Exhibit 10.52


	
  

 	
  

 	
  

 
	
 Borrower:

 	
 APPLE
EIGHT HOSPITALITY, INC. 

 	
 Note Number: 0001

 
	
 Account
 Number:

 	
 9532140754/00001 

 	
  

 
	
 Address:

 	
 901
E BYRD STE. 600 

 	
 Richmond, Virginia

 
	
  

 	
 RICHMOND,
VA 23219-4052 

 	
 Date:   October
 28, 2010

 


PROMISSORY
NOTE


THE UNDERSIGNED REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS
BEING OBTAINED FOR BUSINESS/COMMERCIAL OR AGRICULTURAL PURPOSES. 


For value received, the undersigned, jointly and severally,
if more than one, promises to pay to BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (the
“Bank”), or order, at any of Bank’s offices in the above referenced city (or
such other place or places that may be hereafter designated by Bank), the sum
of SEVENTY-FIVE MILLION DOLLARS & 00/100 Dollars ($75,000,000.00), in immediately
available coin or currency of the United States of America. 


          Interest
shall accrue from the date hereto on the unpaid balance outstanding from time
to time at the Adjusted LIBOR Rate, as defined in the attached Addendum to
Promissory Note.


          Principal
and Interest is payable as follows: Principal (plus any accrued interest not
otherwise scheduled herein) is due in full at maturity on October 28, 2012.
Accrued interest is payable monthly commencing on November 28, 2010 and
continuing on the same day of each calendar period thereafter, with one final
payment of all remaining interest due on October 28, 2012. Prior to an event of
default, Borrower may borrow, repay, and reborrow hereunder pursuant to the
terms of the Loan Agreement, hereinafter defined.


          The
undersigned shall pay to Bank a late fee in the amount of five percent (5%) of
any installment past due for ten (10) or more days. When any installment
payment is past due for ten (10) or more days, subsequent payments shall first
be applied to the past due balance. In addition, the undersigned shall pay to
Bank a returned payment fee if the undersigned or any other obligor hereon
makes any payment at any time by check or other instrument, or by any
electronic means, which is returned to Bank because of nonpayment due to
nonsufficient funds.


          All
interest shall be computed and charged for the actual number of days elapsed on
the basis of a year consisting of three hundred sixty (360) days. In the event
periodic accruals of interest shall exceed any periodic fixed payment amount
described above, the fixed payment amount shall be immediately increased, or
additional supplemental interest payments required on the same periodic basis
as specified above (increased fixed payments or supplemental payments to be
determined in the Bank’s sole discretion), in such amounts and at such times as
shall be necessary to pay all accruals of interest for the period and all
accruals of unpaid interest from previous periods. Such adjustments to the
fixed payment amount or supplemental payments shall remain in effect for so
long as the interest accruals shall exceed the original fixed payment amount
and shall be further adjusted upward or downward to reflect changes in the
variable interest rate; provided that unless elected otherwise above, the fixed
payment amount shall not be reduced below the original fixed payment amount.
However, Bank shall have the right, in its sole discretion, to lower the fixed
payment amount below the original payment amount.


          The
Loan Agreement dated October 28, 2010, executed by Borrower and each Guarantor
(the “Loan Agreement”) shall be security to Bank.


This
Note is made and conditioned upon execution of a Negative Pledge Agreement
dated October 28, 2010.


          All
of the terms, conditions and covenants of the above described agreements (the
“Agreements”) are expressly made a part of this Note by reference in the same
manner and with the same effect as if set forth herein at length and any holder
of this Note is entitled to the benefits of and remedies provided in the
Agreements and any other agreements by and between the undersigned and the
Bank.


          No
delay or omission on the part of the holder in exercising any right hereunder
shall operate as a waiver of such right or of any other right of such holder,
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or of any other right on any future occasion. Every one
of the undersigned and every endorser or guarantor of this Note regardless of
the time, order or place of signing waives presentment, demand, protest and
notices of every kind and assents to any one or more extensions or
postponements of the time of payment or any other indulgences, to any
substitutions, exchanges or releases of collateral if at any time there be
available to the holder collateral for this Note, and to the additions or
releases of any other parties or persons primarily or secondarily liable.


