Exhibit 10.33

 

Loan No.: 50-2827820    Jacksonville, Florida      Residence Inn II [Pool 2]

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”), made as of November
10, 2004 jointly and severally by MARRIOTT RESIDENCE INN II LIMITED PARTNERSHIP,
a Delaware limited partnership (“Borrower”), whose address is 814 E. Main
Street, Richmond, Virginia 23219, and by APPLE HOSPITALITY TWO, INC., a Virginia
corporation (“Principal”) whose address is 814 E. Main Street, Richmond,
Virginia 23219 (Borrower and Principal being referred to herein collectively as
“Indemnitors” and individually as “Indemnitor”), in favor of WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association (“Lender”), whose address
is 301 South Tryon Street, PMB 35-123, Charlotte, North Carolina 28282.

 

W I T N E S S E T H :

 

WHEREAS, Lender has extended to Borrower a loan (the “Loan”) in the principal
amount of Four Million Eight Hundred Seventy-Five Thousand and No/100 Dollars
($4,875,000.00); and

 

WHEREAS, the Loan is evidenced by a Promissory Note (the “Note”) dated of even
date herewith, executed by Borrower and payable to the order of Lender, in the
stated principal amount of Four Million Eight Hundred Seventy-Five Thousand and
No/100 Dollars ($4,875,000.00), and is secured by a Mortgage and Security
Agreement (the “Mortgage”) dated of even date herewith, from Borrower for the
benefit of Lender, encumbering that certain real property situated in the County
of Duval, State of Florida, as is more particularly described on Exhibit A
attached hereto and incorporated herein by this reference, together with the
buildings, structures and other improvements now or hereafter located thereon
(said real property, buildings, structures and other improvements being
hereinafter collectively referred to as the “Property”), and by the other Loan
Documents (as defined in the Mortgage); and

 

WHEREAS, as a condition to making the Loan, Lender has required that Indemnitors
indemnify Lender with respect to any past, present or future environmental
conditions or liabilities on, in, under, affecting or in any way associated with
the Property as herein set forth.

 

NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitors hereby covenant and agree for the benefit of Lender, as follows:

 

1. Indemnity. Indemnitors hereby agree to pay, protect, defend (at trial and
appellate levels and with attorneys, consultants and experts reasonably
acceptable to Lender), and save Lender harmless from and against, and hereby
indemnify Lender from and against any

 

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and all liens, damages (including, without limitation, punitive or exemplary
damages), losses, liabilities (including, without limitation, strict liability),
obligations, settlement payments, penalties, fines, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements and expenses of any kind or of any nature
whatsoever (including, without limitation, reasonable attorneys’, consultants’
and experts’ fees and disbursements actually incurred in investigating,
defending, settling or prosecuting any claim, litigation or proceeding)
(collectively “Costs”) which may at any time be imposed upon, incurred by or
asserted or awarded against Lender, Indemnitors or the Property, and arising
from or out of, whether now, hereafter or heretofore occurring: (i) any
violation or alleged violation of, or liability or alleged liability under, any
local, state or federal law, rule or regulation or common law duty pertaining to
human health as affected by the environment, natural resources or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq.)
(“CERCLA”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901
et seq.), the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.), the Emergency Planning and
Community-Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Endangered Species
Act (16 U.S.C. § 1531 et seq.), the Toxic Substances Control Act (15 U.S.C. §
2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.)
and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), and
those relating to Lead Based Paint (as hereinafter defined) and the regulations
promulgated pursuant to said laws, all as amended from time to time,
(collectively, “Environmental Laws”), relating to or affecting the Property,
whether or not caused by or within the control of Indemnitors; (ii) the
presence, release or threat of release of or exposure to any hazardous, toxic or
harmful substances, wastes, materials containing more than 1% asbestos,
pollutants or contaminants (including, without limitation, polychlorinated
biphenyls, petroleum or petroleum products or byproducts, flammable explosives,
radioactive materials, paint containing more than .05% lead by dry weight (“Lead
Based Paint”), Toxic Mold (as hereinafter defined), infectious substances or raw
materials which include hazardous constituents) or any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous Substances”) or radon, on, in, under or affecting all
or any portion of the Property or any surrounding areas, regardless of whether
or not caused by or within the control of Indemnitors; (iii) any transport,
treatment, recycling, storage, disposal or arrangement therefor of Hazardous
Substances whether on the Property, originating from the Property, or otherwise
associated with the Indemnitors or any operations conducted on the Property at
any time; (iv) the failure by Indemnitors to comply fully with the terms and
conditions of this Agreement; (v) the breach of any representation or warranty
contained in this Agreement in any material respect; (vi) the enforcement of
this Agreement, or (vii) any environmental investigation, assessment, audit or
review conducted in connection with the Property or the operations conducted at
any time thereon, including, without limitation, the cost of assessment,
investigation, and to the extent required by Environmental Laws, containment,
removal and/or remediation of any and all Hazardous Substances from all or any
portion of the Property or any surrounding areas, the cost of any actions taken
in response to the presence, release or threat of release of any Hazardous
Substances on, in, under or affecting any portion of the Property or any
surrounding areas to prevent or minimize such release or threat of release so
that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and costs incurred to
comply with Environmental Laws in connection with all or any portion of the
Property or any surrounding

