Third, if the rent attributable to personal property leased in
    connection with a lease of real property is 15% or less of the
    total rent received under the lease, then the rent attributable
    to personal property will qualify as rents from real property.
    However, if the 15% threshold is exceeded, the rent attributable
    to personal property will not qualify as rents from real
    property.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Fourth, we generally must not operate or manage our real
    property or furnish or render services to our tenants, other
    than through an &#147;independent contractor&#148; who is
    adequately compensated and from whom we do not derive revenue.
    However, we need not provide services through an
    &#147;independent contractor,&#148; but instead may provide
    services directly to our tenants, if the services are
    &#147;usually or customarily rendered&#148; in connection with
    the rental of space for occupancy only and are not considered to
    be provided for the tenants&#146; convenience. In addition, we
    may provide a minimal amount of &#147;noncustomary&#148;
    services to the tenants of a property, other than through an
    independent contractor, as long as our income from the services
    (valued at not less than 150% of our direct cost of performing
    such services) does not exceed 1% of our income from the related
    property. Furthermore, we may own up to 100% of the stock of a
    TRS which may
</TD>
</TR>
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</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    91
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    provide customary and noncustomary services to our tenants
    without tainting our rental income for the related properties.
    See &#147;&#151;&#160;Taxable REIT Subsidiaries.&#148;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our TRS lessees will lease from our operating partnership and
    its subsidiaries the land, buildings, improvements, furnishings
    and equipment comprising our hotel properties. In order for the
    rent paid under the leases to constitute &#147;rents from real
    property,&#148; the leases must be respected as true leases for
    federal income tax purposes and not treated as service
    contracts, joint ventures or some other type of arrangement. The
    determination of whether our leases are true leases depends on
    an analysis of all the surrounding facts and circumstances. In
    making such a determination, courts have considered a variety of
    factors, including the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the intent of the parties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the form of the agreement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the degree of control over the property that is retained by the
    property owner (for example, whether the lessee has substantial
    control over the operation of the property or whether the lessee
    was required simply to use its best efforts to perform its
    obligations under the agreement); and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the extent to which the property owner retains the risk of loss
    with respect to the property (for example, whether the lessee
    bears the risk of increases in operating expenses or the risk of
    damage to the property) or the potential for economic gain with
    respect to the property.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the federal income tax law provides that a contract
    that purports to be a service contract or a partnership
    agreement is treated instead as a lease of property if the
    contract is properly treated as such, taking into account all
    relevant factors. Since the determination of whether a service
    contract should be treated as a lease is inherently factual, the
    presence or absence of any single factor may not be dispositive
    in every case.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently intend to structure our leases so that they qualify
    as true leases for federal income tax purposes. For example,
    with respect to each lease, we generally expect that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our operating partnership and the lessee will intend for their
    relationship to be that of a lessor and lessee, and such
    relationship will be documented by a lease agreement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will have the right to exclusive possession and use
    and quiet enjoyment of the hotels covered by the lease during
    the term of the lease;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will bear the cost of, and will be responsible for,
    <FONT style="white-space: nowrap">day-to-day</FONT>
    maintenance and repair of the hotels other than the cost of
    certain capital expenditures, and will dictate through hotel
    managers that are eligible independent contractors, who will
    work for the lessee during the terms of the lease, and how the
    hotels will be operated and maintained;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will bear all of the costs and expenses of operating
    the hotels, including the cost of any inventory used in their
    operation, during the term of the lease, other than real estate
    and personal property taxes and the cost of certain furniture,
    fixtures and equipment, and certain capital expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will benefit from any savings and will bear the
    burdens of any increases in the costs of operating the hotels
    during the term of the lease;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    in the event of damage or destruction to a hotel, the lessee
    will be at economic risk because it will bear the economic
    burden of the loss in income from operation of the hotels
    subject to the right, in certain circumstances, to terminate the
    lease if the lessor does not restore the hotel to its prior
    condition;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will generally indemnify the lessor against all
    liabilities imposed on the lessor during the term of the lease
    by reason of (A)&#160;injury to persons or damage to property
    occurring at the hotels or (B)&#160;the lessee&#146;s use,
    management, maintenance or repair of the hotels;
</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    92
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will be obligated to pay, at a minimum, substantial
    base rent for the period of use of the hotels under the lease;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the lessee will stand to incur substantial losses or reap
    substantial gains depending on how successfully it, through the
    hotel managers, who work for the lessees during the terms of the
    leases, operates the hotels;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we expect that each lease that we enter into, at the time we
    enter into it (or at any time that any such lease is
    subsequently renewed or extended) will enable the tenant to
    derive a meaningful profit, after expenses and taking into
    account the risks associated with the lease, from the operation
    of the hotels during the term of its leases; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    upon termination of each lease, the applicable hotel will be
    expected to have a substantial remaining useful life and
    substantial remaining fair market value.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investors should be aware that there are no controlling Treasury
    regulations, published rulings or judicial decisions involving
    leases with terms substantially the same as our leases that
    discuss whether such leases constitute true leases for federal
    income tax purposes. If our leases are characterized as service
    contracts or partnership agreements, rather than as true leases,
    part or all of the payments that our operating partnership and
    its subsidiaries receive from the TRS lessees may not be
    considered rent or may not otherwise satisfy the various
    requirements for qualification as &#147;rents from real
    property.&#148; In that case, we likely would not be able to
    satisfy either the 75% or 95% gross income test and, as a
    result, would lose our REIT status unless we qualify for relief,
    as described below under &#147;&#151;&#160;Failure to Satisfy
    Gross Income Tests.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As described above, in order for the rent that we receive to
    constitute &#147;rents from real property,&#148; several other
    requirements must be satisfied. One requirement is that
    percentage rent must not be based in whole or in part on the
    income or profits of any person. Percentage rent, however, will
    qualify as &#147;rents from real property&#148; if it is based
    on percentages of receipts or sales and the percentages:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    are fixed at the time the percentage leases are entered into;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    are not renegotiated during the term of the percentage leases in
    a manner that has the effect of basing percentage rent on income
    or profits; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    conform with normal business practice.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    More generally, percentage rent will not qualify as &#147;rents
    from real property&#148; if, considering the leases and all the
    surrounding circumstances, the arrangement does not conform with
    normal business practice, but is in reality used as a means of
    basing the percentage rent on income or profits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Second, we must not own, actually or constructively, 10% or more
    of the shares or the assets or net profits of any lessee (a
    &#147;related party tenant&#148;), other than a TRS. The
    constructive ownership rules generally provide that, if 10% or
    more in value of our shares of beneficial interest is owned,
    directly or indirectly, by or for any person, we are considered
    as owning the shares owned, directly or indirectly, by or for
    such person. We anticipate that all of our hotels will be leased
    to TRSs. In addition, our declaration of trust prohibits
    transfers of our shares of beneficial interest that would cause
    us to own actually or constructively, 10% or more of the
    ownership interests in any non-TRS lessee. Based on the
    foregoing, we should never own, actually or constructively, 10%
    or more of any lessee other than a TRS. However, because the
    constructive ownership rules are broad and it is not possible to
    monitor continually direct and indirect transfers of our shares
    of beneficial interest, no absolute assurance can be given that
    such transfers or other events of which we have no knowledge
    will not cause us to own constructively 10% or more of a lessee
    (or a subtenant, in which case only rent attributable to the
    subtenant is disqualified) other than a TRS at some future date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As described above, we may own up to 100% of the capital stock
    of one or more TRSs. A TRS is a fully taxable corporation that
    is permitted to lease hotel properties from the related REIT as
    long as it does not directly or indirectly operate or manage any
    lodging facilities or health care facilities or provide rights
    to any brand name under which any lodging or health care
    facility is operated, unless such rights are provided to an
    &#147;eligible independent contractor&#148; to operate or manage
    a lodging or health care facility if such rights are held
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    by the TRS as a franchisee, licensee, or in a similar capacity
    and such hotel is either owned by the TRS or leased to the TRS
    by its parent REIT. A TRS will not be considered to operate or
    manage a qualified lodging facility solely because the TRS
    directly or indirectly possesses a license, permit, or similar
    instrument enabling it to do so. Additionally, a TRS will not be
    considered to operate or manage a qualified lodging facility
    located outside of the United States, as long as an
    &#147;eligible independent contractor&#148; is responsible for
    the daily supervision and direction of such individuals on
    behalf of the TRS pursuant to a management contract or similar
    service contract. However, rent that we receive from a TRS will
    qualify as &#147;rents from real property&#148; as long as the
    property is operated on behalf of the TRS by an
    &#147;independent contractor&#148; who is adequately
    compensated, who does not, directly or through its shareholders,
    own more than 35% of our shares, taking into account certain
    ownership attribution rules, and who is, or is related to a
    person who is, actively engaged in the trade or business of
    operating &#147;qualified lodging facilities&#148; for any
    person unrelated to us and the TRS lessee (an &#147;eligible
    independent contractor&#148;). A &#147;qualified lodging
    facility&#148; is a hotel, motel, or other establishment more
    than one-half of the dwelling units in which are used on a
    transient basis, unless wagering activities are conducted at or
    in connection with such facility by any person who is engaged in
    the business of accepting wagers and who is legally authorized
    to engage in such business at or in connection with such
    facility. A &#147;qualified lodging facility&#148; includes
    customary amenities and facilities operated as part of, or
    associated with, the lodging facility as long as such amenities
    and facilities are customary for other properties of a
    comparable size and class owned by other unrelated owners. See
    &#147;&#151;&#160;Taxable REIT Subsidiaries.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to form several TRSs to lease our hotel properties.
    Our TRS lessees will engage independent third-party hotel
    managers that qualify as &#147;eligible independent
    contractors&#148; to operate the related hotels on behalf of
    such TRS lessees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Third, the rent attributable to the personal property leased in
    connection with the lease of a hotel must not be greater than
    15% of the total rent received under the lease. The rent
    attributable to the personal property contained in a hotel is
    the amount that bears the same ratio to total rent for the
    taxable year as the average of the fair market values of the
    personal property at the beginning and at the end of the taxable
    year bears to the average of the aggregate fair market values of
    both the real and personal property contained in the hotel at
    the beginning and at the end of such taxable year (the
    &#147;personal property ratio&#148;). To comply with this
    limitation, a TRS lessee may acquire furnishings, equipment and
    other personal property. With respect to each hotel in which the
    TRS lessee does not own the personal property, we believe either
    that the personal property ratio will be less than 15% or that
    any rent attributable to excess personal property will not
    jeopardize our ability to qualify as a REIT. There can be no
    assurance, however, that the IRS would not challenge our
    calculation of a personal property ratio, or that a court would
    not uphold such assertion. If such a challenge were successfully
    asserted, we could fail to satisfy the 75% or 95% gross income
    test and thus potentially lose our REIT status.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fourth, we cannot furnish or render noncustomary services to the
    tenants of our hotels, or manage or operate our hotels, other
    than through an independent contractor who is adequately
    compensated and from whom we do not derive or receive any
    income. However, we need not provide services through an
    &#147;independent contractor,&#148; but instead may provide
    services directly to our tenants, if the services are
    &#147;usually or customarily rendered&#148; in connection with
    the rental of space for occupancy only and are not considered to
    be provided for the tenants&#146; convenience. In addition, we
    may provide a minimal amount of &#147;noncustomary&#148;
    services to the tenants of a property, other than through an
    independent contractor, as long as our income from the services
    does not exceed 1% of our income from the related property.
    Finally, we may own up to 100% of the capital stock of one or
    more TRSs, which may provide noncustomary services to our
    tenants without tainting our rents from the related hotel
    properties. We will not perform any services other than
    customary ones for our lessees, unless such services are
    provided through independent contractors or TRSs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a portion of the rent that we receive from a hotel does not
    qualify as &#147;rents from real property&#148; because the rent
    attributable to personal property exceeds 15% of the total rent
    for a taxable year, the portion of the rent that is attributable
    to personal property will not be qualifying income for purposes
    of either the 75% or 95% gross income test. Thus, if such rent
    attributable to personal property, plus any other income that is
    nonqualifying income for purposes of the 95% gross income test,
    during a taxable year exceeds 5% of our gross income during the
    year, we would lose our REIT qualification. If, however, the
    rent from a particular
</DIV>
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    <BR>
    94
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    hotel does not qualify as &#147;rents from real property&#148;
    because either (1)&#160;the percentage rent is considered based
    on the income or profits of the related lessee, (2)&#160;the
    lessee either is a related party tenant or fails to qualify for
    the exception to the related party tenant rule for qualifying
    TRSs or (3)&#160;we furnish noncustomary services to the tenants
    of the hotel, or manage or operate the hotel, other than through
    a qualifying independent contractor or a TRS, none of the rent
    from that hotel would qualify as &#147;rents from real
    property.&#148; In that case, we might lose our REIT
    qualification because we might be unable to satisfy either the
    75% or 95% gross income test. In addition to the rent, the
    lessees will be required to pay certain additional charges. To
    the extent that such additional charges represent either
    (1)&#160;reimbursements of amounts that we are obligated to pay
    to third parties, such as a lessee&#146;s proportionate share of
    a property&#146;s operational or capital expenses, or
    (2)&#160;penalties for nonpayment or late payment of such
    amounts, such charges should qualify as &#147;rents from real
    property.&#148; However, to the extent that such charges do not
    qualify as &#147;rents from real property,&#148; they instead
    will be treated as interest that qualifies for the 95% gross
    income test.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Interest.</I>&#160;&#160;The term &#147;interest&#148;
    generally does not include any amount received or accrued,
    directly or indirectly, if the determination of such amount
    depends in whole or in part on the income or profits of any
    person. However, interest generally includes the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an amount that is based on a fixed percentage or percentages of
    receipts or sales;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an amount that is based on the income or profits of a debtor, as
    long as the debtor derives substantially all of its income from
    the real property securing the debt from leasing substantially
    all of its interest in the property, and only to the extent that
    the amounts received by the debtor would be qualifying
    &#147;rents from real property&#148; if received directly by a
    REIT.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a loan contains a provision that entitles a REIT to a
    percentage of the borrower&#146;s gain upon the sale of the real
    property securing the loan or a percentage of the appreciation
    in the property&#146;s value as of a specific date, income
    attributable to that loan provision will be treated as gain from
    the sale of the property securing the loan, which generally is
    qualifying income for purposes of both gross income tests.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may, on a select basis, purchase mortgage debt and mezzanine
    loans when we believe our investment will allow us to acquire
    ownership of the underlying property. Interest on debt secured
    by a mortgage on real property or on interests in real property,
    including, for this purpose, discount points, prepayment
    penalties, loan assumption fees, and late payment charges that
    are not compensation for services, generally is qualifying
    income for purposes of the 75% gross income test. However, if a
    loan is secured by real property and other property and the
    highest principal amount of a loan outstanding during a taxable
    year exceeds the fair market value of the real property securing
    the loan as of the date the REIT agreed to acquire the loan, a
    portion of the interest income from such loan will not be
    qualifying income for purposes of the 75% gross income test, but
    will be qualifying income for purposes of the 95% gross income
    test. The portion of the interest income that will not be
    qualifying income for purposes of the 75% gross income test will
    be equal to the portion of the principal amount of the loan that
    is not secured by real property&#160;&#151; that is, the amount
    by which the loan exceeds the value of the real estate that is
    security for the loan.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mezzanine loans are loans secured by equity interests in an
    entity that directly or indirectly owns real property, rather
    than by a direct mortgage of the real property. IRS Revenue
    Procedure
    <FONT style="white-space: nowrap">2003-65</FONT>
    provides a safe harbor pursuant to which a mezzanine loan, if it
    meets each of the requirements contained in the Revenue
    Procedure, will be treated by the IRS as a real estate asset for
    purposes of the REIT asset tests described below, and interest
    derived from it will be treated as qualifying mortgage interest
    for purposes of the 75% gross income test. Although the Revenue
    Procedure provides a safe harbor on which taxpayers may rely, it
    does not prescribe rules of substantive tax law. Moreover, we
    anticipate that the mezzanine loans we will acquire typically
    will not meet all of the requirements for reliance on this safe
    harbor. We intend to invest in mezzanine loans in manner that
    will enable us to continue to satisfy the gross income and asset
    tests.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Dividends.</I>&#160;&#160;Our share of any dividends received
    from any corporation (including any TRS, but excluding any REIT)
    in which we own an equity interest will qualify for purposes of
    the 95% gross income test but not for purposes of the 75% gross
    income test. Our share of any dividends received from any other
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    REIT in which we own an equity interest, if any, will be
    qualifying income for purposes of both gross income tests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Prohibited Transactions.</I>&#160;&#160;A REIT will incur a
    100% tax on the net income (including foreign currency gain)
    derived from any sale or other disposition of property, other
    than foreclosure property, that the REIT holds primarily for
    sale to customers in the ordinary course of a trade or business.
    We believe that none of our assets will be held primarily for
    sale to customers and that a sale of any of our assets will not
    be in the ordinary course of our business. Whether a REIT holds
    an asset &#147;primarily for sale to customers in the ordinary
    course of a trade or business&#148; depends, however, on the
    facts and circumstances in effect from time to time, including
    those related to a particular asset. A safe harbor to the
    characterization of the sale of property by a REIT as a
    prohibited transaction and the 100% prohibited transaction tax
    is available if the following requirements are met:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the REIT has held the property for not less than two years;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the aggregate expenditures made by the REIT, or any partner of
    the REIT, during the two-year period preceding the date of the
    sale that are includable in the basis of the property do not
    exceed 30% of the selling prince of the property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    either (1)&#160;during the year in question, the REIT did not
    make more than seven sales of property other than foreclosure
    property or sales to which Section&#160;1033 of the Code
    applies, (2)&#160;the aggregate adjusted bases of all such
    properties sold by the REIT during the year did not exceed 10%
    of the aggregate bases of all of the assets of the REIT at the
    beginning of the year or (3)&#160;the aggregate fair market
    value of all such properties sold by the REIT during the year
    did not exceed 10% of the aggregate fair market value of all of
    the assets of the REIT at the beginning of the year;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    in the case of property not acquired through foreclosure or
    lease termination, the REIT has held the property for at least
    two years for the production of rental income;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    if the REIT has made more than seven sales of non-foreclosure
    property during the taxable year, substantially all of the
    marketing and development expenditures with respect to the
    property were made through an independent contractor from whom
    the REIT derives no income.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will attempt to comply with the terms of safe-harbor
    provision in the federal income tax laws prescribing when an
    asset sale will not be characterized as a prohibited
    transaction. We cannot assure you, however, that we can comply
    with the safe-harbor provision or that we will avoid owning
    property that may be characterized as property that we hold
    &#147;primarily for sale to customers in the ordinary course of
    a trade or business.&#148; The 100% tax will not apply to gains
    from the sale of property that is held through a TRS or other
    taxable corporation, although such income will be taxed to the
    corporation at regular corporate income tax rates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Foreclosure Property.</I>&#160;&#160;We will be subject to
    tax at the maximum corporate rate on any income from foreclosure
    property, which includes certain foreign currency gains and
    related deductions, other than income that otherwise would be
    qualifying income for purposes of the 75% gross income test,
    less expenses directly connected with the production of that
    income. However, gross income from foreclosure property will
    qualify under the 75% and 95% gross income tests. Foreclosure
    property is any real property, including interests in real
    property, and any personal property incident to such real
    property:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    that is acquired by a REIT as the result of the REIT having bid
    on such property at foreclosure, or having otherwise reduced
    such property to ownership or possession by agreement or process
    of law, after there was a default or default was imminent on a
    lease of such property or on indebtedness that such property
    secured;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    for which the related loan was acquired by the REIT at a time
    when the default was not imminent or anticipated;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    for which the REIT makes a proper election to treat the property
    as foreclosure property.
</TD>
</TR>

</TABLE>
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A REIT will not be considered to have foreclosed on a property
    where the REIT takes control of the property as a
    <FONT style="white-space: nowrap">mortgagee-in-possession</FONT>
    and cannot receive any profit or sustain any loss except as a
    creditor of the mortgagor. Property generally ceases to be
    foreclosure property at the end of the third taxable year
    following the taxable year in which the REIT acquired the
    property, or longer if an extension is granted by the Secretary
    of the Treasury. However, this grace period terminates and
    foreclosure property ceases to be foreclosure property on the
    first day:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    on which a lease is entered into for the property that, by its
    terms, will give rise to income that does not qualify for
    purposes of the 75% gross income test, or any amount is received
    or accrued, directly or indirectly, pursuant to a lease entered
    into on or after such day that will give rise to income that
    does not qualify for purposes of the 75% gross income test;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    on which any construction takes place on the property, other
    than completion of a building or any other improvement, where
    more than 10% of the construction was completed before default
    became imminent;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    which is more than 90&#160;days after the day on which the REIT
    acquired the property and the property is used in a trade or
    business which is conducted by the REIT, other than through an
    independent contractor from whom the REIT itself does not derive
    or receive any income.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Hedging Transactions.</I>&#160;&#160;From time to time, we or
    our operating partnership may enter into hedging transactions
    with respect to one or more of our assets or liabilities. Our
    hedging activities may include entering into interest rate
    swaps, caps, and floors, options to purchase such items, and
    futures and forward contracts. Income and gain from
    &#147;hedging transactions&#148; will be excluded from gross
    income for purposes of both the 75% and 95% gross income tests.
    A &#147;hedging transaction&#148; means either (1)&#160;any
    transaction entered into in the normal course of our or our
    operating partnership&#146;s trade or business primarily to
    manage the risk of interest rate changes, price changes, or
    currency fluctuations with respect to borrowings made or to be
    made, or ordinary obligations incurred or to be incurred, to
    acquire or carry real estate assets and (2)&#160;any transaction
    entered into primarily to manage the risk of currency
    fluctuations with respect to any item of income or gain that
    would be qualifying income under the 75% or 95% gross income
    test (or any property which generates such income or gain). We
    are required to clearly identify any such hedging transaction
    before the close of the day on which it was acquired or entered
    into and to satisfy other identification requirements. We intend
    to structure any hedging transactions in a manner that does not
    jeopardize our qualification as a REIT.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Foreign Currency Gain.</I>&#160;&#160;Certain foreign
    currency gains will be excluded from gross income for purposes
    of one or both of the gross income tests. &#147;Real estate
    foreign exchange gain&#148; will be excluded from gross income
    for purposes of the 75% gross income test. Real estate foreign
    exchange gain generally includes foreign currency gain
    attributable to any item of income or gain that is qualifying
    income for purposes of the 75% gross income test, foreign
    currency gain attributable to the acquisition or ownership of
    (or becoming or being the obligor under) obligations secured by
    mortgages on real property or on interests in real property and
    certain foreign currency gain attributable to certain
    &#147;qualified business units&#148; of a REIT. &#147;Passive
    foreign exchange gain&#148; will be excluded from gross income
    for purposes of the 95% gross income test. Passive foreign
    exchange gain generally includes real estate foreign exchange
    gain as described above, and also includes foreign currency gain
    attributable to any item of income or gain that is qualifying
    income for purposes of the 95% gross income test and foreign
    currency gain attributable to the acquisition or ownership of
    (or becoming or being the obligor under) obligations. Because
    passive foreign exchange gain includes real estate foreign
    exchange gain, real estate foreign exchange gain is excluded
    from gross income for purposes of both the 75% and 95% gross
    income tests. These exclusions for real estate foreign exchange
    gain and passive foreign exchange gain do not apply to any
    certain foreign currency gain derived from dealing, or engaging
    in substantial and regular trading, in securities. Such gain is
    treated as nonqualifying income for purposes of both the 75% and
    95% gross income tests.
</DIV>
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    <BR>
    97
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Failure to Satisfy Gross Income Tests.</I>&#160;&#160;If we
    fail to satisfy one or both of the gross income tests for any
    taxable year, we nevertheless may qualify as a REIT for that
    year if we qualify for relief under certain provisions of the
    federal income tax laws. Those relief provisions are available
    if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our failure to meet those tests is due to reasonable cause and
    not to willful neglect;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    following such failure for any taxable year, we file a schedule
    of the sources of our income in accordance with regulations
    prescribed by the Secretary of the U.S.&#160;Treasury.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We cannot predict, however, whether in all circumstances we
    would qualify for the relief provisions. In addition, as
    discussed above in &#147;&#151;&#160;Taxation of Our
    Company,&#148; even if the relief provisions apply, we would
    incur a 100% tax on the gross income attributable to the greater
    of the amount by which we fail the 75% gross income test or the
    95% gross income test multiplied, in either case, by a fraction
    intended to reflect our profitability.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Asset
    Tests</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To qualify as a REIT, we also must satisfy the following asset
    tests at the end of each quarter of each taxable year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    First, at least 75% of the value of our total assets must
    consist of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    cash or cash items, including certain receivables and, in
    certain circumstances, foreign currencies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    government securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    interests in real property, including leaseholds and options to
    acquire real property and leaseholds;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    interests in mortgages loans secured by real property;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    stock in other REITs;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    investments in stock or debt instruments during the one-year
    period following our receipt of new capital that we raise
    through equity offerings or public offerings of debt with at
    least a five-year term.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Second, of our investments not included in the 75% asset class,
    the value of our interest in any one issuer&#146;s securities
    may not exceed 5% of the value of our total assets, or the 5%
    asset test.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Third, of our investments not included in the 75% asset class,
    we may not own more than 10% of the voting power or value of any
    one issuer&#146;s outstanding securities, or the 10% vote or
    value test.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fourth, no more than 25% of the value of our total assets may
    consist of the securities of one or more TRSs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fifth, no more than 25% of the value of our total assets may
    consist of the securities of TRSs and other non-TRS taxable
    subsidiaries and other assets that are not qualifying assets for
    purposes of the 75% asset test, or the 25% securities test.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of the 5% asset test and the 10% vote or value
    test, the term &#147;securities&#148; does not include shares in
    another REIT, equity or debt securities of a qualified REIT
    subsidiary or TRS, mortgage loans that constitute real estate
    assets, or equity interests in a partnership. The term
    &#147;securities,&#148; however, generally includes debt
    securities issued by a partnership or another REIT, except that
    for purposes of the 10% value test, the term
    &#147;securities&#148; does not include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    <I>&#147;Straight debt&#148; </I>securities, which is defined as
    a written unconditional promise to pay on demand or on a
    specified date a sum certain in money if (i)&#160;the debt is
    not convertible, directly or indirectly, into shares, and
    (ii)&#160;the interest rate and interest payment dates are not
    contingent on profits, the borrower&#146;s discretion, or
    similar factors. &#147;Straight debt&#148; securities do not
    include
</TD>
</TR>