          The
failure to pay any part of the principal or interest when due on this Note or
to fully perform any covenant, obligation or warranty on this or on any other
liability to the Bank by any one or more of the undersigned, by any affiliate
of the undersigned (as defined in 11USC Section (101) (2)), or by any guarantor
or surety of this Note (said affiliate, guarantor, and surety are herein called
Obligor); or if any 


1





financial statement or other representation made to the Bank
by any of the undersigned or any Obligor shall be found to be materially
incorrect or incomplete; or if any of the undersigned shall fail to furnish
information to the Bank sufficient to verify the identity of the undersigned as
required under the USA Patriot Act; or in the event of a default pursuant to
any of the Agreements or any other obligation of any of the undersigned or any
Obligor in favor of the Bank; or in the event the Bank demands that the
undersigned secure or provide additional security for its obligations under
this Note and security deemed adequate and sufficient by the Bank is not given
when demanded; or in the event one or more of the undersigned or any Obligor
shall die, terminate its existence, allow the appointment of a receiver for any
part of its property, make an assignment for the benefit of creditors, or where
a proceeding under bankruptcy or insolvency laws is initiated by or against any
of the undersigned or any Obligor; or in the event the Bank should otherwise
deem itself, its security interest, or any collateral unsafe or insecure; or
should the Bank in good faith believe that the prospect of payment or other
performance is impaired; or if there is an attachment, execution, or other
judicial seizure of all or any portion of the Borrower’s or any Obligor’s
assets, including an action or proceeding to seize any funds on deposit with
the Bank, and such seizure is not discharged within 20 days; or if final
judgment for the payment of money shall be rendered against the Borrower or any
Obligor which is not covered by insurance or debt cancellation and shall remain
undischarged for a period of 30 days unless such judgment or execution thereon
is effectively stayed; or the termination of any guaranty agreement given in
connection with this Note, then any one of the same shall be a material default
hereunder and this Note and other debts due the Bank by any one or more of
undersigned shall immediately become due and payable without notice, at the
option of the Bank. From and after any event of default hereunder, interest
shall accrue on the sum of the principal balance and accrued interest then
outstanding at the variable rate equal to the Bank’s Prime Rate plus 5% per
annum (“Default Rate”), provided that such rate shall not exceed at any time
the highest rate of interest permitted by the laws of the Commonwealth of
Virginia; and further provided that such rate shall apply after judgment. In
the event of any default, the then remaining unpaid principal amount and
accrued but unpaid interest then outstanding shall bear interest at the Default
Rate called for hereunder until such principal and interest have been paid in
full. In addition, upon default, the Bank may pursue its full legal remedies at
law or equity, and the balance due hereunder may be charged against any
obligation of the Bank to any party including any Obligor. Bank shall not be obligated to accept any check, money
order, or other payment instrument marked “payment in full” on any disputed
amount due hereunder, and Bank expressly reserves the right to reject all such
payment instruments. Borrower agrees that tender of its check or other payment
instrument so marked will not satisfy or discharge its obligation under this
Note, disputed or otherwise, even if such check or payment instrument is
inadvertently processed by Bank unless in fact such payment is in fact
sufficient to pay the amount due hereunder.


WAIVER OF TRIAL BY JURY. UNLESS EXPRESSLY
PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL
BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF THIS NOTE OR ANY LOAN DOCUMENT
EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIP
BETWEEN THE UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
BANK TO MAKE THE LOAN EVIDENCED BY THIS NOTE. FURTHER, THE UNDERSIGNED HEREBY CERTIFY
THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT SEEK TO ENFORCE THIS WAIVER OR
RIGHT TO JURY TRIAL PROVISION IN THE EVENT OF LITIGATION. NO REPRESENTATIVE OR
AGENT OF BANK, NOR BANK’S COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR
MODIFY THIS PROVISION.


          Unless
otherwise required under a Loan Agreement, if applicable, and as long as any
indebtedness evidenced by this Note remains outstanding or as long as Bank
remains obligated to make advances, the undersigned shall furnish annually an
updated financial statements pursuant to the terms of the Loan Agreementwhich
financial statements, when delivered shall be the property of the Bank.