 

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areas. “Costs” as used in this Agreement shall also include, but not be limited
to, any diminution in the value of the security afforded by the Property or any
future reduction of the sales price of the Property by reason of any matter set
forth in this Section 1. The foregoing indemnity shall specifically not include
any such costs relating to Hazardous Substances which are initially placed on,
in or under the Property after foreclosure or other taking of title to the
Property by Lender or its successor or assigns, or which are finally determined
by a court of competent jurisdiction to have been caused by the gross negligence
or willful misconduct of Lender. For the purposes hereof, “Toxic Mold” shall
mean any mold or fungus at the Property which is of a type (i) that might pose a
significant risk to human health or the environment or (ii) that would
negatively impact the value of the Property.

 

2. Representations and Warranties. Indemnitors hereby represent and warrant to
and covenant and agree with Lender as follows:

 

(a) To the best of Indemnitors’ knowledge, information and belief, none of the
Borrower nor the Property or any tenant at the Property or the operations
conducted thereon is in direct or indirect violation of or otherwise exposed to
any liability under any Environmental Law;

 

(b) To the best of Indemnitors’ knowledge, information and belief, no Hazardous
Substances are located on, in or under or have been handled, generated, stored,
processed or disposed of on, in or under or released or discharged from the
Property (including underground contamination), except for those substances used
by Borrower in the ordinary course of its business, in compliance with all
Environmental Laws and where such could not reasonably be expected to give rise
to liability under Environmental Laws;

 

(c) To the best of Indemnitors’ knowledge, information and belief, radon is not
present at the Property in excess or in violation of any applicable thresholds
or standards or in amounts that require under applicable law disclosure to any
tenant or occupant of or invitee to the Property or to any governmental agency
or the general public.

 

(d) To the best of Indemnitors’ knowledge, information and belief, the Property
is not subject to any private or governmental lien or judicial or administrative
notice or action arising under Environmental Laws;

 

(e) There is no pending, nor, to Indemnitors’ knowledge, information or belief,
threatened litigation arising under Environmental Laws affecting Borrower or the
Property;

 

(f) To the best of Indemnitors’ knowledge, information and belief, there are no
and have been no underground storage tanks or other underground storage
receptacles or surface impoundments for Hazardous Substances or landfills or
dumps on the Property;

 

(g) Indemnitors have received no notice of, and to the best of Indemnitors’
knowledge and belief, there exists no investigation, action, proceeding or claim
by any agency, authority or unit of government or by any third party which could
result in any liability, penalty, sanction or judgment under any Environmental
Laws with respect to any condition, use or

 

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operation of the Property, nor do Indemnitors know of any basis for such an
investigation, action, proceeding or claim;

 

(h) Indemnitors have received no notice that, and to the best of Indemnitors’
knowledge and belief, there has been no claim by any party that, any use,
operation or condition of the Property has caused any nuisance or any other
liability or adverse condition on any other property, nor do Indemnitors know of
any basis for such a claim;

 

(i) Indemnitors have not received nor to the best of Indemnitors’ knowledge,
information and belief has there been issued, any notice, notification, demand,
request for information, citation, summons, or order in any way relating to any
actual, alleged or potential violation or liability arising under Environmental
Laws; and

 

(j) To the best of Indemnitors’ knowledge, information and belief, the Property
is not listed or, to the best of Indemnitors’ knowledge, information and belief,
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal or state
list of sites requiring environmental investigation or clean-up.