</TABLE>
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    <BR>
    98
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    any securities issued by a partnership or a corporation in which
    we or any controlled TRS (<I>i.e.</I>, a TRS in which we own
    directly or indirectly more than 50% of the voting power or
    value of the stock) hold non-&#147;straight debt&#148;
    securities that have an aggregate value of more than 1% of the
    issuer&#146;s outstanding securities. However, &#147;straight
    debt&#148; securities include debt subject to the following
    contingencies:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a contingency relating to the time of payment of interest or
    principal, as long as either (i)&#160;there is no change to the
    effective yield of the debt obligation, other than a change to
    the annual yield that does not exceed the greater of 0.25% or 5%
    of the annual yield, or (ii)&#160;neither the aggregate issue
    price nor the aggregate face amount of the issuer&#146;s debt
    obligations held by us exceeds $1&#160;million and no more than
    12&#160;months of unaccrued interest on the debt obligations can
    be required to be prepaid;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a contingency relating to the time or amount of payment upon a
    default or prepayment of a debt obligation, as long as the
    contingency is consistent with customary commercial practice.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any loan to an individual or an estate;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any &#147;section&#160;467&#160;rental agreement,&#148; other
    than an agreement with a related party tenant;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any obligation to pay &#147;rents from real property&#148;;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Certain securities issued by governmental entities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any security issued by a REIT;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any debt instrument issued by an entity treated as a partnership
    for federal income tax purposes in which we are a partner to the
    extent of our proportionate interest in the equity and debt
    securities of the partnership;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    Any debt instrument issued by an entity treated as a partnership
    for federal income tax purposes not described in the preceding
    bullet points if at least 75% of the partnership&#146;s gross
    income, excluding income from prohibited transactions, is
    qualifying income for purposes of the 75% gross income test
    described above in &#147;&#151;&#160;Gross Income Tests.&#148;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For purposes of the 10% value test, our proportionate share of
    the assets of a partnership is our proportionate interest in any
    securities issued by the partnership, without regard to the
    securities described in the last two bullet points above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As described above, we may, on a select basis, invest in
    mezzanine loans. Although we expect that our investments in
    mezzanine loans will generally be treated as real estate assets,
    we anticipate that the mezzanine loans in which we invest will
    not meet all the requirements of the safe harbor in IRS Revenue
    Procedure
    <FONT style="white-space: nowrap">2003-65.</FONT>
    Thus no assurance can be provided that the IRS will not
    challenge our treatment of mezzanine loans as real estate
    assets. We intend to invest in mezzanine loans in a manner that
    will enable us to continue to satisfy the asset and gross income
    test requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will monitor the status of our assets for purposes of the
    various asset tests and will manage our portfolio in order to
    comply at all times with such tests. If we fail to satisfy the
    asset tests at the end of a calendar quarter, we will not lose
    our REIT qualification if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we satisfied the asset tests at the end of the preceding
    calendar quarter;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the discrepancy between the value of our assets and the asset
    test requirements arose from changes in the market values of our
    assets and was not wholly or partly caused by the acquisition of
    one or more non-qualifying assets.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we did not satisfy the condition described in the second
    item, above, we still could avoid disqualification by
    eliminating any discrepancy within 30&#160;days after the close
    of the calendar quarter in which it arose.
</DIV>
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    <BR>
    99
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that we violate the 5% asset test or the 10% vote
    or value test described above, we will not lose our REIT
    qualification if (1)&#160;the failure is <I>de minimis </I>(up
    to the lesser of 1% of our assets or $10&#160;million) and
    (2)&#160;we dispose of assets or otherwise comply with the asset
    tests within six months after the last day of the quarter in
    which we identify such failure. In the event of a failure of any
    of the asset tests (other than <I>de minimis </I>failures
    described in the preceding sentence), as long as the failure was
    due to reasonable cause and not to willful neglect, we will not
    lose our REIT status if we (1)&#160;dispose of assets or
    otherwise comply with the asset tests within six months after
    the last day of the quarter in which we identify the failure,
    (2)&#160;we file a description of each asset causing the failure
    with the IRS and (3)&#160;pay a tax equal to the greater of
    $50,000 or 35% of the net income from the nonqualifying assets
    during the period in which we failed to satisfy the asset tests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We believe that the assets that we will hold will satisfy the
    foregoing asset test requirements. However, we will not obtain
    independent appraisals to support our conclusions as to the
    value of our assets and securities, or the real estate
    collateral for the mortgage or mezzanine loans that support our
    investments. Moreover, the values of some assets may not be
    susceptible to a precise determination. As a result, there can
    be no assurance that the IRS will not contend that our ownership
    of securities and other assets violates one or more of the asset
    tests applicable to REITs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Distribution
    Requirements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each taxable year, we must distribute dividends, other than
    capital gain dividends and deemed distributions of retained
    capital gain, to our shareholders in an aggregate amount at
    least equal to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the sum of
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    90% of our &#147;REIT taxable income,&#148; computed without
    regard to the dividends paid deduction and our net capital gain
    or loss,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    90% of our after-tax net income, if any, from foreclosure
    property, minus
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the sum of certain items of non-cash income.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We must pay such distributions in the taxable year to which they
    relate, or in the following taxable year if either (a)&#160;we
    declare the distribution before we timely file our federal
    income tax return for the year and pay the distribution on or
    before the first regular dividend payment date after such
    declaration or (b)&#160;we declare the distribution in October,
    November or December of the taxable year, payable to
    shareholders of record on a specified day in any such month, and
    we actually pay the dividend before the end of January of the
    following year. The distributions under clause&#160;(a) are
    taxable to the shareholders in the year in which paid, and the
    distributions in clause&#160;(b) are treated as paid on
    December&#160;31st&#160;of the prior taxable year. In both
    instances, these distributions relate to our prior taxable year
    for purposes of the 90% distribution requirement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay federal income tax on taxable income, including net
    capital gain, that we do not distribute to shareholders.
    Furthermore, if we fail to distribute during a calendar year, or
    by the end of January following the calendar year in the case of
    distributions with declaration and record dates falling in the
    last three months of the calendar year, at least the sum of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    85% of our REIT ordinary income for such year,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    95% of our REIT capital gain income for such year,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any undistributed taxable income from prior periods,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    we will incur a 4% nondeductible excise tax on the excess of
    such required distribution over the amounts we actually
    distribute.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may elect to retain and pay income tax on the net long-term
    capital gain we receive in a taxable year. If we so elect, we
    will be treated as having distributed any such retained amount
    for purposes of the 4% nondeductible excise tax described above.
    We intend to make timely distributions sufficient to satisfy the
    annual distribution requirements and to avoid corporate income
    tax and the 4% nondeductible excise tax.
</DIV>
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    <BR>
    100
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is possible that, from time to time, we may experience timing
    differences between the actual receipt of income and actual
    payment of deductible expenses and the inclusion of that income
    and deduction of such expenses in arriving at our REIT taxable
    income. For example, we may not deduct recognized capital losses
    from our &#147;REIT taxable income.&#148; Further, it is
    possible that, from time to time, we may be allocated a share of
    net capital gain attributable to the sale of depreciated
    property that exceeds our allocable share of cash attributable
    to that sale. As a result of the foregoing, we may have less
    cash than is necessary to distribute taxable income sufficient
    to avoid corporate income tax and the excise tax imposed on
    certain undistributed income or even to meet the 90%
    distribution requirement. In such a situation, we may need to
    borrow funds or, if possible, pay taxable dividends of our
    shares of beneficial interest or debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under certain circumstances, we may be able to correct a failure
    to meet the distribution requirement for a year by paying
    &#147;deficiency dividends&#148; to our shareholders in a later
    year. We may include such deficiency dividends in our deduction
    for dividends paid for the earlier year. Although we may be able
    to avoid income tax on amounts distributed as deficiency
    dividends, we will be required to pay interest to the IRS based
    upon the amount of any deduction we take for deficiency
    dividends.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxable
    REIT Subsidiaries</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As described above, we may own up to 100% of the capital stock
    of one or more TRSs. A TRS is a fully taxable corporation that
    may earn income that would not be qualifying income if earned
    directly by us. A TRS may provide services to our lessees and
    perform activities unrelated to our lessees, such as third-party
    management, development, and other independent business
    activities. However, a TRS may not directly or indirectly
    operate or manage any lodging facilities or health care
    facilities or provide rights to any brand name under which any
    hotel or health care facility is operated, unless such rights
    are provided to an &#147;eligible independent contractor&#148;
    (as described below) to operate or manage a lodging facility if
    such rights are held by the TRS as a franchisee, licensee, or in
    a similar capacity and such lodging facility is either owned by
    the TRS or leased to the TRS by its parent REIT. A TRS will not
    be considered to operate or manage a qualified lodging facility
    solely because the TRS directly or indirectly possesses a
    license, permit, or similar instrument enabling it to do so.
    Additionally, a TRS that employs individuals working at a
    qualified lodging facility located outside the United States
    will not be considered to operate or manage a qualified lodging
    facility as long as an &#147;eligible independent
    contractor&#148; is responsible for the daily supervision and
    direction of such individuals on behalf of the TRS pursuant to a
    management contract or similar service contract.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We and our corporate subsidiary must elect for the subsidiary to
    be treated as a TRS. A corporation of which a qualifying TRS
    directly or indirectly owns more than 35% of the voting power or
    value of the shares will automatically be treated as a TRS.
    Overall, no more than 25% of the value of our assets may consist
    of securities of one or more TRSs, and no more than 25% of the
    value of our assets may consist of the securities of TRSs and
    other taxable subsidiaries and other assets that are not
    qualifying assets for purposes of the 75% asset test.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Rent that we receive from our TRSs will qualify as &#147;rents
    from real property&#148; as long as the property is operated on
    behalf of the TRS by a person who qualifies as an
    &#147;independent contractor&#148; and who is, or is related to
    a person who is, actively engaged in the trade or business of
    operating &#147;qualified lodging facilities&#148; for any
    person unrelated to us and the TRS lessee (an &#147;eligible
    independent contractor&#148;). A &#147;qualified lodging
    facility&#148; includes customary amenities and facilities
    operated as part of, or associated with, the lodging facility as
    long as such amenities and facilities are customary for other
    properties of a comparable size and class owned by other
    unrelated owners.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We intend to lease all of our hotel properties to TRSs, and all
    of those TRSs will engage &#147;eligible independent
    contractors&#148; to operate and manage those hotels.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The TRS rules limit the deductibility of interest paid or
    accrued by a TRS to us to assure that the TRS is subject to an
    appropriate level of corporate taxation. Further, the rules
    impose a 100% excise tax on certain transactions between a TRS
    and us or our tenants that are not conducted on an
    arm&#146;s-length basis. We believe that all transactions
    between us and each of our TRSs will be conducted on an
    arm&#146;s-length basis.
</DIV>
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    <BR>
    101
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Recordkeeping
    Requirements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We must maintain certain records in order to qualify as a REIT.
    In addition, to avoid a monetary penalty, we must request on an
    annual basis information from our shareholders designed to
    disclose the actual ownership of our outstanding shares of
    beneficial interest. We intend to comply with these requirements.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Failure
    to Qualify</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we fail to satisfy one or more requirements for REIT
    qualification, other than the gross income tests and the asset
    tests, we could avoid disqualification if our failure is due to
    reasonable cause and not to willful neglect and we pay a penalty
    of $50,000 for each such failure. In addition, there are relief
    provisions for a failure of the gross income tests and asset
    tests, as described in &#147;&#151;&#160;Gross Income
    Tests&#148; and &#147;&#151;&#160;Asset Tests.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we fail to qualify as a REIT in any taxable year, and no
    relief provision applies, we would be subject to federal income
    tax and any applicable alternative minimum tax on our taxable
    income at regular corporate rates. In calculating our taxable
    income in a year in which we fail to qualify as a REIT, we would
    not be able to deduct amounts paid out to shareholders. In fact,
    we would not be required to distribute any amounts to
    shareholders in that year. In such event, to the extent of our
    current and accumulated earnings and profits, all distributions
    to shareholders would be taxable as ordinary income. Subject to
    certain limitations of the federal income tax laws, corporate
    shareholders might be eligible for the dividends received
    deduction and shareholders taxed at individual rates may be
    eligible for the reduced federal income tax rate of 15% through
    2010 on such dividends. Unless we qualified for relief under
    specific statutory provisions, we also would be disqualified
    from taxation as a REIT for the four taxable years following the
    year during which we ceased to qualify as a REIT. We cannot
    predict whether in all circumstances we would qualify for such
    statutory relief.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Taxable U.S. Shareholders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As used herein, the term &#147;U.S.&#160;shareholder&#148; means
    a holder of our common shares that for U.S.&#160;federal income
    tax purposes is:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a citizen or resident of the United States;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a corporation (including an entity treated as a corporation for
    federal income tax purposes) created or organized in or under
    the laws of the United States, any of its states or the District
    of Columbia;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an estate whose income is subject to federal income taxation
    regardless of its source;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    any trust if (1)&#160;a U.S.&#160;court is able to exercise
    primary supervision over the administration of such trust and
    one or more U.S.&#160;persons have the authority to control all
    substantial decisions of the trust or (2)&#160;it has a valid
    election in place to be treated as a U.S.&#160;person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a partnership, entity or arrangement treated as a partnership
    for U.S.&#160;federal income tax purposes holds our common
    shares, the federal income tax treatment of a partner in the
    partnership will generally depend on the status of the partner
    and the activities of the partnership. If you are a partner in a
    partnership holding our common shares, you are urged to consult
    your tax advisor regarding the consequences of the ownership and
    disposition of our common shares by the partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As long as we qualify as a REIT, a taxable U.S.&#160;shareholder
    must generally take into account as ordinary income
    distributions made out of our current or accumulated earnings
    and profits that we do not designate as capital gain dividends
    or retained long-term capital gain. A U.S.&#160;shareholder will
    not qualify for the dividends received deduction generally
    available to corporations. In addition, dividends paid to a
    U.S.&#160;shareholder generally will not qualify for the 15% tax
    rate for &#147;qualified dividend income.&#148; The maximum tax
    rate for qualified dividend income received by non-corporate
    taxpayers is 15% through 2010. The maximum tax rate on qualified
    dividend income is lower than the maximum tax rate on ordinary
    income, which is currently 35%. Qualified dividend income
    generally includes dividends paid to taxpayers taxed at
    individual rates by domestic C corporations and certain
    qualified foreign corporations. Because we are not
</DIV>
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    <BR>
    102
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    generally subject to federal income tax on the portion of our
    REIT taxable income distributed to our shareholders (see
    &#147;&#151;&#160;Taxation of Our Company&#148; above), our
    dividends generally will not be eligible for the 15% rate on
    qualified dividend income. As a result, our ordinary REIT
    dividends will be taxed at the higher tax rate applicable to
    ordinary income. However, the 15% tax rate for qualified
    dividend income will apply to our ordinary REIT dividends
    (i)&#160;attributable to dividends received by us from non-REIT
    corporations, such as our TRS, and (ii)&#160;to the extent
    attributable to income upon which we have paid corporate income
    tax (<I>e.g.</I>, to the extent that we distribute less than
    100% of our taxable income). In general, to qualify for the
    reduced tax rate on qualified dividend income, a shareholder
    must hold our common shares for more than 60&#160;days during
    the <FONT style="white-space: nowrap">121-day</FONT>
    period beginning on the date that is 60&#160;days before the
    date on which our common shares becomes ex-dividend.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A U.S.&#160;shareholder generally will take into account as
    long-term capital gain any distributions that we designate as
    capital gain dividends without regard to the period for which
    the U.S.&#160;shareholder has held our common shares. We
    generally will designate our capital gain dividends as either
    15% or 25% rate distributions. See &#147;&#151;&#160;Capital
    Gains and Losses.&#148; A corporate U.S.&#160;shareholder,
    however, may be required to treat up to 20% of certain capital
    gain dividends as ordinary income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may elect to retain and pay income tax on the net long-term
    capital gain that we receive in a taxable year. In that case, to
    the extent that we designate such amount in a timely notice to
    such shareholder, a U.S.&#160;shareholder would be taxed on its
    proportionate share of our undistributed long-term capital gain.
    The U.S.&#160;shareholder would receive a credit for its
    proportionate share of the tax we paid. The
    U.S.&#160;shareholder would increase the basis in its shares of
    beneficial interest by the amount of its proportionate share of
    our undistributed long-term capital gain, minus its share of the
    tax we paid.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A U.S.&#160;shareholder will not incur tax on a distribution in
    excess of our current and accumulated earnings and profits if
    the distribution does not exceed the adjusted basis of the
    U.S.&#160;shareholder&#146;s common shares. Instead, the
    distribution will reduce the adjusted basis of such shares of
    beneficial interest. A U.S.&#160;shareholder will recognize a
    distribution in excess of both our current and accumulated
    earnings and profits and the U.S.&#160;shareholder&#146;s
    adjusted basis in his or her shares of beneficial interest as
    long-term capital gain, or short-term capital gain if the shares
    of beneficial interest have been held for one year or less,
    assuming the shares of beneficial interest are a capital asset
    in the hands of the U.S.&#160;shareholder. In addition, if we
    declare a distribution in October, November, or December of any
    year that is payable to a U.S.&#160;shareholder of record on a
    specified date in any such month, such distribution shall be
    treated as both paid by us and received by the
    U.S.&#160;shareholder on December 31 of such year, provided that
    we actually pay the distribution during January of the following
    calendar year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may not include in their individual income tax
    returns any of our net operating losses or capital losses.
    Instead, these losses are generally carried over by us for
    potential offset against our future income. Taxable
    distributions from us and gain from the disposition of our
    common shares will not be treated as passive activity income
    and, therefore, shareholders generally will not be able to apply
    any &#147;passive activity losses,&#148; such as losses from
    certain types of limited partnerships in which the shareholder
    is a limited partner, against such income. In addition, taxable
    distributions from us and gain from the disposition of our
    common shares generally will be treated as investment income for
    purposes of the investment interest limitations. We will notify
    shareholders after the close of our taxable year as to the
    portions of the distributions attributable to that year that
    constitute ordinary income, return of capital and capital gain.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of U.S. Shareholders on the Disposition of Common
    Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A U.S.&#160;shareholder who is not a dealer in securities must
    generally treat any gain or loss realized upon a taxable
    disposition of our common shares as long-term capital gain or
    loss if the U.S.&#160;shareholder has held our common shares for
    more than one year and otherwise as short-term capital gain or
    loss. In general, a U.S.&#160;shareholder will realize gain or
    loss in an amount equal to the difference between the sum of the
    fair market value of any property and the amount of cash
    received in such disposition and the
    U.S.&#160;shareholder&#146;s adjusted tax basis. A
    shareholder&#146;s adjusted tax basis generally will equal the
    U.S.&#160;shareholder&#146;s acquisition cost, increased by the
    excess of net capital gains deemed distributed to the
    U.S.&#160;shareholder (discussed above)
</DIV>
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    <BR>
    103
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    less tax deemed paid on such gains and reduced by any returns of
    capital. However, a U.S.&#160;shareholder must treat any loss
    upon a sale or exchange of common shares held by such
    shareholder for six months or less as a long-term capital loss
    to the extent of capital gain dividends and any other actual or
    deemed distributions from us that such U.S.&#160;shareholder
    treats as long-term capital gain. All or a portion of any loss
    that a U.S.&#160;shareholder realizes upon a taxable disposition
    of our common shares may be disallowed if the
    U.S.&#160;shareholder purchases other common shares within
    30&#160;days before or after the disposition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Capital
    Gains and Losses</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A taxpayer generally must hold a capital asset for more than one
    year for gain or loss derived from its sale or exchange to be
    treated as long-term capital gain or loss. The highest marginal
    individual income tax rate currently is 35% (which, absent
    additional congressional action, rate will apply until
    December&#160;31, 2010). The maximum tax rate on long-term
    capital gain applicable to taxpayers taxed at individual rates
    is 15% for sales and exchanges of assets held for more than one
    year occurring through December&#160;31, 2010. The maximum tax
    rate on long-term capital gain from the sale or exchange of
    &#147;Section&#160;1250 property,&#148; or depreciable real
    property, is 25%, which applies to the lesser of the total
    amount of the gain or the accumulated depreciation on the
    Section&#160;1250 property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to distributions that we designate as capital gain
    dividends and any retained capital gain that we are deemed to
    distribute, we generally may designate whether such a
    distribution is taxable to our shareholders taxed at individual
    rates at a 15% or 25% rate. Thus, the tax rate differential
    between capital gain and ordinary income for those taxpayers may
    be significant. In addition, the characterization of income as
    capital gain or ordinary income may affect the deductibility of
    capital losses. A non-corporate taxpayer may deduct capital
    losses not offset by capital gains against its ordinary income
    only up to a maximum annual amount of $3,000. A non-corporate
    taxpayer may carry forward unused capital losses indefinitely. A
    corporate taxpayer must pay tax on its net capital gain at
    ordinary corporate rates. A corporate taxpayer may deduct
    capital losses only to the extent of capital gains, with unused
    losses being carried back three years and forward five years.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of Tax-Exempt Shareholders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Tax-exempt entities, including qualified employee pension and
    profit sharing trusts and individual retirement accounts,
    generally are exempt from federal income taxation. However, they
    are subject to taxation on their unrelated business taxable
    income, or UBTI. Although many investments in real estate
    generate UBTI, the IRS has issued a ruling that dividend
    distributions from a REIT to an exempt employee pension trust do
    not constitute UBTI so long as the exempt employee pension trust
    does not otherwise use the shares of beneficial interest in the
    REIT in an unrelated trade or business of the pension trust.
    Based on that ruling, amounts that we distribute to tax-exempt
    shareholders generally should not constitute UBTI. However, if a
    tax-exempt shareholder were to finance its acquisition of common
    shares with debt, a portion of the income that it receives from
    us would constitute UBTI pursuant to the &#147;debt-financed
    property&#148; rules. Moreover, social clubs, voluntary employee
    benefit associations, supplemental unemployment benefit trusts
    and qualified group legal services plans that are exempt from
    taxation under special provisions of the federal income tax laws
    are subject to different UBTI rules, which generally will
    require them to characterize distributions that they receive
    from us as UBTI. Finally, in certain circumstances, a qualified
    employee pension or profit sharing trust that owns more than 10%
    of our shares of beneficial interest must treat a percentage of
    the dividends that it receives from us as UBTI. Such percentage
    is equal to the gross income we derive from an unrelated trade
    or business, determined as if we were a pension trust, divided
    by our total gross income for the year in which we pay the
    dividends. That rule applies to a pension trust holding more
    than 10% of our shares of beneficial interest only if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the percentage of our dividends that the tax-exempt trust must
    treat as UBTI is at least 5%;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    we qualify as a REIT by reason of the modification of the rule
    requiring that no more than 50% of our shares of beneficial
    interest be owned by five or fewer individuals that allows the
</TD>
</TR>
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</TABLE>
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    <BR>
    104
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    beneficiaries of the pension trust to be treated as holding our
    shares of beneficial interest in proportion to their actuarial
    interests in the pension trust;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    either:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="5%"></TD>
    <TD width="82%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    one pension trust owns more than 25% of the value of our shares
    of beneficial interest;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a group of pension trusts individually holding more than 10% of
    the value of our shares of beneficial interest collectively owns
    more than 50% of the value of our shares of beneficial interest.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxation
    of <FONT style="white-space: nowrap">Non-U.S.</FONT>
    Shareholders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The term
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;shareholder&#148;</FONT>
    means a holder of our common shares that is not a
    U.S.&#160;shareholder or a partnership (or entity treated as a
    partnership for federal income tax purposes). The rules
    governing federal income taxation of nonresident alien
    individuals, foreign corporations, foreign partnerships, and
    other foreign shareholders are complex. This section is only a
    summary of such rules. <B>We urge
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholders</FONT>
    to consult their own tax advisors to determine the impact of
    federal, state, and local income tax laws on the purchase,
    ownership and sale of our common shares, including any reporting
    requirements</B>.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    that receives a distribution that is not attributable to gain
    from our sale or exchange of a &#147;United States real property
    interest,&#148; or USRPI, as defined below, and that we do not
    designate as a capital gain dividend or retained capital gain
    will recognize ordinary income to the extent that we pay such
    distribution out of our current or accumulated earnings and
    profits. A withholding tax equal to 30% of the gross amount of
    the distribution ordinarily will apply to such distribution
    unless an applicable tax treaty reduces or eliminates the tax.
    However, if a distribution is treated as effectively connected
    with the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder&#146;s</FONT>
    conduct of a U.S.&#160;trade or business, the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    generally will be subject to federal income tax on the
    distribution at graduated rates, in the same manner as
    U.S.&#160;shareholders are taxed with respect to such
    distribution, and a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    that is a corporation also may be subject to the 30% branch
    profits tax with respect to that distribution. We plan to
    withhold U.S.&#160;income tax at the rate of 30% on the gross
    amount of any such distribution paid to a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    unless either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    a lower treaty rate applies and the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    files an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    evidencing eligibility for that reduced rate with us;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    files an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8ECI</FONT>
    with us claiming that the distribution is effectively connected
    income.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will not incur tax on a distribution in excess of our current
    and accumulated earnings and profits if the excess portion of
    such distribution does not exceed the adjusted basis of its
    common shares. Instead, the excess portion of such distribution
    will reduce the adjusted basis of such shares of beneficial
    interest. A
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will be subject to tax on a distribution that exceeds both our
    current and accumulated earnings and profits and the adjusted
    basis of its common shares, if the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    otherwise would be subject to tax on gain from the sale or
    disposition of its common shares, as described below. Because we
    generally cannot determine at the time we make a distribution
    whether the distribution will exceed our current and accumulated
    earnings and profits, we normally will withhold tax on the
    entire amount of any distribution at the same rate as we would
    withhold on a dividend. However, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    may claim a refund of amounts that we withhold if we later
    determine that a distribution in fact exceeded our current and
    accumulated earnings and profits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For any year in which we qualify as a REIT, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will incur tax on distributions that are attributable to gain
    from our sale or exchange of a USRPI under the Foreign
    Investment in Real Property Act of 1980, or FIRPTA. A USRPI
    includes certain interests in real property and stock in
    corporations at least 50% of whose assets consist of interests
    in real property. Under FIRPTA, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    is taxed on distributions attributable to gain from sales of
    USRPIs as if such gain were effectively connected with a
    U.S.&#160;business of the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder.</FONT>
    A
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    thus would be taxed on such a distribution at the normal capital
    gains rates applicable to U.S.&#160;shareholders, subject to
    applicable
</DIV>
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    <BR>
    105
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    alternative minimum tax and a special alternative minimum tax in
    the case of a nonresident alien individual. A
    <FONT style="white-space: nowrap">non-U.S.&#160;corporate</FONT>
    shareholder not entitled to treaty relief or exemption also may
    be subject to the 30% branch profits tax on such a distribution.
    We would be required to withhold 35% of any distribution that we
    could designate as a capital gain dividend. A
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    may receive a credit against its tax liability for the amount we
    withhold.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    However, if our common shares are regularly traded on an
    established securities market in the United States, capital gain
    distributions on our common shares that are attributable to our
    sale of real property will be treated as ordinary dividends
    rather than as gain from the sale of a USRPI, as long as the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    did not own more than 5% of our common shares at any time during
    the one-year period preceding the distribution. As a result,
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholders</FONT>
    generally will be subject to withholding tax on such capital
    gain distributions in the same manner as they are subject to
    withholding tax on ordinary dividends. We anticipate that our
    common shares will be regularly traded on an established
    securities market in the United States following this offering.
    If our common shares are not regularly traded on an established
    securities market in the United States or the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    owned more than 5% of our common shares at any time during the
    one-year period preceding the distribution, capital gain
    distributions that are attributable to our sale of real property
    would be subject to tax under FIRPTA, as described in the
    preceding paragraph. Moreover, if a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    disposes of our common shares during the
    <FONT style="white-space: nowrap">30-day</FONT>
    period preceding a dividend payment, and such
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    (or a person related to such
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder)</FONT>
    acquires or enters into a contract or option to acquire our
    common shares within 61&#160;days of the first day of the
    <FONT style="white-space: nowrap">30-day</FONT>
    period described above, and any portion of such dividend payment
    would, but for the disposition, be treated as a USRPI capital
    gain to such
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder,</FONT>
    then such
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    shall be treated as having USRPI capital gain in an amount that,
    but for the disposition, would have been treated as USRPI
    capital gain.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">Non-U.S.&#160;shareholders</FONT>
    could incur tax under FIRPTA with respect to gain realized upon
    a disposition of our common shares if we are a United States
    real property holding corporation during a specified testing
    period. If at least 50% of a REIT&#146;s assets are United
    States real property interests, then the REIT will be a United
    States real property holding corporation. We anticipate that we
    will be a United States real property holding corporation based
    on our investment strategy. However, if we are a United States
    real property holding corporation, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    generally would not incur tax under FIRPTA on gain from the sale
    of our common shares if we are a &#147;domestically controlled
    qualified investment entity.&#148; A domestically controlled
    qualified investment entity includes a REIT in which, at all
    times during a specified testing period, less than 50% in value
    of its shares are held directly or indirectly by
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholders.</FONT>
    We cannot assure you that this test will be met. If our common
    shares are regularly traded on an established securities market,
    an additional exception to the tax under FIRPTA will be
    available with respect to our common shares, even if we do not
    qualify as a domestically controlled qualified investment entity
    at the time the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    sells our common shares. Under that exception, the gain from
    such a sale by such a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will not be subject to tax under FIRPTA if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our common shares are treated as being regularly traded under
    applicable U.S.&#160;Treasury regulations on an established
    securities market;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    owned, actually or constructively, 5% or less of our common
    shares at all times during a specified testing period.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As noted above, we anticipate that our common shares will be
    regularly traded on an established securities market following
    this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the gain on the sale of our common shares were taxed under
    FIRPTA, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    would be taxed on that gain in the same manner as
    U.S.&#160;shareholders, subject to applicable alternative
    minimum tax and a special alternative minimum tax in the case of
    nonresident alien individuals. Furthermore, a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    generally will incur tax on gain not subject to FIRPTA if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the gain is effectively connected with the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder&#146;s</FONT>
    U.S.&#160;trade or business, in which case the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will be subject to the same treatment as U.S.&#160;shareholders
    with respect to such gain;&#160;or
</TD>
</TR>