          The
term “Prime Rate,” if used herein, means the rate of interest per annum
announced by the Bank from time to time and adopted as its Prime Rate. The
Prime Rate is one of several rate indexes employed by the Bank when extending
credit. Any change in the interest rate resulting from a change in the Bank’s
Prime Rate shall become effective as of the opening of business on the
effective date of the change. If this Note is placed with an attorney for
collection, the undersigned agrees to pay, in addition to principal and
interest, all costs of collection, including but not limited to reasonable
attorneys’ fees. All obligations of the undersigned and of any Obligor shall
bind his heirs, executors, administrators, successors, and/or assigns. Use of
the masculine pronoun herein shall include the feminine and the neuter, and
also the plural. If more than one party shall execute this Note, the term
“undersigned” as used herein shall mean all the parties signing this Note and
each of them, and all such parties shall be jointly and severally obligated
hereunder. Wherever possible, each provision of this Note shall be interpreted
in such a manner to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under such law, such
provision shall be ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note. All of the undersigned hereby waive all
exemptions and homestead laws. The proceeds of the loan evidenced by this Note
may be paid to any one or more of the undersigned.


          From
time to time the maturity date of this Note may be extended, or this Note may
be renewed in whole or in part, or a new note of different form may be substituted
for this Note, or the rate of interest 


2





may be modified, or changes may be made in consideration of
loan extensions, and the holder hereof, from time to time may waive or
surrender, either in whole or in part any rights, guaranties, secured interest,
or liens, given for the benefit of the holder in connection with the payment
and the securing the payment of this Note; but no such occurrence shall in any
manner affect, limit, modify, or otherwise impair any rights, guaranties or
security of the holder not specifically waived, released, or surrendered in
writing, nor shall the undersigned makers, or any guarantor, endorser, or any
person who is or might be liable hereon, either primarily or contingently, be
released from such event. The holder hereof, from time to time, shall have the
unlimited right to release any person who might be liable hereon, and such
release shall not affect or discharge the liability of any other person who is
or might be liable hereon. No waivers and modifications shall be valid unless
in writing and signed by the Bank. The Bank may, at its option, charge any
reasonable fees for the modification, renewal, extension, or amendment of any
of the terms of the Note permitted by applicable laws. In case of a conflict
between the terms of this Note and the Loan Agreement or Commitment Letter
issued in connection herewith, the priority of controlling terms shall be first
this Note, then the Loan Agreement, and then the Commitment Letter. This Note
shall be governed by and construed in accordance with the laws of Virginia.


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


	
  
 	
  
 	
  
 	
  
 	
  
 
	
 WITNESS:
 	
  
 	
 APPLE
 EIGHT HOSPITALITY, INC.
 
	
  
 	
  
 	
  
 	
  
 
	
  
 	
  
 	
 By:
 	
  
 	
  (SEAL)
 
	

 
 	
  
 	
  
 	

 
 	
  
 
	
  
 	
  
 	
            Bryan
   F. Peery

	
  
 	
  
 	
 Title:
   Vice President
 



COMMONWEALTH OF VIRGINIA 
CITY OF RICHMOND_______________


On
this 28th day of October, 2010, before me, the undersigned Notary
Public, personally appeared Bryan F. Peery, and known to me to be the Vice
President of Apple Eight Hospitality, Inc., and
acknowledged this instrument to be thefree and voluntary act and deed of the
corporation, by authority of its Bylaws or by the resolution of its board of
directors, for the uses and purposes therein mentioned, and on oath stated that
he or she is authorized to execute this instrument and in fact executed the
instrument on behalf of the corporation.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (STAMP OR SEAL)

 	
  

 	
 (SEAL)

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
 Notary Public

 
	
  

 	
  

 	
 My Commission
 Expires: ______________

 
	
  

 	
  

 	
 Notary Registration
 Number: ____________

 


3









	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Borrower:

 	
 APPLE EIGHT HOSPITALITY, INC.

 	
  

 	
  

 	
 Note Number: 0002

 
	
 Account Number:

 	
 9532140754/00002

 	
  

 	
  

 	
  

 
	
 Address:

 	
 901 E BYRD STE. 600

 	
  

 	
  

 	
 Richmond, Virginia

 
	
  

 	
 RICHMOND, VA 23219-4052

 	
  

 	
 Date:   October 28, 2010

 


PROMISSORY NOTE


THE UNDERSIGNED REPRESENTS THAT THE LOAN
EVIDENCED HEREBY IS BEING OBTAINED FOR BUSINESS/COMMERCIAL OR AGRICULTURAL
PURPOSES. 