 

3. Covenants of Indemnitors.

 

(a) Indemnitors shall comply with all applicable Environmental Laws. Indemnitors
shall keep or cause the Property to be kept free from Hazardous Substances
(except those substances used by Borrower in the ordinary course of its
business, in compliance with all Environmental Laws and where such could not
reasonably be expected to give rise to liability under Environmental Laws) and
except in compliance with all Environmental Laws, Indemnitors shall not install
or use any underground storage tanks. Indemnitors shall expressly prohibit the
use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all tenants of space in the Improvements in quantities
or conditions that would violate or give rise to any obligation to take remedial
or other action under any applicable Environmental Laws. Without limiting the
generality of the foregoing, during the term of this Agreement, Indemnitors
shall not install in the Improvements or permit to be installed in the
Improvements any materials containing more than 1% asbestos. Indemnitors further
acknowledge and agree that Lender has no duty to provide Indemnitors with any
information regarding the Environmental Laws or any interpretation thereof.

 

(b) Indemnitors shall immediately notify Lender should Indemnitors, or either of
them, become aware of (i) the actual or potential existence of any Hazardous
Substances on the Property, other than those occurring in the ordinary course of
Borrower’s business and which do not violate, or would not otherwise give rise
to liability under Environmental Laws, (ii) any violation of, or other exposure
to liability under, any Environmental Laws, (iii) any lien, action or notice
affecting the Property or Borrower resulting from any violation or alleged
violation of or liability or alleged liability under any Environmental Laws,
(iv) the institution of any investigation, inquiry or proceeding concerning
Borrower or the Property pursuant to any Environmental Laws or otherwise
relating to Hazardous Substances, or (v) the discovery of any occurrence,
condition or state of facts which would render any representation or warranty

 

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contained in this Agreement incorrect in any material respect if made at the
time of such discovery. Immediately upon receipt of same, Indemnitors, or either
of them, shall deliver to Lender copies of any and all requests for information,
complaints, citations, summonses, orders, notices, reports or other
communications, documents or instruments in any way relating to any actual,
alleged or potential violation or liability of any nature whatsoever arising
under Environmental Laws and relating to the Property or to Borrower.
Indemnitors shall remedy or cause to be remedied in a timely manner (and in any
event within the time period permitted by applicable Environmental Laws) any
violation of Environmental Laws or any condition that could give rise to
liability under Environmental Laws. Without limiting the foregoing, Indemnitors
shall, at their own expense, take all actions required by applicable
Environmental Laws, for the clean-up of any and all portions of the Property or
other affected property, including, without limitation, all investigative,
monitoring, removal, containment and remedial actions in accordance with all
applicable Environmental Laws (and in all events in a manner satisfactory to
Lender), and shall further pay or cause to be paid, at no expense to Lender, all
clean-up, administrative and enforcement costs of applicable governmental
agencies which may be asserted against Indemnitors or the Property.

 

(c) Upon the request of Lender following the occurrence and continuance of an
Event of Default or at such other time as Lender has reasonable grounds to
believe that Hazardous Substances are or have been released, stored or disposed
of on or around the Property or that the Property may be in violation of the
Environmental Laws, Indemnitors shall perform or cause to be performed, at
Indemnitors’ sole expense and in scope, form and substance satisfactory to
Lender, an inspection or audit of the Property prepared by a hydrogeologist or
environmental engineer or other appropriate consultant approved by Lender
indicating the presence or absence of Hazardous Substances on the Property, the
compliance or non-compliance status of the Property and the operations conducted
thereon with applicable Environmental Laws, or an inspection or audit of the
Property prepared by an engineering or consulting firm approved by Lender
indicating the presence or absence of friable asbestos or substances containing
in excess of 1% asbestos or lead or substances containing lead on the Property.
If Indemnitors fail to provide reports of such inspection or audit within thirty
(30) days after such request, Lender may order the same, and Indemnitors hereby
grant to Lender access to the Property and an irrevocable license to undertake
such inspection or audit. The cost of such inspection or audit shall be included
in Costs and shall be paid by Indemnitors in accordance with the terms of
Section 4(c) hereof.