</TABLE>
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    <BR>
    106
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    is a nonresident alien individual who was present in the
    U.S.&#160;for 183&#160;days or more during the taxable year and
    has a &#147;tax home&#148; in the United States, in which case
    the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will incur a 30% tax on his or her capital gains.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Information
    Reporting Requirements and Backup Withholding</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will report to our shareholders and to the IRS the amount of
    distributions we pay during each calendar year, and the amount
    of tax we withhold, if any. Under the backup withholding rules,
    a shareholder may be subject to backup withholding at a rate of
    28% with respect to distributions unless the holder:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is a corporation or qualifies for certain other exempt
    categories and, when required, demonstrates this fact;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    provides a taxpayer identification number, certifies as to no
    loss of exemption from backup withholding, and otherwise
    complies with the applicable requirements of the backup
    withholding rules.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A shareholder who does not provide us with its correct taxpayer
    identification number also may be subject to penalties imposed
    by the IRS. Any amount paid as backup withholding will be
    creditable against the shareholder&#146;s income tax liability.
    In addition, we may be required to withhold a portion of capital
    gain distributions to any shareholders who fail to certify their
    non-foreign status to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Backup withholding will generally not apply to payments of
    dividends made by us or our paying agents, in their capacities
    as such, to a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    provided that the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    furnishes to us or our paying agent the required certification
    as to its
    <FONT style="white-space: nowrap">non-U.S.&#160;status,</FONT>
    such as providing a valid IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    or <FONT style="white-space: nowrap">W-8ECI,</FONT>
    or certain other requirements are met. Notwithstanding the
    foregoing, backup withholding may apply if either we or our
    paying agent has actual knowledge, or reason to know, that the
    holder is a U.S.&#160;person that is not an exempt recipient.
    Payments of the net proceeds from a disposition or a redemption
    effected outside the U.S.&#160;by a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    made by or through a foreign office of a broker generally will
    not be subject to information reporting or backup withholding.
    However, information reporting (but not backup withholding)
    generally will apply to such a payment if the broker has certain
    connections with the U.S.&#160;unless the broker has documentary
    evidence in its records that the beneficial owner is a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    and specified conditions are met or an exemption is otherwise
    established. Payment of the net proceeds from a disposition by a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    of common shares made by or through the U.S.&#160;office of a
    broker is generally subject to information reporting and backup
    withholding unless the
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    certifies under penalties of perjury that it is not a
    U.S.&#160;person and satisfies certain other requirements, or
    otherwise establishes an exemption from information reporting
    and backup withholding.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Backup withholding is not an additional tax. Any amounts
    withheld under the backup withholding rules may be refunded or
    credited against the shareholder&#146;s federal income tax
    liability if certain required information is furnished to the
    IRS. Shareholders are urged consult their own tax advisors
    regarding application of backup withholding to them and the
    availability of, and procedure for obtaining an exemption from,
    backup withholding.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Other Tax
    Consequences</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Tax
    Aspects of Our Investments in Our Operating Partnership and
    Subsidiary Partnerships</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discussion summarizes certain federal income tax
    considerations applicable to our direct or indirect investments
    in our operating partnership and any subsidiary partnerships or
    limited liability companies that we form or acquire (each
    individually a &#147;Partnership&#148; and, collectively, the
    &#147;Partnerships&#148;). The discussion does not cover state
    or local tax laws or any federal tax laws other than income tax
    laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Classification as Partnerships.</I>&#160;&#160;We will be
    entitled to include in our income our distributive share of each
    Partnership&#146;s income and to deduct our distributive share
    of each Partnership&#146;s losses only if such Partnership is
    classified for federal income tax purposes as a partnership (or
    an entity that is disregarded for federal income tax purposes if
    the entity has only one owner or member) rather than as a
    corporation or an
</DIV>
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    <BR>
    107
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    association taxable as a corporation. An unincorporated entity
    with at least two owners or members will be classified as a
    partnership, rather than as a corporation, for federal income
    tax purposes if it:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is treated as a partnership under the Treasury regulations
    relating to entity classification (the
    <FONT style="white-space: nowrap">&#147;check-the-box</FONT>
    regulations&#148;);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    is not a &#147;publicly traded&#148; partnership.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the
    <FONT style="white-space: nowrap">check-the-box</FONT>
    regulations, an unincorporated entity with at least two owners
    or members may elect to be classified either as an association
    taxable as a corporation or as a partnership. If such an entity
    fails to make an election, it generally will be treated as a
    partnership (or an entity that is disregarded for federal income
    tax purposes if the entity has only one owner or member) for
    federal income tax purposes. Each Partnership intends to be
    classified as a partnership for federal income tax purposes and
    no Partnership will elect to be treated as an association
    taxable as a corporation under the
    <FONT style="white-space: nowrap">check-the-box</FONT>
    regulations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A publicly traded partnership is a partnership whose interests
    are traded on an established securities market or are readily
    tradable on a secondary market or the substantial equivalent
    thereof. A publicly traded partnership will not, however, be
    treated as a corporation for any taxable year if, for each
    taxable year beginning after December&#160;31, 1987 in which it
    was classified as a publicly traded partnership, 90% or more of
    the partnership&#146;s gross income for such year consists of
    certain passive-type income, including real property rents,
    gains from the sale or other disposition of real property,
    interest, and dividends, or (the &#147;90% passive income
    exception&#148;). Treasury regulations (the &#147;PTP
    regulations&#148;) provide limited safe harbors from the
    definition of a publicly traded partnership. Pursuant to one of
    those safe harbors (the &#147;private placement
    exclusion&#148;), interests in a partnership will not be treated
    as readily tradable on a secondary market or the substantial
    equivalent thereof if (1)&#160;all interests in the partnership
    were issued in a transaction or transactions that were not
    required to be registered under the Securities Act of 1933, as
    amended, and (2)&#160;the partnership does not have more than
    100 partners at any time during the partnership&#146;s taxable
    year. In determining the number of partners in a partnership, a
    person owning an interest in a partnership, grantor trust, or
    S&#160;corporation that owns an interest in the partnership is
    treated as a partner in such partnership only if
    (1)&#160;substantially all of the value of the owner&#146;s
    interest in the entity is attributable to the entity&#146;s
    direct or indirect interest in the partnership and (2)&#160;a
    principal purpose of the use of the entity is to permit the
    partnership to satisfy the 100-partner limitation. Each
    Partnership is expected to qualify for the private placement
    exclusion in the foreseeable future. Additionally, if our
    operating partnership were a publicly traded partnership, we
    believe that our operating partnership would have sufficient
    qualifying income to satisfy the 90% passive income exception
    and thus would continue to be taxed as a partnership for federal
    income tax purposes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have not requested, and do not intend to request, a ruling
    from the IRS that the Partnerships will be classified as
    partnerships for federal income tax purposes. If for any reason
    a Partnership were taxable as a corporation, rather than as a
    partnership, for federal income tax purposes, we likely would
    not be able to qualify as a REIT unless we qualified for certain
    relief provisions. See &#147;&#151;&#160;Gross Income
    Tests&#148; and &#147;&#151;&#160;Asset Tests.&#148; In
    addition, any change in a Partnership&#146;s status for tax
    purposes might be treated as a taxable event, in which case we
    might incur tax liability without any related cash distribution.
    See &#147;&#151;&#160;Distribution Requirements.&#148; Further,
    items of income and deduction of such Partnership would not pass
    through to its partners, and its partners would be treated as
    shareholders for tax purposes. Consequently, such Partnership
    would be required to pay income tax at corporate rates on its
    net income, and distributions to its partners would constitute
    dividends that would not be deductible in computing such
    Partnership&#146;s taxable income.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Income
    Taxation of the Partnerships and their Partners</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Partners, Not the Partnerships, Subject to
    Tax.</I>&#160;&#160;A partnership is not a taxable entity for
    federal income tax purposes. Rather, we are required to take
    into account our allocable share of each Partnership&#146;s
    income, gains, losses, deductions, and credits for any taxable
    year of such Partnership ending within or with our taxable year,
    without regard to whether we have received or will receive any
    distribution from such Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Partnership Allocations.</I>&#160;&#160;Although a
    partnership agreement generally will determine the allocation of
    income and losses among partners, such allocations will be
    disregarded for tax purposes if they do not
</DIV>
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    <BR>
    108
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    comply with the provisions of the federal income tax laws
    governing partnership allocations. If an allocation is not
    recognized for federal income tax purposes, the item subject to
    the allocation will be reallocated in accordance with the
    partners&#146; interests in the partnership, which will be
    determined by taking into account all of the facts and
    circumstances relating to the economic arrangement of the
    partners with respect to such item. Each Partnership&#146;s
    allocations of taxable income, gain, and loss are intended to
    comply with the requirements of the federal income tax laws
    governing partnership allocations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Tax Allocations With Respect to Our
    Properties.</I>&#160;&#160;Income, gain, loss, and deduction
    attributable to appreciated or depreciated property that is
    contributed to a partnership in exchange for an interest in the
    partnership must be allocated in a manner such that the
    contributing partner is charged with, or benefits from,
    respectively, the unrealized gain or unrealized loss associated
    with the property at the time of the contribution. The amount of
    such unrealized gain or unrealized loss (&#147;built-in
    gain&#148; or &#147;built-in loss&#148;) is generally equal to
    the difference between the fair market value of the contributed
    property at the time of contribution and the adjusted tax basis
    of such property at the time of contribution (a &#147;book-tax
    difference&#148;). Any property purchased by our operating
    partnership for cash initially will have an adjusted tax basis
    equal to its fair market value, resulting in no book-tax
    difference. In the future, however, our operating partnership
    may admit partners in exchange for a contribution of appreciated
    or depreciated property, resulting in book-tax differences. Such
    allocations are solely for federal income tax purposes and do
    not affect the book capital accounts or other economic or legal
    arrangements among the partners. The U.S.&#160;Treasury
    Department has issued regulations requiring partnerships to use
    a &#147;reasonable method&#148; for allocating items with
    respect to which there is a book-tax difference and outlining
    several reasonable allocation methods. Under certain available
    methods, the carryover basis of contributed properties in the
    hands of our operating partnership (i)&#160;would cause us to be
    allocated lower amounts of depreciation deductions for tax
    purposes than would be allocated to us if all contributed
    properties were to have a tax basis equal to their fair market
    value at the time of the contribution and (ii)&#160;in the event
    of a sale of such properties, could cause us to be allocated
    taxable gain in excess of the economic or book gain allocated to
    us as a result of such sale, with a corresponding benefit to the
    contributing partners. An allocation described in
    (ii)&#160;above might cause us to recognize taxable income in
    excess of cash proceeds in the event of a sale or other
    disposition of property, which might adversely affect our
    ability to comply with the REIT distribution requirements and
    may result in a greater portion of our distributions being taxed
    as dividends. We have not yet decided what method will be used
    to account for book-tax differences for properties that may be
    acquired by our operating partnership in the future.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Basis in Partnership Interest.</I>&#160;&#160;Our adjusted
    tax basis in our partnership interest in our operating
    partnership generally is equal to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the amount of cash and the basis of any other property
    contributed by us to our operating partnership;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    increased by our allocable share of our operating
    partnership&#146;s income and our allocable share of
    indebtedness of our operating partnership;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    reduced, but not below zero, by our allocable share of our
    operating partnership&#146;s loss and the amount of cash
    distributed to us, and by constructive distributions resulting
    from a reduction in our share of indebtedness of our operating
    partnership.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the allocation of our distributive share of our operating
    partnership&#146;s loss would reduce the adjusted tax basis of
    our partnership interest below zero, the recognition of such
    loss will be deferred until such time as the recognition of such
    loss would not reduce our adjusted tax basis below zero. To the
    extent that our operating partnership&#146;s distributions, or
    any decrease in our share of the indebtedness of our operating
    partnership, which is considered a constructive cash
    distribution to the partners, reduce our adjusted tax basis
    below zero, such distributions will constitute taxable income to
    us. Such distributions and constructive distributions normally
    will be characterized as long-term capital gain.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Depreciation Deductions Available to Our Operating
    Partnership.</I>&#160;&#160;To the extent that our operating
    partnership acquired its hotels in exchange for cash, its
    initial basis in such hotels for federal income tax purposes
    generally was or will be equal to the purchase price paid by our
    operating partnership. Our operating partnership generally will
    depreciate such depreciable hotel property for federal income
    tax purposes under the modified accelerated cost recovery system
    of depreciation (&#147;MACRS&#148;). Under MACRS, our operating
    partnership generally will depreciate furnishings and equipment
    over a seven-year recovery period using a 200%
</DIV>
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    <BR>
    109
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
     declining balance method and a half-year convention. If,
    however, our operating partnership places more than 40% of its
    furnishings and equipment in service during the last three
    months of a taxable year, a mid-quarter depreciation convention
    must be used for the furnishings and equipment placed in service
    during that year. Under MACRS, our operating partnership
    generally will depreciate buildings and improvements over a
    <FONT style="white-space: nowrap">39-year</FONT>
    recovery period using a straight line method and a mid-month
    convention. Our operating partnership&#146;s initial basis in
    hotels acquired in exchange for units in our operating
    partnership should be the same as the transferor&#146;s basis in
    such hotels on the date of acquisition by our operating
    partnership. Although the law is not entirely clear, our
    operating partnership generally will depreciate such depreciable
    hotel property for federal income tax purposes over the same
    remaining useful lives and under the same methods used by the
    transferors. Our operating partnership&#146;s tax depreciation
    deductions will be allocated among the partners in accordance
    with their respective interests in our operating partnership,
    except to the extent that our operating partnership is required
    under the federal income tax laws governing partnership
    allocations to use a method for allocating tax depreciation
    deductions attributable to contributed properties that results
    in our receiving a disproportionate share of such deductions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sale of a
    Partnership&#146;s Property</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Generally, any gain realized by a Partnership on the sale of
    property held by the Partnership for more than one year will be
    long-term capital gain, except for any portion of such gain that
    is treated as depreciation or cost recovery recapture. Any gain
    or loss recognized by a Partnership on the disposition of
    contributed properties will be allocated first to the partners
    of the Partnership who contributed such properties to the extent
    of their built-in gain or loss on those properties for federal
    income tax purposes. The partners&#146; built-in gain or loss on
    such contributed properties will equal the difference between
    the partners&#146; proportionate share of the book value of
    those properties and the partners&#146; tax basis allocable to
    those properties at the time of the contribution. Any remaining
    gain or loss recognized by the Partnership on the disposition of
    the contributed properties, and any gain or loss recognized by
    the Partnership on the disposition of the other properties, will
    be allocated among the partners in accordance with their
    respective percentage interests in the Partnership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our share of any gain realized by a Partnership on the sale of
    any property held by the Partnership as inventory or other
    property held primarily for sale to customers in the ordinary
    course of the Partnership&#146;s trade or business will be
    treated as income from a prohibited transaction that is subject
    to a 100% penalty tax. Such prohibited transaction income also
    may have an adverse effect upon our ability to satisfy the
    income tests for REIT status. See &#147;&#151;&#160;Gross Income
    Tests.&#148; We do not presently intend to acquire or hold or to
    allow any Partnership to acquire or hold any property that
    represents inventory or other property held primarily for sale
    to customers in the ordinary course of our or such
    Partnership&#146;s trade or business.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Sunset of
    Reduced Tax Rate Provisions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Several of the tax considerations described herein are subject
    to a sunset provision. The sunset provisions generally provide
    that for taxable years beginning after December&#160;31, 2010,
    certain provisions that are currently in the Code will revert
    back to a prior version of those provisions. These provisions
    include provisions related to the reduced maximum income tax
    rate for long-term capital gains of 15% (rather than 20%) for
    taxpayers taxed at individual rates, the application of the 15%
    tax rate to qualified dividend income, and certain other tax
    rate provisions described herein. The impact of this reversion
    is not discussed herein. Consequently, prospective shareholders
    are urged to consult their own tax advisors regarding the effect
    of sunset provisions on an investment in our common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">State,
    Local and Foreign Taxes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We <FONT style="white-space: nowrap">and/or</FONT>
    you may be subject to taxation by various states, localities and
    foreign jurisdictions, including those in which we or a
    shareholder transacts business, owns property or resides. The
    state, local and foreign tax treatment may differ from the
    federal income tax treatment described above. Consequently, you
    are urged to consult your own tax advisors regarding the effect
    of state, local and foreign tax laws upon an investment in our
    common shares.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    110
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='118'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ERISA
    CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A fiduciary of a pension, profit sharing, retirement or other
    employee benefit plan, or plan, subject to the Employee
    Retirement Income Security Act of 1974, as amended, or ERISA,
    should consider the fiduciary standards under ERISA in the
    context of the plan&#146;s particular circumstances before
    authorizing an investment of a portion of such plan&#146;s
    assets in the common shares. Accordingly, such fiduciary should
    consider (i)&#160;whether the investment satisfies the
    diversification requirements of Section&#160;404(a)(1)(C) of
    ERISA, (ii)&#160;whether the investment is in accordance with
    the documents and instruments governing the plan as required by
    Section&#160;404(a)(1)(D) of ERISA, and (iii)&#160;whether the
    investment is prudent under ERISA. In addition to the imposition
    of general fiduciary standards of investment prudence and
    diversification, ERISA, and the corresponding provisions of the
    Code, prohibit a wide range of transactions involving the assets
    of the plan and persons who have certain specified relationships
    to the plan (&#147;parties in interest&#148; within the meaning
    of ERISA, &#147;disqualified persons&#148; within the meaning of
    the Code). Thus, a plan fiduciary considering an investment in
    our common shares also should consider whether the acquisition
    or the continued holding of the shares might constitute or give
    rise to a direct or indirect prohibited transaction that is not
    subject to an exemption issued by the Department of Labor, or
    the DOL. Similar restrictions apply to many governmental and
    foreign plans which are not subject to ERISA. Thus, those
    considering investing in the shares on behalf of such a plan
    should consider whether the acquisition or the continued holding
    of the shares might violate any such similar restrictions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The DOL has issued final regulations, or the DOL Regulations, as
    to what constitutes assets of an employee benefit plan under
    ERISA. Under the DOL Regulations, if a plan acquires an equity
    interest in an entity, which interest is neither a
    &#147;publicly offered security&#148; nor a security issued by
    an investment company registered under the Investment Company
    Act of 1940, as amended, the plan&#146;s assets would include,
    for purposes of the fiduciary responsibility provision of ERISA,
    both the equity interest and an undivided interest in each of
    the entity&#146;s underlying assets unless certain specified
    exceptions apply. The DOL Regulations define a publicly offered
    security as a security that is &#147;widely held,&#148;
    &#147;freely transferable,&#148; and either part of a class of
    securities registered under the Exchange Act, or sold pursuant
    to an effective registration statement under the Securities Act
    (provided the securities are registered under the Exchange Act
    within 120&#160;days after the end of the fiscal year of the
    issuer during which the public offering occurred). The shares
    are being sold in an offering registered under the Securities
    Act and will be registered under the Exchange Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The DOL Regulations provide that a security is &#147;widely
    held&#148; only if it is part of a class of securities that is
    owned by 100 or more investors independent of the issuer and of
    one another. A security will not fail to be &#147;widely
    held&#148; because the number of independent investors falls
    below 100 subsequent to the initial public offering as a result
    of events beyond the issuer&#146;s control. We expect our common
    shares to be &#147;widely held&#148; upon completion of this
    offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The DOL Regulations provide that whether a security is
    &#147;freely transferable&#148; is a factual question to be
    determined on the basis of all relevant facts and circumstances.
    The DOL Regulations further provide that when a security is part
    of an offering in which the minimum investment is $10,000 or
    less, as is the case with this offering, certain restrictions
    ordinarily will not, alone or in combination, affect the finding
    that such securities are &#147;freely transferable.&#148; We
    believe that the restrictions imposed under our declaration of
    trust on the transfer of our shares are limited to the
    restrictions on transfer generally permitted under the DOL
    Regulations and are not likely to result in the failure of the
    common shares to be &#147;freely transferable.&#148; The DOL
    Regulations only establish a presumption in favor of the finding
    of free transferability, and, therefore, no assurance can be
    given that the DOL will not reach a contrary conclusion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Assuming that the common shares will be &#147;widely held&#148;
    and &#147;freely transferable,&#148; we believe that our common
    shares will be publicly offered securities for purposes of the
    DOL Regulations and that our assets will not be deemed to be
    &#147;plan assets&#148; of any plan that invests in our common
    shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each holder of our common shares will be deemed to have
    represented and agreed that its purchase and holding of such
    common shares (or any interest therein) will not constitute or
    result in a non-exempt prohibited transaction under ERISA or
    Section&#160;4975 of the Code.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    111
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='119'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">UNDERWRITING</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Merrill Lynch, Pierce, Fenner&#160;&#038; Smith Incorporated,
    Raymond James&#160;&#038; Associates, Inc. and Wells Fargo
    Securities, LLC are acting as representatives of each of the
    underwriters named below. Subject to the terms and conditions
    set forth in a purchase agreement among us, our operating
    partnership and the underwriters, we have agreed to sell to the
    underwriters, and each of the underwriters has agreed, severally
    and not jointly, to purchase from us, the number of common
    shares set forth opposite its name below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="87%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Underwriter</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>of Shares</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -52pt; margin-left: 52pt">
    Merrill Lynch, Pierce, Fenner&#160;&#038; Smith<BR>
    Incorporated
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Raymond James&#160;&#038; Associates, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Wells Fargo Securities, LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Calyon Securities (USA) Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    RBC Capital Markets Corporation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 62pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to the terms and conditions set forth in the purchase
    agreement, the underwriters have agreed, severally and not
    jointly, to purchase all of the shares sold under the purchase
    agreement if any of these shares are purchased. If an
    underwriter defaults, the purchase agreement provides that the
    purchase commitments of the nondefaulting underwriters may be
    increased or the purchase agreement may be terminated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have agreed to indemnify the underwriters against certain
    liabilities, including liabilities under the Securities Act, or
    to contribute to payments the underwriters may be required to
    make in respect of those liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters are offering the shares, subject to prior sale,
    when, as and if issued to and accepted by them, subject to
    approval of legal matters by their counsel, including the
    validity of the shares, and other conditions contained in the
    purchase agreement, such as the receipt by the underwriters of
    officer&#146;s certificates and legal opinions. The underwriters
    reserve the right to withdraw, cancel or modify offers to the
    public and to reject orders in whole or in part.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Commissions
    and Discounts</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The representatives have advised us that the underwriters
    propose initially to offer the shares to the public at the
    public offering price set forth on the cover page of this
    prospectus and to dealers at that price less a concession not in
    excess of $&#160;&#160;&#160;&#160;&#160; per share. The
    underwriters may allow, and the dealers may reallow, a discount
    not in excess of $&#160;&#160;&#160;&#160;&#160; per share to
    other dealers. After the initial offering, the public offering
    price, concession or any other term of this offering may be
    changed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table shows the public offering price,
    underwriting discount and proceeds, before expenses, to us. The
    information assumes either no exercise or full exercise by the
    underwriters of their overallotment option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="59%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Per Share</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Without Option</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>With Option</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Underwriting discount(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Proceeds, before expenses, to us
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="center" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">At the closing of this offering,
    the underwriters will be entitled to receive
    $&#160;&#160;&#160;&#160;&#160; from us for each share sold in
    this offering. The underwriters will forego the receipt of
    payment of $&#160;&#160;&#160;&#160;&#160; per share, until such
    time as we purchase assets in accordance with our investment
    strategy as described in this prospectus with an aggregate
    purchase price (including the amount of any outstanding
    indebtedness assumed or incurred by us) at least equal to the
    net proceeds from this offering (after deducting the full
    underwriting discount and other estimated offering expenses
    payable by us), at which time, we have agreed to pay the
    underwriters an amount equal to $&#160;&#160;&#160;&#160;&#160;
    per share sold in this offering.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    112
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table presents information about the underwriting
    discount, payable by us:
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="90%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Per Share</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;$
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Underwriting discount paid by us at closing ( %)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;$
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Underwriting discount paid by us upon purchase of assets with a
    purchase price described above ( %)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;$
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total underwriting discount paid by us ( %)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;$
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Deferral by the underwriters of a portion of the underwriting
    discount reduces the underwriting discount immediately payable
    by us at closing. However, once we purchase assets with an
    aggregate purchase price at least equal to the net proceeds from
    this offering, as described above, we will pay the underwriters
    the deferred amount. By deferring a portion of the underwriting
    discount, full payment will only occur when we have purchased
    assets with the specified aggregate purchase price, instead of
    at the closing when we have not yet invested any of the proceeds
    raised in this offering.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The expenses of this offering, not including the underwriting
    discount, are estimated at $1,400,000 and are payable by us.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Overallotment
    Option</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have granted an option to the underwriters to purchase up to
    2,625,000&#160;additional shares at the public offering price,
    less the underwriting discount. The underwriters may exercise
    this option for 30&#160;days from the date of this prospectus
    solely to cover any overallotments. If the underwriters exercise
    this option, each will be obligated, subject to conditions
    contained in the purchase agreement, to purchase a number of
    additional shares proportionate to that underwriter&#146;s
    initial amount reflected in the above table.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Purchases
    by Trustees, Officers and Employees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At our request, the underwriters have
    reserved&#160;&#160;&#160;&#160;&#160; of the shares offered by
    this prospectus for sale to our trustees, officers, employees
    and certain other persons associated with us at the public
    offering price set forth on the cover page of this prospectus.
    These persons must commit to purchase from an underwriter or
    selected dealer at the same time as the general public. The
    number of shares available for sale to the general public will
    be reduced to the extent these persons purchase the reserved
    shares. Any reserved shares purchased by our trustees or
    executive officers or by any of our employees in this offering
    will be subject to the lock-up agreements described below. We
    are not making loans to any of our trustees, employees or other
    persons to purchase such shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">No Sales
    of Similar Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We, our executive officers and our trustees have agreed not to
    sell or transfer any common shares or securities convertible
    into, exchangeable for, exercisable for, or repayable with
    common shares, for 180&#160;days after the date of this
    prospectus without first obtaining the written consent of the
    representatives. Specifically, we and these other persons have
    agreed, with certain limited exceptions, not to directly or
    indirectly
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    offer, pledge, sell or contract to sell any common shares,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    sell any option or contract to purchase any common shares,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    purchase any option or contract to sell any common shares,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    grant any option, right or warrant for the sale of any common
    shares,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    lend or otherwise dispose of or transfer any common shares,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    request or demand that we file a registration statement related
    to the common shares,&#160;or
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    113
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    enter into any swap or other agreement that transfers, in whole
    or in part, the economic consequence of ownership of any common
    shares whether any such swap or transaction is to be settled by
    delivery of shares or other securities, in cash or otherwise.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This <FONT style="white-space: nowrap">lock-up</FONT>
    provision applies to common shares and to securities convertible
    into or exchangeable or exercisable for or repayable with common
    shares. It also applies to common shares owned now or acquired
    later by the person executing the agreement or for which the
    person executing the agreement later acquires the power of
    disposition. In the event that either (x)&#160;during the last
    17&#160;days of
    <FONT style="white-space: nowrap">lock-up</FONT>
    period referred to above, we issue an earnings release or
    material news or a material event relating to us occurs or
    (y)&#160;prior to the expiration of the
    <FONT style="white-space: nowrap">lock-up</FONT>
    period, we announce that we will release earnings results or
    become aware that material news or a material event will occur
    during the
    <FONT style="white-space: nowrap">16-day</FONT>
    period beginning on the last day of the
    <FONT style="white-space: nowrap">lock-up</FONT>
    period, the restrictions described above shall continue to apply
    until the expiration of the
    <FONT style="white-space: nowrap">18-day</FONT>
    period beginning on the issuance of the earnings release or the
    occurrence of the material news or material event.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">New York
    Stock Exchange Listing</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to apply for listing of our common shares on the NYSE
    under the symbol &#147;PEB.&#148; In order to meet the
    requirements for listing on that exchange, the underwriters will
    undertake to sell a minimum number of shares to a minimum number
    of beneficial owners as required by that exchange.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Before this offering, there has been no public market for our
    common shares. The initial public offering price will be
    determined through negotiations between us and the
    representatives. In addition to prevailing market conditions,
    the factors to be considered in determining the initial public
    offering price are
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="6%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the valuation multiples of publicly traded companies that the
    representatives believe to be comparable to us,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    our financial information,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the history of, and the prospects for, our company and the
    industry in which we compete,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    an assessment of our management, its past and present
    operations, and the prospects for, and timing of, our future
    revenues,
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the present state of our development,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    the above factors in relation to market values and various
    valuation measures of other companies engaged in activities
    similar to ours.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An active trading market for the shares may not develop. It is
    also possible that after this offering the shares will not trade
    in the public market at or above the initial public offering
    price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters do not expect to sell more than 5% of the
    shares in the aggregate to accounts over which they exercise
    discretionary authority.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Price
    Stabilization, Short Positions and Penalty Bids</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Until the distribution of the shares is completed, SEC rules may
    limit underwriters and selling group members from bidding for
    and purchasing our common shares. However, the representatives
    may engage in transactions that stabilize the price of the
    common shares, such as bids or purchases to peg, fix or maintain
    that price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with this offering, the underwriters may purchase
    and sell our common shares in the open market. These
    transactions may include short sales, purchases on the open
    market to cover positions created by short sales and stabilizing
    transactions. Short sales involve the sale by the underwriters
    of a greater number of shares than they are required to purchase
    in this offering. &#147;Covered&#148; short sales are sales made
    in an amount not greater than the underwriters&#146;
    overallotment option. The underwriters may close out any covered
    short position by either exercising their overallotment option
    or purchasing shares in the open market. In determining the
    source of shares to close out the covered short position, the
    underwriters will consider,
</DIV>
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    <BR>
    114
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    among other things, the price of shares available for purchase
    in the open market as compared to the price at which they may
    purchase shares through the overallotment option.
    &#147;Naked&#148; short sales are sales in excess of the
    overallotment option. The underwriters must close out any naked
    short position by purchasing shares in the open market. A naked
    short position is more likely to be created if the underwriters
    are concerned that there may be downward pressure on the price
    of our common shares in the open market after pricing that could
    adversely affect investors who purchase in this offering.
    Stabilizing transactions consist of various bids for or
    purchases of common shares made by the underwriters in the open
    market prior to the completion of this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The underwriters may also impose a penalty bid. This occurs when
    a particular underwriter repays to the underwriters a portion of
    the underwriting discount received by it because the
    representatives have repurchased shares sold by or for the
    account of such underwriter in stabilizing or short covering
    transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Similar to other purchase transactions, the underwriters&#146;
    purchases to cover the syndicate short sales may have the effect
    of raising or maintaining the market price of our common shares
    or preventing or retarding a decline in the market price of our
    common shares. As a result, the price of our common shares may
    be higher than the price that might otherwise exist in the open
    market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor any of the underwriters make any representation
    or prediction as to the direction or magnitude of any effect
    that the transactions described above may have on the price of
    our common shares. In addition, neither we nor any of the
    underwriters make any representation that the representatives
    will engage in these transactions or that these transactions,
    once commenced, will not be discontinued without notice.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Electronic
    Offer, Sale and Distribution of Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with this offering, certain of the underwriters or
    securities dealers may distribute prospectuses by electronic
    means, such as
    <FONT style="white-space: nowrap">e-mail.</FONT> In
    addition, Merrill Lynch, Pierce, Fenner&#160;&#038; Smith
    Incorporated may facilitate Internet distribution for this
    offering to certain of its Internet subscription customers.
    Merrill Lynch, Pierce, Fenner&#160;&#038; Smith Incorporated may
    allocate a limited number of shares for sale to its online
    brokerage customers. An electronic prospectus is available on
    the Internet website maintained by Merrill Lynch, Pierce,
    Fenner&#160;&#038; Smith Incorporated. Other than the prospectus
    in electronic format, the information on the Merrill Lynch,
    Pierce, Fenner&#160;&#038; Smith Incorporated website is not
    part of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Other
    Relationships</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of the underwriters and their affiliates may in the future
    engage in investment banking and other commercial dealings in
    the ordinary course of business with us or our affiliates and
    they may receive customary fees and commissions for these
    transactions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Notice to
    Prospective Investors in the EEA</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In relation to each Member State of the European Economic Area
    which has implemented the Prospectus Directive (each, a
    &#147;Relevant Member State&#148;) an offer to the public of any
    shares which are the subject of this offering contemplated by
    this prospectus may not be made in that Relevant Member State,
    except that an offer to the public in that Relevant Member State
    of any shares may be made at any time under the following
    exemptions under the Prospectus Directive, if they have been
    implemented in that Relevant Member State:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;to any legal entity which has two or more of
    (1)&#160;an average of at least 250&#160;employees during the
    last financial year; (2)&#160;a total balance sheet of more than
    &#128;43,000,000 and (3)&#160;an annual net turnover of more
    than &#128;50,000,000, as shown in its last annual or
    consolidated accounts;
</DIV>
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    <BR>
    115
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;by the underwriters to fewer than 100 natural or legal
    persons (other than &#147;qualified investors&#148; as defined
    in the Prospectus Directive) subject to obtaining the prior
    consent of the representatives for any such offer;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (d)&#160;in any other circumstances falling within
    Article&#160;3(2) of the Prospectus Directive;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    provided that no such offer of shares shall result in a
    requirement for the publication by us or any representative of a
    prospectus pursuant to Article&#160;3 of the Prospectus
    Directive.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any person making or intending to make any offer of shares
    within the EEA should only do so in circumstances in which no
    obligation arises for us or any of the underwriters to produce a
    prospectus for such offer. Neither we nor the underwriters have
    authorized, nor do they authorize, the making of any offer of
    shares through any financial intermediary, other than offers
    made by the underwriters which constitute the final offering of
    shares contemplated in this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For the purposes of this provision, and your representation
    below, the expression an &#147;offer to the public&#148; in
    relation to any shares in any Relevant Member State means the
    communication in any form and by any means of sufficient
    information on the terms of the offer and any shares to be
    offered so as to enable an investor to decide to purchase any
    shares, as the same may be varied in that Relevant Member State
    by any measure implementing the Prospectus Directive in that
    Relevant Member State and the expression &#147;Prospectus
    Directive&#148; means Directive 2003/71/EC and includes any
    relevant implementing measure in each Relevant Member State.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each person in a Relevant Member State who receives any
    communication in respect of, or who acquires any shares under,
    the offer of shares contemplated by this prospectus will be
    deemed to have represented, warranted and agreed to and with us
    and each underwriter that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;it is a &#147;qualified investor&#148; within the
    meaning of the law in that Relevant Member State implementing
    Article&#160;2(1)(e) of the Prospectus Directive;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;in the case of any shares acquired by it as a financial
    intermediary, as that term is used in Article&#160;3(2) of the
    Prospectus Directive, (i)&#160;the shares acquired by it in this
    offering have not been acquired on behalf of, nor have they been
    acquired with a view to their offer or resale to, persons in any
    Relevant Member State other than &#147;qualified investors&#148;
    (as defined in the Prospectus Directive), or in circumstances in
    which the prior consent of the representatives has been given to
    the offer or resale; or (ii)&#160;where shares have been
    acquired by it on behalf of persons in any Relevant Member State
    other than qualified investors, the offer of those shares to it
    is not treated under the Prospectus Directive as having been
    made to such persons.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Notice to
    Prospective Investors in Switzerland</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have not and will not register with the Swiss Financial
    Market Supervisory Authority (FINMA) as a foreign collective
    investment scheme pursuant to Article&#160;119 of the Federal
    Act on Collective Investment Scheme of 23&#160;June 2006, as
    amended (CISA), and accordingly the shares being offered
    pursuant to this prospectus have not and will not be approved,
    and may not be licenseable, with FINMA. Therefore, the shares
    have not been authorized for distribution by FINMA as a foreign
    collective investment scheme pursuant to Article&#160;119 CISA
    and the shares offered hereby may not be offered to the public
    (as this term is defined in Article&#160;3 CISA) in or from
    Switzerland. The shares may solely be offered to &#147;qualified
    investors,&#148; as this term is defined in Article&#160;10
    CISA, and in the circumstances set out in Article&#160;3 of the
    Ordinance on Collective Investment Scheme of 22&#160;November
    2006, as amended (CISA), such that there is no public offer.
    Investors, however, do not benefit from protection under CISA or
    supervision by FINMA. This prospectus and any other materials
    relating to the shares are strictly personal and confidential to
    each offeree and do not constitute an offer to any other person.
    This prospectus may only be used by those qualified investors to
    whom it has been handed out in connection with the offer
    described herein and may neither directly or indirectly be
    distributed or made available to any person or entity other than
    its recipients. It may not be used in connection with any other
    offer and shall in particular not be copied
    <FONT style="white-space: nowrap">and/or</FONT>
    distributed to the public in Switzerland or from Switzerland.
    This prospectus does not constitute an issue prospectus as that
    term is understood pursuant to Article&#160;652a
    <FONT style="white-space: nowrap">and/or</FONT>
</DIV>
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    <BR>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    1156 of the Swiss Federal Code of Obligations. We have not
    applied for a listing of the shares on the SIX Swiss Exchange or
    any other regulated securities market in Switzerland, and
    consequently, the information presented in this prospectus does
    not necessarily comply with the information standards set out in
    the listing rules of the SIX Swiss Exchange and corresponding
    prospectus schemes annexed to the listing rules of the SIX Swiss
    Exchange.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Notice to
    Prospective Investors in the Dubai International Financial
    Centre</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This document relates to an exempt offer in accordance with the
    Offered Securities Rules of the Dubai Financial Services
    Authority. This document is intended for distribution only to
    persons of a type specified in those rules. It must not be
    delivered to, or relied on by, any other person. The Dubai
    Financial Services Authority has no responsibility for reviewing
    or verifying any documents in connection with exempt offers. The
    Dubai Financial Services Authority has not approved this
    document nor taken steps to verify the information set out in
    it, and has no responsibility for it. The shares which are the
    subject of this offering contemplated by this prospectus may be
    illiquid
    <FONT style="white-space: nowrap">and/or</FONT>
    subject to restrictions on their resale. Prospective purchasers
    of the shares offered should conduct their own due diligence on
    the shares. If you do not understand the contents of this
    document you should consult an authorised financial adviser.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Notice to
    Prospective Investors in Korea</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus should not be construed in any way as our (or
    any of our affiliates or agents) soliciting investment or
    offering to sell our shares in the Republic of Korea
    (&#147;Korea&#148;). We are not making any representation with
    respect to the eligibility of any recipients of this prospectus
    to acquire the shares under the laws of Korea, including,
    without limitation, the Financial Investment Services and
    Capital Markets Act (the &#147;FSCMA&#148;), the Foreign
    Exchange Transaction Act (the &#147;FETA&#148;), and any
    regulations thereunder. The shares have not been registered with
    the Financial Services Commission of Korea (the &#147;FSC&#148;)
    in any way pursuant to the FSCMA, and the shares may not be
    offered, sold or delivered, or offered or sold to any person for
    reoffering or resale, directly or indirectly, in Korea or to any
    resident of Korea except pursuant to applicable laws and
    regulations of Korea. Furthermore, the shares may not be resold
    to any Korean resident unless such Korean resident as the
    purchaser of the resold shares complies with all applicable
    regulatory requirements (including, without limitation,
    reporting or approval requirements under the FETA and
    regulations thereunder) relating to the purchase of the resold
    shares.
</DIV>

<A name='120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain legal matters in connection with this offering will be
    passed upon for us by Hunton&#160;&#038; Williams LLP. Venable
    LLP, Baltimore, Maryland, will issue an opinion to us regarding
    certain matters of Maryland law, including the validity of the
    common shares offered by this prospectus. Sidley Austin LLP, New
    York, New York, will act as counsel to the underwriters.
</DIV>

<A name='121'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The balance sheet of Pebblebrook Hotel Trust as of
    October&#160;7, 2009, has been included herein and in the
    registration statement in reliance upon the report of KPMG LLP,
    independent registered public accounting firm, appearing
    elsewhere herein, and upon the authority of said firm as experts
    in accounting and auditing.
</DIV>

<A name='122'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-11,</FONT>
    including exhibits and schedules filed with this registration
    statement, under the Securities Act of 1933, as amended, with
    respect to our common shares to be sold in this offering. This
    prospectus does not contain all of the information set forth in
    the registration statement and exhibits and schedules to the
    registration statement. For further information with respect to
    our company and our common shares to be sold in this offering,
    reference is made to the registration statement, including the
    exhibits and schedules to the registration statement. Statements
    contained in this prospectus as to the contents of any contract
    or other document referred to in this prospectus are not
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    117
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    necessarily complete and, where that contract is an exhibit to
    the registration statement, each statement is qualified in all
    respects by reference to the exhibit to which the reference
    relates. Copies of the registration statement, including the
    exhibits and schedules to the registration statement, may be
    examined without charge at the public reference room of the
    Securities and Exchange Commission, 100&#160;F&#160;Street,
    N.E., Room&#160;1580, Washington, DC 20549. Information about
    the operation of the public reference room may be obtained by
    calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0300.</FONT>
    Copies of all or a portion of the registration statement can be
    obtained from the public reference room of the SEC upon payment
    of prescribed fees. Our SEC filings, including our registration
    statement, are also available to you on the SEC&#146;s website
    www.sec.gov.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result of this offering, we will become subject to the
    information and reporting requirements of the Securities
    Exchange Act of 1934, as amended, and will file periodic reports
    and proxy statements and will make available to our shareholders
    quarterly reports for the first three quarters of each fiscal
    year containing unaudited interim financial information.
</DIV>

<A name='123'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REPORTS
    TO SHAREHOLDERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will furnish our shareholders with annual reports containing
    consolidated financial statements audited by our independent
    certified public accountants.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    118
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='124'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEX TO
    FINANCIAL STATEMENTS</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="95%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#300'>Report of independent registered public
    accounting firm</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#301'>Balance sheet as of October&#160;7, 2009</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#302'>Notes to balance sheet</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-4
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='300'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Trustees and Shareholder
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pebblebrook Hotel Trust:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have audited the accompanying balance sheet of Pebblebrook
    Hotel Trust (the &#147;Company&#148;) as of October&#160;7,
    2009. This financial statement is the responsibility of the
    Company&#146;s management. Our responsibility is to express an
    opinion on the financial statement based on our audit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We conducted our audit in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statement is
    free of material misstatement. An audit includes examining, on a
    test basis, evidence supporting the amounts and disclosures in
    the financial statement. An audit also includes assessing the
    accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial
    statement presentation. We believe that our audit provides a
    reasonable basis for our opinion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In our opinion, the balance sheet referred to above presents
    fairly, in all material respects, the financial position of
    Pebblebrook Hotel Trust as of October&#160;7, 2009, in
    conformity with U.S.&#160;generally accepted accounting
    principles.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">KPMG
    LLP</FONT></DIV>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    McLean, Virginia
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    November&#160;9, 2009
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PEBBLEBROOK
    HOTEL TRUST<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <A name='301'><B><FONT style="font-family: 'Times New Roman', Times">BALANCE
    SHEET<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    </A><B><FONT style="font-family: 'Times New Roman', Times">October&#160;7,
    2009</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="93%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>ASSETS</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD colspan="5">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="5" align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B>
</DIV>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Liabilities:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Shareholders&#146; Equity:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Common shares, $0.01&#160;par value per share; 1,000&#160;shares
    authorized; 1,000&#160;shares issued and outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Additional
    <FONT style="white-space: nowrap">paid-in-capital</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    990
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total shareholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total liabilities and shareholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The accompanying notes are an integral part of this financial
    statement.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    F-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PEBBLEBROOK
    HOTEL TRUST<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">