For value received, the undersigned, jointly
and severally, if more than one, promises to pay to BRANCH BANKING AND TRUST COMPANY, a North Carolina banking
corporation (the “Bank”), or order, at any of Bank’s offices in the above
referenced city (or such other place or places that may be hereafter designated
by Bank), the sum of TWENTY-FIVE MILLION DOLLARS & 00/100 Dollars ($
25,000,000.00), in immediately available coin or currency of the United States
of America. 


          Interest shall accrue from the date hereto on
the unpaid balance outstanding from time to time at the Adjusted LIBOR Rate, as
defined in the attached Addendum to Promissory Note.


          Principal and Interest is payable as follows:
Principal (plus any accrued interest not otherwise scheduled herein) is due in
full at maturity on October 28, 2012. Accrued interest is payable monthly
commencing on November 28, 2010 and continuing on the same day of each calendar
period thereafter, with one final payment of all remaining interest due on
October 28, 2012.


          The
undersigned shall pay to Bank a late fee in the amount of five percent (5%) of
any installment past due for ten (10) or more days. When any installment
payment is past due for ten (10) or more days, subsequent payments shall first
be applied to the past due balance. In addition, the undersigned shall pay to
Bank a returned payment fee if the undersigned or any other obligor hereon
makes any payment at any time by check or other instrument, or by any
electronic means, which is returned to Bank because of nonpayment due to
nonsufficient funds.


          All
interest shall be computed and charged for the actual number of days elapsed on
the basis of a year consisting of three hundred sixty (360) days. In the event
periodic accruals of interest shall exceed any periodic fixed payment amount
described above, the fixed payment amount shall be immediately increased, or
additional supplemental interest payments required on the same periodic basis
as specified above (increased fixed payments or supplemental payments to be
determined in the Bank’s sole discretion), in such amounts and at such times as
shall be necessary to pay all accruals of interest for the period and all
accruals of unpaid interest from previous periods. Such adjustments to the
fixed payment amount or supplemental payments shall remain in effect for so
long as the interest accruals shall exceed the original fixed payment amount
and shall be further adjusted upward or downward to reflect changes in the
variable interest rate; provided that unless elected otherwise above, the fixed
payment amount shall not be reduced below the original fixed payment amount.
However, Bank shall have the right, in its sole discretion, to lower the fixed
payment amount below the original payment amount.


          This
note (“Note”) is given by the undersigned in connection with those two Deeds of
Trust between Apple Eight Hospitality Ownership, Inc. and the Bank, dated October
28, 2010 in the maximum principal amount of TWENTY-FIVE MILLION DOLLARS &
NO/100 DOLLARS ($25,000,000.00). Apple Eight Hospitality Ownership, Inc. is a
100% wholly owned subsidiary of the undersigned.


          The
Loan Agreement dated October 28, 2010, executed by Borrower and each Guarantor
shall be security to Bank.


          This
Note is made and conditioned upon execution of an Assignment of Leases and
Rents dated October 28, 2010, executed by APPLE EIGHT HOSPITALITY OWNERSHIP,
INC.


          All
of the terms, conditions and covenants of the above described agreements (the
“Agreements”) are expressly made a part of this Note by reference in the same
manner and with the same effect as if set forth herein at length and any holder
of this Note is entitled to the benefits of and remedies provided in the
Agreements and any other agreements by and between the undersigned and the
Bank. In addition to Bank’s rights of off-set and to any liens and security
interests granted to Bank in the Agreements, the undersigned hereby grants to
Bank a security interest in all of its depository accounts with and investment
property held by Bank, which shall serve as collateral for the indebtedness and
obligations evidenced by this Note.


          No
delay or omission on the part of the holder in exercising any right hereunder
shall operate as a waiver of such right or of any other right of such holder,
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or of any other right on any future occasion. Every one
of the undersigned and every endorser or guarantor of this Note regardless of
the time, order or place of signing waives presentment, demand, protest and
notices of every kind and assents to any one or more extensions or
postponements of the time of payment or any other indulgences, to any


1





substitutions, exchanges or releases of
collateral if at any time there be available to the holder collateral for this
Note, and to the additions or releases of any other parties or persons
primarily or secondarily liable.