 

(d) If, prior to the date hereof, it was determined that the Property contains
Lead Based Paint, the assessment report describing the location and condition of
the Lead Based Paint (a “Lead Based Paint Report”) is attached hereto and made a
part hereof as Exhibit B. If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Indemnitors agree, at their sole
cost and expense and within sixty (60) days thereafter, to cause to be prepared
a Lead Based Paint Report prepared by an expert, and in form, scope and
substance, acceptable to Lender.

 

(e) Indemnitors agree that if it has been, or if at any time hereafter it is,
determined that the Property contains Lead Based Paint, on or before thirty (30)
days following (i) the date hereof, if such determination was made prior to the
date hereof or (ii) such determination, if such

 

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determination is hereafter made, as applicable, Indemnitors shall, at their sole
cost and expenses, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and
maintenance plan for the Lead Based Paint on the Property, which plan shall be
prepared by an expert, and be in form, scope and substance, acceptable to Lender
(together with any plan attached hereto as Exhibit C, the “O&M Plan”). (If an
O&M Plan has been prepared prior to the date hereof, same is attached hereto and
made a part hereof as Exhibit C, and Indemnitors agree to diligently and
continually carry out (or cause to be carried out) the provisions thereof.)
Compliance with the O&M Plan shall require or be deemed to require, without
limitation, the proper preparation and maintenance of all records, papers and
forms required under the Environmental Laws.

 

4. Indemnification Procedures.

 

(a) If any action shall be brought against Lender based upon any of the Costs
for which Lender is indemnified hereunder, Lender shall notify Indemnitors in
writing thereof and Indemnitors shall promptly assume the defense thereof,
including, without limitation, the employment of counsel reasonably acceptable
to Lender and the negotiation of any settlement; provided, however, that any
failure of Lender to notify Indemnitors of such matter shall not impair or
reduce the obligations of Indemnitors hereunder. In the event Indemnitors shall
fail to discharge or undertake to defend Lender against any claim, loss or
liability for which Lender is indemnified hereunder, Lender may, at its sole
option and election, defend or settle such claim, loss or liability, and, upon
prior notice to Indemnitors, Lender shall have the right, at the expense of
Indemnitors (which expense shall be included in Costs), to employ separate
counsel in any such action and to participate in the defense thereof. The
liability of Indemnitors to Lender hereunder shall be conclusively established
by such settlement (absent manifest error), provided such settlement is made in
good faith, the amount of such liability to include both the settlement
consideration and the costs and expenses, including, without limitation
reasonable attorney’s fees and disbursements, actually incurred by Lender in
effecting such settlement. In such event, such settlement consideration, costs
and expenses shall be included in Costs and Indemnitors shall pay the same as
hereinafter provided.

 

(b) Indemnitors shall not, without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed: (i) settle or compromise any
action, suit, proceeding or claim or consent to the entry of any judgment that
does not include as an unconditional term thereof the delivery by the claimant
or plaintiff to Lender of a full and complete written release of Lender (in
form, scope and substance satisfactory to Lender in its sole discretion) from
all liability in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim; or (ii)
settle or compromise any action, suit, proceeding or claim in any manner that
may adversely affect Lender or obligate Lender to pay any sum or perform any
obligation as determined by Lender.

 

(c) All Costs shall be immediately reimbursable to Lender when and as incurred
and, in the event of any litigation, claim or other proceeding, without any
requirement of waiting for the ultimate outcome of such litigation, claim or
other proceeding, and Indemnitors shall pay to Lender any and all Costs within
ten (10) days after written notice from Lender itemizing in

 

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reasonable detail the amounts thereof incurred to the date of such notice. In
addition to any other remedy available for the failure of Indemnitors to
periodically pay such Costs, such Costs, if not paid within said ten-day period,
shall bear interest at the Default Interest Rate (as defined in the Note) and
such costs and interest shall be additional indebtedness of Borrower secured by
the Mortgage and by the other Loan Documents securing all or part of the Loan.

 

5. Reinstatement of Obligations. If at any time all or any part of any payment
made by Indemnitors or received by Lender from Indemnitors under or with respect
to this Agreement is or must be rescinded or returned for any reason whatsoever
(including, but not limited to, the insolvency, bankruptcy or reorganization of
either Indemnitor), then the obligations of Indemnitors hereunder shall, to the
extent of the payment rescinded or returned, be deemed to have continued in
existence, notwithstanding such previous payment made by Indemnitors, or receipt
of payment by Lender, and the obligations of Indemnitors hereunder shall
continue to be effective or be reinstated, as the case may be, as to such
payment, all as though such previous payment by Indemnitors had never been made.