    <A name='302'><B><FONT style="font-family: 'Times New Roman', Times">NOTES&#160;TO
    BALANCE SHEET<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    </A><B><FONT style="font-family: 'Times New Roman', Times">October&#160;7,
    2009</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">1.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Organization</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pebblebrook Hotel Trust (the &#147;Company&#148;) was formed as
    a Maryland real estate investment trust on October&#160;2, 2009.
    The Company is internally managed and was organized to
    opportunistically acquire and invest in hotel properties located
    primarily in major United States cities, with an emphasis on
    major coastal markets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has no assets other than cash and has not yet
    commenced operations. The Company has not entered into any
    contracts to acquire hotel properties or other assets. The
    Company is in the process of forming a subsidiary, Pebblebrook
    Hotel Limited Partnership (the &#147;Operating
    Partnership&#148;). The Company will be the sole general partner
    of the Operating Partnership and plans to conduct substantially
    all of its business through the Operating Partnership following
    its formation.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">2.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    of Significant Accounting Policies</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Below is a discussion of significant accounting policies as the
    Company prepares to commence operations and acquire hotel assets:
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Basis
    of Presentation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The balance sheet includes all of the accounts of the Company as
    of October&#160;7, 2009, presented in accordance with
    U.S.&#160;generally accepted accounting principles.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Use of
    Estimates</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The preparation of the financial statement in conformity with
    U.S.&#160;generally accepted accounting principles requires
    management to make estimates and assumptions that affect the
    reported amounts of assets and liabilities and disclosure of
    contingent assets and liabilities at the date of the financial
    statements. Actual results could differ from those estimates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Hotel
    Properties</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Acquisitions and Property Improvements.</I>&#160;&#160;Upon
    acquisition, we allocate the purchase price based on the fair
    value of the acquired land, building, furniture, fixtures and
    equipment, identifiable intangible assets, other assets and
    assumed liabilities. Identifiable intangible assets typically
    arise from contractual arrangements. We determine the
    acquisition-date fair values of all assets and assumed
    liabilities using methods similar to those used by independent
    appraisers (<I>e.g.</I>, discounted cash flow analysis) and that
    utilize appropriate discount
    <FONT style="white-space: nowrap">and/or</FONT>
    capitalization rates and available market information. Estimates
    of future cash flows are based on a number of factors including
    historical operating results, known and anticipated trends, and
    market and economic conditions. Acquisition costs are expensed
    as incurred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Hotel renovations
    <FONT style="white-space: nowrap">and/or</FONT>
    replacements of assets that improve or extend the life of the
    asset are capitalized and depreciated over their estimated
    useful lives. Furniture, fixtures and equipment under capital
    leases are carried at the present value of the minimum lease
    payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Repair and maintenance costs are charged to expense as incurred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Depreciation and Amortization.</I>&#160;&#160;Hotel
    properties are carried at cost and depreciated using the
    straight-line method over an estimated useful life of 25 to
    40&#160;years for buildings and one to 10&#160;years for
    furniture, fixtures and equipment. Intangible assets arising
    from contractual arrangements are typically amortized over the
    life of the contract.
</DIV>
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    <BR>
    F-4
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PEBBLEBROOK
    HOTEL TRUST<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">NOTES&#160;TO
    BALANCE SHEET&#160;&#151;&#160;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are required to make subjective assessments as to the useful
    lives and classification of our properties for purposes of
    determining the amount of depreciation expense to reflect each
    year with respect to the assets. These assessments may impact
    our results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Impairment.</I>&#160;&#160;We monitor events and changes in
    circumstances for indicators that the carrying value of the
    hotel and related assets may be impaired. We will prepare an
    estimate of the undiscounted future cash flows, without interest
    charges, of the specific hotel and determine if the investment
    in such hotel is recoverable based on the undiscounted future
    cash flows. If impairment is indicated, an adjustment is made to
    the carrying value of the hotel to reflect the hotel at fair
    value. These assessments may impact the results of our
    operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A hotel is considered held for sale when a contract for sale is
    entered into, a substantial, non-refundable deposit has been
    committed by the purchaser, and sale is expected to close.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Cash
    and Cash Equivalents</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company considers all highly liquid investments with an
    original maturity of three months or less to be cash equivalents.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Revenue
    Recognition</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Revenue consists of amounts derived from hotel operations,
    including the sales of rooms, food and beverage, and other
    ancillary amenities. Revenue is recognized when rooms are
    occupied and services have been rendered. These revenue sources
    are affected by conditions impacting the travel and hospitality
    industry as well as competition from other hotels and businesses
    in similar markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Income
    Taxes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has elected to be taxed as a pass-through entity
    under subchapter S of the Internal Revenue Code, but intends to
    revoke the subchapter S election on the business day prior to
    the closing of a proposed offering of common shares to the
    public. The Company intends to elect to be taxed as a real
    estate investment trust (&#147;REIT&#148;) for federal income
    tax purposes commencing with a short taxable year beginning on
    the date of the revocation of the subchapter S election and
    ending on December&#160;31, 2009. The Company expects to have
    little or no taxable income prior to electing REIT status. To
    qualify as a REIT, the Company must meet certain organizational
    and operational requirements, including a requirement to
    distribute at least 90% of the Company&#146;s annual REIT
    taxable income to its shareholders (which is computed without
    regard to the dividends paid deduction or net capital gain and
    which does not necessarily equal net income as calculated in
    accordance with U.S.&#160;generally accepted accounting
    principals). As a REIT, the Company generally will not be
    subject to federal income tax to the extent it distributes
    qualifying dividends to its shareholders. If the Company fails
    to qualify as a REIT in any taxable year, it will be subject to
    federal income tax on its taxable income at regular corporate
    income tax rates and generally will not be permitted to qualify
    for treatment as a REIT for federal income tax purposes for the
    four taxable years following the year during which qualification
    is lost unless the Internal Revenue Service grants the Company
    relief under certain statutory provisions. Such an event could
    materially adversely affect the Company&#146;s net income and
    net cash available for distribution to shareholders. However,
    the Company intends to organize and operate in such a manner as
    to qualify for treatment as a REIT.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Share-based
    Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have adopted an equity incentive plan that provides for the
    grant of common share options, share awards, share appreciation
    rights, performance units, LTIP units and other equity-based
    awards. Equity-based compensation is recognized as an expense in
    the financial statements and measured at the fair value of the
    award
</DIV>
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    <BR>
    F-5
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PEBBLEBROOK
    HOTEL TRUST<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">NOTES&#160;TO
    BALANCE SHEET&#160;&#151;&#160;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    on the date of grant. The amount of the expense may be subject
    to adjustment in future periods depending on the specific
    characteristics of the equity-based award and the application of
    the accounting guidance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of October&#160;7, 2009, the Company has not granted or
    issued any share based awards.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Organizational
    and Offering Costs</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company expenses organization costs as incurred and offering
    costs, which include selling commissions, will be deferred and
    charged to shareholders&#146; equity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Recently
    Issued Accounting Standards</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In May 2009, the Financial Accounting Standards Board
    (&#147;FASB&#148;) issued an accounting standard that
    establishes general standards of accounting for and disclosure
    of events that occur after the balance sheet date but before
    financial statements are issued or are available to be issued.
    It requires the disclosure of the date through which an entity
    has evaluated subsequent events and the basis for that date. It
    also requires public entities to evaluate subsequent events
    through the date that the financial statements are issued. The
    adoption of this accounting standard did not have a material
    impact on the Company&#146;s financial statements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued an accounting standard that
    requires enterprises to perform a more qualitative approach to
    determining whether or not a variable interest entity will need
    to be consolidated. This evaluation will be based on an
    enterprise&#146;s ability to direct and influence the activities
    of a variable interest entity that most significantly impact its
    economic performance. It requires ongoing reassessments of
    whether an enterprise is the primary beneficiary of a variable
    interest entity. This accounting standard is effective for
    fiscal years beginning after November&#160;15, 2009. Early
    adoption is not permitted. The Company is currently evaluating
    the impact of this accounting standard.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued an accounting standard that made
    the FASB Accounting Standards Codification (the
    &#147;Codification&#148;) the source of authoritative GAAP
    recognized by the FASB to be applied by nongovernmental
    entities. Rules and interpretive releases of the SEC under
    authority of federal securities laws are also sources of
    authoritative GAAP for SEC registrants. The Codification will
    supersede all then-existing non-SEC accounting and reporting
    standards. All other nongrandfathered non-SEC accounting
    literature not included in the Codification will become
    nonauthoritative. This accounting standard is effective for
    financial statements issued for interim and annual periods
    ending after September&#160;15, 2009. Following the issuance of
    this accounting standard, the FASB will not issue new standards
    in the form of Statements, FASB Staff Positions, or Emerging
    Issues Task Force Abstracts. Instead, it will issue Accounting
    Standards Updates. The Board will not consider Accounting
    Standards Updates as authoritative in their own right.
    Accounting Standards Updates will serve only to update the
    Codification, provide background information about the guidance,
    and provide the bases for conclusions on the change(s) in the
    Codification. The adoption of this accounting standard did not
    have a significant impact on the Company&#146;s financial
    statements.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Non-controlling
    Interests</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company will form an operating partnership subsidiary (the
    OP) through which we will conduct substantially all of our
    operations and make substantially all of our investments. The
    Company will be the sole general partner in the OP. When
    acquiring hotel properties, the OP may issue limited partnership
    interests as full or partial consideration to hotel sellers.
    These limited partners will have redemption rights which will
    permit them to redeem their interests in exchange for cash or
    common shares at the option of the Company on a
    <FONT style="white-space: nowrap">one-for-one</FONT>
    basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These limited partner interests in our OP will be considered
    non-controlling interests. Non-controlling interests are
    presented on the balance sheet as either shareholders equity or
    outside of shareholders equity depending upon specific
    provisions of the governing documents related to such an
    interest. Because our OP
</DIV>
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    <BR>
    F-6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PEBBLEBROOK
    HOTEL TRUST<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">NOTES&#160;TO
    BALANCE SHEET&#160;&#151;&#160;(Continued)</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    agreement will permit the settlement of the redemption feature
    for unregistered common shares and because we will control the
    actions and events necessary to issue the maximum number of
    shares that are required to be delivered at the redemption date,
    the non-controlling limited partner interests in our OP will be
    presented as a separate component of shareholder&#146;s equity
    on our balance sheet. The
    <FONT style="white-space: nowrap">per-unit</FONT>
    redemption value of these non-controlling interests will equal
    the closing share price on the last day of the reporting period.
    Our revenues, expenses and net income or loss will include
    amounts attributable to both the controlling and non-controlling
    interests. Amounts attributable to non-controlling interests
    will be deducted from net income or loss to arrive at net income
    or loss attributable to common shareholders on our statement of
    operations.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">3.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Shareholders&#146;
    Equity</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the Declaration of Trust of the Company, the total number
    of shares authorized for issuance is 1,000 common shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At formation, the Company issued the sole shareholder of the
    Company 1,000 common shares at $1&#160;per share.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">4.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Initial
    Public Offering and Concurrent Private Placement</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company intends to offer for sale common shares through the
    filing of a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-11</FONT>
    and also expects to issue common shares in a concurrent private
    placement at the public offering price per share to its
    Chairman, President and Chief Executive Officer, Jon&#160;E.
    Bortz, and its Executive Vice President and Chief Financial
    Officer, Raymond D. Martz.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company will reimburse its sole shareholder for any
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses to be incurred in connection with the organization of
    the Company and the proposed offering of common shares to the
    public. As of October&#160;7, 2009, organizational costs
    incurred by the shareholder were inconsequential. If the
    proposed offering is terminated, the Company will have no
    obligation to reimburse the shareholder for any organizational
    or offering costs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">5.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Subsequent
    Events</FONT></B>
</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has evaluated the need for disclosures
    <FONT style="white-space: nowrap">and/or</FONT>
    adjustments resulting from subsequent events through
    November&#160;9, 2009, the date the financial statements were
    available to be issued. This evaluation did not result in any
    subsequent events that necessitated disclosures
    <FONT style="white-space: nowrap">and/or</FONT>
    adjustments.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
  <!-- XBRL Pagebreak Begin -->

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    <BR>
    F-7
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 85%; margin-left: 7%"><!-- BEGIN PAGE WIDTH -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=0 -->

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#160;&#160;&#160;&#160;&#160;Until&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    20&#160;&#160; (25&#160;days after the date of this prospectus),
    all dealers that effect transactions in our common shares,
    whether or not participating in this offering, may be required
    to deliver a prospectus. This is in addition to the
    dealers&#146; obligation to deliver a prospectus when acting as
    underwriters and with respect to their unsold allotments or
    subscriptions.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">17,500,000 Shares</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="w75877a2w7587711.gif" alt="(PEBBLE BROOK HOTEL TRUST LOGO)"><B><FONT style="font-size: 18pt">
    </FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">Common Shares</FONT></B>
</DIV>

<DIV style="margin-top: 135pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=90 -->

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=90 -->

<DIV style="margin-top: 135pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV><B><FONT style="font-size: 18pt">BofA
    Merrill Lynch</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV><B><FONT style="font-size: 18pt">Raymond
    James</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV><B><FONT style="font-size: 18pt">Wells
    Fargo Securities</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV><B><FONT style="font-size: 18pt">Calyon
    Securities (USA) Inc.</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV><B><FONT style="font-size: 18pt">RBC
    Capital Markets</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
<DIV style="margin-top: 6pt; font-size: 1pt">
&nbsp;
</DIV>
<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>December&#160;&#160;&#160;, 2009</B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=432 length=0 -->
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 85%; margin-left: 7%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PART&#160;II.
    INFORMATION NOT REQUIRED IN PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;31.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Other
    Expenses of Issuance and Distribution.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth the costs and expenses of the
    sale and distribution of the securities being registered, all of
    which are being borne by the Registrant.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="87%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    SEC registration fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    22,459
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FINRA filing fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,750
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    NYSE fees
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    115,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Printing and engraving fees
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    150,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Legal fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    950,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Accounting fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Blue Sky fees and expenses (including legal fees)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Miscellaneous expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    91,791
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,400,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    To be filed by amendment.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All expenses, except the Securities and Exchange Commission
    registration fee and FINRA filing fee, are estimated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;32.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Sales
    to Special Parties.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;6, 2009, we issued 1,000 common shares to
    Mr.&#160;Bortz in connection with the formation and initial
    capitalization of our company for an aggregate purchase price of
    $1,000. We will redeem the shares from Mr.&#160;Bortz for $1,000
    upon completion of this offering.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;33.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Recent
    Sales of Unregistered Securities.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have issued or agreed to issue the following securities that
    were not registered under the Securities Act of 1933, as amended
    (the &#147;Securities Act&#148;):
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;6, 2009, we issued 1,000 common shares to
    Mr.&#160;Bortz in connection with the formation and initial
    capitalization of our company for an aggregate purchase price of
    $1,000. We will redeem the shares from Mr.&#160;Bortz for $1,000
    upon completion of this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares were issued in reliance on the exemption set forth in
    Section&#160;4(2) of the Securities Act and Rule&#160;506
    thereunder. Mr.&#160;Bortz is our Chairman, President and Chief
    Executive Officer and has represented to us that he is an
    &#147;accredited investor&#148; as defined in Rule&#160;501
    under the Securities Act.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will sell 125,000 common shares to Mr.&#160;Bortz and 10,000
    common shares to Mr.&#160;Martz, our Executive Vice President
    and Chief Financial Officer, in a private placement concurrently
    with the closing of the offering at a price per share equal to
    the public offering price in the offering. The shares will be
    sold to Messrs. Bortz and Martz in reliance on the exemption set
    forth in Section&#160;4(2) of the Securities Act and Rule 506 of
    Regulation&#160;D thereunder. Each of Mr.&#160;Bortz and
    Mr.&#160;Martz has represented to us that he is an
    &#147;accredited investor&#148; as defined in Rule 501 under the
    Securities Act.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;34.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Indemnification
    of Trustees and Officers.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Maryland law permits a Maryland real estate investment trust to
    include in its declaration of trust a provision limiting the
    liability of its trustees and officers to the real estate
    investment trust and its shareholders for money damages except
    for liability resulting from (a)&#160;actual receipt of an
    improper benefit or profit in money, property or services or
    (b)&#160;active or deliberate dishonesty established by a final
    judgment as being material to the cause of action. Our
    declaration of trust contains a provision which limits the
    liability of our trustees and officers to the maximum extent
    permitted by Maryland law.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our declaration of trust permits us and our bylaws obligate us,
    to the maximum extent permitted by Maryland law, to indemnify
    and to pay or reimburse reasonable expenses in advance of final
    disposition of a proceeding to (a)&#160;any present or former
    trustee or officer or (b)&#160;any individual who, while a
    trustee or officer and at our request, serves or has served
    another real estate investment trust, corporation, partnership,
    limited liability company, joint venture, trust, employee
    benefit plan or any other enterprise as a director, trustee,
    officer, member, manager or partner and who is made or is
    threatened to be made a party to the proceeding by reason of his
    or her service in any such capacity, from and against any claim
    or liability to which that individual may become subject or
    which that individual may incur by reason of his or her service
    in any such capacity and to pay or reimburse his or her
    reasonable expenses in advance of final disposition of a
    proceeding. Our declaration of trust and bylaws also permit us
    to indemnify and advance expenses to any person who served a
    predecessor of our company in any of the capacities described
    above and to any employee or agent of our company or a
    predecessor of our company. Maryland law requires us to
    indemnify a trustee or officer who has been successful, on the
    merits or otherwise, in the defense of any proceeding to which
    he is made a party by reason of his service in that capacity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Maryland General Corporation Law permits a Maryland real
    estate investment trust to indemnify and advance expenses to its
    trustees, officers, employees and agents to the same extent as
    permitted for directors and officers of Maryland corporations.
    The MGCL permits a corporation to indemnify its present and
    former directors and officers, among others, against judgments,
    penalties, fines, settlements and reasonable expenses actually
    incurred by them in connection with any proceeding to which they
    may be a party by reason of their service in those or other
    capacities unless it is established that (a)&#160;the act or
    omission of the director or officer was material to the matter
    giving rise to the proceeding and (i)&#160;was committed in bad
    faith or (ii)&#160;was a result of active and deliberate
    dishonesty, (b)&#160;the director or officer actually received
    an improper personal benefit in money, property or services or
    (c)&#160;in the case of any criminal proceeding, the director or
    officer has reasonable cause to believe that the act or omission
    was unlawful. However, a Maryland corporation may not indemnify
    for an adverse judgment in a suit by or in the right if the
    corporation or if the director or officer was adjudged to be
    liable for an improper personal benefit, unless in either case a
    court orders indemnification and then only for expenses. In
    accordance with the Maryland General Corporation Law and our
    bylaws, our bylaws require us, as a condition to advancing
    expenses, to obtain (a)&#160;a written affirmation by the
    trustee or officer of his or her good faith belief that he or
    she has met the standard of conduct necessary for
    indemnification and (b)&#160;a written statement by or on his or
    her behalf to repay the amount paid or reimbursed by us if it
    shall ultimately be determined that the standard of conduct was
    not met.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also expect to enter into indemnification agreements with our
    trustees and our executive officers providing for procedures for
    indemnification by us to the fullest extent permitted by law and
    advancements by us of certain expenses and costs relating to
    claims, suits or proceedings arising from their service to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to obtain an insurance policy under which our trustees
    and executive officers will be insured, subject to the limits of
    the policy, against certain losses arising from claims made
    against such trustees and officers by reason of any acts or
    omissions covered under such policy in their respective
    capacities as trustees or officers, including certain
    liabilities under the Securities Act of 1933.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have been advised that the SEC has expressed the opinion that
    indemnification of trustees, officers or persons otherwise
    controlling a company for liabilities arising under the
    Securities Act of 1933 is against public policy and is therefore
    unenforceable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;35.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Treatment
    of Proceeds from Shares&#160;Being Registered.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    None of the net proceeds will be credited to an account other
    than the appropriate capital share account.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;36.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Financial
    Statements and Exhibits.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;<I>Financial Statements.</I>&#160;&#160;See
    <FONT style="white-space: nowrap">page&#160;F-1</FONT>
    for an index of the financial statements included in the
    Registration Statement.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-2
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;<I>Exhibits.</I>&#160;&#160;The following exhibits are
    filed as part of, or incorporated by reference into, this
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-11:</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="90%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exhibit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Exhibit Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Underwriting Agreement by and among Pebblebrook Hotel
    Trust, Pebblebrook Hotel, L.P. and the Underwriters named herein
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .1***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Declaration of Trust of Pebblebrook
    Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .2***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Bylaws of Pebblebrook Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .3**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Agreement of Limited Partnership of Pebblebrook Hotel,
    L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    5
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Venable LLP
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    8
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Tax opinion of Hunton&#160;&#038; Williams LLP
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .1***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Pebblebrook Hotel Trust&#160;2009 Equity Incentive Plan
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .2***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Change in Control Severance Agreement between
    Pebblebrook Hotel Trust and Jon&#160;E.&#160;Bortz
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .3***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Change in Control Severance Agreement between
    Pebblebrook Hotel Trust and Raymond D. Martz
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .4***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Indemnification Agreement between Pebblebrook Hotel
    Trust and its officers and trustees
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .5**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Share Award Agreement for officers
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .6**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Share Award Agreement for trustees
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    21
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    List of Subsidiaries of Pebblebrook Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .1**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    KPMG LLP Consent
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .2*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Venable LLP Consent (included in Exhibit&#160;5.1)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .3*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Hunton&#160;&#038; Williams LLP Consent (included in
    Exhibit&#160;8.1)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    To be filed by amendment.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR>
    <TD valign="top">
    ** </TD>
    <TD></TD>
    <TD valign="bottom">
    Filed herewith.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    *** </TD>
    <TD></TD>
    <TD valign="bottom">
    Previously filed.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;37.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: 'Times New Roman', Times">Undertakings.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;The undersigned registrant hereby undertakes to provide
    to the underwriters at the closing specified in the underwriting
    agreement certificates in such denominations and registered in
    such names as required by the underwriters to permit prompt
    delivery to each purchaser.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;Insofar as indemnification for liabilities arising
    under the Securities Act of 1933&#160;may be permitted to
    trustees, officers or controlling persons of the registrant
    pursuant to the foregoing provisions, or otherwise, the
    registrant has been advised that in the opinion of the
    Securities and Exchange Commission such indemnification is
    against public policy as expressed in the Act and is, therefore,
    unenforceable. In the event that a claim for indemnification
    against such liabilities (other than the payment by the
    registrant of expenses incurred or paid by a trustee, officer or
    controlling person of the registrant in the successful defense
    of any action, suit or proceeding) is asserted by such trustee,
    officer or controlling person in connection with the securities
    being registered, the registrant will, unless in the opinion of
    its counsel the matter has been settled by controlling
    precedent, submit to a court of appropriate jurisdiction the
    question whether such indemnification by it is against public
    policy as expressed in the Act, and will be governed by the
    final adjudication of such issue.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;The undersigned Registrant hereby further undertakes
    that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;For purposes of determining any liability under the
    Securities Act of 1933, the information omitted from the form of
    prospectus filed as part of this registration statement in
    reliance under Rule&#160;430A and contained in a form of
    prospectus filed by the Registrant pursuant to
    Rule&#160;424(b)(1) or (4), or 497(h) under the Securities Act
    shall be deemed to be part of this registration statement as of
    the time it was declared effective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 7%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;For the purpose of determining any liability under the
    Securities Act of 1933, each post-effective amendment that
    contains a form of prospectus shall be deemed to be a new
    registration statement relating to the securities offered
    herein, and the offering of such securities at that time shall
    be deemed to be the initial bona fide offering thereof.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SIGNATURES</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, the
    registrant certifies that it has reasonable grounds to believe
    that it meets all of the requirements for filing on
    <FONT style="white-space: nowrap">Form&#160;S-11</FONT>
    and has duly caused this Amendment No.&#160;2 to be signed on
    its behalf by the undersigned, thereunto duly authorized, in the
    City of Bethesda, State of Maryland on the 25th day of November,
    2009.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    PEBBLEBROOK HOTEL TRUST
</DIV>

<DIV style="margin-top: 48pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Jon
    E. Bortz</DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=0 -->

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Jon E. Bortz
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Chairman of the Board, President and Chief<BR>
    Executive Officer
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 7%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, this
    Amendment No.&#160;2 has been signed below by the following
    person in the capacities and on the dates indicated.
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="4%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="36%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="36%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Signature</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 12pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;Jon
    E. Bortz</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=180 length=0 -->Jon
    E. Bortz
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    Chairman of the Board, President, Chief Executive Officer and
    Trustee (Principal Executive Officer, Principal Financial
    Officer and Principal Accounting Officer)
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    November&#160;25, 2009
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>
  <!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    II-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXHIBIT
    INDEX</FONT></B>
</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="90%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Exhibit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Exhibit Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Underwriting Agreement by and among Pebblebrook Hotel
    Trust, Pebblebrook Hotel, L.P. and the Underwriters named herein
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .1***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Declaration of Trust of Pebblebrook
    Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .2***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Bylaws of Pebblebrook Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .3**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Agreement of Limited Partnership of Pebblebrook Hotel,
    L.P.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    5
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Venable LLP
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    8
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Tax opinion of Hunton&#160;&#038; Williams LLP
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .1***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Pebblebrook Hotel Trust&#160;2009 Equity Incentive Plan
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .2***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Change in Control Severance Agreement between
    Pebblebrook Hotel Trust and Jon&#160;E.&#160;Bortz
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .3***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Change in Control Severance Agreement between
    Pebblebrook Hotel Trust and Raymond D. Martz
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .4***
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Indemnification Agreement between Pebblebrook Hotel
    Trust and its officers and trustees
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .5**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Share Award Agreement for officers
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .6**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Share Award Agreement for trustees
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    21
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    List of Subsidiaries of Pebblebrook Hotel Trust
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .1**
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    KPMG LLP Consent
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .2*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Venable LLP Consent (included in Exhibit&#160;5.1)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .3*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Hunton&#160;&#038; Williams LLP Consent (included in
    Exhibit&#160;8.1)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    To be filed by amendment.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR>
    <TD valign="top">
    ** </TD>
    <TD></TD>
    <TD valign="bottom">
    Filed herewith.</TD>
</TR>

</TABLE>

<DIV align="left"><FONT size="1">

</FONT></DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    *** </TD>
    <TD></TD>
    <TD valign="bottom">
    Previously filed. </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
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<DIV align="left"><FONT size="1">

</FONT></DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.3
<SEQUENCE>2
<FILENAME>w75877a2exv3w3.htm
<DESCRIPTION>EX-3.3
<TEXT>
<HTML>
<HEAD>
<TITLE>exv3w3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;3.3</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">AGREEMENT OF LIMITED PARTNERSHIP
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">OF

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">PEBBLEBROOK HOTEL, L.P.<BR>
(a Delaware limited partnership)