          The
failure to pay any part of the principal or interest when due on this Note or
to fully perform any covenant, obligation or warranty on this or on any other
liability to the Bank by any one or more of the undersigned, by any affiliate
of the undersigned (as defined in 11USC Section (101) (2)), or by any guarantor
or surety of this Note (said affiliate, guarantor, and surety are herein called
Obligor); or if any financial statement or other representation made to the
Bank by any of the undersigned or any Obligor shall be found to be materially
incorrect or incomplete; or if any of the undersigned shall fail to furnish
information to the Bank sufficient to verify the identity of the undersigned as
required under the USA Patriot Act; or in the event of a default pursuant to
any of the Agreements or any other obligation of any of the undersigned or any
Obligor in favor of the Bank; or in the event the Bank demands that the
undersigned secure or provide additional security for its obligations under
this Note and security deemed adequate and sufficient by the Bank is not given
when demanded; or in the event one or more of the undersigned or any Obligor
shall die, terminate its existence, allow the appointment of a receiver for any
part of its property, make an assignment for the benefit of creditors, or where
a proceeding under bankruptcy or insolvency laws is initiated by or against any
of the undersigned or any Obligor; or in the event the Bank should otherwise deem
itself, its security interest, or any collateral unsafe or insecure; or should
the Bank in good faith believe that the prospect of payment or other
performance is impaired; or if there is an attachment, execution, or other
judicial seizure of all or any portion of the Borrower’s or any Obligor’s
assets, including an action or proceeding to seize any funds on deposit with
the Bank, and such seizure is not discharged within 20 days; or if final
judgment for the payment of money shall be rendered against the Borrower or any
Obligor which is not covered by insurance or debt cancellation and shall remain
undischarged for a period of 30 days unless such judgment or execution thereon
is effectively stayed; or the termination of any guaranty agreement given in connection
with this Note, then any one of the same shall be a material default hereunder
and this Note and other debts due the Bank by any one or more of undersigned
shall immediately become due and payable without notice, at the option of the
Bank. From and after any event of default hereunder, interest shall accrue on
the sum of the principal balance and accrued interest then outstanding at the
variable rate equal to the Bank’s Prime Rate plus 5% per annum (“Default
Rate”), provided that such rate shall not exceed at any time the highest rate
of interest permitted by the laws of the Commonwealth of Virginia; and further
provided that such rate shall apply after judgment. In the event of any
default, the then remaining unpaid principal amount and accrued but unpaid
interest then outstanding shall bear interest at the Default Rate called for
hereunder until such principal and interest have been paid in full. In
addition, upon default, the Bank may pursue its full legal remedies at law or
equity, and the balance due hereunder may be charged against any obligation of
the Bank to any party including any Obligor. Bank
shall not be obligated to accept any check, money order, or other payment
instrument marked “payment in full” on any disputed amount due hereunder, and
Bank expressly reserves the right to reject all such payment instruments.
Borrower agrees that tender of its check or other payment instrument so marked
will not satisfy or discharge its obligation under this Note, disputed or
otherwise, even if such check or payment instrument is inadvertently processed
by Bank unless in fact such payment is in fact sufficient to pay the amount due
hereunder.


          WAIVER
OF TRIAL BY JURY. UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE
UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS
ARISING OUT OF THIS NOTE OR ANY LOAN DOCUMENT EXECUTED IN CONNECTION HEREWITH
OR OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND BANK.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO MAKE THE LOAN EVIDENCED BY
THIS NOTE. FURTHER, THE UNDERSIGNED HEREBY CERTIFY THAT NO REPRESENTATIVE OR
AGENT OF BANK, NOR BANK’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT BANK WOULD NOT SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION
IN THE EVENT OF LITIGATION. NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S
COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.


          Unless
otherwise required under a Loan Agreement, if applicable, and as long as any
indebtedness evidenced by this Note remains outstanding or as long as Bank
remains obligated to make advances, the undersigned shall furnish annually an
updated financial statement in a form satisfactory to Bank, which, when
delivered shall be the property of the Bank.