 

6. Waivers by Indemnitors. To the fullest extent permitted by law, Indemnitors
hereby waive and agree not to assert or take advantage of:

 

(a) Any right to require Lender to proceed against any other person or to
proceed against or exhaust any security held by Lender at any time or to pursue
any other remedy in Lender’s power or under any other agreement before
proceeding against Indemnitors hereunder;

 

(b) Any defense that may arise by reason of the incapacity, lack of authority,
death or disability of any other person or persons or the failure of Lender to
file or enforce a claim against the estate (in administration, bankruptcy or any
other proceeding) of any other person or persons;

 

(c) Except as expressly provided herein, demand, presentment for payment, notice
of nonpayment, protest, notice of protest and all other notices of any kind, or
the lack of any thereof, including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Lender, any endorser or creditor of either Indemnitor or any other person
whomsoever under this or any other Loan Documents held by Lender;

 

(d) Any defense based upon an election of remedies by Lender;

 

(e) Any right or claim of right to cause a marshaling of the assets of either
Indemnitor;

 

(f) Any principle or provision of law, statutory or otherwise, which is or might
be in conflict with the terms and provisions of this Agreement;

 

(g) Any duty on the part of Lender to disclose to Indemnitors any facts Lender
may now or hereafter know about the Property, regardless of whether Lender has
reason to believe that any such facts materially increase the risk beyond that
which Indemnitors intend to assume or has reason to believe that such facts are
unknown to Indemnitors or has a reasonable

 

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opportunity to communicate such facts to Indemnitors, it being understood and
agreed that Indemnitors are fully responsible for being and keeping informed of
the condition of the Property and of any and all circumstances bearing on the
risk that liability may be incurred by Indemnitors hereunder;

 

(h) Any lack of notice of disposition or of manner of disposition of any
collateral for the Loan;

 

(i) Any invalidity, irregularity or unenforceability, in whole or in part, of
any one or more of the Loan Documents;

 

(j) Any lack of commercial reasonableness in dealing with the collateral for the
Loan;

 

(k) Any deficiencies in the collateral for the Loan or any deficiency in the
ability of Lender to collect or to obtain performance from any persons or
entities now or hereafter liable for the payment and performance of any
obligation hereby guaranteed;

 

(l) An assertion or claim that the automatic stay provided by 11 U.S.C. §362
(arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or
any other stay provided under any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any of its rights, whether now or hereafter required, which
Lender may have against Principal or the collateral for the Loan;

 

(m) Any modifications of the Loan Documents or any obligation of Borrower
relating to the Loan by operation of law or by action of any court, whether
pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

 

(n) Any action, occurrence, event or matter consented to by Indemnitors under
Section 7(i) hereof, under any other provision hereof, or otherwise.

 

7. General Provisions.

 

(a) Fully Recourse. All Costs guaranteed hereunder are recourse obligations of
Indemnitors and not restricted by any limitation on recourse liability set forth
in any of the Loan Documents.

 

(b) Right to Indemnification Not Affected by Knowledge. Lender’s right to
defense, indemnification, payment of costs or other remedy based on this
Agreement shall not be diminished or affected in any way by any investigation
conducted by Lender or other knowledge acquired (or capable of being acquired)
in any way by Lender at any time.

 

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(c) Unsecured Obligations. Indemnitors hereby acknowledge that Lender’s
appraisal of the Property is such that Lender is not willing to accept the
consequences of the inclusion of Indemnitors’ indemnity set forth herein among
the obligations secured by the Mortgage and the other Loan Documents and that
Lender would not make the Loan but for the unsecured recourse liability
undertaken by Indemnitors herein. Indemnitors further hereby acknowledge that
even though the representations, warranties, covenants or agreements of
Indemnitors contained herein may be identical or substantially similar to
representations, warranties, covenants or agreements of Borrower set forth in
the Mortgage and secured thereby, the obligations of Indemnitors under this
Agreement are not secured by the lien of the Mortgage or the security interests
or other collateral described in the Mortgage or the other Loan Documents, it
being the intent of Lender to create separate obligations of Indemnitors
hereunder which can be enforced against Indemnitors without regard to the
existence of the Mortgage or other Loan Documents or the liens or security
interests created therein.