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE I DEFINED TERMS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE II FORMATION OF PARTNERSHIP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.01 Formation of the Partnership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.02 Name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.03 Registered Office and Agent; Principal Office</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.04 Term and Dissolution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.05 Filing of Certificate and Perfection of Limited Partnership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.06 Certificates Describing Partnership Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE III BUSINESS OF THE PARTNERSHIP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.01 Capital Contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.02 Additional Capital Contributions and Issuances
of Additional Partnership Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.03 Additional Funding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.04 LTIP Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.05 Conversion of LTIP Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.06 Capital Accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.07 Percentage Interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.08 No Interest on Contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.09 Return of Capital Contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.10 No Third-Party Beneficiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE V PROFITS AND LOSSES; DISTRIBUTIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.01 Allocation of Profit and Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.02 Distribution of Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.03 REIT Distribution Requirements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.04 No Right to Distributions in Kind</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.05 Limitations on Return of Capital Contributions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.06 Distributions Upon Liquidation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.07 Substantial Economic Effect</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.01 Management of the Partnership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.02 Delegation of Authority</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.03 Indemnification and Exculpation of Indemnitees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.04 Liability of the General Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.05 Partnership Obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.06 Outside Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.07 Employment or Retention of Affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.08 General Partner Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- i -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.09 Title to Partnership Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">6.10 Redemption of General Partner&#146;s Partnership Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VII CHANGES IN GENERAL PARTNER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.01 Transfer of the General Partner&#146;s Partnership Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.02 Admission of a Substitute or Additional General Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">7.04 Removal of a General Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.01 Management of the Partnership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.02 Power of Attorney</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.03 Limitation on Liability of Limited Partners</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.04 Class&nbsp;A Unit Redemption Right</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">8.05 Registration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE IX TRANSFERS OF PARTNERSHIP INTERESTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.01 Purchase for Investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.02 Restrictions on Transfer of Partnership Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.03 Admission of Substitute Limited Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.04 Rights of Assignees of Partnership Interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">9.06 Joint Ownership of Partnership Units</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.01 Books and Records</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.02 Custody of Partnership Funds; Bank Accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.03 Fiscal and Taxable Year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.04 Annual Tax Information and Report</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">10.06 Reports to Limited Partners</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XI AMENDMENT OF AGREEMENT; MERGER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.01 Amendment of Agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">11.02 Merger of Partnership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE XII GENERAL PROVISIONS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.01 Notices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.02 Survival of Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.03 Additional Documents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.04 Severability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.05 Entire Agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.06 Pronouns and Plurals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.07 Headings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.08 Counterparts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">12.09 Governing Law</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- ii -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBITS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT A &#151; Partners, Capital Contributions and Percentage Interests
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT B &#151; Notice of Exercise of Common Unit Redemption Right
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT C-1 &#151; Certification of Non-Foreign Status (For Redeeming Limited Partners That Are
Entities)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT C-2 &#151; Certification of Non-Foreign Status (For Redeeming Limited Partners That Are
Individuals)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT D &#151; Notice of Election by Partner to Convert LTIP Units into Common Units
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EXHIBIT E &#151; Notice of Election by Partnership to Force Conversion of LTIP Units into Common Units
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- iii -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AGREEMENT OF LIMITED PARTNERSHIP</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OF</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>PEBBLEBROOK HOTEL, L.P.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>RECITALS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pebblebrook Hotel, L.P. (the &#147;Partnership&#148;) was formed as a limited partnership under the laws
of the State of Delaware, pursuant to a Certificate of Limited Partnership filed with the Secretary
of State of the State of Delaware effective as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> &#091;&#95;&#95;&#95;&#093;, 2009 and this Agreement of
Limited Partnership, entered into this &#091;&#95;&#95;&#95;&#093; day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2009, by and between Pebblebrook
Hotel Trust, a Maryland real estate investment trust (together with its successors and assigns, the
&#147;General Partner&#148;), and the Limited Partners set forth on <U>Exhibit&nbsp;A</U> hereto. Capitalized
terms used herein but not otherwise defined shall have the meaning given to such terms in Article&nbsp;I
below.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between the parties
hereto, and of other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>DEFINED TERMS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following defined terms used in this Agreement shall have the meanings specified below:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Act</B>&#148; means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from
time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Additional Funds</B>&#148; has the meaning set forth in Section&nbsp;4.03 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Additional Securities</B>&#148; has the meaning set forth in Section&nbsp;4.02(a)(ii) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Adjustment Event</B>&#148; has the meaning set forth in Section&nbsp;4.04(a)(i) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Administrative Expenses</B>&#148; means (i)&nbsp;all administrative and operating costs and expenses
incurred by the Partnership, (ii)&nbsp;administrative costs and expenses of the General Partner,
including any salaries or other payments to trustees, officers or employees of the General Partner,
and any accounting and legal expenses of the General Partner, which expenses, the Partners have
agreed, are expenses of the Partnership and not the General Partner, and (iii)&nbsp;to the extent not
included in clauses (i)&nbsp;or (ii)&nbsp;above, REIT Expenses; <U>provided</U>, <U>however</U>, that
Administrative Expenses shall not include any administrative costs and expenses incurred by the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">General Partner that are attributable to Properties or interests in a Subsidiary that are
owned by the General Partner other than through its ownership interest in the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Affiliate</B>&#148; means, (i)&nbsp;any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person, (ii)&nbsp;any other Person that owns, beneficially,
directly or indirectly, 10% or more of the outstanding capital stock, shares or equity interests of
such Person, or (iii)&nbsp;any officer, director, employee, partner, member, manager or trustee of such
Person or any Person controlling, controlled by or under common control with such Person (excluding
trustees and persons serving in similar capacities who are not otherwise an Affiliate of such
Person). For the purposes of this definition, &#147;control&#148; (including the correlative meanings of the
terms &#147;controlled by&#148; and &#147;under common control with&#148;), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership of voting securities or partnership
interests or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Agreed Value</B>&#148; means the fair market value of a Partner&#146;s non-cash Capital Contribution as of
the date of contribution as agreed to by such Partner and the General Partner. The names and
addresses of the Partners, number of Partnership Units issued to each Partner, and the Agreed Value
of non-cash Capital Contributions as of the date of contribution is set forth on <U>Exhibit&nbsp;A</U>,
as it may be amended or restated from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Agreement</B>&#148; means this Agreement of Limited Partnership , as it may be amended, supplemented
or restated from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Board of Trustees</B>&#148; means the Board of Trustees of the General Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Capital Account</B>&#148; has the meaning provided in Section&nbsp;4.06 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Capital Account Limitation</B>&#148; has the meaning set forth in Section&nbsp;4.05(b) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Capital Contribution</B>&#148; means the total amount of cash, cash equivalents, and the Agreed Value
of any Property or other asset contributed or agreed to be contributed, as the context requires, to
the Partnership by each Partner pursuant to the terms of the Agreement. Any reference to the
Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor
holder of the Partnership Interest of such Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Cash Amount</B>&#148; means an amount of cash per Common Unit equal to the Value of the REIT Shares
Amount on the date of receipt by the Partnership and the General Partner of a Notice of Redemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Certificate</B>&#148; means any instrument or document that is required under the laws of the State of
Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and
sworn to by the Partners of the Partnership (either by themselves or pursuant to the
power-of-attorney granted to the General Partner in Section&nbsp;8.02 hereof) and filed for recording in
the appropriate public offices within the State of Delaware or such other jurisdiction to perfect
or maintain the Partnership as a limited partnership, to effect the admission, withdrawal or
substitution of any Partner of the Partnership, or to protect the limited liability of the Limited
Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Change of Control</B>&#148; means, as to the General Partner, the occurrence of any of the following:
(i)&nbsp;the sale, lease or transfer, in one or a series of related transactions, of 80% or more of the
assets of the General Partner, taken as a whole, to any Person or group (within the meaning of
Section&nbsp;13(d)(3) or Section&nbsp;14(d)(2) of the Exchange Act, or any successor provision), other than
an Affiliate of the General Partner; or (ii)&nbsp;the acquisition by any Person or group (within the
meaning of Section&nbsp;13(d)(3) or Section&nbsp;14(d)(2) of the Exchange Act, or any successor provision),
including any group acting for the purpose of acquiring, holding or disposing of securities (within
the meaning of Rule&nbsp;13d-5(b)(1) under the Exchange Act), other than an Affiliate of the General
Partner in a single transaction or in a related series of transactions, by way of merger, share
exchange, consolidation or other business combination or purchase of beneficial ownership (within
the meaning of Rule&nbsp;13d-3 under the Exchange Act, or any successor provision) of more than 50% of
the total voting power of the voting capital securities of the General Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Partnership Unit Distribution</B>&#148; has the meaning set forth in Section&nbsp;4.04(a)(ii)
hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Redemption Amount</B>&#148; means either the Cash Amount or the REIT Shares Amount, as selected
by the General Partner pursuant to Section&nbsp;8.04(b) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Unit</B>&#148; means a Partnership Unit which is designated as a Common Unit of the
Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Unit Distribution</B>&#148; has the meaning set forth in Section&nbsp;4.04(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Unit Economic Balance</B>&#148; has the meaning set forth in Section&nbsp;5.01(g) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Unit Redemption Right</B>&#148; has the meaning provided in Section&nbsp;8.04(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Common Unit Transaction</B>&#148; has the meaning set forth in Section&nbsp;4.05(f) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Code</B>&#148; means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time
to time. Reference to any particular provision of the Code shall mean that provision in the Code
at the date hereof and any successor provision of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Commission</B>&#148; means the U.S. Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Constituent Person</B>&#148; has the meaning set forth in Section&nbsp;4.05(f) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Conversion Date</B>&#148; has the meaning set forth in Section&nbsp;4.05(b) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Conversion Factor</B>&#148; means 1.0, <U>provided</U> <U>that</U> in the event that the General
Partner (i)&nbsp;declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii)&nbsp;subdivides its
outstanding REIT Shares or (iii)&nbsp;combines its outstanding REIT Shares into a smaller number of REIT
Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which shall be the number of REIT Shares issued and outstanding on
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the record date for such dividend, distribution, subdivision or combination (assuming for such
purposes that such dividend, distribution, subdivision or combination has occurred as of such
time), and the denominator of which shall be the actual number of REIT Shares (determined without
the above assumption) issued and outstanding on such date and, <U>provided</U> <U>further</U>,
that in the event that an entity other than an Affiliate of the General Partner shall become
General Partner pursuant to any merger, consolidation or combination of the General Partner with or
into another entity (the &#147;<B>Successor Entity</B>&#148;), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by the number of shares of the Successor Entity into which one
REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the
date of such merger, consolidation or combination. Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of such event retroactive to the record date,
if any, for such event; <U>provided</U>, <U>however</U>, that if the General Partner receives a
Notice of Redemption after the record date, but prior to the effective date of such dividend,
distribution, subdivision or combination, the Conversion Factor shall be determined as if the
General Partner had received the Notice of Redemption immediately prior to the record date for such
dividend, distribution, subdivision or combination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Conversion Notice</B>&#148; has the meaning set forth in Section&nbsp;4.05(b) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Conversion Right</B>&#148; has the meaning set forth in Section&nbsp;4.05(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Declaration of Trust</B>&#148; means the Articles of Amendment and Restatement of the General Partner
filed with the Secretary of State of the State of Delaware, as amended, supplemented or restated
from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Defaulting Limited Partner</B>&#148; means a Limited Partner that has failed to pay any amount owed to
the Partnership under a Partnership Loan within 15&nbsp;days after demand for payment thereof is made by
the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Distributable Amount</B>&#148; has the meaning set forth in Section&nbsp;5.02(d) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Economic Capital Account Balances</B>&#148; has the meaning set forth in Section&nbsp;5.01(g) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Equity Incentive Plan</B>&#148; means any equity incentive or compensation plan hereafter adopted by
the Partnership or the General Partner, including, without limitation, the General Partner&#146;s 2009
Equity Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Event of Bankruptcy</B>&#148; as to any Person means (i)&nbsp;the filing of a petition for relief as to
such Person as debtor or bankrupt under the Bankruptcy Code of 1978, as amended, or similar
provision of law of any jurisdiction (except if such petition is contested by such Person and has
been dismissed within 90&nbsp;days); (ii)&nbsp;the insolvency or bankruptcy of such Person as finally
determined by a court proceeding; (iii)&nbsp;the filing by such Person of a petition or application to
accomplish the same or for the appointment of a receiver or a trustee for such Person or a
substantial part of his assets; or (iv)&nbsp;the commencement of any proceedings relating to such Person
as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by
such Person or by another, <U>provided</U> <U>that</U> if such proceeding is commenced by
another, such
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Person indicates his approval of such proceeding, consents thereto or acquiesces therein, or
such proceeding is contested by such Person and has not been finally dismissed within 90&nbsp;days.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Excepted Holder Limit</B>&#148; has the meaning set forth in the Declaration of Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Exchange Act</B>&#148; means the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Forced Conversion</B>&#148; has the meaning set forth in Section&nbsp;4.05(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Forced Conversion Notice</B>&#148; has the meaning set forth in Section&nbsp;4.05(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>General Partner</B>&#148; has the meaning set forth in the first paragraph of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>General Partner Loan</B>&#148; means a loan extended by the General Partner to a Defaulting Limited
Partner in the form of a payment on a Partnership Loan by the General Partner to the Partnership on
behalf of the Defaulting Limited Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>General Partnership Interest</B>&#148; means the Partnership Interest held by the General Partner in
its capacity as the general partner of the Partnership, which Partnership Interest is an interest
as a general partner under the Act. The General Partnership Interest may be expressed as a number
of Partnership Units. A number of Common Units held by the General Partner equal to one-tenth of
one percent (0.1%) of all outstanding Partnership Units shall be deemed to be the General
Partnership Interest. All other Partnership Units owned by the General Partner and any Partnership
Units owned by any Affiliate or Subsidiary of the General Partner shall be considered to constitute
a Limited Partnership Interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Indemnified Party</B>&#148; has the meaning set forth in Section&nbsp;8.05(f).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Indemnifying Party</B>&#148; has the meaning set forth in Section&nbsp;8.05(f).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Indemnitee</B>&#148; means (i)&nbsp;any Person made a party to a proceeding by reason of its status as (A)
the General Partner or (B)&nbsp;a trustee of the General Partner or an officer or employee of the
Partnership or the General Partner, and (ii)&nbsp;such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and absolute discretion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Independent Trustee</B>&#148; means a trustee of the General Partner who meets the NYSE requirements
for an independent director as set forth from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Limited Partner</B>&#148; means any Person named as a Limited Partner on <U>Exhibit&nbsp;A</U> attached
hereto, as it may be amended or restated from time to time, and any Person who becomes a Substitute
Limited Partner or any additional Limited Partner, in such Person&#146;s capacity as a Limited Partner
in the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Limited Partnership Interest</B>&#148; means a Partnership Interest held by a Limited Partner at any
particular time representing a fractional part of the Partnership Interest of all Limited Partners,
and includes any and all benefits to which the holder of such a Limited Partnership
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this Agreement and of such
Act. Limited Partnership Interests may be expressed as a number of Common Units, LTIP Units or
other Partnership Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Liquidating Gains</B>&#148; has the meaning set forth in Section&nbsp;5.01(g) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>LTIP Unit</B>&#148; means a Partnership Unit which is designated as an LTIP Unit and which has the
rights, preferences and other privileges designated in Section&nbsp;4.04 hereof and elsewhere in this
Agreement in respect of holders of LTIP Units. The allocation of LTIP Units among the Partners
shall be set forth on <U>Exhibit&nbsp;A</U>, as it may be amended or restated from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>LTIP Unitholder</B>&#148; means a Partner that holds LTIP Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Loss</B>&#148; has the meaning provided in Section&nbsp;5.01(h) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Majority in Interest</B>&#148; means the Limited Partners holding more than fifty percent (50%) of the
Percentage Interests of the Limited Partners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Notice of Redemption</B>&#148; means the Notice of Exercise of Common Unit Redemption Right
substantially in the form attached as <U>Exhibit&nbsp;B</U> hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>NYSE</B>&#148; means the New York Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Offer</B>&#148; has the meaning set forth in Section&nbsp;7.01(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Offering</B>&#148; means the underwritten initial public offering of REIT Shares by the General
Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partner</B>&#148; means any General Partner or Limited Partner, and &#147;Partners&#148; means the General
Partner and the Limited Partners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partner Nonrecourse Debt Minimum Gain</B>&#148; has the meaning set forth in Regulations Section
1.704-2(i). A Partner&#146;s share of Partner Nonrecourse Debt Minimum Gain shall be determined in
accordance with Regulations Section&nbsp;1.704-2(i)(5).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership</B>&#148; means Pebblebrook Hotel, L.P., a limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership Interest</B>&#148; means an ownership interest in the Partnership held by either a Limited
Partner or the General Partner, and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together with all obligations
of such Person to comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Common Units, LTIP Units or other Partnership Units.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership Loan</B>&#148; means a loan from the Partnership to the Partner on the day the Partnership
pays over the excess of the Withheld Amount over the Distributable Amount to a taxing authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership Minimum Gain</B>&#148; has the meaning set forth in Regulations Section&nbsp;1.704-2(d). In
accordance with Regulations Section&nbsp;1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Partnership nonrecourse liability, any gain the Partnership
would realize if it disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately computed gains. A
Partner&#146;s share of Partnership Minimum Gain shall be determined in accordance with Regulations
Section&nbsp;1.704-2(g)(1).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership Record Date</B>&#148; means the record date established by the General Partner for the
distribution of cash pursuant to Section&nbsp;5.02 hereof, which record date shall be the same as the
record date established by the General Partner for a distribution to its shareholders of some or
all of its portion of such distribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Partnership Unit</B>&#148; means a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder, and includes Common Units, LTIP Units and any other class or series of
Partnership Units that may be established after the date hereof. The number of Partnership Units
outstanding and the Percentage Interests represented by such Partnership Units are set forth on
<U>Exhibit&nbsp;A</U> hereto, as it may be amended or restated from time to time. The ownership of
Partnership Units may be evidenced by a certificate in a form approved by the General Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Percentage Interest</B>&#148; means the percentage determined by dividing the number of Partnership
Units of a Partner by the sum of the number of Partnership Units of all Partners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Person</B>&#148; means any individual, partnership, corporation, limited liability company, joint
venture, trust or other entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Profit</B>&#148; has the meaning provided in Section&nbsp;5.01(h) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Property</B>&#148; means any property or other investment in which the Partnership, directly or
indirectly, holds an ownership interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Redemption Shares</B>&#148; has the meaning set forth in Section&nbsp;8.05(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Redeeming Limited Partner</B>&#148; has the meaning provided in Section&nbsp;8.04(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Regulations</B>&#148; means the Federal Income Tax Regulations issued under the Code, as amended and
as hereafter amended from time to time. Reference to any particular provision of the Regulations
shall mean that provision of the Regulations on the date hereof and any successor provision of the
Regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>REIT</B>&#148; means a real estate investment trust under Sections&nbsp;856 through 860 of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>REIT Expenses</B>&#148; means (i)&nbsp;costs and expenses relating to the formation and continuity of
existence and operation of the General Partner and any Subsidiaries thereof (which
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subsidiaries shall, for purposes hereof, be included within the definition of the General
Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses
or fees payable to any director, officer or employee of the General Partner, (ii)&nbsp;costs and
expenses relating to any public offering and registration, or private offering, of securities by
the General Partner, and all statements, reports, fees and expenses incidental thereto, including,
without limitation, underwriting discounts and selling commissions applicable to any such offering
of securities, and any costs and expenses associated with any claims made by any holders of such
securities or any underwriters or placement agents thereof, (iii)&nbsp;costs and expenses associated
with any repurchase of any securities by the General Partner, (iv)&nbsp;costs and expenses associated
with the preparation and filing of any periodic or other reports and communications by the General
Partner under federal, state or local laws or regulations, including filings with the Commission,
(v)&nbsp;costs and expenses associated with compliance by the General Partner with laws, rules and
regulations promulgated by any regulatory body, including the Commission and any securities
exchange, (vi)&nbsp;costs and expenses associated with any 401(k) plan, incentive plan, bonus plan or
other plan providing for compensation for the employees of the General Partner, (vii)&nbsp;costs and
expenses incurred by the General Partner relating to any issuing or redemption of Partnership
Interests and (viii)&nbsp;all other operating or administrative costs of the General Partner incurred in
the ordinary course of its business on behalf of or in connection with the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>REIT Share</B>&#148; means one common share of beneficial interest, par value $0.01 per share, of the
General Partner (or Successor Entity, as the case may be).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>REIT Shares Amount</B>&#148; means the number of REIT Shares equal to the product of (X)&nbsp;the number of
Common Units offered for redemption by a Redeeming Limited Partner, multiplied by (Y)&nbsp;the
Conversion Factor as adjusted to and including the Specified Redemption Date; <U>provided</U> that
in the event the General Partner issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the holders of REIT Shares to subscribe for or
purchase additional REIT Shares, or any other securities or property (collectively, the &#147;<B>Rights</B>&#148;),
and such Rights have not expired at the Specified Redemption Date, then the REIT Shares Amount
shall also include such Rights issuable to a holder of the REIT Shares Amount on the record date
fixed for purposes of determining the holders of REIT Shares entitled to Rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Restriction Notice</B>&#148; has the meaning set forth in Section&nbsp;8.04(f) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Rights</B>&#148; has the meaning set forth in the definition of &#147;REIT Shares Amount&#148; contained herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>S-3 Eligible Date</B>&#148; has the meaning set forth in Section&nbsp;8.05(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Safe Harbor Election</B>&#148; has the meaning set forth in Section&nbsp;11.01 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Safe Harbor Interest</B>&#148; has the meaning set forth in Section&nbsp;11.01 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Securities Act</B>&#148; means the Securities Act of 1933, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Service</B>&#148; means the Internal Revenue Service.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Share Ownership Limit</B>&#148; has the meaning set forth in the Declaration of Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Specified Redemption Date</B>&#148; means the first business day of the month that is at least 60
calendar days after the receipt by the General Partner of a Notice of Redemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Subsidiary</B>&#148; means, with respect to any Person, any corporation or other entity of which a
majority of (i)&nbsp;the voting power of the voting equity securities or (ii)&nbsp;the outstanding equity
interests is owned, directly or indirectly, by such Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Subsidiary Partnership</B>&#148; means any partnership or limited liability company in which the
General Partner, the Partnership, or a wholly owned subsidiary of the General Partner or the
Partnership owns a partnership or limited liability company interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Substitute Limited Partner</B>&#148; means any Person admitted to the Partnership as a Limited Partner
pursuant to Section&nbsp;9.03 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Successor Entity</B>&#148; has the meaning set forth in the definition of &#147;Conversion Factor&#148;
contained herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Survivor</B>&#148; has the meaning set forth in Section&nbsp;7.01(d) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Tax Matters Partner</B>&#148; has the meaning set forth within Section&nbsp;6231(a)(7) of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Trading Day</B>&#148; means a day on which the principal national securities exchange on which a
security is listed or admitted to trading is open for the transaction of business or, if a security
is not listed or admitted to trading on any national securities exchange, shall mean any day other
than a Saturday, a Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Transaction</B>&#148; has the meaning set forth in Section&nbsp;7.01(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Transfer</B>&#148; has the meaning set forth in Section&nbsp;9.02(a) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>TRS</B>&#148; means a taxable REIT subsidiary (as defined in Section 856(l) of the Code) of the
General Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Unvested LTIP Units</B>&#148; has the meaning set forth in Section&nbsp;4.04(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Value</B>&#148; means, with respect to any security, the average of the daily market price of such
security for the ten consecutive Trading Days immediately preceding the date of such valuation.
The market price for each such Trading Day shall be: (i)&nbsp;if the security is listed or admitted to
trading on the NYSE or any national securities exchange, the last reported sale price, regular way,
on such day, or if no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, (ii)&nbsp;if the security is not listed or admitted to trading on the
NYSE or any national securities exchange, the last reported sale price on such day or, if no sale
takes place on such day, the average of the closing bid and asked prices on such day, as reported
by a reliable quotation source designated by the General Partner, or (iii)&nbsp;if the security is not
listed or admitted to trading on the NYSE or any national securities exchange and
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">no such last reported sale price or closing bid and asked prices are available, the average of
the reported high bid and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent day (not more than
ten days prior to the date in question) for which prices have been so reported; <U>provided</U>
that if there are no bid and asked prices reported during the ten days prior to the date in
question, the value of the security shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the security includes any additional rights, then the value of such
rights shall be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment, appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Vested LTIP Units</B>&#148; has the meaning set forth in Section&nbsp;4.04(c) hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Vesting Agreement</B>&#148; means each or any, as the context implies, agreement or instrument entered
into by an LTIP Unitholder upon acceptance of an award of LTIP Units under an Equity Incentive
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>Withheld Amount</B>&#148; means any amount required to be withheld by the Partnership to pay over to
any taxing authority as a result of any allocation or distribution of income to a Partner.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE II</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>FORMATION OF PARTNERSHIP</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.01 </B><U><B>Formation of the Partnership</B></U>. The Partnership was formed as a limited
partnership pursuant to the provisions of the Act and upon the terms and conditions set forth in
this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of
the Partners and administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all purposes.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.02 </B><U><B>Name</B></U>. The Name of the Partnership shall be &#147;Pebblebrook Hotel, L.P.&#148; and the
Partnership&#146;s business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate thereof. The words
&#147;Limited Partnership,&#148; &#147;LP,&#148; &#147;L.P.&#148; or &#147;Ltd.&#148; or similar words or letters shall be included in the
Partnership&#146;s name where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may change the name of
the Partnership at any time and from time to time and shall notify the Partners of such change in
the next regular communication to the Partners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.03 </B><U><B>Registered Office and Agent; Principal Office</B></U>. The address of the registered
office of the Partnership in the State of Delaware is located at Corporation Trust Center, 1209
Orange Street, Wilmington, DE 19801, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office is The Corporation Trust Company, a
Delaware corporation. The principal office of the Partnership is located at <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>,<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> or such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary or desirable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.04 </B><U><B>Term and Dissolution</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The term of the Partnership shall continue in full force and effect until dissolved upon
the first to occur of any of the following events:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the occurrence of an Event of Bankruptcy as to a General Partner or the
dissolution, death, removal or withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section&nbsp;7.03(b) hereof; <U>provided</U> that if a
General Partner is on the date of such occurrence a partnership, the dissolution of such
General Partner as a result of the dissolution, death, withdrawal, removal or Event of
Bankruptcy of a partner in such partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and such General Partner and such
partners comply with any other applicable requirements of this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the passage of 90&nbsp;days after the sale or other disposition of all or substantially
all of the assets of the Partnership (<U>provided</U> that if the Partnership receives an
installment obligation as consideration for such sale or other disposition, the Partnership
shall continue, unless sooner dissolved under the provisions of this Agreement, until such
time as such installment obligations are paid in full);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the redemption of all Limited Partnership Interests (other than any such Limited
Partnership Interests held by the General Partner), unless the General Partner determines to
continue the term of the Partnership by the admission of one or more additional Limited
Partners; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the election by the General Partner that the Partnership should be dissolved.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Upon dissolution of the Partnership (unless the business of the Partnership is continued
pursuant to Section&nbsp;7.03(b) hereof), the General Partner (or its trustee, receiver, successor or
legal representative) shall amend or cancel the Certificate and liquidate the Partnership&#146;s assets
and apply and distribute the proceeds thereof in accordance with Section&nbsp;5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)&nbsp;defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the Partnership (including those
necessary to satisfy the Partnership&#146;s debts and obligations), or (ii)&nbsp;distribute the assets to the
Partners in kind.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.05 </B><U><B>Filing of Certificate and Perfection of Limited Partnership</B></U>. The General Partner
shall execute, acknowledge, record and file at the expense of the Partnership the Certificate and
any and all amendments thereto and all requisite fictitious name statements and notices in such
places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited
partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in
which the Partnership conducts business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.06 </B><U><B>Certificates Describing Partnership Units</B></U>. At the request of a Limited Partner,
the General Partner, at its option, may issue a certificate summarizing the terms of such Limited
Partner&#146;s interest in the Partnership, including the class or series and number of Partnership
Units owned and the Percentage Interest represented by such Partnership Units as of the date of
such certificate. Any such certificate (i)&nbsp;shall be in form and substance as determined by the
General Partner, (ii)&nbsp;shall not be negotiable and (iii)&nbsp;shall bear a legend to the following
effect:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS REPRESENTED BY
THIS CERTIFICATE ARE GOVERNED BY AND TRANSFERABLE ONLY IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF PEBBLEBROOK HOTEL,
L.P., AS AMENDED, SUPPLEMENTED OR RESTATED FROM TIME TO TIME.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE III</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>BUSINESS OF THE PARTNERSHIP</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose and nature of the business to be conducted by the Partnership is (i)&nbsp;to conduct
any business that may be lawfully conducted by a limited partnership organized pursuant to the Act,
<U>provided</U>, <U>however</U>, that such business shall be limited to and conducted in such a
manner as to permit the General Partner at all times to qualify as a REIT, unless the General
Partner otherwise ceases to, or the Board of Trustees determines that the General Partner shall no
longer, qualify as a REIT, (ii)&nbsp;to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged
in any of the foregoing and (iii)&nbsp;to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the General Partner&#146;s right in its sole and
absolute discretion to cease qualifying as a REIT, the Partners acknowledge that the General
Partner intends to elect REIT status and the avoidance of income and excise taxes on the General
Partner inures to the benefit of all the Partners and not solely to the General Partner.
Notwithstanding the foregoing, the Limited Partners agree that the General Partner may
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">terminate or revoke its status as a REIT under the Code at any time. The General Partner
shall also be empowered to do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a &#147;publicly traded partnership&#148; taxable as a corporation for
purposes of Section&nbsp;7704 of the Code.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IV</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>CAPITAL CONTRIBUTIONS AND ACCOUNTS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.01 </B><U><B>Capital Contributions</B></U>. The General Partner and each Limited Partner has made a
capital contribution to the Partnership in exchange for the Partnership Units set forth opposite
such Partner&#146;s name on <U>Exhibit&nbsp;A</U> hereto, as it may be amended or restated from time to time
by the General Partner to the extent necessary to reflect accurately sales, exchanges or other
Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units or
similar events having an effect on a Partner&#146;s ownership of Partnership Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.02 </B><U><B>Additional Capital Contributions and Issuances of Additional Partnership Units</B></U>.
Except as provided in this Section&nbsp;4.02 or in Section&nbsp;4.03 hereof, the Partners shall have no right
or obligation to make any additional Capital Contributions or loans to the Partnership. The
General Partner may contribute additional capital to the Partnership, from time to time, and
receive additional Partnership Interests, in the form of Partnership Units, in respect thereof, in
the manner contemplated in this Section&nbsp;4.02.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Issuances of Additional Partnership Units</U>.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>General</U>. As of the effective date of this Agreement, the Partnership
shall have two classes of Partnership Units, entitled &#147;Common Units&#148; and &#147;LTIP Units.&#148; The
General Partner is hereby authorized to cause the Partnership to issue such additional
Partnership Interests, in the form of Partnership Units, for any Partnership purpose at any
time or from time to time to the Partners (including the General Partner) or to other
Persons for such consideration and on such terms and conditions as shall be established by
the General Partner in its sole and absolute discretion, all without the approval of any
Limited Partners. The General Partner&#146;s determination that consideration is adequate shall
be conclusive insofar as the adequacy of consideration relates to whether the Partnership
Units are validly issued and fully paid. Any additional Partnership Units issued thereby
may be issued in one or more classes, or one or more series of any of such classes, with
such designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to the
then-outstanding Partnership Units held by the Limited Partners, all as shall be determined
by the General Partner in its sole and absolute discretion and without the approval of any
Limited Partner, subject to Delaware law, including, without limitation, (i)&nbsp;the allocations
of items of Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Units; (ii)&nbsp;the right of each such class or series of Partnership
Units to share in Partnership distributions; and (iii)&nbsp;the rights of each such class or
series of Partnership Units upon dissolution and liquidation of the Partnership;
<U>provided</U>, <U>however</U>, that no additional Partnership Units shall be issued to
the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">General Partner (or any direct or indirect wholly owned Subsidiary of the General
Partner) unless:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (A)&nbsp;the additional Partnership Units are issued in connection with an
issuance of REIT Shares of or other interests in the General Partner, which shares
or interests have designations, preferences and other rights, all such that the
economic interests are substantially similar to the designations, preferences and
other rights of the additional Partnership Units issued to the General Partner (or
any direct or indirect wholly owned Subsidiary of the General Partner) by the
Partnership in accordance with this Section&nbsp;4.02 and (B)&nbsp;the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner) shall make a
Capital Contribution to the Partnership in an amount equal to the cash consideration
received by the General Partner from the issuance of such REIT Shares or other
interests in the General Partner;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) (A)&nbsp;the additional Partnership Units are issued in connection with an
issuance of REIT Shares of or other interests in the General Partner pursuant to a
taxable share dividend declared by the General Partner, which shares or interests
have designations, preferences and other rights, all such that the economic
interests are substantially similar to the designations, preferences and other
rights of the additional Partnership Units issued to the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner) by the
Partnership in accordance with this Section&nbsp;4.02, (B)&nbsp;if the General Partner allows
the holders of its REIT Shares to elect whether to receive such dividend in REIT
Shares, other interests of the General Partner or cash, the Partnership will give
the Limited Partners (excluding the General Partner or any direct or indirect
Subsidiary of the General Partner) the same election to elect to receive (I)
Partnership Units or cash or, (II)&nbsp;at the election of the General Partner, REIT
Shares or cash, and (C)&nbsp;if the Partnership issues additional Partnership Units
pursuant to this Section&nbsp;4.02(a)(i)(2), then an amount of income equal to the value
of the Partnership Units received will be allocated to those holders of Common Units
that elect to receive additional Partnership Units;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the additional Partnership Units are issued in exchange for property owned
by the General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) with a fair market value, as determined by the General Partner, in
good faith, equal to the value of the Partnership Units; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the additional Partnership Units are issued to all Partners in proportion
to their respective Percentage Interests.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Without limiting the foregoing, the General Partner is expressly authorized to cause the
Partnership to issue Partnership Units for less than fair market value, so long as the
General Partner concludes in good faith that such issuance is in the best interests of the
General Partner and the Partnership.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <U>Upon Issuance of Additional Securities</U>. The General Partner shall not
issue any additional REIT Shares (other than REIT Shares issued in connection with an
exchange pursuant to Section&nbsp;8.04 hereof or a taxable share dividend as described in Section
4.02(a)(i)(2) hereof) or Rights (collectively, &#147;<B>Additional Securities</B>&#148;) other than to all
holders of REIT Shares, unless (A)&nbsp;the General Partner shall cause the Partnership to issue
to the General Partner (or any direct or indirect wholly owned Subsidiary of the General
Partner) Partnership Units or Rights having designations, preferences and other rights, all
such that the economic interests are substantially similar to those of the Additional
Securities, and (B)&nbsp;the General Partner (or any direct or indirect wholly owned Subsidiary
of the General Partner) contributes the proceeds from the issuance of such Additional
Securities and from any exercise of Rights contained in such Additional Securities to the
Partnership; <U>provided</U>, <U>however</U>, that the General Partner is allowed to issue
Additional Securities in connection with an acquisition of Property to be held directly by
the General Partner, but if and only if, such direct acquisition and issuance of Additional
Securities have been approved by a majority of the Independent Directors. Without limiting
the foregoing, the General Partner is expressly authorized to issue Additional Securities
for less than fair market value, and the General Partner is authorized to cause the
Partnership to issue to the General Partner (or any direct or indirect wholly owned
Subsidiary of the General Partner) corresponding Partnership Units, so long as (x)&nbsp;the
General Partner concludes in good faith that such issuance is in the best interests of the
General Partner and the Partnership and (y)&nbsp;the General Partner (or any direct or indirect
wholly owned Subsidiary of the General Partner) contributes all proceeds from such issuance
to the Partnership, including without limitation, the issuance of REIT Shares and
corresponding Partnership Units pursuant to a share purchase plan providing for purchases of
REIT Shares at a discount from fair market value or pursuant to share awards, including
share options that have an exercise price that is less than the fair market value of the
REIT Shares, either at the time of issuance or at the time of exercise<B>, </B>and restricted or
other share awards approved by the Board of Trustees. For example, in the event the General
Partner issues REIT Shares for a cash purchase price and the General Partner (or any direct
or indirect wholly owned Subsidiary of the General Partner) contributes all of the proceeds
of such issuance to the Partnership as required hereunder, the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner) shall be issued a number
of additional Partnership Units equal to the product of (A)&nbsp;the number of such REIT Shares
issued by the General Partner, the proceeds of which were so contributed, multiplied by (B)
a fraction, the numerator of which is 100%, and the denominator of which is the Conversion
Factor in effect on the date of such contribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Certain Contributions of Proceeds of Issuance of REIT Shares</U>. In connection with
any and all issuances of REIT Shares, the General Partner (or any direct or indirect wholly owned
Subsidiary of the General Partner) shall make Capital Contributions to the Partnership of the
proceeds therefrom, <U>provided</U> that if the proceeds actually received and contributed by the
General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) are less
than the gross proceeds of such issuance as a result of any underwriter&#146;s discount, commissions,
placement fees or other expenses paid or incurred in connection with such issuance, then the
General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) shall
make a Capital Contribution of such net proceeds to the Partnership but
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shall receive additional Partnership Units with a value equal to the aggregate amount of the
gross proceeds of such issuance pursuant to Section&nbsp;4.02(a) hereof. Upon any such Capital
Contribution by the General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner), the Capital Account of the General Partner (or any direct or indirect wholly
owned Subsidiary of the General Partner) shall be increased by the actual amount of its Capital
Contribution pursuant to Section&nbsp;4.06 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Repurchases of Shares</U><B>. </B>If the General Partner shall repurchase shares of any
class of its shares of beneficial interest, the purchase price thereof and all costs incurred in
connection with such repurchase shall be reimbursed to the General Partner by the Partnership
pursuant to Section&nbsp;6.05 hereof and the General Partner shall cause the Partnership to redeem an
equivalent number of Partnership Units of the appropriate class or series held by the General
Partner (which, in the case of REIT Shares, shall be a number equal to the quotient of the number
of such REIT Shares divided by the Conversion Factor) in the manner provided in Section&nbsp;6.10
hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.03 </B><U><B>Additional Funding</B></U>. If the General Partner determines that it is in the best
interests of the Partnership to provide for additional Partnership funds (&#147;<B>Additional Funds</B>&#148;) for
any Partnership purpose, the General Partner may (i)&nbsp;cause the Partnership to obtain such funds
from outside borrowings, or (ii)&nbsp;elect to have the General Partner or any of its Affiliates provide
such Additional Funds to the Partnership through loans or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.04 </B><U><B>LTIP Units</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Issuance of LTIP Units</U>. The General Partner may from time to time issue LTIP
Units to Persons who provide services to the Partnership or the General Partner, for such
consideration as the General Partner may determine to be appropriate, and admit such Persons as