          The
term “Prime Rate,” if used herein, means the rate of interest per annum
announced by the Bank from time to time and adopted as its Prime Rate. The
Prime Rate is one of several rate indexes employed by the Bank when extending
credit. Any change in the interest rate resulting from a change in the Bank’s
Prime Rate shall become effective as of the opening of business on the
effective date of the change. If this Note is placed with an attorney for
collection, the undersigned agrees to pay, in addition to principal and
interest, all costs of collection, including but not limited to reasonable
attorneys’ fees. All obligations of the undersigned and of any Obligor shall
bind his heirs, executors, administrators, successors, and/or assigns. Use of
the masculine pronoun herein shall include the feminine and the neuter, and
also the plural. If more than one party shall execute this Note, the term
“undersigned” as used herein shall mean all the parties signing this Note and
each of them, and all such parties shall be jointly and severally obligated
hereunder. Wherever possible, each provision of this 


2





Note shall be interpreted in such a manner to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under such law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Note. All of the undersigned hereby waive all exemptions and homestead
laws. The proceeds of the loan evidenced by this Note may be paid to any one or
more of the undersigned.


          From
time to time the maturity date of this Note may be extended, or this Note may
be renewed in whole or in part, or a new note of different form may be
substituted for this Note, or the rate of interest may be modified, or changes
may be made in consideration of loan extensions, and the holder hereof, from
time to time may waive or surrender, either in whole or in part any rights,
guaranties, secured interest, or liens, given for the benefit of the holder in
connection with the payment and the securing the payment of this Note; but no
such occurrence shall in any manner affect, limit, modify, or otherwise impair
any rights, guaranties or security of the holder not specifically waived,
released, or surrendered in writing, nor shall the undersigned makers, or any
guarantor, endorser, or any person who is or might be liable hereon, either
primarily or contingently, be released from such event. The holder hereof, from
time to time, shall have the unlimited right to release any person who might be
liable hereon, and such release shall not affect or discharge the liability of
any other person who is or might be liable hereon. No waivers and modifications
shall be valid unless in writing and signed by the Bank. The Bank may, at its
option, charge any reasonable fees for the modification, renewal, extension, or
amendment of any of the terms of the Note permitted by applicable laws. In case
of a conflict between the terms of this Note and the Loan Agreement or
Commitment Letter issued in connection herewith, the priority of controlling
terms shall be first this Note, then the Loan Agreement, and then the
Commitment Letter. This Note shall be governed by and construed in accordance
with the laws of Virginia.


(SIGNATURE ON FOLLOWING PAGES)  


 3







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


	
  
 	
  
 	
  
 	
  
 	
  
 
	
 WITNESS:
 	
  
 	
 APPLE
 EIGHT HOSPITALITY, INC.
 	
  
 
	
  
 	
  
 	
  
 	
  
 	
  
 
	
  
 	
  
 	
 By:
 	
  
 	
 (SEAL)
 
	

 
 	
  
 	
  
 	

 
 	
  
 
	
  
 	
  
 	
              Bryan
   F. Peery
	
  
 
	
  
 	
  
 	
 Title:     Vice
 President
 	
  
 




COMMONWEALTH OF VIRGINIA
CITY OF RICHMOND ______________


On this 28th day of October, 2010,
before me, the undersigned Notary Public, personally appeared Bryan F. Peery,
and known to me to be the Vice President of Apple Eight Hospitality, Inc., the company that executed this
instrument and acknowledged this instrument to be “the free and voluntary act
and deed of the corporation, by authority of its Bylaws or by the resolution of
its board of directors, for the uses and purposes therein mentioned, and on
oath stated that he or she is authorized to execute this instrument and in fact
executed the instrument on behalf of the corporation.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
           (STAMP
 OR SEAL)

 	
  

 	
  

 	
  

 	
 (SEAL)

 
	
  

 	

 


 	
  

 
	
  

 	
 Notary Public

 	
  

 	
  

 	
  

 
	
  

 	
 My Commission
 Expires: ________________

 
	
  

 	
 Notary
 Registration Number: ______________

 


4









	
  

 
	
 BB&T 

 
	
 LOAN AGREEMENT

 
	

  


 
	
 953-2140754/00001

 
	

 


 
	
 Account
 Number

 


This Loan Agreement (the
“Agreement”) is made this 28th day of October, 2010 by and between BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (“Bank”), and:


Apple Eight Hospitality,
Inc., a Virginia corporation (“Borrower”), having its chief executive office at
814 E. Main St., Richmond, Virginia.


Apple REIT Eight, Inc.
(the “REIT”), Apple Eight Hospitality Massachusetts, Inc., Apple Eight
Hospitality Midwest, LLC, Apple Eight Hospitality Ownership, Inc., and Apple
Eight Hospitality Texas, LLC (individually “Guarantor” and collectively the
“Guarantors”).