 

(d) Survival. This Agreement shall be deemed to be continuing in nature and
shall remain in full force and effect and shall survive the payment of the
indebtedness evidenced and secured by the Loan Documents and the exercise of any
remedy by Lender under the Mortgage or any of the other Loan Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even if,
as a part of such remedy, the Loan is paid or satisfied in full.

 

(e) No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction
by Principal of any liability hereunder, Principal shall not have any right of
subrogation, contribution, reimbursement or indemnity whatsoever or any right of
recourse to or with respect to the assets or property of Borrower or to any
collateral for the Loan. In connection with the foregoing, Principal expressly
waives any and all rights of subrogation to Lender against Borrower, and
Principal hereby waives any rights to enforce any remedy which Lender may have
against Borrower and any right to participate in any collateral for the Loan. In
addition to and without in any way limiting the foregoing, Principal hereby
subordinates any and all indebtedness of Borrower now or hereafter owed to
Principal to all indebtedness of Borrower to Lender, and agrees with Lender that
Principal shall not demand or accept any payment of principal or interest from
Borrower, shall not claim any offset or other reduction of Principal’s
obligations hereunder because of any such indebtedness and shall not take any
action to obtain any of the collateral from the Loan. Further, neither
Indemnitor shall have any right of recourse against Lender by reason of any
action Lender may take or omit to take under the provisions of this Agreement or
under the provisions of any of the Loan Documents.

 

(f) Reservation of Rights. Nothing contained in this Agreement shall prevent or
in any way diminish or interfere with any rights or remedies, including, without
limitation, the right to contribution or cost recovery, which Lender may have
against either Indemnitor or any other party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (codified at
Title 42 U.S.C. §9601 et seq.), as it may be amended from time to time, or any
other applicable federal, state or local laws, all such rights being hereby
expressly reserved.

 

(g) Financial Statements. Each Indemnitor hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to comply with the provisions
of Section 1.18 of the Mortgage as concerns such Indemnitor. Each Indemnitor
hereby warrants and represents unto

 

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Lender that any and all balance sheets, net worth statements and other financial
data which have heretofore been given or may hereafter be given to Lender with
respect to said Indemnitor did or will at the time of such delivery fairly and
accurately present the financial condition of said Indemnitor.

 

(h) Rights Cumulative; Payments. Lender’s rights under this Agreement shall be
in addition to all rights of Lender under the Note, the Mortgage and the other
Loan Documents. FURTHER, PAYMENTS MADE BY INDEMNITORS UNDER THIS AGREEMENT SHALL
NOT REDUCE IN ANY RESPECT BORROWER’S OBLIGATIONS AND LIABILITIES UNDER THE NOTE,
THE MORTGAGE AND THE OTHER LOAN DOCUMENTS EXCEPT WITH RESPECT TO, AND TO THE
EXTENT OF, BORROWER’S OBLIGATION AND LIABILITY FOR THE PAYMENT MADE BY
INDEMNITORS.

 

(i) No Limitation on Liability. Indemnitors hereby consent and agree that Lender
may at any time and from time to time without further consent from Indemnitors
do any of the following events, and the liability of Indemnitors under this
Agreement shall be unconditional and absolute and shall in no way be impaired or
limited by any of the following events, whether occurring with or without notice
to Indemnitors or with or without consideration unless the same shall have the
effect of satisfying Borrower’s obligations under the Loan Documents: (i) any
extensions of time for performance required by any of the Loan Documents or
extension or renewal of the Note; (ii) any sale, assignment or foreclosure of
the Note, the Mortgage or any of the other Loan Documents or any sale or
transfer of the Property, (but subject to the provisions of Section 1.5(d)(C)(5)
of the Note and Section 1.13(b)(10) of the Mortgage); (iii) any change in the
composition of Borrower, including, without limitation, the withdrawal or
removal of Indemnitors from any current or future position of ownership,
management or control of Borrower; (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitors herein or by Borrower in any
of the Loan Documents; (v) the release of Borrower or of any other person or
entity from performance or observance of any of the agreements, covenants, terms
or conditions contained in any of the Loan Documents by operation of law,
Lender’s voluntary act or otherwise; (vi) the release or substitution in whole
or in part of any security for the Loan; (vii) Lender’s failure to record the
Mortgage or to file any financing statement (or Lender’s improper recording or
filing thereof) or to otherwise perfect, protect, secure or insure any lien or
security interest given as security for the Loan; or (viii) the modification of
the terms of any one or more of the Loan Documents. No such action which Lender
shall take or fail to take in connection with the Loan Documents or any
collateral for the Loan, nor any course of dealing with Borrower or any other
person, shall limit, impair or release Indemnitors’ obligations hereunder,
affect this Agreement in any way or afford Indemnitors any recourse against
Lender. Nothing contained in this Section shall be construed to require Lender
to take or refrain from taking any action referred to herein.