Limited Partners. Subject to the following provisions of this Section&nbsp;4.04 and the special
provisions of Sections&nbsp;4.05 and 5.01(g) hereof, LTIP Units shall be treated as Common Units, with
all of the rights, privileges and obligations attendant thereto. For purposes of computing the
Partners&#146; Percentage Interests, holders of LTIP Units shall be treated as Common Unit holders and
LTIP Units shall be treated as Common Units. In particular, the Partnership shall maintain at all
times a one-to-one correspondence between LTIP Units and Common Units for conversion, distribution
and other purposes, including, without limitation, complying with the following procedures:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If an Adjustment Event (as defined below) occurs, then the General Partner shall
make a corresponding adjustment to the LTIP Units to maintain a one-for-one conversion and
economic equivalence ratio between Common Units and LTIP Units. The following shall be
&#147;<B>Adjustment Events</B>&#148;: (A)&nbsp;the Partnership makes a distribution on all outstanding Common
Units in Partnership Units, (B)&nbsp;the Partnership subdivides the outstanding Common Units into
a greater number of units or combines the outstanding Common Units into a smaller number of
units, or (C)&nbsp;the Partnership issues any Partnership Units in exchange for its outstanding
Common Units by way of a reclassification or recapitalization of its Common Units. If more
than one Adjustment Event occurs, the adjustment to the LTIP Units need be made only once
using a single formula that takes into account each and every Adjustment Event as if all
Adjustment
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Events occurred simultaneously. For the avoidance of doubt, the following shall not be
Adjustment Events: (x)&nbsp;the issuance of Partnership Units in a financing, reorganization,
acquisition or other similar business Common Unit Transaction, (y)&nbsp;the issuance of
Partnership Units pursuant to any employee benefit or compensation plan or distribution
reinvestment plan or (z)&nbsp;the issuance of any Partnership Units to the General Partner in
respect of a capital contribution to the Partnership of proceeds from the sale of Additional
Securities by the General Partner. If the Partnership takes an action affecting the Common
Units other than actions specifically described above as &#147;Adjustment Events&#148; and in the
opinion of the General Partner such action would require an adjustment to the LTIP Units to
maintain the one-to-one correspondence described above, the General Partner shall have the
right to make such adjustment to the LTIP Units, to the extent permitted by law and by any
Equity Incentive Plan, in such manner and at such time as the General Partner, in its sole
discretion, may determine to be appropriate under the circumstances. If an adjustment is
made to the LTIP Units, as herein provided, the Partnership shall promptly file in the books
and records of the Partnership an officer&#146;s certificate setting forth such adjustment and a
brief statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error. Promptly
after filing of such certificate, the Partnership shall mail a notice to each LTIP
Unitholder setting forth the adjustment to his or her LTIP Units and the effective date of
such adjustment; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The LTIP Unitholders shall, when, as and if authorized and declared by the General
Partner out of assets legally available for that purpose, be entitled to receive
distributions in an amount per LTIP Unit equal to the distributions per Common Unit (the
&#147;<B>Common Partnership Unit Distribution</B>&#148;), paid to holders of Common Units on such Partnership
Record Date established by the General Partner with respect to such distribution. So long
as any LTIP Units are outstanding, no distributions (whether in cash or in kind) shall be
authorized, declared or paid on Common Units, unless equal distributions have been or
contemporaneously are authorized, declared and paid on the LTIP Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Priority</U>. Subject to the provisions of this Section&nbsp;4.04 and the special
provisions of Sections&nbsp;4.05 and 5.01(g) hereof, the LTIP Units shall rank <I>pari passu </I>with the
Common Units as to the payment of regular and special periodic or other distributions and
distribution of assets upon liquidation, dissolution or winding up. As to the payment of
distributions and as to distribution of assets upon liquidation, dissolution or winding up, any
class or series of Partnership Units which by its terms specifies that it shall rank junior to, on
a parity with, or senior to the Common Units shall also rank junior to, or <I>pari passu </I>with, or
senior to, as the case may be, the LTIP Units. Subject to the terms of any Vesting Agreement, an
LTIP Unitholder shall be entitled to transfer his or her LTIP Units to the same extent, and subject
to the same restrictions as holders of Common Units are entitled to transfer their Common Units
pursuant to Article&nbsp;IX.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Special Provisions</U>. LTIP Units shall be subject to the following special
provisions:
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Vesting Agreements</U>. LTIP Units may, in the sole discretion of the General
Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer
pursuant to the terms of a Vesting Agreement. The terms of any Vesting Agreement may be
modified by the General Partner from time to time in its sole discretion, subject to any
restrictions on amendment imposed by the relevant Vesting Agreement or by the Equity
Incentive Plan, if applicable. LTIP Units that have vested under the terms of a Vesting
Agreement are referred to as &#147;<B>Vested LTIP Units</B>&#148;; all other LTIP Units shall be treated as
&#147;<B>Unvested LTIP Units</B>.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <U>Forfeiture</U>. Unless otherwise specified in the Vesting Agreement, upon the
occurrence of any event specified in a Vesting Agreement as resulting in either the right of
the Partnership or the General Partner to repurchase LTIP Units at a specified purchase
price or some other forfeiture of any LTIP Units, then if the Partnership or the General
Partner exercises such right to repurchase or forfeiture in accordance with the applicable
Vesting Agreement, the relevant LTIP Units shall immediately, and without any further
action, be treated as cancelled and no longer outstanding for any purpose. Unless otherwise
specified in the Vesting Agreement, no consideration or other payment shall be due with
respect to any LTIP Units that have been forfeited, other than any distributions declared
with respect to a Partnership Record Date prior to the effective date of the forfeiture. In
connection with any repurchase or forfeiture of LTIP Units, the balance of the portion of
the Capital Account of the LTIP Unitholder that is attributable to all of his or her LTIP
Units shall be reduced by the amount, if any, by which it exceeds the target balance
contemplated by Section&nbsp;5.01(g) hereof, calculated with respect to the LTIP Unitholder&#146;s
remaining LTIP Units, if any.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <U>Allocations</U>. LTIP Unitholders shall be entitled to certain special
allocations of gain under Section&nbsp;5.01(g) hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <U>Redemption</U>. The Common Unit Redemption Right provided to Limited Partners
under Section&nbsp;8.04 hereof shall not apply with respect to LTIP Units unless and until they
are converted to Common Units as provided in clause (v)&nbsp;below and Section&nbsp;4.05 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <U>Conversion to Common Units</U>. Vested LTIP Units are eligible to be converted
into Common Units in accordance with Section&nbsp;4.05 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Voting</U>. LTIP Unitholders shall (a)&nbsp;have the same voting rights as the Limited
Partners, with the LTIP Units voting as a single class with the Common Units and having one vote
per LTIP Unit; and (b)&nbsp;have the additional voting rights that are expressly set forth below. So
long as any LTIP Units remain outstanding, the Partnership shall not, without the affirmative vote
of the holders of a majority of the LTIP Units outstanding at the time, given in person or by
proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal,
whether by merger, consolidation or otherwise, the provisions of this Agreement applicable to LTIP
Units so as to materially and adversely affect any right, privilege or voting power of the LTIP
Units or the LTIP Unitholders as such, unless such amendment, alteration, or repeal affects
equally, ratably and proportionately the rights, privileges and voting powers of the Limited
Partners; but subject, in any event, to the following provisions:
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) With respect to any Common Unit Transaction (as defined in Section&nbsp;4.05(f) hereof),
so long as the LTIP Units are treated in accordance with Section&nbsp;4.05(f) hereof, the
consummation of such Common Unit Transaction shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of the LTIP Units or the LTIP
Unitholders as such; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Any creation or issuance of any Partnership Units or of any class or series of
Partnership Interest including without limitation additional Common Units or LTIP Units,
whether ranking senior to, junior to, or on a parity with the LTIP Units with respect to
distributions and the distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights, preferences, privileges
or voting powers of the LTIP Units or the LTIP Unitholders as such.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing voting provisions will not apply if, at or prior to the time when the act with
respect to which such vote would otherwise be required will be effected, all outstanding LTIP Units
shall have been converted into Common Units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.05 </B><U><B>Conversion of LTIP Units</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;An LTIP Unitholder shall have the right (the &#147;<B>Conversion Right</B>&#148;), at his or her option, at
any time to convert all or a portion of his or her Vested LTIP Units into Common Units;
<U>provided, however</U>, that a holder may not exercise the Conversion Right for less than one
thousand (1,000) Vested LTIP Units or, if such holder holds less than one thousand Vested LTIP
Units, all of the Vested LTIP Units held by such holder. LTIP Unitholders shall not have the right
to convert Unvested LTIP Units into Common Units until they become Vested LTIP Units;
<U>provided</U>, <U>however</U>, that when an LTIP Unitholder is notified of the expected
occurrence of an event that will cause his or her Unvested LTIP Units to become Vested LTIP Units,
such LTIP Unitholder may give the Partnership a Conversion Notice conditioned upon and effective as
of the time of vesting and such Conversion Notice, unless subsequently revoked by the LTIP
Unitholder, shall be accepted by the Partnership subject to such condition. The General Partner
shall have the right at any time to cause a conversion of Vested LTIP Units into Common Units. In
all cases, the conversion of any LTIP Units into Common Units shall be subject to the conditions
and procedures set forth in this Section&nbsp;4.05.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;A holder of Vested LTIP Units may convert such LTIP Units into an equal number of fully
paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to
Section&nbsp;4.04 hereof. Notwithstanding the foregoing, in no event may a holder of Vested LTIP Units
convert a number of Vested LTIP Units that exceeds (x)&nbsp;the Economic Capital Account Balance of such
Limited Partner, to the extent attributable to its ownership of LTIP Units, divided by (y)&nbsp;the
Common Unit Economic Balance, in each case as determined as of the effective date of conversion
(the &#147;<B>Capital Account Limitation</B>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to exercise his or her Conversion Right, an LTIP Unitholder shall deliver a notice (a
&#147;<B>Conversion Notice</B>&#148;) in the form attached as <U>Exhibit&nbsp;D</U> to the Partnership (with a copy to
the General Partner) not less than ten nor more than 60&nbsp;days prior to a date (the &#147;<B>Conversion
Date</B>&#148;) specified in such Conversion Notice; <U>provided</U>, <U>however</U>, that if the General
Partner has
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not given to the LTIP Unitholders notice of a proposed or upcoming Common Unit Transaction (as
defined in Section&nbsp;4.05(f) hereof) at least 30&nbsp;days prior to the effective date of such Common Unit
Transaction, then LTIP Unitholders shall have the right to deliver a Conversion Notice until the
earlier of (x)&nbsp;the tenth day after such notice from the General Partner of a Common Unit
Transaction or (y)&nbsp;the third business day immediately preceding the effective date of such Common
Unit Transaction. A Conversion Notice shall be provided in the manner provided in Section&nbsp;12.01
hereof. Each LTIP Unitholder covenants and agrees with the Partnership that all Vested LTIP Units
to be converted pursuant to this Section&nbsp;4.05(b) shall be free and clear of all liens.
Notwithstanding anything herein to the contrary, a holder of LTIP Units may deliver a Notice of
Redemption pursuant to Section&nbsp;8.04(a) hereof relating to those Common Units that will be issued to
such holder upon conversion of such LTIP Units into Common Units in advance of the Conversion Date;
<U>provided</U>, <U>however</U>, that the redemption of such Common Units by the Partnership
shall in no event take place until after the Conversion Date. For clarity, it is noted that the
objective of this paragraph is to put an LTIP Unitholder in a position where, if he or she so
wishes, the Common Units into which his or her Vested LTIP Units will be converted can be redeemed
by the Partnership simultaneously with such conversion, with the further consequence that, if the
General Partner elects to assume the Partnership&#146;s redemption obligation with respect to such
Common Units under Section&nbsp;8.04(b) hereof by delivering to such holder REIT Shares rather than
cash, then such holder can have such REIT Shares issued to him or her simultaneously with the
conversion of his or her Vested LTIP Units into Common Units. The General Partner and LTIP
Unitholder shall reasonably cooperate with each other to coordinate the timing of the events
described in the foregoing sentence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Partnership, at any time at the election of the General Partner, may cause any number
of Vested LTIP Units held by an LTIP Unitholder to be converted (a &#147;<B>Forced Conversion</B>&#148;) into an
equal number of Common Units, giving effect to all adjustments (if any) made pursuant to Section
4.04 hereof; <U>provided</U>, <U>however</U>, that the Partnership may not cause Forced
Conversion of any LTIP Units that would not at the time be eligible for conversion at the option of
such LTIP Unitholder pursuant to Section&nbsp;4.05(b) hereof. In order to exercise its right of Forced
Conversion, the Partnership shall deliver a notice (a &#147;<B>Forced Conversion Notice</B>&#148;) in the form
attached as <U>Exhibit&nbsp;E</U> to the applicable LTIP Unitholder not less than ten nor more than 60
days prior to the Conversion Date specified in such Forced Conversion Notice. A Forced Conversion
Notice shall be provided in the manner provided in Section&nbsp;12.01 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;A conversion of Vested LTIP Units for which the holder thereof has given a Conversion
Notice or the Partnership has given a Forced Conversion Notice shall occur automatically after the
close of business on the applicable Conversion Date without any action on the part of such LTIP
Unitholder, as of which time such LTIP Unitholder shall be credited on the books and records of the
Partnership with the issuance as of the opening of business on the next day of the number of Common
Units issuable upon such conversion. After the conversion of LTIP Units as aforesaid, the
Partnership shall deliver to such LTIP Unitholder, upon his or her written request, a certificate
of the General Partner certifying the number of Common Units and remaining LTIP Units, if any, held
by such person immediately after such conversion. The Assignee of any Limited Partner pursuant to
Article&nbsp;IX hereof may exercise the rights of such Limited Partner pursuant to this Section&nbsp;4.05 and
such Limited Partner shall be bound by the exercise of such rights by the Assignee.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;For purposes of making future allocations under Section&nbsp;5.01(g) hereof and applying the
Capital Account Limitation, the portion of the Economic Capital Account Balance of the applicable
LTIP Unitholder that is treated as attributable to his or her LTIP Units shall be reduced, as of
the date of conversion, by the product of the number of LTIP Units converted and the Common Unit
Economic Balance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;If the Partnership or the General Partner shall be a party to any Common Unit Transaction
(including without limitation a merger, consolidation, unit exchange, self tender offer for all or
substantially all Common Units or other business combination or reorganization, or sale of all or
substantially all of the Partnership&#146;s assets, but excluding any Common Unit Transaction which
constitutes an Adjustment Event) in each case as a result of which Common Units shall be exchanged
for or converted into the right, or the holders of such Units shall otherwise be entitled, to
receive cash, securities or other property or any combination thereof (each of the foregoing being
referred to herein as a &#147;<B>Common Unit Transaction</B>&#148;), then the General Partner shall, immediately
prior to the Common Unit Transaction, exercise its right to cause a Forced Conversion with respect
to the maximum number of LTIP Units then eligible for conversion, taking into account any
allocations that occur in connection with the Common Unit Transaction or that would occur in
connection with the Common Unit Transaction if the assets of the Partnership were sold at the
Common Unit Transaction price or, if applicable, at a value determined by the General Partner in
good faith using the value attributed to the Partnership Units in the context of the Common Unit
Transaction (in which case the Conversion Date shall be the effective date of the Common Unit
Transaction).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In anticipation of such Forced Conversion and the consummation of the Common Unit Transaction,
the Partnership shall use commercially reasonable efforts to cause each LTIP Unitholder to be
afforded the right to receive in connection with such Common Unit Transaction in consideration for
the Common Units into which his or her LTIP Units will be converted the same kind and amount of
cash, securities and other property (or any combination thereof) receivable upon the consummation
of such Common Unit Transaction by a holder of the same number of Common Units, assuming such
holder of Common Units is not a Person with which the Partnership consolidated or into which the
Partnership merged or which merged into the Partnership or to which such sale or transfer was made,
as the case may be (a &#147;<B>Constituent Person</B>&#148;), or an affiliate of a Constituent Person. In the event
that holders of Common Units have the opportunity to elect the form or type of consideration to be
received upon consummation of the Common Unit Transaction, prior to such Common Unit Transaction
the General Partner shall give prompt written notice to each LTIP Unitholder of such election, and
shall use commercially reasonable efforts to afford the LTIP Unitholders the right to elect, by
written notice to the General Partner, the form or type of consideration to be received upon
conversion of each LTIP Unit held by such holder into Common Units in connection with such Common
Unit Transaction. If an LTIP Unitholder fails to make such an election, such holder (and any of
its transferees) shall receive upon conversion of each LTIP Unit held him or her (or by any of his
or her transferees) the same kind and amount of consideration that a holder of a Common Unit would
receive if such Common Unit holder failed to make such an election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the rights of the Partnership and the General Partner under any Vesting Agreement
and any Equity Incentive Plan, the Partnership shall use commercially reasonable effort to cause
the terms of any Common Unit Transaction to be consistent with the provisions of
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">this Section&nbsp;4.05(f) and to enter into an agreement with the successor or purchasing entity,
as the case may be, for the benefit of any LTIP Unitholders whose LTIP Units will not be converted
into Common Units in connection with the Common Unit Transaction that will (i)&nbsp;contain provisions
enabling the holders of LTIP Units that remain outstanding after such Common Unit Transaction to
convert their LTIP Units into securities as comparable as reasonably possible under the
circumstances to the Common Units and (ii)&nbsp;preserve as far as reasonably possible under the
circumstances the distribution, special allocation, conversion, and other rights set forth in this
Agreement for the benefit of the LTIP Unitholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.06 </B><U><B>Capital Accounts</B></U>. A separate capital account (a &#147;<B>Capital Account</B>&#148;) shall be
established and maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). If (i)&nbsp;a new or existing Partner acquires an additional Partnership Interest in
exchange for more than a <I>de minimis </I>Capital Contribution, (ii)&nbsp;the Partnership distributes to a
Partner more than a <I>de minimis </I>amount of Partnership property as consideration for a Partnership
Interest, (iii)&nbsp;the Partnership is liquidated within the meaning of Regulation&nbsp;Section
1.704-1(b)(2)(ii)(g) or (iv)&nbsp;the Partnership grants a Partnership Interest (other than a <I>de minimis</I>
Partnership Interest) as consideration for the provision of services to or for the benefit of the
Partnership to an existing Partner acting in a Partner capacity, or to a new Partner acting in a
Partner capacity or in anticipation of being a Partner, the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the General Partner, in its
sole and absolute discretion, and taking into account Section 7701(g) of the Code) in accordance
with Regulations Section&nbsp;1.704-1(b)(2)(iv)(f); <U>provided</U> that the issuance of any LTIP Unit
shall be deemed to require a revaluation pursuant to this Section&nbsp;4.06. When the Partnership&#146;s
property is revalued by the General Partner, the Capital Accounts of the Partners shall be adjusted
in accordance with Regulations Sections&nbsp;1.704-1(b)(2)(iv)(f) and (g), which generally require such
Capital Accounts to be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts previously) would be
allocated among the Partners pursuant to Section&nbsp;5.01 hereof if there were a taxable disposition of
such property for its fair market value (as determined by the General Partner, in its sole and
absolute discretion, and taking into account Section 7701(g) of the Code) on the date of the
revaluation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.07 </B><U><B>Percentage Interests</B></U>. If the number of outstanding Common Units or other class
or series of Partnership Units increases or decreases during a taxable year, each Partner&#146;s
Percentage Interest shall be adjusted by the General Partner effective as of the effective date of
each such increase or decrease to a percentage equal to the number of Common Units or other class
or series of Partnership Units held by such Partner divided by the aggregate number of Common Units
or other class or series of Partnership Units, as applicable, outstanding after giving effect to
such increase or decrease. If the Partners&#146; Percentage Interests are adjusted pursuant to this
Section&nbsp;4.07, the Profits and Losses for the taxable year in which the adjustment occurs shall be
allocated between the part of the year ending on the day when the Partnership&#146;s property is
revalued by the General Partner and the part of the year beginning on the following day either (i)
as if the taxable year had ended on the date of the adjustment or (ii)&nbsp;based on the number of days
in each part. The General Partner, in its sole and absolute discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in which the adjustment
occurs. The allocation of Profits and Losses for the earlier part of the year
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shall be based on the Percentage Interests before adjustment, and the allocation of Profits
and Losses for the later part shall be based on the adjusted Percentage Interests.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.08 </B><U><B>No Interest on Contributions</B></U>. No Partner shall be entitled to interest on its
Capital Contribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.09 </B><U><B>Return of Capital Contributions</B></U>. No Partner shall be entitled to withdraw any
part of its Capital Contribution or its Capital Account or to receive any distribution from the
Partnership, except as specifically provided in this Agreement. Except as otherwise provided
herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such
Partner&#146;s Capital Contribution for so long as the Partnership continues in existence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.10 </B><U><B>No Third-Party Beneficiary</B></U>. No creditor or other third party having dealings
with the Partnership shall have the right to enforce the right or obligation of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in
equity, it being understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the parties hereto and their respective successors
and assigns. None of the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any
purpose by any creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure
any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the
intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return
of money or other property in violation of the Act. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the obligation of such Limited
Partner and not of the General Partner. Without limiting the generality of the foregoing, a
deficit Capital Account of a Partner shall not be deemed to be a liability of such Partner nor an
asset or property of the Partnership.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE V</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>PROFITS AND LOSSES; DISTRIBUTIONS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.01 </B><U><B>Allocation of Profit and Loss</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Profit</U>. Profit of the Partnership for each fiscal year of the Partnership shall
be allocated to the Partners in accordance with their respective Percentage Interests.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Loss</U>. Loss of the Partnership for each fiscal year of the Partnership shall be
allocated to the Partners in accordance with their respective Percentage Interests.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Minimum Gain Chargeback</U>. Notwithstanding any provision to the contrary, (i)&nbsp;any
expense of the Partnership that is a &#147;nonrecourse deduction&#148; within the meaning of Regulations
Section&nbsp;1.704-2(b)(1) shall be allocated in accordance with the Partners&#146; respective Common Units,
(ii)&nbsp;any expense of the Partnership that is a &#147;partner nonrecourse deduction&#148; within the meaning of
Regulations Section&nbsp;1.704-2(i)(2) shall be allocated to the Partner that bears the &#147;economic risk
of loss&#148; of such deduction in accordance with Regulations
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;1.704-2(i)(1), (iii)&nbsp;if there is a net decrease in Partnership Minimum Gain within the
meaning of Regulations Section&nbsp;1.704-2(f)(1) for any Partnership taxable year, then, subject to the
exceptions set forth in Regulations Section&nbsp;1.704-2(f)(2),(3), (4)&nbsp;and (5), items of gain and
income shall be allocated among the Partners in accordance with Regulations Section&nbsp;1.704-2(f) and
the ordering rules contained in Regulations Section&nbsp;1.704-2(j), and (iv)&nbsp;if there is a net decrease
in Partner Nonrecourse Debt Minimum Gain within the meaning of Regulations Section&nbsp;1.704-2(i)(4)
for any Partnership taxable year, then, subject to the exceptions set forth in Regulations Section
1.704(2)(g), items of gain and income shall be allocated among the Partners in accordance with
Regulations Section&nbsp;1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). The manner in which it is reasonably expected that the deductions attributable to
nonrecourse liabilities will be allocated for purposes of determining a Partner&#146;s share of the
nonrecourse liabilities of the Partnership within the meaning of Regulations Section&nbsp;1.752-3(a)(3)
shall be in accordance with a Partner&#146;s Percentage Interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Qualified Income Offset</U>. If a Partner receives in any taxable year an adjustment,
allocation or distribution described in subparagraphs (4), (5)&nbsp;or (6)&nbsp;of Regulations Section
1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partner&#146;s Capital Account
that exceeds the sum of such Partner&#146;s shares of Partnership Minimum Gain and Partner Nonrecourse
Debt Minimum Gain, as determined in accordance with Regulations Sections&nbsp;1.704-2(g) and 1.704-2(i),
such Partner shall be allocated specially for such taxable year (and, if necessary, later taxable
years) items of income and gain in an amount and manner sufficient to eliminate such deficit
Capital Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to a Partner in
accordance with this Section&nbsp;5.01(d), to the extent permitted by Regulations Section&nbsp;1.704-1(b),
items of expense or loss shall be allocated to such Partner in an amount necessary to offset the
income or gain previously allocated to such Partner under this Section&nbsp;5.01(d).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Capital Account Deficits</U>. Loss shall not be allocated to a Limited Partner to the
extent that such allocation would cause a deficit in such Partner&#146;s Capital Account (after
reduction to reflect the items described in Regulations Section&nbsp;1.704-1(b)(2)(ii)(d)(4), (5)&nbsp;and
(6)) to exceed the sum of such Partner&#146;s shares of Partnership Minimum Gain and Partner Nonrecourse
Debt Minimum Gain. Any Loss in excess of that limitation shall be allocated to the General
Partner. After the occurrence of an allocation of Loss to the General Partner in accordance with
this Section&nbsp;5.01(e), to the extent permitted by Regulations Section&nbsp;1.704-1(b), Profit first shall
be allocated to the General Partner in an amount necessary to offset the Loss previously allocated
to the General Partner under this Section&nbsp;5.01(e).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Allocations Between Transferor and Transferee</U>. If a Partner transfers any part or
all of its Partnership Interest, the distributive shares of the various items of Profit and Loss
allocable among the Partners during such fiscal year of the Partnership shall be allocated between
the transferor and the transferee Partner either (i)&nbsp;as if the Partnership&#146;s fiscal year had ended
on the date of the transfer or (ii)&nbsp;based on the number of days of such fiscal year that each was a
Partner without regard to the results of Partnership activities in the respective portions of such
fiscal year in which the transferor and the transferee were Partners. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between the transferor and the
transferee Partner.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Special Allocations Regarding LTIP Units</U>. Notwithstanding the provisions of
Sections&nbsp;5.01(a) and (b)&nbsp;hereof, Liquidating Gains shall first be allocated to the LTIP Unitholders
until their Economic Capital Account Balances, to the extent attributable to their ownership of
LTIP Units, are equal to (i)&nbsp;the Common Unit Economic Balance, multiplied by (ii)&nbsp;the number of
their LTIP Units; provided that no such Liquidating Gains will be allocated with respect to any
particular LTIP Unit unless and to the extent that the Common Unit Economic Balance exceeds the
Common Unit Economic Balance in existence at the time such LTIP Unit was issued. For this purpose,
&#147;<B>Liquidating Gains</B>&#148; means net capital gains realized in connection with the actual or hypothetical
sale of all or substantially all of the assets of the Partnership, including but not limited to net
capital gain realized in connection with an adjustment to the value of Partnership assets under
Section 704(b) of the Code. The &#147;<B>Economic Capital Account Balances</B>&#148; of the LTIP Unit holders will
be equal to their Capital Account balances to the extent attributable to their ownership of LTIP
Units. Similarly, the &#147;<B>Common Unit Economic Balance</B>&#148; shall mean (i)&nbsp;the Capital Account balance of
the General Partner, plus the amount of the General Partner&#146;s share of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to the General Partner&#146;s
ownership of Common Units and computed on a hypothetical basis after taking into account all
allocations through the date on which any allocation is made under this Section&nbsp;5.01(g), divided by
(ii)&nbsp;the number of the General Partner&#146;s Common Units. Any such allocations shall be made among the
LTIP Unitholders in proportion to the amounts required to be allocated to each under this Section
5.01(g). The parties agree that the intent of this Section&nbsp;5.01(g) is to make the Capital Account
balance associated with each LTIP Unit to be economically equivalent to the Capital Account balance
associated with the General Partner&#146;s Common Units (on a per-Unit basis), but only if and to the
extent that the Capital Account balance associated with the General Partner&#146;s Common Units has
increased on a per-Unit basis since the issuance of the relevant LTIP Unit.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Definition of Profit and Loss</U>. &#147;<B>Profit</B>&#148; and &#147;<B>Loss</B>&#148; and any items of income, gain,
expense or loss referred to in this Agreement shall be determined in accordance with federal income
tax accounting principles, as modified by Regulations Section&nbsp;1.704-1(b)(2)(iv), except that Profit
and Loss shall not include items of income, gain and expense that are specially allocated pursuant
to Sections&nbsp;5.01(c), (d)or (e)&nbsp;hereof. All allocations of income, Profit, gain, Loss and expense
(and all items contained therein) for federal income tax purposes shall be identical to all
allocations of such items set forth in this Section&nbsp;5.01, except as otherwise required by Section
704(c) of the Code and Regulations Section&nbsp;1.704-1(b)(4). With respect to properties acquired by
the Partnership, the General Partner shall have the authority to elect the method to be used by the
Partnership for allocating items of income, gain and expense as required by Section 704(c) of the
Code with respect to such properties, and such election shall be binding on all Partners.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.02 </B><U><B>Distribution of Cash</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to Sections&nbsp;5.02(d), (d)&nbsp;and (e)&nbsp;hereof, the Partnership shall distribute cash at
such times and in such amounts as are determined by the General Partner in its sole and absolute
discretion, to the Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period) in proportion with their respective Common Units on the
Partnership Record Date.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;In accordance with Section&nbsp;4.04(a)(ii), the LTIP Unitholders shall be entitled to receive
distributions in an amount per LTIP Unit equal to the Common Unit Distribution.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If a new or existing Partner acquires additional Partnership Units in exchange for a
Capital Contribution on any date other than a Partnership Record Date, the cash distribution
attributable to such additional Partnership Units relating to the Partnership Record Date next
following the issuance of such additional Partnership Units shall be reduced in the proportion to
(i)&nbsp;the number of days that such additional Partnership Units are held by such Partner bears to
(ii)&nbsp;the number of days between such Partnership Record Date and the immediately preceding
Partnership Record Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Notwithstanding any other provision of this Agreement, the General Partner is authorized
to take any action that it determines to be necessary or appropriate to cause the Partnership to
comply with any withholding requirements established under the Code or any other federal, state or
local law including, without limitation, pursuant to Sections&nbsp;1441, 1442, 1445 and 1446 of the
Code. To the extent that the Partnership is required to withhold and pay over to any taxing
authority any amount resulting from the allocation or distribution of income to a Partner or
assignee (including by reason of Section&nbsp;1446 of the Code), either (i)&nbsp;if the actual amount to be
distributed to the Partner (the &#147;<B>Distributable Amount</B>&#148;) equals or exceeds the Withheld Amount, the
entire Distributable Amount shall be treated as a distribution of cash to such Partner, or (ii)&nbsp;if
the Distributable Amount is less than the Withheld Amount, the excess of the Withheld Amount over
the Distributable Amount shall be treated as a Partnership Loan from the Partnership to the Partner
on the day the Partnership pays over such amount to a taxing authority. A Partnership Loan shall
be repaid upon the demand of the Partnership or, alternatively, through withholding by the
Partnership with respect to subsequent distributions to the applicable Partner or assignee. In the
event that a Limited Partner fails to pay any amount owed to the Partnership with respect to the
Partnership Loan within 15&nbsp;days after demand for payment thereof is made by the Partnership on the
Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the
payment to the Partnership on behalf of such Defaulting Limited Partner. In such event, on the
date of payment, the General Partner shall be deemed to have extended a General Partner Loan to the
Defaulting Limited Partner in the amount of the payment made by the General Partner and shall
succeed to all rights and remedies of the Partnership against the Defaulting Limited Partner as to
that amount. Without limitation, the General Partner shall have the right to receive any
distributions that otherwise would be made by the Partnership to the Defaulting Limited Partner
until such time as the General Partner Loan has been paid in full, and any such distributions so
received by the General Partner shall be treated as having been received by the Defaulting Limited
Partner and immediately paid to the General Partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to this
Section&nbsp;5.02(d) shall bear interest at the lesser of (i)&nbsp;300 basis points above the base rate on
corporate loans at large United States money center commercial banks, as published from time to
time in <U>The Wall Street Journal</U>, or (ii)&nbsp;the maximum lawful rate of interest on such
obligation, such interest to accrue from the date the Partnership or the General Partner, as
applicable, is deemed to extend the loan until such loan is repaid in full.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;In no event may a Partner receive a distribution of cash with respect to a Partnership
Unit if such Partner is entitled to receive a cash dividend as the holder of record of a REIT Share
for which all or part of such Partnership Unit has been or will be redeemed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.03 </B><U><B>REIT Distribution Requirements</B></U>. The General Partner shall use commercially
reasonable efforts to cause the Partnership to distribute amounts sufficient to enable the General
Partner to pay distributions to its shareholders that will allow the General Partner to (i)&nbsp;meet
its distribution requirement for qualification as a REIT as set forth in Section&nbsp;857 of the Code
and (ii)&nbsp;avoid any federal income or excise tax liability imposed by the Code, other than to the
extent the General Partner elects to retain and pay income tax on its net capital gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.04 </B><U><B>No Right to Distributions in Kind</B></U>. No Partner shall be entitled to demand
property other than cash in connection with any distributions by the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.05 </B><U><B>Limitations on Return of Capital Contributions</B></U>. Notwithstanding any of the
provisions of this Article&nbsp;V, no Partner shall have the right to receive, and the General Partner
shall not have the right to make, a distribution that includes a return of all or part of a
Partner&#146;s Capital Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for
the return of his Capital Contribution, does not exceed the fair market value of the Partnership&#146;s
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.06 </B><U><B>Distributions Upon Liquidation</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon liquidation of the Partnership, after payment of, or adequate provision for, debts
and obligations of the Partnership, including any Partner loans, any remaining assets of the
Partnership shall be distributed to all Partners with positive Capital Accounts in accordance with
their respective positive Capital Account balances.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;For purposes of Section&nbsp;5.06(a) hereof, the Capital Account of each Partner shall be
determined after the following adjustments: (i)&nbsp;all adjustments made in accordance with Sections
5.01 and 5.02 hereof resulting from Partnership operations and from all sales and dispositions of
all or any part of the Partnership&#146;s assets, and (ii)&nbsp;allocating to the General Partner an amount
equal to the excess of (A)&nbsp;the value of the Partnership Units it received in exchange for Capital
Contributions of the proceeds of an issuance of REIT Shares pursuant to Section&nbsp;4.02(b) hereof over
(B)&nbsp;the actual amount of its Capital Contributions pursuant to Section&nbsp;4.02(b) hereof (<I>i.e.</I>, as a
result of any underwriters&#146; discount, commissions, placement fees or other expenses paid or
incurred in connection with such issuance).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Any distributions pursuant to this Section&nbsp;5.06 shall be made by the end of the
Partnership&#146;s taxable year in which the liquidation occurs (or, if later, within 90&nbsp;days after the
date of the liquidation). To the extent deemed advisable by the General Partner, appropriate
arrangements (including the use of a liquidating trust) may be made to assure that adequate funds
are available to pay any contingent debts or obligations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.07 </B><U><B>Substantial Economic Effect</B></U>. It is the intent of the Partners that the
allocations of Profit and Loss under the Agreement have substantial economic effect (or be
consistent with the Partners&#146; interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the Code as interpreted
by the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Regulations promulgated pursuant thereto. Article&nbsp;V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VI</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>RIGHTS</B></U><B>, </B><U><B>OBLIGATIONS AND</B></U><BR>
<U><B>POWERS OF THE GENERAL PARTNER</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.01 </B><U><B>Management of the Partnership</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Except as otherwise expressly provided in this Agreement, the General Partner shall have
full, complete and exclusive discretion to manage and control the business of the Partnership for
the purposes herein stated, and shall make all decisions affecting the business and assets of the
Partnership. Subject to the restrictions specifically contained in this Agreement, the powers of
the General Partner shall include, without limitation, the authority to take the following actions
on behalf of the Partnership:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to acquire, purchase, own, operate, lease and dispose of any real property and any
other property or assets including, but not limited to, notes and mortgages that the General
Partner determines are necessary or appropriate in the business of the Partnership;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to construct buildings and make other improvements on the properties owned or
leased by the Partnership;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Units or
any securities (including secured and unsecured debt obligations of the Partnership, debt
obligations of the Partnership convertible into any class or series of Partnership Units, or
Rights relating to any class or series of Partnership Units) of the Partnership;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) to borrow or lend money for the Partnership, issue or receive evidences of
indebtedness in connection therewith, refinance, increase the amount of, modify, amend or
change the terms of, or extend the time for the payment of, any such indebtedness, and
secure indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership&#146;s
assets;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) to pay, either directly or by reimbursement, for all operating costs and general
administrative expenses of the Partnership to third parties or to the General Partner or its
Affiliates as set forth in this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) to guarantee or become a co-maker of indebtedness of any Subsidiary of the General
Partner or the Partnership, refinance, increase the amount of, modify, amend or change the
terms of, or extend the time for the payment of, any such guarantee or indebtedness, and
secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on
the Partnership&#146;s assets;
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) to use assets of the Partnership (including, without limitation, cash on hand)
for any purpose consistent with this Agreement, including, without limitation, payment,
either directly or by reimbursement, of all operating costs and general and administrative
expenses of the General Partner, the Partnership or any Subsidiary of either, to third
parties or to the General Partner as set forth in this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) to lease all or any portion of any of the Partnership&#146;s assets, whether or not
the terms of such leases extend beyond the termination date of the Partnership and whether
or not any portion of the Partnership&#146;s assets so leased are to be occupied by the lessee,
or, in turn, subleased in whole or in part to others, for such consideration and on such
terms as the General Partner may determine;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) to prosecute, defend, arbitrate or compromise any and all claims or liabilities in
favor of or against the Partnership, on such terms and in such manner as the General Partner
may reasonably determine, and similarly to prosecute, settle or defend litigation with
respect to the Partners, the Partnership or the Partnership&#146;s assets;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) to file applications, communicate and otherwise deal with any and all governmental
agencies having jurisdiction over, or in any way affecting, the Partnership&#146;s assets or any
other aspect of the Partnership&#146;s business;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) to make or revoke any election permitted or required of the Partnership by any
taxing authority;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) to maintain such insurance coverage for public liability, fire and casualty, and
any and all other insurance for the protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in
such amounts and such types, as it shall determine from time to time;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) to determine whether or not to apply any insurance proceeds for any property to
the restoration of such property or to distribute the same;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) to establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain legal
counsel, accountants, consultants, real estate brokers and such other persons as the General
Partner may deem necessary or appropriate in connection with the Partnership business and to
pay therefor such reasonable remuneration as the General Partner may deem reasonable and
proper;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) to retain other services of any kind or nature in connection with the Partnership
business, and to pay therefor such remuneration as the General Partner may deem reasonable
and proper;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to
any of the rights, powers and authority conferred upon the General Partner;
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) to maintain accurate accounting records and to file promptly all federal, state
and local income tax returns on behalf of the Partnership;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) to distribute Partnership cash or other Partnership assets in accordance with
this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) to form or acquire an interest in, and contribute property to, any further
limited or general partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests in, and the
contributions of property to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) to establish Partnership reserves for working capital, capital expenditures,
contingent liabilities or any other valid Partnership purpose;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi) to merge, consolidate or combine the Partnership with or into another person;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii) to do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a &#147;publicly traded partnership&#148; taxable as a
corporation under Section&nbsp;7704 of the Code; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiii) to take such other action, execute, acknowledge, swear to or deliver such other
documents and instruments, and perform any and all other acts that the General Partner deems
necessary or appropriate for the formation, continuation and conduct of the business and
affairs of the Partnership (including, without limitation, all actions consistent with
allowing the General Partner at all times to qualify as a REIT unless the General Partner
voluntarily terminates its REIT status) and to possess and enjoy all of the rights and
powers of a general partner as provided by the Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Except as otherwise provided herein, to the extent the duties of the General Partner
require expenditures of funds to be paid to third parties, the General Partner shall not have any
obligations hereunder except to the extent that Partnership funds are reasonably available to it
for the performance of such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual funds for payment to
third parties or to undertake any individual liability or obligation on behalf of the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.02 </B><U><B>Delegation of Authority</B></U>. The General Partner may delegate any or all of its
powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with
any Person for the transaction of the business of the Partnership, which Person may, under
supervision of the General Partner, perform any acts or services for the Partnership as the General
Partner may approve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.03 </B><U><B>Indemnification and Exculpation of Indemnitees</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Partnership shall indemnify an Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including reasonable legal fees
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and expenses), judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i)&nbsp;the act or omission of the Indemnitee was material to the matter giving rise
to the proceeding and either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii)&nbsp;the Indemnitee actually received an improper personal benefit in money, property
or services; or (iii)&nbsp;in the case of any criminal proceeding, the Indemnitee had reasonable cause
to believe that the act or omission was unlawful. The termination of any proceeding by judgment,
order or settlement does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section&nbsp;6.03(a). The termination of any proceeding by
conviction or upon a plea of <I>nolo contendere </I>or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the Indemnitee acted in a manner
contrary to that specified in this Section&nbsp;6.03(a). Any indemnification pursuant to this Section
6.03 shall be made only out of the assets of the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Partnership shall reimburse an Indemnitee for reasonable expenses incurred by an
Indemnitee who is a party to a proceeding in advance of the final disposition of the proceeding
upon receipt by the Partnership of (i)&nbsp;a written affirmation by the Indemnitee of the Indemnitee&#146;s
good faith belief that the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section&nbsp;6.03 has been met, and (ii)&nbsp;a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct
has not been met.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The indemnification provided by this Section&nbsp;6.03 shall be in addition to any other rights
to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any
vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who
has ceased to serve in such capacity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The Partnership may purchase and maintain insurance, as an expense of the Partnership, on
behalf of the Indemnitees and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership&#146;s activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;For purposes of this Section&nbsp;6.03, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of
this Section&nbsp;6.03; and actions taken or omitted by the Indemnitee with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that
is not opposed to the best interests of the Partnership.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;An Indemnitee shall not be denied indemnification in whole or in part under this Section
6.03 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;The provisions of this Section&nbsp;6.03 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Any amendment, modification or repeal of this Section&nbsp;6.03 or any provision hereof shall
be prospective only and shall not in any way affect the indemnification of an Indemnitee by the
Partnership under this Section&nbsp;6.03 as in effect immediately prior to such amendment, modification
or repeal with respect to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when claims relating to such matters may arise or be
asserted.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.04 </B><U><B>Liability of the General Partner</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Notwithstanding anything to the contrary set forth in this Agreement, neither the General
Partner, nor any of its trustees, officers, agents or employees shall be liable for monetary
damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result
of errors in judgment or mistakes of fact or law or of any act or omission if any such party acted
in good faith. The General Partner shall not be in breach of any duty that the General Partner may
owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any
duty stated or implied by law or equity provided the General Partner, acting in good faith, abides
by the terms of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Limited Partners expressly acknowledge that the General Partner is acting on behalf of
the Partnership and the General Partner&#146;s shareholders collectively, that the General Partner is
under no obligation to consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all,
of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take)
any actions. In the event of a conflict between the interests of the shareholders of the General
Partner on the one hand and the Limited Partners on the other, the General Partner shall endeavor
in good faith to resolve the conflict in a manner not adverse to either the shareholders of the
General Partner or the Limited Partners; <U>provided</U>, <U>however</U>, that for so long as the
General Partner owns a controlling interest in the Partnership, any such conflict that the General
Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse
to either the shareholders of the General Partner or the Limited Partners shall be resolved in
favor of the shareholders of the General Partner. The General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred or benefits not derived by the Limited
Partners in connection with such decisions.
</DIV>



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</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Subject to its obligations and duties as General Partner set forth in Section&nbsp;6.01 hereof,
the General Partner may exercise any of the powers granted to it under this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Notwithstanding any other provisions of this Agreement or the Act, any action of the
General Partner on behalf of the Partnership or any decision of the General Partner to refrain from
acting on behalf of the Partnership, undertaken in the good faith belief that such action or
omission is necessary or advisable in order (i)&nbsp;to protect the ability of the General Partner to
continue to qualify as a REIT or (ii)&nbsp;to prevent the General Partner from incurring any taxes under
Section&nbsp;857, Section&nbsp;4981 or any other provision of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Any amendment, modification or repeal of this Section&nbsp;6.04 or any provision hereof shall
be prospective only and shall not in any way affect the limitations on the General Partner&#146;s or any
of its officer&#146;s, director&#146;s, agent&#146;s or employee&#146;s liability to the Partnership and the Limited
Partners under this Section&nbsp;6.04 as in effect immediately prior to such amendment, modification or
repeal with respect to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when claims relating to such matters may arise or be
asserted.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.05 </B><U><B>Partnership Obligations</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Except as provided in this Section&nbsp;6.05 and elsewhere in this Agreement (including the
provisions of Articles V and VI hereof regarding distributions, payments and allocations to which
it may be entitled), the General Partner shall not be compensated for its services as general
partner of the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;All Administrative Expenses shall be obligations of the Partnership, and the General
Partner shall be entitled to reimbursement by the Partnership for any expenditure (including
Administrative Expenses) incurred by it on behalf of the Partnership that shall be made other than
out of the funds of the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.06 </B><U><B>Outside Activities</B></U>. Subject to Section&nbsp;6.08 hereof, the Declaration of Trust and
any agreements entered into by the General Partner or its Affiliates with the Partnership or a
Subsidiary, any officer, director, employee, agent, trustee, Affiliate or shareholder of the
General Partner, the General Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the Partnership. Neither
the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement
in any such business ventures, interest or activities. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership relationship
established hereby in any such business ventures, interests or activities, and the General Partner
shall have no obligation pursuant to this Agreement to offer any interest in any such business
ventures, interests and activities to the Partnership or any Limited Partner, even if such
opportunity is of a
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">character that, if presented to the Partnership or any Limited Partner, could be taken by such
Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.07 </B><U><B>Employment or Retention of Affiliates</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Any Affiliate of the General Partner may be employed or retained by the Partnership and
may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of
goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any
compensation, price or other payment therefor that the General Partner determines to be fair and
reasonable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Partnership may lend or contribute to its Subsidiaries or other Persons in which it
has an equity investment, and such Persons may borrow funds from the Partnership, on terms and
conditions established in the sole and absolute discretion of the General Partner. The foregoing
authority shall not create any right or benefit in favor of any Subsidiary or any other Person.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Partnership may transfer assets to joint ventures, other partnerships, corporations or
other business entities in which it is or thereby becomes a participant upon such terms and subject
to such conditions as the General Partner deems are consistent with this Agreement and applicable
law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.08 </B><U><B>General Partner Activities</B></U>. The General Partner agrees that, generally, all
business activities of the General Partner, including activities pertaining to the acquisition,
development, ownership of or investment in hotel properties or other property, shall be conducted
through the Partnership or one or more Subsidiary Partnerships; <U>provided</U>, <U>however</U>,
that the General Partner may make direct acquisitions or undertake business activities if such
acquisitions or activities are made in connection with the issuance of Additional Securities by the
General Partner or the business activity has been approved by a majority of the Independent
Trustees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.09 </B><U><B>Title to Partnership Assets</B></U>. Title to Partnership assets, whether real, personal
or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be
held in the name of the Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The General Partner hereby
declares and warrants that any Partnership assets for which legal title is held in the name of the
General Partner or any nominee or Affiliate of the General Partner shall be held by the General
Partner for the use and benefit of the Partnership in accordance with the provisions of this
Agreement; <U>provided</U>, <U>however</U>, that the General Partner shall use its best efforts
to cause beneficial and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal title to such
Partnership assets is held.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.10 </B><U><B>Redemption of General Partner&#146;s Partnership Units</B></U>. In the event the General
Partner redeems or repurchases any REIT Shares, then the General Partner shall cause the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Partnership to purchase from the General Partner a number of Partnership Units as determined
based on the application of the Conversion Factor on the same terms that the General Partner
redeemed such REIT Shares. Moreover, if the General Partner makes a cash tender offer or other
offer to acquire REIT Shares, then the General Partner shall cause the Partnership to make a
corresponding offer to the General Partner to acquire an equal number of Partnership Units held by
the General Partner. In the event any REIT Shares are redeemed or repurchased by the General
Partner pursuant to such offer, the Partnership shall redeem or repurchase an equivalent number of
the General Partner&#146;s Partnership Units for an equivalent purchase price based on the application
of the Conversion Factor.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VII</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>CHANGES IN GENERAL PARTNER</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.01 </B><U><B>Transfer of the General Partner&#146;s Partnership Interest</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The General Partner shall not transfer all or any portion of its General Partnership
Interests, and the General Partner shall not withdraw as General Partner, except as provided in or
in connection with a transaction contemplated by Sections&nbsp;7.01(c), (d)&nbsp;or (e)&nbsp;hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The General Partner agrees that its General Partnership Interest will at all times be in
the aggregate at least 0.1%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Except as otherwise provided in Section&nbsp;7.01(d) or (e)&nbsp;hereof, the General Partner shall
not engage in any merger, consolidation or other combination with or into another Person or sale of
all or substantially all of its assets (other than in connection with a change in the General
Partner&#146;s state of incorporation or organizational form), in each case which results in a Change of
Control of the General Partner (a &#147;<B>Transaction</B>&#148;), unless at least one of the following conditions
is met:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the consent of a Majority in Interest (other than the General Partner or any
Subsidiary of the General Partner) is obtained;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) as a result of such Transaction, all Limited Partners (other than the General
Partner and any Subsidiary of the General Partner) will receive, or have the right to
receive, for each Partnership Unit an amount of cash, securities or other property equal in
value to the product of the Conversion Factor and the greatest amount of cash, securities or
other property paid in the Transaction to a holder of one REIT Share in consideration of one
REIT Share, <U>provided</U> that if, in connection with such Transaction, a purchase,
tender or exchange offer (&#147;<B>Offer</B>&#148;) shall have been made to and accepted by the holders of
more than 50% of the outstanding REIT Shares, each holder of Partnership Units (other than
the General Partner and any Subsidiary of the General Partner) shall be given the option to
exchange its Partnership Units for the greatest amount of cash, securities or other property
that such Limited Partner would have received had it (A)&nbsp;exercised its Common Unit
Redemption Right pursuant to Section&nbsp;8.04 hereof and (B)&nbsp;sold, tendered or exchanged
pursuant to the Offer the REIT Shares received upon
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->- 35 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">exercise of the Common Unit Redemption Right immediately prior to the expiration of the
Offer; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the General Partner is the surviving entity in the Transaction and either (A)&nbsp;the
holders of REIT Shares do not receive cash, securities or other property in the Transaction
or (B)&nbsp;all Limited Partners (other than the General Partner or any Subsidiary of the General
Partner) receive for each Partnership Unit an amount of cash, securities or other property
(expressed as an amount per REIT Share) that is no less in value than the product of the
Conversion Factor and the greatest amount of cash, securities or other property (expressed
as an amount per REIT Share) received in the Transaction by any holder of REIT Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Notwithstanding Section&nbsp;7.01(c) hereof, the General Partner may merge with or into or
consolidate with another entity if immediately after such merger or consolidation (i)&nbsp;substantially
all of the assets of the successor or surviving entity (the &#147;<B>Survivor</B>&#148;), other than Partnership
Units held by the General Partner, are contributed, directly or indirectly, to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value equal to the value
of the assets so contributed as determined by the Survivor in good faith and (ii)&nbsp;the Survivor
expressly agrees to assume all obligations of the General Partner hereunder. Upon such
contribution and assumption, the Survivor shall have the right and duty to amend this Agreement as
set forth in this Section&nbsp;7.01(d). The Survivor shall in good faith arrive at a new method for the
calculation of the Cash Amount, the REIT Shares Amount and Conversion Factor for a Partnership Unit
after any such merger or consolidation so as to approximate the existing method for such
calculation as closely as reasonably possible. Such calculation shall take into account, among
other things, the kind and amount of securities, cash and other property that was receivable upon
such merger or consolidation by a holder of REIT Shares or options, warrants or other rights
relating thereto, and which a holder of Partnership Units could have acquired had such Partnership
Units been exchanged immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustment to such method of calculation, which shall be as nearly
equivalent as may be practicable to the adjustments provided for with respect to the Conversion
Factor. The Survivor also shall in good faith modify the definition of REIT Shares and make such
amendments to Section&nbsp;8.04 hereof so as to approximate the existing rights and obligations set
forth in Section&nbsp;8.04 hereof as closely as reasonably possible. The above provisions of this
Section&nbsp;7.01(d) shall similarly apply to successive mergers or consolidations permitted hereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In respect of any transaction described in the preceding paragraph, the General Partner is
required to use its commercially reasonable efforts to structure such transaction to avoid causing
the Limited Partners (other than the General Partner or any Subsidiary) to recognize a gain for
federal income tax purposes by virtue of the occurrence of or their participation in such
transaction, <U>provided</U> such efforts are consistent with and subject in all respects to the
exercise of the Board of Trustees&#146; fiduciary duties to the shareholders of the General Partner
under applicable law.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 36 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Notwithstanding anything in this Article&nbsp;VII,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The General Partner may transfer all or any portion of its General Partnership
Interest to (A)&nbsp;any wholly owned Subsidiary of the General Partner or (B)&nbsp;the owner of all
of the ownership interests of the General Partner, and following a transfer of all of its
General Partnership Interest, may withdraw as General Partner; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the General Partner may engage in a transaction required by law or by the rules of
any national securities exchange or over-the-counter interdealer quotation system on which
the REIT Shares are listed or traded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.02 </B><U><B>Admission of a Substitute or Additional General Partner</B></U>. A Person shall be
admitted as a substitute or additional General Partner of the Partnership only if the following
terms and conditions are satisfied:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;the Person to be admitted as a substitute or additional General Partner shall have
accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a
counterpart thereof and such other documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General Partner, and a certificate evidencing the
admission of such Person as a General Partner shall have been filed for recordation and all other
actions required by Section&nbsp;2.05 hereof in connection with such admission shall have been
performed;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;if the Person to be admitted as a substitute or additional General Partner is a
corporation or a partnership, it shall have provided the Partnership with evidence satisfactory to
counsel for the Partnership of such Person&#146;s authority to become a General Partner and to be bound
by the terms and provisions of this Agreement; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;counsel for the Partnership shall have rendered an opinion (relying on such opinions from
other counsel as may be necessary) that the admission of the Person to be admitted as a substitute
or additional General Partner is in conformity with the Act, that none of the actions taken in
connection with the admission of such Person as a substitute or additional General Partner will
cause (i)&nbsp;the Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii)&nbsp;the loss of any Limited Partner&#146;s limited liability.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.03 </B><U><B>Effect of Bankruptcy</B></U><B>, </B><U><B>Withdrawal</B></U><B>, </B><U><B>Death or Dissolution of General
Partner</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon the occurrence of an Event of Bankruptcy as to the General Partner (and its removal
pursuant to Section&nbsp;7.04(a) hereof) or the death, withdrawal, removal or dissolution of the General
Partner (except that, if the General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of the General Partner if the business of the
General Partner is continued by the remaining partner or partners), the Partnership shall be
dissolved and terminated unless the Partnership is continued pursuant to Section&nbsp;7.03(b) hereof.
The merger of the General Partner with or into any entity that is admitted as a substitute or
successor General Partner pursuant to Section&nbsp;7.02 hereof shall not be deemed to be the withdrawal,
dissolution or removal of the General Partner.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 37 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Following the occurrence of an Event of Bankruptcy as to the General Partner (and its
removal pursuant to Section&nbsp;7.04(a) hereof) or the death, withdrawal, removal or dissolution of the
General Partner (except that, if the General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner
in, such partnership shall be deemed not to be a dissolution of the General Partner if the business
of such General Partner is continued by the remaining partner or partners), the Limited Partners,
within 90&nbsp;days after such occurrence, may elect to continue the business of the Partnership for the
balance of the term specified in Section&nbsp;2.04 hereof by selecting, subject to Section&nbsp;7.02 hereof
and any other provisions of this Agreement, a substitute General Partner by consent of a Majority
in Interest. If the Limited Partners elect to continue the business of the Partnership and admit a
substitute General Partner, the relationship with the Partners and of any Person who has acquired
an interest of a Partner in the Partnership shall be governed by this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.04 </B><U><B>Removal of General Partner</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of, the General
Partner, the General Partner shall be deemed to be removed automatically; <U>provided</U>,
<U>however</U>, that if the General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to or removal of a partner in such
partnership shall be deemed not to be a dissolution of the General Partner if the business of the
General Partner is continued by the remaining partner or partners. The Limited Partners may not
remove the General Partner, with or without cause.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;If the General Partner has been removed pursuant to this Section&nbsp;7.04 and the Partnership
is continued pursuant to Section&nbsp;7.03 hereof, the General Partner shall promptly transfer and
assign its General Partnership Interest in the Partnership to the substitute General Partner
approved by a Majority in Interest in accordance with Section&nbsp;7.03(b) hereof and otherwise be
admitted to the Partnership in accordance with Section&nbsp;7.02 hereof. At the time of assignment, the
removed General Partner shall be entitled to receive from the substitute General Partner the fair
market value of the General Partnership Interest of such removed General Partner as reduced by any
damages caused to the Partnership by such General Partner. Such fair market value shall be
determined by an appraiser mutually agreed upon by the General Partner and a Majority in Interest
(excluding the General Partner and any Subsidiary of the General Partner) within ten days following
the removal of the General Partner. In the event that the parties are unable to agree upon an
appraiser, the removed General Partner and a Majority in Interest (excluding the General Partner
and any Subsidiary of the General Partner) each shall select an appraiser. Each such appraiser
shall complete an appraisal of the fair market value of the removed General Partner&#146;s General
Partnership Interest within 30&nbsp;days of the General Partner&#146;s removal, and the fair market value of
the removed General Partner&#146;s General Partnership Interest shall be the average of the two
appraisals; <U>provided</U>, <U>however</U>, that if the higher appraisal exceeds the lower
appraisal by more than 20% of the amount of the lower appraisal, the two appraisers, no later than
40&nbsp;days after the removal of the General Partner, shall select a third appraiser who shall complete
an appraisal of the fair market value of the removed General Partner&#146;s General Partnership Interest
no later than 60&nbsp;days after the removal of the General Partner. In such case, the fair market
value of the removed General Partner&#146;s General Partnership Interest shall be the average of the two
appraisals closest in value.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 38 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The General Partnership Interest of a removed General Partner, during the time after
default until transfer under Section&nbsp;7.04(b) hereof, shall be converted to that of a special
Limited Partner; <U>provided</U>, <U>however</U>, such removed General Partner shall not have any
rights to participate in the management and affairs of the Partnership, and shall not be entitled
to any portion of the income, expense, profit, gain or loss allocations or cash distributions
allocable or payable, as the case may be, to the Limited Partners. Instead, such removed General
Partner shall receive and be entitled only to retain distributions or allocations of such items
that it would have been entitled to receive in its capacity as General Partner, until the transfer
is effective pursuant to Section&nbsp;7.04(b) hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;All Partners shall have given and hereby do give such consents, shall take such actions
and shall execute such documents as shall be legally necessary and sufficient to effect all the
foregoing provisions of this Section&nbsp;7.04.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VIII</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>RIGHTS AND OBLIGATIONS</B></U><BR>
<U><B>OF THE LIMITED PARTNERS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.01 </B><U><B>Management of the Partnership</B></U>. The Limited Partners shall not participate in the
management or control of Partnership business nor shall they transact any business for the
Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being
vested solely and exclusively in the General Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.02 </B><U><B>Power of Attorney</B></U>. Each Limited Partner hereby irrevocably appoints the General
Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name,
place and stead, and for its use and benefit, to sign, acknowledge, swear to, deliver, file or
record, at the appropriate public offices, any and all documents, certificates and instruments as
may be deemed necessary or desirable by the General Partner to carry out fully the provisions of
this Agreement and the Act in accordance with their terms, including amendments hereto, which power
of attorney is coupled with an interest and shall survive the death, dissolution or legal
incapacity of the Limited Partner, or the transfer by the Limited Partner of any part or all of its
Partnership Interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.03 </B><U><B>Limitation on Liability of Limited Partners</B></U>. No Limited Partner shall be liable
for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall
be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when
due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital Contributions or other
payments or lend any funds to the Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.04 </B><U><B>Common Unit Redemption Right</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to Sections&nbsp;8.04(b), (c), (d), (e)&nbsp;and (f)&nbsp;hereof and the provisions of any
agreements between the Partnership and one or more Limited Partners with respect to Common Units
(including any LTIP Units that are converted into Common Units) held by them, each Limited Partner
(other than the General Partner or any Subsidiary of the General Partner,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shall have the right (the &#147;<B>Common Unit Redemption Right</B>&#148;) to require the Partnership to redeem
on a Specified Redemption Date all or a portion of the Common Units held by such Limited Partner at
a redemption price equal to and in the form of the Common Redemption Amount to be paid by the
Partnership, <U>provided</U> that such Common Units shall have been outstanding for at least one
year (or such lesser time as determined by the General Partner in its sole and absolute
discretion), and subject to any restriction agreed to in writing between the Redeeming Limited
Partner and the General Partner. The Common Unit Redemption Right shall be exercised pursuant to a
Notice of Exercise of Redemption Right in the form attached hereto as Exhibit&nbsp;B delivered to the
Partnership (with a copy to the General Partner) by the Limited Partner who is exercising the
Common Unit Redemption Right (the &#147;<B>Redeeming Limited Partner</B>&#148;); <U>provided</U>, <U>however</U>,
that the Partnership shall, in its sole and absolute discretion, have the option to deliver either
the Cash Amount or the REIT Shares Amount; <U>provided</U>, <U>further</U>, that the Partnership
shall not be obligated to satisfy such Common Unit Redemption Right if the General Partner elects
to purchase the Common Units subject to the Notice of Redemption; and <U>provided</U>,
<U>further</U>, that no Limited Partner may deliver more than two Notices of Redemption during
each calendar year. A Limited Partner may not exercise the Common Unit Redemption Right for less
than one thousand (1,000) Common Units or, if such Limited Partner holds less than one thousand
(1,000) Common Units, all of the Common Units held by such Limited Partner. The Redeeming Limited
Partner shall have no right, with respect to any Common Units so redeemed, to receive any
distribution paid with respect to Common Units if the record date for such distribution is on or
after the Specified Redemption Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding the provisions of Section&nbsp;8.04(a) hereof, a Limited Partner that exercises
the Common Unit Redemption Right shall be deemed to have offered to sell the Common Units described
in the Notice of Redemption to the General Partner, and the General Partner may, in its sole and
absolute discretion, elect to purchase directly and acquire such Common Units by paying to the
Redeeming Limited Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified Redemption Date, whereupon
the General Partner shall acquire the Common Units offered for redemption by the Redeeming Limited
Partner and shall be treated for all purposes of this Agreement as the owner of such Common Units.
If the General Partner shall elect to exercise its right to purchase Common Units under this
Section&nbsp;8.04(b) with respect to a Notice of Redemption, it shall so notify the Redeeming Limited
Partner within five Business Days after the receipt by the General Partner of such Notice of
Redemption.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event the General Partner shall exercise its right to purchase Common Units with
respect to the exercise of a Common Unit Redemption Right, the Partnership shall have no obligation
to pay any amount to the Redeeming Limited Partner with respect to such Redeeming Limited Partner&#146;s
exercise of such Common Unit Redemption Right, and each of the Redeeming Limited Partner, the
Partnership and the General Partner shall treat the transaction between the General Partner and the
Redeeming Limited Partner for federal income tax purposes as a sale of the Redeeming Limited
Partner&#146;s Common Units to the General Partner. Each Redeeming Limited Partner agrees to execute
such documents as the General Partner may reasonably require in connection with the issuance of
REIT Shares upon exercise of the Common Unit Redemption Right.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Notwithstanding the provisions of Section&nbsp;8.04(a) and 8.04(b) hereof, a Limited Partner
shall not be entitled to exercise the Common Unit Redemption Right if the delivery of REIT Shares
to such Limited Partner on the Specified Redemption Date by the General Partner pursuant to Section
8.04(b) hereof (regardless of whether or not the General Partner would in fact exercise its rights
under Section&nbsp;8.04(b) hereof) would (i)&nbsp;result in such Limited Partner or any other Person (as
defined in the Declaration of Trust) owning, directly or indirectly, REIT Shares in excess of the
Share Ownership Limit or any Excepted Holder Limit (each as defined in Declaration of Trust) and
calculated in accordance therewith, except as provided in the Declaration of Trust, (ii)&nbsp;result in
REIT Shares being owned by fewer than 100 persons (determined without reference to any rules of
attribution), (iii)&nbsp;result in the General Partner being &#147;closely held&#148; within the meaning of
Section 856(h) of the Code, (iv)&nbsp;cause the General Partner to own, actually or constructively, 10%
or more of the ownership interests in a tenant (other than a TRS) of the General Partner&#146;s, the
Partnership&#146;s or a Subsidiary Partnership&#146;s real property, within the meaning of Section
856(d)(2)(B) of the Code, (v)&nbsp;otherwise cause the General Partner to fail to qualify as a REIT
under the Code, including, but not limited to, as a result of any &#147;eligible independent contractor&#148;
(as defined in Section&nbsp;856(d)(9)(A) of the Code) that operates a &#147;qualified lodging facility&#148; (as
defined in Section&nbsp;856(d)(9)(D) of the Code) on behalf of a TRS failing to qualify as such, or (vi)
cause the acquisition of REIT Shares by such Limited Partner to be &#147;integrated&#148; with any other
distribution of REIT Shares or Common Units for purposes of complying with the registration
provisions of the Securities Act. The General Partner, in its sole and absolute discretion, may
waive the restriction on redemption set forth in this Section&nbsp;8.04(c).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Any Cash Amount to be paid to a Redeeming Limited Partner pursuant to this Section&nbsp;8.04
shall be paid on the Specified Redemption Date; <U>provided</U>, <U>however</U>, that the General
Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 90
days to the extent required for the General Partner to cause additional REIT Shares to be issued to
provide financing to be used to make such payment of the Cash Amount. Any REIT Share Amount to be
paid to a Redeeming Limited Partner pursuant to this Section&nbsp;8.04 shall be paid on the Specified
Redemption Date; <U>provided</U>, <U>however</U>, that the General Partner may elect to cause the
Specified Redemption Date to be delayed for up to an additional 60&nbsp;days to the extent required for
the General Partner to cause additional REIT Shares to be issued. Notwithstanding the foregoing,
the General Partner agrees to use its best efforts to cause the closing of the acquisition of
redeemed Common Units hereunder to occur as quickly as reasonably possible.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Notwithstanding any other provision of this Agreement, the General Partner is authorized
to take any action that it determines to be necessary or appropriate to cause the Partnership to
comply with any withholding requirements established under the Code or any other federal, state or
local law that apply upon a Redeeming Limited Partner&#146;s exercise of the Common Unit Redemption
Right. If a Redeeming Limited Partner believes that it is exempt from such withholding upon the
exercise of the Common Unit Redemption Right, such Partner must furnish the General Partner with a
FIRPTA Certificate in the form attached hereto as <U>Exhibit&nbsp;C</U>. If the Partnership or the
General Partner is required to withhold and pay over to any taxing authority any amount upon a
Redeeming Limited Partner&#146;s exercise of the Common Unit Redemption Right and if the Common
Redemption Amount equals or exceeds the Withheld Amount, the Withheld Amount shall be treated as an
amount received by such Partner in
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">redemption of its Common Units. If, however, the Common Redemption Amount is less than the
Withheld Amount, the Redeeming Limited Partner shall not receive any portion of the Common
Redemption Amount, the Common Redemption Amount shall be treated as an amount received by such
Partner in redemption of its Common Units, and the Partner shall contribute the excess of the
Withheld Amount over the Common Redemption Amount to the Partnership before the Partnership is
required to pay over such excess to a taxing authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Notwithstanding any other provision of this Agreement, the General Partner shall place
appropriate restrictions on the ability of the Limited Partners to exercise their Common Unit
Redemption Rights as and if deemed necessary to ensure that the Partnership does not constitute a
&#147;publicly traded partnership&#148; taxable as a corporation under Section&nbsp;7704 of the Code. If and when
the General Partner determines that imposing such restrictions is necessary, the General Partner
shall give prompt written notice thereof (a &#147;<B>Restriction Notice</B>&#148;) to each of the Limited Partners,
which notice shall be accompanied by a copy of an opinion of counsel to the Partnership that states
that, in the opinion of such counsel, restrictions are necessary in order to avoid the Partnership
being treated as a &#147;publicly traded partnership&#148; under Section&nbsp;7704 of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.05 </B><U><B>Registration</B></U>. Subject to the terms of any agreement between the General Partner
and a Limited Partner with respect to Common Units held by such Limited Partner:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Shelf Registration of the REIT Shares</U>. Following the date on which the General
Partner becomes eligible to use a registration statement on Form S-3 for the registration of
securities under the Securities Act (the &#147;<B>S-3 Eligible Date</B>&#148;) and within the time period that may
be agreed by the General Partner and a Limited Partner (other than the General Partner or any
Subsidiary of the General Partner), the General Partner shall file with the Commission a shelf
registration statement under Rule&nbsp;415 of the Securities Act (a &#147;<B>Registration Statement</B>&#148;), or any
similar rule that may be adopted by the Commission, covering (i)&nbsp;the issuance of REIT Shares
issuable upon redemption of the Common Units held by such Limited Partner (&#147;<B>Redemption Shares</B>&#148;)
and/or (ii)&nbsp;the resale by the holder of the Redemption Shares, with respect to Common Units issued
prior to the S-3 Eligible Date; <U>provided</U>, <U>however</U>, that the General Partner shall
be required to file only two such registrations in any 12-month period. In connection therewith,
the General Partner will:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) use its reasonable best efforts to have such Registration Statement declared
effective;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) furnish to each holder of Redemption Shares such number of copies of prospectuses,
and supplements or amendments thereto, and such other documents as such holder reasonably
requests;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) register or qualify the Redemption Shares covered by the Registration Statement
under the securities or blue sky laws of such jurisdictions within the United States as any
holder of Redemption Shares shall reasonably request, and do such other reasonable acts and
things as may be required of it to enable such holders to consummate the sale or other
disposition in such jurisdictions of the Redemption Shares; <U>provided</U>,
<U>however</U>, that the General Partner shall not be required to (i)&nbsp;qualify as a
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">foreign corporation or consent to a general or unlimited service or process in any
jurisdictions in which it would not otherwise be required to be qualified or so consent or
(ii)&nbsp;qualify as a dealer in securities; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) otherwise use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The General Partner further agrees to supplement or make amendments to each Registration
Statement, if required by the rules, regulations or instructions applicable to the registration
form utilized by the General Partner or by the Securities Act or rules and regulations thereunder
for such Registration Statement. Each Limited Partner agrees to furnish to the General Partner,
upon request, such information with respect to the Limited Partner as may be required to complete
and file the Registration Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with and as a condition to the General Partner&#146;s obligations with respect to the
filing of a Registration Statement pursuant to this Section&nbsp;8.05, each Limited Partner agrees with
the General Partner that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;it will not offer or sell its Redemption Shares until (A)&nbsp;such Redemption Shares have been
included in a Registration Statement and (B)&nbsp;it has received copies of a prospectus, and any
supplement or amendment thereto, as contemplated by Section&nbsp;8.05(a) hereof, and receives notice
that the Registration Statement covering such Redemption Shares, or any post-effective amendment
thereto, has been declared effective by the Commission;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;if the General Partner determines in its good faith judgment, after consultation with
counsel, that the use of the Registration Statement, including any post-effective amendment
thereto, or the use of any prospectus contained in such Registration Statement would require the
disclosure of important information that the General Partner has a <I>bona fide </I>business purpose for
preserving as confidential or the disclosure of which would impede the General Partner&#146;s ability to
consummate a significant transaction, upon written notice of such determination by the General
Partner, the rights of each Limited Partner to offer, sell or distribute its Redemption Shares
pursuant to such Registration Statement or prospectus or to require the General Partner to take
action with respect to the registration or sale of any Redemption Shares pursuant to a Registration
Statement (including any action contemplated by this Section&nbsp;8.05) will be suspended until the date
upon which the General Partner notifies such Limited Partner in writing (which notice shall be
deemed sufficient if given through the issuance of a press release) that suspension of such rights
for the grounds set forth in this paragraph is no longer necessary; <U>provided</U>,
<U>however</U>, that the General Partner may not suspend such rights for an aggregate period of
more than 90&nbsp;days in any 12-month period; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;in the case of the registration of any underwritten equity offering proposed by the
General Partner (other than any registration by the General Partner on Form S-8, or a successor or
substantially similar form, of (A)&nbsp;an employee share option, share purchase or compensation plan or
of securities issued or issuable pursuant to any such plan or (B)&nbsp;a dividend reinvestment plan),
each Limited Partner will agree, if requested in writing by the managing underwriter or
underwriters administering such offering, not to effect any offer, sale or distribution of any REIT
Shares or Redemption Shares (or any option or right to acquire REIT
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Shares or Redemption Shares) during the period commencing on the tenth day prior to the
expected effective date (which date shall be stated in such notice) of the registration statement
covering such underwritten primary equity offering or, if such offering shall be a &#147;take-down&#148; from
an effective shelf registration statement, the tenth day prior to the expected commencement date
(which date shall be stated in such notice) of such offering, and ending on the date specified by
such managing underwriter in such written request to the Limited Partners; <U>provided</U>,
<U>however</U>, that no Limited Partner shall be required to agree not to effect any offer, sale
or distribution of its Redemption Shares for a period of time that is longer than the greater of 90
days or the period of time for which any senior executive of the General Partner is required so to
agree in connection with such offering. Nothing in this paragraph shall be read to limit the
ability of any Limited Partner to redeem its Common Units in accordance with the terms of this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Listing on Securities Exchange</U>. If the General Partner lists or maintains the
listing of REIT Shares on any securities exchange or national market system, it shall, at its
expense and as necessary to permit the registration and sale of the Redemption Shares hereunder,
list thereon, maintain and, when necessary, increase such listing to include such Redemption
Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Registration Not Required</U>. Notwithstanding the foregoing, the General Partner
shall not be required to file or maintain the effectiveness of a registration statement relating to
Redemption Shares after the first date upon which, in the opinion of counsel to the General
Partner, all of the Redemption Shares covered thereby could be sold by the holders thereof pursuant
to Rule&nbsp;144 under the Securities Act, or any successor rule thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Allocation of Expenses</U>. The Partnership shall pay all expenses in connection with
the Registration Statement, including without limitation (i)&nbsp;all expenses incident to filing with
the Financial Industry Regulatory Authority, Inc., (ii)&nbsp;registration fees, (iii)&nbsp;printing expenses,
(iv)&nbsp;accounting and legal fees and expenses, except to the extent holders of Redemption Shares
elect to engage accountants or attorneys in addition to the accountants and attorneys engaged by
the General Partner or the Partnership, which fees and expenses for such accountants or attorneys
shall be for the account of the holders of the Redemption Shares, (v)&nbsp;accounting expenses incident
to or required by any such registration or qualification and (vi)&nbsp;expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such registration or
qualification; <U>provided</U>, <U>however</U>, neither the Partnership nor the General Partner
shall be liable for (A)&nbsp;any discounts or commissions to any underwriter or broker attributable to
the sale of Redemption Shares, or (B)&nbsp;any fees or expenses incurred by holders of Redemption Shares
in connection with such registration that, according to the written instructions of any regulatory
authority, the Partnership or the General Partner is not permitted to pay.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Indemnification</U>.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In connection with the Registration Statement, the General Partner and the
Partnership agree to indemnify holders of Redemption Shares within the meaning of Section&nbsp;15
of the Securities Act, against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any untrue, or alleged
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">untrue, statement of a material fact contained in the Registration Statement,
preliminary prospectus or prospectus (as amended or supplemented if the General Partner
shall have furnished any amendments or supplements thereto) or caused by any omission or
alleged omission, to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any untrue statement, alleged untrue
statement, omission, or alleged omission based upon information furnished to the General
Partner by the Limited Partner of the holder for use therein. The General Partner and each
officer, director and controlling person of the General Partner and the Partnership shall be
indemnified by each Limited Partner or holder of Redemption Shares covered by the
Registration Statement for all such losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any untrue, or alleged untrue,
statement or any omission, or alleged omission, based upon information furnished to the
General Partner by the Limited Partner or the holder for use therein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Promptly upon receipt by a party indemnified under this Section&nbsp;8.05(e) of notice
of the commencement of any action against such indemnified party in respect of which
indemnity or reimbursement may be sought against any indemnifying party under this Section
8.05(e), such indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure to so notify the indemnifying party shall not
relieve it of any liability that it may have to any indemnified party otherwise than under
this Section&nbsp;8.05(e) unless such failure shall materially adversely affect the defense of
such action. In case notice of commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party shall be entitled to
participate in and, to the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such indemnified party. The indemnified party
shall have the right to employ separate counsel in any such action and participate in the
defense thereof, but the reasonable fees and expenses of such counsel (other than reasonable
costs of investigation) shall be paid by the indemnified party unless (i)&nbsp;the indemnifying
party agrees to pay the same, (ii)&nbsp;the indemnifying party fails to assume the defense of
such action with counsel reasonably satisfactory to the indemnified party or (iii)&nbsp;the named
parties to any such action (including any impleaded parties) have been advised by such
counsel that representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional conduct (in which
case the indemnified party shall have the right to separate counsel and the indemnifying
party shall pay the reasonable fees and expenses of such separate counsel, provided that,
the indemnifying party shall not be liable for more than one separate counsel). No
indemnifying party shall be liable for any settlement entered into without its consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Contribution</U>.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If for any reason the indemnification provisions contemplated by Section&nbsp;8.05(e)
hereof are either unavailable or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities referred to therein, then the party
that would otherwise be required to provide indemnification or the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">indemnifying party (in either case, for purposes of this Section&nbsp;8.05(f), the
&#147;<B>Indemnifying Party</B>&#148;) in respect of such losses, claims, damages or liabilities, shall
contribute to the amount paid or payable by the party that would otherwise be entitled to
indemnification or the indemnified party (in either case, for purposes of this Section
8.05(f), the &#147;<B>Indemnified Party</B>&#148;) as a result of such losses, claims, damages, liabilities
or expense, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact
related to information supplied by the Indemnifying Party or Indemnified Party, and the
parties&#146; relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section&nbsp;8.05(f) were determined by pro rata allocation (even if the holders
were treated as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately preceding
paragraph. No person or entity determined to have committed a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The contribution provided for in this Section&nbsp;8.05(f) shall survive the
termination of this Agreement and shall remain in full force and effect regardless of any
investigation made by or on behalf of any Indemnified Party.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IX</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>TRANSFERS OF PARTNERSHIP INTERESTS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.01 </B><U><B>Purchase for Investment</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Each Limited Partner, by its signature below or by its subsequent admission to the
Partnership, hereby represents and warrants to the General Partner and to the Partnership that the
acquisition of such Limited Partner&#146;s Partnership Units is made for investment purposes only and
not with a view to the resale or distribution of such Partnership Units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Subject to the provisions of Section&nbsp;9.02 hereof, each Limited Partner agrees that such
Limited Partner will not sell, assign or otherwise transfer such Limited Partner&#146;s Partnership
Units or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or
otherwise, to any Person who does not make the representations and warranties to the General
Partner set forth in Section&nbsp;9.01(a) hereof.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.02 </B><U><B>Restrictions on Transfer of Partnership Units</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to the provisions of Sections&nbsp;9.02(b), (c)&nbsp;and (d)&nbsp;hereof, no Limited Partner may
offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of such Limited
Partner&#146;s Partnership Units, or any of such Limited Partner&#146;s economic rights as a Limited Partner,
whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a
&#147;<B>Transfer</B>&#148;) without the consent of the General Partner, which consent may be granted or withheld in
its sole and absolute discretion. The General Partner may require, as a condition of any Transfer
to which it consents, that the transferor assume all costs incurred by the Partnership in
connection therewith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;No Limited Partner may withdraw from the Partnership other than as a result of a permitted
Transfer (<I>i.e.</I>, a Transfer consented to as contemplated by clause (a)&nbsp;above or clause (c)&nbsp;below or
a Transfer pursuant to Section&nbsp;9.05 hereof) of all of such Limited Partner&#146;s Partnership Units
pursuant to this Article&nbsp;IX or pursuant to a redemption of all of such Limited Partner&#146;s Common
Units pursuant to Section&nbsp;8.04 hereof. Upon the permitted Transfer or redemption of all of a
Limited Partner&#146;s Common Units, such Limited Partner shall cease to be a Limited Partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Subject to Sections&nbsp;9.02(d), (e)&nbsp;and (f)&nbsp;hereof, a Limited Partner may Transfer, with the
consent of the General Partner, all or a portion of such Limited Partner&#146;s Partnership Units to
such Limited Partner&#146;s (i)&nbsp;parent or parent&#146;s spouse, (ii)&nbsp;spouse, (iii)&nbsp;natural or adopted
descendant or descendants, (iv)&nbsp;spouse of such Limited Partner&#146;s descendant, (v)&nbsp;brother or sister,
(vi)&nbsp;trust created by such Limited Partner for the primary benefit of such Limited Partner and/or
any such Person(s) described in (i)&nbsp;through (v)&nbsp;above, of which trust such Limited Partner or any
such Person(s) or bank or other commercial entity in the business of acting as a fiduciary in its
ordinary course of business and having an equity capitalization of at least $100,000,000 is a
trustee, (vii)&nbsp;a corporation, partnership or limited liability company controlled by a Person or
Persons named in (i)&nbsp;through (v)&nbsp;above, or (viii)&nbsp;if the Limited Partner is an entity, its
beneficial owners.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;No Limited Partner may effect a Transfer of its Partnership Units, in whole or in part,
if, in the opinion of legal counsel for the Partnership, such proposed Transfer would require the
registration of the Partnership Units under the Securities Act or would otherwise violate any
applicable federal or state securities or blue sky law (including investment suitability
standards).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;No Transfer by a Limited Partner of its Partnership Units, in whole or in part, may be
made to any Person if (i)&nbsp;in the opinion of legal counsel for the Partnership, such Transfer would
result in the Partnership being treated as an association taxable as a corporation (other than a
qualified REIT subsidiary within the meaning of Section 856(i) of the Code), (ii)&nbsp;in the opinion of
legal counsel for the Partnership, it would adversely affect the ability of the General Partner to
continue to qualify as a REIT or subject the General Partner to any additional taxes under Section
857 or Section&nbsp;4981 of the Code or (iii)&nbsp;such Transfer is effectuated through an &#147;established
securities market&#148; or a &#147;secondary market (or the substantial equivalent thereof)&#148; within the
meaning of Section&nbsp;7704 of the Code.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any purported Transfer in contravention of any of the provisions of this Article&nbsp;IX shall
be void <I>ab initio </I>and ineffectual and shall not be binding upon, or recognized by, the General
Partner or the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Prior to the consummation of any Transfer under this Article&nbsp;IX, the transferor and/or the
transferee shall deliver to the General Partner such opinions, certificates and other documents as
the General Partner shall request in connection with such Transfer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.03 </B><U><B>Admission of Substitute Limited Partner</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to the other provisions of this Article&nbsp;IX, an assignee of the Partnership Units
of a Limited Partner (which shall be understood to include any purchaser, transferee, donee or
other recipient of any disposition of such Partnership Units) shall be deemed admitted as a Limited
Partner of the Partnership only with the consent of the General Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion, and upon the satisfactory
completion of the following:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The assignee shall have accepted and agreed to be bound by the terms and provisions
of this Agreement by executing a counterpart or an amendment thereof, including a revised
<U>Exhibit&nbsp;A</U>, and such other documents or instruments as the General Partner may
require in order to effect the admission of such Person as a Limited Partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) To the extent required, an amended Certificate evidencing the admission of such
Person as a Limited Partner shall have been signed, acknowledged and filed in accordance
with the Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The assignee shall have delivered a letter containing the representation set
forth in Section&nbsp;9.01(a) hereof and the representations and warranties set forth in Section
9.01(b) hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If the assignee is a corporation, partnership or trust, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the Partnership of
the assignee&#146;s authority to become a Limited Partner under the terms and provisions of this
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The assignee shall have executed a power of attorney containing the terms and
provisions set forth in Section&nbsp;8.02 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The assignee shall have paid all legal fees and other expenses of the Partnership
and the General Partner and filing and publication costs in connection with its substitution
as a Limited Partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The assignee shall have obtained the prior written consent of the General Partner
to its admission as a Substitute Limited Partner, which consent may be given or denied in
the exercise of the General Partner&#146;s sole and absolute discretion.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;For the purpose of allocating Profits and Losses and distributing cash received by the
Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the
records of the Partnership as, a Partner upon the filing of the Certificate described in Section
9.03(a)(ii) hereof or, if no such filing is required, the later of the date specified in the
transfer documents or the date on which the General Partner has received all necessary instruments
of transfer and substitution.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The General Partner and the Substitute Limited Partner shall cooperate with each other by
preparing the documentation required by this Section&nbsp;9.03 and making all official filings and
publications. The Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article&nbsp;IX to the admission of such Person as a Limited
Partner of the Partnership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.04 </B><U><B>Rights of Assignees of Partnership Units</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to the provisions of Sections&nbsp;9.01 and 9.02 hereof, except as required by
operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize
the assignment by any Limited Partner of its Partnership Units until the Partnership has received
notice thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Any Person who is the assignee of all or any portion of a Limited Partner&#146;s Partnership
Units, but does not become a Substitute Limited Partner and desires to make a further assignment of
such Partnership Units, shall be subject to all the provisions of this Article&nbsp;IX to the same
extent and in the same manner as any Limited Partner desiring to make an assignment of its
Partnership Units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.05 </B><U><B>Effect of Bankruptcy</B></U><B>, </B><U><B>Death</B></U><B>, </B><U><B>Incompetence or Termination of a Limited
Partner</B></U>. The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a
Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall
include, but not be limited to, insanity) shall not cause the termination or dissolution of the
Partnership, and the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of his estate
or, if such Limited Partner dies, such Limited Partner&#146;s executor, administrator or trustee, or, if
such Limited Partner is finally adjudicated incompetent, such Limited Partner&#146;s committee,
guardian or conservator, shall have the rights of such Limited Partner for the purpose of settling
or managing such Limited Partner&#146;s estate property and such power as the bankrupt, deceased or
incompetent Limited Partner possessed to assign all or any part of such Limited Partner&#146;s
Partnership Units and to join with the assignee in satisfying conditions precedent to the admission
of the assignee as a Substitute Limited Partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.06 </B><U><B>Joint Ownership of Partnership Units</B></U>. A Partnership Unit may be acquired by two
individuals as joint tenants with right of survivorship, <U>provided</U> that such individuals
either are married or are related and share the same home as tenants in common. The written
consent or vote of both owners of any such jointly held Partnership Unit shall be required to
constitute the action of the owners of such Partnership Unit; <U>provided</U>, <U>however</U>,
that the written consent of only one joint owner will be required if the Partnership has been
provided with evidence satisfactory to the counsel for the Partnership that the actions of a single
joint owner can bind
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">both owners under the applicable laws of the state of residence of such joint owners. Upon
the death of one owner of a Partnership Unit held in a joint tenancy with a right of survivorship,
the Partnership Unit shall become owned solely by the survivor as a Limited Partner and not as an
assignee. The Partnership need not recognize the death of one of the owners of a jointly-held
Partnership Unit until it shall have received notice of such death. Upon notice to the General
Partner from either owner, the General Partner shall cause the Partnership Unit to be divided into
two equal Partnership Units, which shall thereafter be owned separately by each of the former
owners.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE X</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.01 </B><U><B>Books and Records</B></U>. At all times during the continuance of the Partnership, the
General Partner shall keep or cause to be kept at the Partnership&#146;s specified office true and
complete books of account in accordance with generally accepted accounting principles, including:
(a)&nbsp;a current list of the full name and last known business address of each Partner, (b)&nbsp;a copy of
the Certificate Limited Partnership and all certificates of amendment thereto, (c)&nbsp;copies of the
Partnership&#146;s federal, state and local income tax returns and reports, (d)&nbsp;copies of this Agreement
and any financial statements of the Partnership for the three most recent years and (e)&nbsp;all
documents and information required under the Act. Any Partner or its duly authorized
representative, upon paying the costs of collection, duplication and mailing, shall be entitled to
inspect or copy such records during ordinary business hours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.02 </B><U><B>Custody of Partnership Funds; Bank Accounts</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;All funds of the Partnership not otherwise invested shall be deposited in one or more
accounts maintained in such banking or brokerage institutions as the General Partner shall
determine, and withdrawals shall be made only on such signature or signatures as the General
Partner may, from time to time, determine.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;All deposits and other funds not needed in the operation of the business of the
Partnership may be invested by the General Partner. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may necessarily result
from an investment in those investment companies permitted by this Section&nbsp;10.02(b).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.03 </B><U><B>Fiscal and Taxable Year</B></U>. The fiscal and taxable year of the Partnership shall
be the calendar year unless otherwise required by the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.04 </B><U><B>Annual Tax Information and Report</B></U>. Within 75&nbsp;days after the end of each fiscal
year of the Partnership, the General Partner shall furnish to each person who was a Limited Partner
at any time during such year the tax information necessary to file such Limited Partner&#146;s
individual tax returns as shall be reasonably required by law.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.05 </B><U><B>Tax Matters Partner; Tax Elections; Special Basis Adjustments</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The General Partner shall be the Tax Matters Partner of the Partnership. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all actions authorized and
required, respectively, by the Code for the Tax Matters Partner. The General Partner shall have
the right to retain professional assistance in respect of any audit of the Partnership by the
Service and all out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the event the General
Partner receives notice of a final Partnership adjustment under Section&nbsp;6223(a)(2) of the Code, the
General Partner shall either (i)&nbsp;file a court petition for judicial review of such final adjustment
within the period provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii)&nbsp;mail a written notice to
all Limited Partners, within such period, that describes the General Partner&#146;s reasons for
determining not to file such a petition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;All elections required or permitted to be made by the Partnership under the Code or any
applicable state or local tax law shall be made by the General Partner in its sole and absolute
discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In the event of a transfer of all or any part of the Partnership Interest of any Partner,
the Partnership, at the option of the General Partner, may elect pursuant to Section&nbsp;754 of the
Code to adjust the basis of the Properties. Notwithstanding anything contained in Article&nbsp;V of
this Agreement, any adjustments made pursuant to Section&nbsp;754 shall affect only the successor in
interest to the transferring Partner and in no event shall be taken into account in establishing,
maintaining or computing Capital Accounts for the other Partners for any purpose under this
Agreement. Each Partner will furnish the Partnership with all information necessary to give effect
to such election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Partners, intending to be legally bound, hereby authorize the Partnership to make an
election (the &#147;<B>Safe Harbor Election</B>&#148;) to have the &#147;liquidation value&#148; safe harbor provided in
Proposed Treasury Regulation &#167; 1.83-3(1) and the Proposed Revenue Procedure set forth in Internal
Revenue Service Notice 2005-43, as such safe harbor may be modified when such proposed guidance is
issued in final form or as amended by subsequently issued guidance (the &#147;<B>Safe Harbor</B>&#148;), apply to
any interest in the Partnership transferred to a service provider while the Safe Harbor Election
remains effective, to the extent such interest meets the Safe Harbor requirements (collectively,
such interests are referred to as &#147;<B>Safe Harbor Interests</B>&#148;). The Tax Matters Partner is authorized
and directed to execute and file the Safe Harbor Election on behalf of the Partnership and the
Partners. The Partnership and the Partners (including any person to whom an interest in the
Partnership is transferred in connection with the performance of services) hereby agree to comply
with all requirements of the Safe Harbor (including forfeiture allocations) with respect to all
Safe Harbor Interests and to prepare and file all U.S. federal income tax returns reporting the tax
consequences of the issuance and vesting of Safe Harbor Interests consistent with such final Safe
Harbor guidance. The Partnership is also authorized to take such actions as are necessary to
achieve, under the Safe Harbor, the effect that the election and compliance with all requirements
of the Safe Harbor referred to above would be intended to achieve under Proposed Treasury
Regulation &#167; 1.83-3, including amending this Agreement.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.06 </B><U><B>Reports to Limited Partners</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If the General Partner is required to furnish an annual report to its shareholders
containing financial statements of the General Partner, the General Partner will, at the same time
and in the same manner, furnish such annual report to each Limited Partner.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Any Partner shall further have the right to a private audit of the books and records of
the Partnership, <U>provided</U> that such audit is made for Partnership purposes, at the expense
of the Partner desiring it and is made during normal business hours.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XI</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>AMENDMENT OF AGREEMENT; MERGER</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.01 </B><U><B>Amendment of Agreement</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The General Partner&#146;s consent shall be required for any amendment to this Agreement. The
General Partner, without the consent of the Limited Partners, may amend this Agreement in any
respect; <U>provided</U>, <U>however</U>, that the following amendments shall require the consent
of a Majority in Interest (other than the General Partner or any Subsidiary of the General
Partner):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;any amendment affecting the operation of the Conversion Factor or the Common Unit
Redemption Right (except as otherwise provided herein) in a manner that adversely affects the
Limited Partners;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;any amendment that would adversely affect the rights of the Limited Partners to receive
the distributions payable to them hereunder, other than with respect to the issuance of additional
Partnership Units pursuant to Section&nbsp;4.02 hereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;any amendment that would alter the Partnership&#146;s allocations of Profit and Loss to the
Limited Partners, other than with respect to the issuance of additional Partnership Units pursuant
to Section&nbsp;4.02 hereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;any amendment that would impose on the Limited Partners any obligation to make additional
Capital Contributions to the Partnership; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;any amendment to this Article&nbsp;XI.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.02 </B><U><B>Merger of Partnership</B></U><B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The General Partner, without the consent of the Limited Partners, may (i)&nbsp;merge or consolidate
the Partnership with or into any other domestic or foreign partnership, limited partnership,
limited liability company or corporation or (ii)&nbsp;sell all or substantially all of the assets of the
Partnership in a transaction pursuant to Sections&nbsp;7.01(c) or (d)&nbsp;hereof and may amend this
Agreement in connection with any such transaction consistent with the provisions of this Article
XI; <U>provided</U>, <U>however</U>, that the consent of a Majority in Interest (other than the
General Partner or any Subsidiary of the General Partner) shall be required in the case of (a)&nbsp;the
merger or consolidation of the Partnership with or into any other domestic or foreign partnership,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">limited partnership, limited liability company or corporation or (b)&nbsp;sale of all or
substantially all of the assets of the Partnership in a transaction that is not pursuant to
Sections&nbsp;7.01(c) or (d)&nbsp;hereof.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XII</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>GENERAL PROVISIONS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.01 </B><U><B>Notices</B></U>. All communications required or permitted under this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or upon deposit in the
United States mail, registered, postage prepaid return receipt requested, to the Partners at the
addresses set forth in <U>Exhibit&nbsp;A</U> attached hereto, as it may be amended or restated from
time to time; <U>provided</U>, <U>however</U>, that any Partner may specify a different address
by notifying the General Partner in writing of such different address. Notices to the General
Partner and the Partnership shall be delivered at or mailed to its office address set forth in
Section&nbsp;2.03 hereof. The General Partner and the Partnership may specify a different address by
notifying the Limited Partners in writing of such different address.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.02 </B><U><B>Survival of Rights</B></U>. Subject to the provisions hereof limiting transfers, this
Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and
their respective legal representatives, successors, transferees and assigns.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.03 </B><U><B>Additional Documents</B></U>. Each Partner agrees to perform all further acts and
execute, swear to, acknowledge and deliver all further documents that may be reasonable, necessary,
appropriate or desirable to carry out the provisions of this Agreement or the Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.04 </B><U><B>Severability</B></U>. If any provision of this Agreement shall be declared illegal,
invalid or unenforceable in any jurisdiction, then such provision shall be deemed to be severable
from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity
or unenforceability shall not affect the remainder hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.05 </B><U><B>Entire Agreement</B></U>. This Agreement and exhibits attached hereto constitute the
entire Agreement of the Partners and supersede all prior written agreements and prior and
contemporaneous oral agreements, understandings and negotiations with respect to the subject matter
hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.06 </B><U><B>Pronouns and Plurals</B></U>. When the context in which words are used in the Agreement
indicates that such is the intent, words in the singular number shall include the plural and the
masculine gender shall include the neuter or female gender as the context may require.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.07 </B><U><B>Headings</B></U>. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement or any particular
Article.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.08 </B><U><B>Counterparts</B></U>. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original copy and all of which together shall constitute one and the
same instrument binding on all parties hereto, notwithstanding that all parties shall not have
signed the same counterpart.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->- 53 -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.09 </B><U><B>Governing Law</B></U>. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;<I>SIGNATURE PAGE FOLLOWS</I>&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 54 -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this
Agreement of Limited Partnership, all as of the &#091;&#95;&#95;&#95;&#093; day of &#95;&#95;&#95;, 20_.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">GENERAL PARTNER:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">PEBBLEBROOK HOTEL TRUST</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><DIV style="border-bottom: 1px solid #000000">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jon E. Bortz</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman, President and Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 55 -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">LIMITED PARTNERS:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">PEBBLEBROOK HOTEL TRUST</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><DIV style="border-bottom: 1px solid #000000">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jon E. Bortz</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman, President and Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center">&#091;name of LTIP-holding officer&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center">&#091;name of LTIP-holding officer&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center">&#091;name of LTIP-holding officer&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center">&#091;name of LTIP-holding officer&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center">&#091;name of LTIP-holding officer&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 56 -<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT A</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(As of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 20&#95;&#95;&#95;)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Agreed</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Value of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Cash</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Capital</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Common</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">LTIP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Percentage</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Partner</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Contribution</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Contribution</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Units</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Units</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Interest</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>General Partner:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pebblebrook Hotel Trust
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
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</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD nowrap align="right" valign="top">&nbsp;</TD>
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</TR>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD valign="top">&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
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    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Limited Partners:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pebblebrook Hotel Trust
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Name of officer&#093;<br>
&#091;&#95;&#95;&#95;address lines&#95;&#95;&#95;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Name of officer&#093;<br>
&#091;&#95;&#95;&#95;address lines&#95;&#95;&#95;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Name of officer&#093;<br>
&#091;&#95;&#95;&#95;address lines&#95;&#95;&#95;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Name of officer&#093;<br>
&#091;&#95;&#95;&#95;address lines&#95;&#95;&#95;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;Name of officer&#093;<br>
&#091;&#95;&#95;&#95;address lines&#95;&#95;&#95;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;%
</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV align="right" style="margin-left:0px; text-indent:-0px">TOTALS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">$&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#091;&#95;&#95;&#95;&#093;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;100.0000</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 3px double #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 3px double #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit A-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT B</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>NOTICE OF EXERCISE OF REDEMPTION RIGHT</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Section&nbsp;8.04 of the Agreement of Limited Partnership (the &#147;Agreement&#148;) of
Pebblebrook Hotel, L.P., the undersigned hereby irrevocably (i)&nbsp;presents for redemption <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
Common Units in Pebblebrook Hotel, L.P. in accordance with the terms of the Agreement and the
Common Unit Redemption Right referred to in Section&nbsp;8.04 thereof, (ii)&nbsp;surrenders such Common Units
and all right, title and interest therein and (iii)&nbsp;directs that the Cash Amount or REIT Shares
Amount (as defined in the Agreement) as determined by the General Partner deliverable upon exercise
of the Common Unit Redemption Right be delivered to the address specified below, and if REIT Shares
(as defined in the Agreement) are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dated:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> &#95;&#95;&#95;, &#95;&#95;&#95;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name of Limited Partner:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Signature of Limited Partner)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Mailing Address)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(City) (State) (Zip Code)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature Guaranteed by:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">If REIT Shares are to be issued, issue to:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please insert social security or identifying number:

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Name:

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit B-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT C-1</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>CERTIFICATION OF NON-FOREIGN STATUS</B></U><BR>
<U><B>(FOR REDEEMING LIMITED PARTNERS THAT ARE ENTITIES)</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;), in the
event of a disposition by a non-U.S. person of a partnership interest in a partnership in which (i)
50% or more of the value of the gross assets consists of United States real property interests
(&#147;USRPIs&#148;), as defined in Section 897(c) of the Code, and (ii)&nbsp;90% or more of the value of the
gross assets consists of USRPIs, cash, and cash equivalents, the transferee will be required to
withhold 10% of the amount realized by the non-U.S. person upon the disposition. To inform
Pebblebrook Hotel Trust (the &#147;General Partner&#148;) and Pebblebrook Hotel, L.P. (the &#147;Partnership&#148;)
that no withholding is required with respect to the redemption by <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (&#147;Partner&#148;) of its
Common Units in the Partnership, the undersigned hereby certifies the following on behalf of
Partner:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Partner is not a foreign corporation, foreign partnership, foreign trust, or foreign estate,
as those terms are defined in the Code and the Treasury regulations thereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Partner is not a disregarded entity as defined in Treasury Regulation&nbsp;Section
1.1445-2(b)(2)(iii).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
<td>The U.S. employer identification number of Partner is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</td>
</tr>
<TR style="font-size:6pt"><TD>&nbsp;</TD></TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The principal business address of Partner is: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>,
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> and Partner&#146;s place of incorporation is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Partner agrees to inform the General Partner if it becomes a foreign person at any time
during the three-year period immediately following the date of this notice.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Partner understands that this certification may be disclosed to the Internal Revenue Service
by the General Partner and that any false statement contained herein could be punished by
fine, imprisonment, or both.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">PARTNER:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit C-1-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under penalties of perjury, I declare that I have examined this certification and, to the best of
my knowledge and belief, it is true, correct, and complete, and I further declare that I have
authority to sign this document on behalf of Partner.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit C-1-2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT C-2</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>CERTIFICATION OF NON-FOREIGN STATUS</B></U><BR>
<U><B>(FOR REDEEMING LIMITED PARTNERS THAT ARE INDIVIDUALS)</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;), in the
event of a disposition by a non-U.S. person of a partnership interest in a partnership in which (i)
50% or more of the value of the gross assets consists of United States real property interests
(&#147;USRPIs&#148;), as defined in Section 897(c) of the Code, and (ii)&nbsp;90% or more of the value of the
gross assets consists of USRPIs, cash, and cash equivalents, the transferee will be required to
withhold 10% of the amount realized by the non-U.S. person upon the disposition. To inform
Pebblebrook Hotel Trust (the &#147;General Partner&#148;) and Pebblebrook Hotel, L.P. (the &#147;Partnership&#148;)
that no withholding is required with respect to my redemption of my Common Units in the
Partnership, I, <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, hereby certify the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I am not a nonresident alien for purposes of U.S. income taxation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>My U.S. taxpayer identification number (social security number) is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>My home address is: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I agree to inform the General Partner promptly if I become a nonresident alien at any time
during the three-year period immediately following the date of this notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I understand that this certification may be disclosed to the Internal Revenue Service by the
General Partner and that any false statement contained herein could be punished by fine,
imprisonment, or both.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under penalties of perjury, I declare that I have examined this certification and, to the best of
my knowledge and belief, it is true, correct, and complete.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit C-2-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT D</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>NOTICE OF ELECTION BY PARTNER TO CONVERT</B></U><BR>
<U><B>LTIP UNITS INTO COMMON UNITS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned holder of LTIP Units hereby irrevocably (i)&nbsp;elects to convert the number of
LTIP Units in Pebblebrook Hotel, L.P. (the &#147;Partnership&#148;) set forth below into Common Units in
accordance with the terms of the Agreement of Limited Partnership of the Partnership, as amended;
and (ii)&nbsp;directs that any cash in lieu of Common Units that may be deliverable upon such conversion
be delivered to the address specified below. The undersigned hereby represents, warrants, and
certifies that the undersigned (a)&nbsp;has title to such LTIP Units, free and clear of the rights or
interests of any other person or entity other than the Partnership; (b)&nbsp;has the full right, power,
and authority to cause the conversion of such LTIP Units as provided herein; and (c)&nbsp;has obtained
the consent to or approval of all persons or entities, if any, having the right to consent or
approve such conversion.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name of Holder:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Please Print: Exact Name as Registered with Partnership)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Number of LTIP Units to be Converted:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date of this Notice:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">(Signature of Holder: Sign Exact Name as Registered with Partnership)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">(Street Address)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">(City)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(State)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Zip Code)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="3">Signature Guaranteed by:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000; margin-left: 1%">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit D-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EXHIBIT E</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION OF</B></U><BR>
<U><B>LTIP UNITS INTO COMMON UNITS</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pebblebrook Hotel, L.P. (the &#147;Partnership&#148;) hereby irrevocably elects to cause the number of
LTIP Units held by the holder of LTIP Units set forth below to be converted into Common Units in
accordance with the terms of the Agreement of Limited Partnership of the Partnership, as amended.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name of Holder:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
(Please Print: Exact Name as Registered with Partnership)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Number of LTIP Units to be Converted: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date of this Notice: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->Exhibit E-1<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>3
<FILENAME>w75877a2exv10w5.htm
<DESCRIPTION>EX-10.5
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w5</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.5</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PEBBLEBROOK HOTEL TRUST
</DIV>




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Share Award Agreement</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS SHARE AWARD AGREEMENT (the &#147;Agreement&#148;), dated as of the &#95;&#95;&#95;day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2009,
governs the Share Award granted by PEBBLEBROOK HOTEL TRUST, a Maryland real estate investment trust
(the &#147;Company&#148;), to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (the &#147;Participant&#148;), in accordance with and subject
to the provisions of the Company&#146;s 2009 Equity Incentive Plan (the &#147;Plan&#148;). A copy of the Plan has
been made available to the Participant. All terms used in this Agreement that are defined in the
Plan have the same meaning given them in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Grant of Share Award.</U> In accordance with the Plan, and effective as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
&#95;&#95;&#95;, 2009 (the &#147;Date of Grant&#148;), the Company granted to the Participant, subject to the terms and
conditions of the Plan and this Agreement, a Share Award of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Common Shares (the &#147;Share
Award&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Vesting.</U> The Participant&#146;s interest in the Common Shares covered by the Share
Award shall become vested and nonforfeitable to the extent provided in paragraphs (a), (b), (c)&nbsp;and
(d)&nbsp;below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <B>Continued Employment. </B>The Participant&#146;s interest in one-third of the Common Shares
covered by the Share Award shall become vested and nonforfeitable on the first anniversary of the
Date of Grant if the Participant remains in the continuous employ of the Company or an Affiliate
from the Date of Grant until the first anniversary of the Date of Grant. The Participant&#146;s
interest in an additional one-third of the Common Shares covered by the Share Award shall become
vested and nonforfeitable on the second anniversary of the Date of Grant if the Participant remains
in the continuous employ of the Company or an Affiliate from the Date of Grant until the second
anniversary of the Date of Grant. The Participant&#146;s interest in the remaining one-third of the
Common Shares covered by the Share Award shall become vested and nonforfeitable on the third
anniversary of the Date of Grant if the Participant remains in the continuous employ of the Company
or an Affiliate from the Date of Grant until the third anniversary of the Date of Grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <B>Change in Control. </B>The Participant&#146;s interest in all of the Common Shares covered by the
Share Award (if not sooner vested), shall become vested and nonforfeitable on a Control Change Date
if the Participant remains in the continuous employ of the Company or an Affiliate from the Date of
Grant until the Control Change Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<B>Death or Disability. </B>The Participant&#146;s interest in all of the Common Shares covered by
the Share Award (if not sooner vested), shall become vested and nonforfeitable on the date that the
Participant&#146;s employment by the Company and its Affiliates ends if (i)&nbsp;such employment ends on
account of the Participant&#146;s death or permanent and total disability (as defined in Code section
22(e)(3)) and (ii)&nbsp;the Participant remains in the continuous
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">employ of the Company or an Affiliate from the Date of Grant until the date such employment ends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <B>Termination of Employment Without Cause. </B>The Participant&#146;s interest in all of the Common
Shares covered by the Share Award (if not sooner vested), shall become vested and nonforfeitable on
the date that the Participant&#146;s employment by the Company and its Affiliates ends if (i)&nbsp;such
employment is terminated by the Company or an Affiliate without Cause and (ii)&nbsp;the Participant
remains in the continuous employ of the Company or an Affiliate from the Date of Grant until the
date such employment ends. For purposes of this Agreement, the term &#147;Cause&#148; means that the Board
concludes, in good faith and after reasonable investigation, that (i)&nbsp;the Participant has been
charged by the United States or a State or political subdivision thereof with conduct which is a
felony under the laws of the United States or any State or political subdivision thereof; (ii)&nbsp;the
Participant engaged in conduct relating to the Company constituting material breach of fiduciary
duty, willful misconduct (including acts of employment discrimination or sexual harassment) or
fraud; (iii)&nbsp;the Participant breached his obligations or covenants restricting the recruitment of
Company or Affiliate employees to work for another employer set forth in an agreement with the
Company in any material respect; or (iv)&nbsp;the Participant materially failed to follow a proper
directive of the Board within the scope of the Participant&#146;s duties (which shall be capable of
being performed by the Participant with reasonable effort) after written notice from the Board
specifying the performance required and the Participant&#146;s failure to perform within thirty days
after such notice. For this purpose, no act, or failure to act, on the Participant&#146;s part shall be
deemed &#147;willful&#148; unless done, or omitted to be done, by the Participant not in good faith or if the
result thereof would be unethical or illegal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as provided in this Section&nbsp;2, any Common Shares covered by the Share Award that are not
vested and nonforfeitable on or before the date that the Participant&#146;s employment by the Company
and its Affiliates ends shall be forfeited on the date that such employment terminates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Transferability.</U> Common Shares covered by the Share Award that have not become
vested and nonforfeitable as provided in Section&nbsp;2 cannot be transferred. Common Shares covered by
the Share Award may be transferred, subject to the requirements of applicable securities laws,
after they become vested and nonforfeitable as provided in Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Shareholder Rights.</U> On and after the Date of Grant and prior to their forfeiture,
the Participant shall have all of the rights of a shareholder of the Company with respect to the
Common Shares covered by the Share Award, including the right to vote the shares and to receive,
free of all restrictions, all dividends declared and paid on the shares. Notwithstanding the
preceding sentence, the Company shall retain custody of the certificates evidencing the Common
Shares covered by the Share Award until the date that the Common Shares become vested and
nonforfeitable and the Participant hereby appoints the Company&#146;s Secretary as the Participant&#146;s
attorney in fact, with full power of substitution, with the power to transfer to the Company and
cancel any Common Shares covered by the Share Award that are forfeited under Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>No Right to Continued Employment.</U> The grant of the Share Award does not give the
Participant any rights with respect to continued employment by the Company or an Affiliate.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Governing Law.</U> This Agreement shall be governed by the laws of the State of
Maryland except to the extent that Maryland law would require the application of the laws of
another State.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Conflicts.</U> In the event of any conflict between the provisions of the Plan as in
effect on the Date of Grant and this Agreement, the provisions of the Plan shall govern. All
references herein to the Plan shall mean the Plan as in effect on the Date of Grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Participant Bound by Plan.</U> The Participant hereby acknowledges that a copy of the
Plan has been made available to the Participant and the Participant agrees to be bound by all the
terms and provisions of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Binding Effect.</U> Subject to the limitations stated above and in the Plan, this
Agreement shall be binding upon the Participant and his or her successors in interest and the
Company and any successors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the
date first set forth above.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">PEBBLEBROOK HOTEL TRUST</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;NAME OF PARTICIPANT&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>4
<FILENAME>w75877a2exv10w6.htm
<DESCRIPTION>EX-10.6
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w6</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.6</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PEBBLEBROOK HOTEL TRUST
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Share Award Agreement</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS SHARE AWARD AGREEMENT (the &#147;Agreement&#148;), dated as of the &#95;&#95;&#95;day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2009,
governs the Share Award granted by PEBBLEBROOK HOTEL TRUST, a Maryland real estate investment trust
(the &#147;Company&#148;), to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (the &#147;Participant&#148;), in accordance with and subject
to the provisions of the Company&#146;s 2009 Equity Incentive Plan (the &#147;Plan&#148;). A copy of the Plan has
been made available to the Participant. All terms used in this Agreement that are defined in the
Plan have the same meaning given them in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Grant of Share Award.</U> In accordance with the Plan, and effective as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
&#95;&#95;&#95;, 2009 (the &#147;Date of Grant&#148;), the Company granted to the Participant, subject to the terms and
conditions of the Plan and this Agreement, a Share Award of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Common Shares (the &#147;Share
Award&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Vesting.</U> The Participant&#146;s interest in the Common Shares covered by the Share
Award shall become vested and nonforfeitable to the extent provided in paragraphs (a), (b)&nbsp;and (c)
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <B>Continued Service on Board. </B>The Participant&#146;s interest in one-third of the Common Shares
covered by the Share Award shall become vested and nonforfeitable on the first anniversary of the
Date of Grant if the Participant serves continuously as a member of the Board from the Date of
Grant until the first anniversary of the Date of Grant. The Participant&#146;s interest in an
additional one-third of the Common Shares covered by the Share Award shall become vested and
nonforfeitable on the second anniversary of the Date of Grant if the Participant serves
continuously as a member of the Board from the Date of Grant until the second anniversary of the
Date of Grant. The Participant&#146;s interest in the remaining one-third of the Common Shares shall
become vested and nonforfeitable on the third anniversary of the Date of Grant if the Participant
serves continuously as a member of the Board from the Date of Grant until the third anniversary of
the Date of Grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <B>Change in Control. </B>The Participant&#146;s interest in all of the Common Shares covered by the
Share Award (if not sooner vested), shall become vested and nonforfeitable on a Control Change Date
if the Participant serves continuously as a member of the Board from the Date of Grant until the
Control Change Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<B>Death or Disability. </B>The Participant&#146;s interest in all of the Common Shares covered by
the Share Award (if not sooner vested), shall become vested and nonforfeitable on the date that the
Participant&#146;s service as a member of the Board ends if (i)&nbsp;the Participant&#146;s service on the Board
ends on account of the Participant&#146;s death or permanent and total disability (as defined in Code
section 22(e)(3)) and (ii)&nbsp;the Participant serves continuously
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as a member of the Board from the Date of Grant until the date of such cessation of Board service.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Except as provided in this Section&nbsp;2, any Common Shares covered by the Share Award that are not
vested and nonforfeitable on or before the date that the Participant&#146;s service on the Board ends
shall be forfeited on the date that such service terminates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Transferability.</U> Common Shares covered by the Share Award that have not become
vested and nonforfeitable as provided in Section&nbsp;2 cannot be transferred. Common Shares covered by
the Share Award may be transferred, subject to the requirements of applicable securities laws,
after they become vested and nonforfeitable as provided in Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Shareholder Rights.</U> On and after the Date of Grant and prior to their forfeiture,
the Participant shall have all of the rights of a shareholder of the Company with respect to the
Common Shares covered by the Share Award, including the right to vote the shares and to receive,
free of all restrictions, all dividends declared and paid on the shares. Notwithstanding the
preceding sentence, the Company shall retain custody of the certificates evidencing the Common
Shares covered by the Share Award until the date that the Common Shares become vested and
nonforfeitable and the Participant hereby appoints the Company&#146;s Secretary as the Participant&#146;s
attorney in fact, with full power of substitution, with the power to transfer to the Company and
cancel any Common Shares covered by the Share Award that are forfeited under Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>No Right to Continued Service.</U> The grant of the Share Award does not give the
Participant any rights with respect to continuing to serve on the Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Governing Law.</U> This Agreement shall be governed by the laws of the State of
Maryland except to the extent that Maryland law would require the application of the laws of
another State.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Conflicts.</U> In the event of any conflict between the provisions of the Plan as in
effect on the Date of Grant and this Agreement, the provisions of the Plan shall govern. All
references herein to the Plan shall mean the Plan as in effect on the Date of Grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Participant Bound by Plan.</U> The Participant hereby acknowledges that a copy of the
Plan has been made available to the Participant and the Participant agrees to be bound by all the
terms and provisions of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Binding Effect.</U> Subject to the limitations stated above and in the Plan, this
Agreement shall be binding upon the Participant and his or her successors in interest and the
Company and any successors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the
date first set forth above.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">PEBBLEBROOK HOTEL TRUST</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;NAME OF PARTICIPANT&#093;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>w75877a2exv23w1.htm
<DESCRIPTION>EX-23.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv23w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 18pt">EXHIBIT 23.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Consent of Independent Registered Public Accounting Firm
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Board of Trustees<BR>
Pebblebrook Hotel Trust:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We consent to the use of our report included herein and to the reference to our firm under the
heading &#147;Experts&#148; in the prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 18pt">/s/ KPMG LLP
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">McLean, Virginia<BR>
November&nbsp;25, 2009
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>6
<FILENAME>w75877a2w7587711.gif
<DESCRIPTION>GRAPHIC
<TEXT>
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