 

(j) Entire Agreement; Amendment; Severability. This Agreement contains the
entire agreement between the parties respecting the matters herein set forth and
supersedes (except as to the Mortgage) all prior agreements, whether written or
oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and executed
by the parties hereto. A determination that any provision of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision,

 

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and any determination that the application of any provision of this Agreement to
any person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.

 

(k) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, EXCEPT
TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE
PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.

 

(l) Binding Effect; Waiver of Acceptance. This Agreement shall bind each
Indemnitor and the heirs, personal representatives, successors and assigns of
each Indemnitor and shall inure to the benefit of Lender and the officers,
directors, shareholders, agents and employees of Lender and their respective
heirs, personal representatives, successors and assigns. Notwithstanding the
foregoing, except to the extent of a merger as permitted under the Mortgage,
Indemnitors shall not assign any of their respective rights or obligations under
this Agreement without the prior written consent of Lender, which consent may be
withheld by Lender in its sole discretion. Each Indemnitor hereby waives any
acceptance of this Agreement by Lender, and this Agreement shall immediately be
binding upon Indemnitors.

 

(m) Notice. All notices, demands, requests or other communications to be sent by
one party to the other hereunder or required by law shall be in writing and
shall be deemed to have been validly given or served by delivery of the same in
person to the intended addressee, or by depositing the same with Federal Express
or another reputable private courier service for next business day delivery to
the intended addressee at its address set forth on the first page of this
Agreement or at such other address as may be designated by such party as herein
provided, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed to the
intended addressee at its address set forth on the first page of this Agreement
or at such other address as may be designated by such party as herein provided.
All notices, demands and requests shall be effective upon such personal
delivery, or one (1) business day after being deposited with the private courier
service, or two (2) business days after being deposited in the United States
mail as required above. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request sent. By
giving to the other party hereto at least fifteen (15) days’ prior written
notice thereof in accordance with the provisions hereof, the parties hereto
shall have the right from time to time to change their respective addresses and
each shall have the right to specify as its address any other address within the
United States of America.

 

(n) No Waiver; Time of Essence; Business Days. The failure of any party hereto
to enforce any right or remedy hereunder, or to promptly enforce any such right
or remedy, shall not constitute a waiver thereof nor give rise to any estoppel
against such party nor excuse any of the parties hereto from their respective
obligations hereunder. Any waiver of such right or remedy must be in writing and
signed by the party to be bound. This Agreement is subject to enforcement at law
or in equity, including actions for damages or specific performance. Time is

 

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of the essence hereof. The term “business day” as used herein shall mean a
weekday, Monday through Friday, except a legal holiday or a day on which banking
institutions in New York, New York are authorized by law to be closed.

 

(o) Captions for Convenience. The captions and headings of the sections and
paragraphs of this Agreement are for convenience of reference only and shall not
be construed in interpreting the provisions hereof.

 

(p) Reasonable Attorney’s Fees. In the event it is necessary for Lender to
retain the services of an attorney or any other consultants in order to enforce
this Agreement, or any portion thereof, Indemnitors agree to pay to Lender any
and all costs and expenses, including, without limitation, reasonable attorney’s
fees, incurred by Lender as a result thereof and such costs, fees and expenses
shall be included in Costs.

 

(q) Successive Actions. A separate right of action hereunder shall arise each
time Lender acquires knowledge of any matter indemnified by Indemnitors under
this Agreement. Separate and successive actions may be brought hereunder to
enforce any of the provisions hereof at any time and from time to time. No
action hereunder shall preclude any subsequent action, and Indemnitors hereby
waive and covenant not to assert any defense in the nature of splitting of
causes of action or merger of judgments.

 

(r) Reliance. Lender would not make the Loan to Borrower without this Agreement.
Accordingly, Indemnitors intentionally and unconditionally enter into the
covenants and agreements as set forth above and understand that, in reliance
upon and in consideration of such covenants and agreements, the Loan shall be
made and, as part and parcel thereof, specific monetary and other obligations
have been, are being and shall be entered into which would not be made or
entered into but for such reliance.

 

(s) Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be effective only upon delivery and thereafter shall be
deemed an original, and all of which shall be taken to be one and the same
instrument, for the same effect as if all parties hereto had signed the same
signature page. Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.

 

(t) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

 

(1) INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMIT TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS
LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THIS AGREEMENT, (B) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING
IN THE COUNTY AND STATE, IN WHICH THE PROPERTY IS LOCATED,

 

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(C) SUBMIT TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREE THAT NEITHER OF THEM WILL BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

 

(2) INDEMNITORS AND LENDER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITORS, OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITORS, IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

(u) Waiver by Indemnitors. Borrower and Principal covenant and agree that upon
the commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, neither Borrower nor Principal shall seek a supplemental stay
or otherwise seek, pursuant to 11 U.S.C. §105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to
stay, interdict, condition, reduce or inhibit the ability of Lender to enforce
any rights of Lender against Principal by virtue of this Agreement or otherwise.

 

(v) Secondary Market. Lender may sell, transfer and deliver the Loan Documents
to one or more investors in the secondary mortgage market. In connection with
such sale, Lender may retain or assign responsibility for servicing the Loan or
may delegate some or all of such responsibility and/or obligations to a
servicer, including, but not limited to, any subservicer or master servicer, on
behalf of the investors.

 

(w) Dissemination of Information. If Lender determines at any time to sell,
transfer or assign the Note, the Mortgage and the other Loan Documents
including, but not limited to this Agreement, and any or all servicing rights
with respect thereto, or to grant participations therein (the “Participations”)
or issue mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private placement
(the “Securities”), Lender may forward to each purchaser, transferee, assignee,
servicer, participant, investor, or their respective successors in such
Participations and/or Securities (collectively, the “Investor”) or any Rating
Agency (as defined in the Mortgage) rating such Securities, each prospective
Investor and each of the foregoing’s respective counsel, all documents and
information which Lender now has or may hereafter acquire relating to the debt
evidenced by this Note and to Borrower, any guarantor, any indemnitor and the
Property, which shall have been furnished by Borrower, any guarantor or any
indemnitor as Lender determines necessary or desirable.

 

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(x) Splitting the Loan. Lender, at no cost to Borrower, shall have the right
from time to time to sever the Note and the other Loan Documents into one or
more separate notes, mortgages, deeds of trust and other security documents (the
“Severed Loan Documents”) in such denominations and priorities as Lender shall
determine in its sole discretion, provided, however, that the terms, provisions
and clauses of the Severed Loan Documents shall be no more adverse to Borrower
than those contained in the Note, the Mortgage and the other Loan Documents and
there shall be no additional obligations of Borrower and no change in the Note
Rate (as defined in the Note). Borrower shall execute and deliver to Lender, at
Borrower’s sole cost and expense, from time to time, promptly after the request
of Lender, a severance agreement and such other documents as Lender shall
reasonably request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, that Lender shall not make or execute any such documents under such
power until ten (10) business days after notice has been given to Borrower by
Lender of Lender’s intent to exercise its rights under such power.

 

(y) Cross-Default; Cross-Collateralization. This Agreement and all other Loan
Documents are and shall be cross-defaulted and cross-collateralized with the
Contemporaneous Loan Documents (as defined in the Mortgage) as set forth in the
Note and the Mortgage.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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IN WITNESS WHEREOF, Indemnitors have executed this Agreement as of the day and
year first written above.

 

BORROWER:

MARRIOTT RESIDENCE INN II LIMITED

PARTNERSHIP,

a Delaware limited partnership

By:

 

AHT Res II GP, Inc.,

a Virginia corporation

Its:

 

General Partner

   

By:

 

/s/ David S. McKenney

   

Name:

 

David S. McKenney

   

Title:

 

Vice President

PRINCIPAL:

APPLE HOSPITALITY TWO, INC.,

a Virginia corporation

By:

 

/s/ David S. McKenney

   

Name:

 

David S. McKenney

   

Title:

 

President - Capital Market

 

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EXHIBIT A

 

Legal Description