The Borrower has applied
to Bank for and the Bank has agreed to make, subject to the terms of this
Agreement, the following loan(s) (hereinafter referred to, singularly or
collectively, if more than one, as “Loan”):


Line of Credit
(“Line of Credit”) in the maximum principal amount not to exceed $75,000,000.00
at any one time outstanding for the purpose of working capital, property
renovation, capital expenditure funding and completion of property acquisition
which shall be evidenced by the Borrower’s Promissory Note dated on or after
the date hereof which shall mature October 28, 2012, when the entire unpaid
principal balance then outstanding plus accrued interest thereon shall be paid
in full unless the line is renewed or termed out under a different loan
structure. Funds shall be advanced under the Line of Credit at the request of
an authorized officer of the Borrower, which shall be made in writing in a form
acceptable to the Bank. Prior to maturity or the occurrence of any Event of
Default hereunder and subject to any availability limitations, as applicable,
the Borrower may borrow, repay, and re-borrow under the Line of Credit through
maturity. The Line of Credit shall bear interest at the one month LIBOR rate
plus two and twenty-five one-hundredths of a percent (2.25%) per annum, and
adjusted monthly on the note date and the rate will have a floor of three and
fifty one-hundredths of a percent (3.50%). Accrued interest shall be repayable
monthly and all interest shall be computed and charged for the actual number of
days elapsed on the basis of a year consisting of three hundred sixty (360)
days.


Section 1 Conditions Precedent


The Bank shall not be
obligated to make any disbursement of Loan proceeds until all of the following
conditions have been satisfied by proper evidence, execution, and/or delivery
to the Bank of the following items in addition to this Agreement, all in form
and substance satisfactory to the Bank and the Bank’s counsel in their sole
discretion: 


USA Patriot
Act Verification Information: Information or documentation, including but not limited to the legal
name, address, tax identification number, driver’s license, and date of birth
(if the Borrower is an individual) of the Borrower sufficient for the Bank to
verify the identity of the Borrower in accordance with the USA Patriot Act.
Borrower shall notify Bank promptly of any change in such information.


	
  

 
	
 Note(s):
 The Note(s) evidencing the Loans(s) duly executed by the
 Borrower.

 
	
 Deed(s)
 of Trust: The Credit Line Deed(s) of Trust in which Apple
 Eight Hospitality Ownership, Inc. (“Mortgagor”) shall grant to a Trustee for
 the benefit of bank a first Deed of Trust lien on the specified real property
 and improvements thereon (“Mortgaged Property”). The Mortgaged Property shall
 be cross-collateralized with the $25,000,000.00 term loan (the “Term Loan”)
 to Apple Eight Hospitality, Inc.

 
	
 Assignment
 of Leases and Rents: The Assignment of Leases and Rents in
 which the Mortgagor shall assign to Bank all existing and thereafter arising
 leases on the Mortgaged Property and the rents and profits therefrom. 

 
	
 Security
 Agreement(s): Security Agreement(s) in which Borrower and any
 other owner (a “Debtor”) of personal property collateral shall grant to Bank
 a first priority security interest in the personal property specified
 therein. (If Bank has or will have a security interest in any collateral
 which is inferior to the security interest of another creditor, Borrower must
 fully disclose to Bank any and all prior security interests, and Bank must
 specifically approve any such security interest which will continue during
 the Loan.)

 
	
 UCC
 Financing Statements: Copies of UCC Financing Statements
 duly filed in Borrower’s or other owner’s state of incorporation,
 organization or residence, and in all jurisdictions necessary, or in the
 opinion of the Bank desirable, to perfect the security interests granted in
 the Security Agreement(s), and certified copies of Information Requests
 identifying all previous financing statements on record for the Borrower or
 other owner, as appropriate from all jurisdictions indicating that no
 security interest has previously been granted in any of the collateral
 described in the Security Agreement(s), unless prior approval has been given
 by the Bank.

 
	
 Commitment
 Fee: A commitment fee (or balance thereof) of $93,500.00
 payable to the Bank on the date of execution of the Loan Documents.

 
	
 Negative
 Pledge Agreement: To secure payment of the line of credit,
 the Borrower shall grant, pledge, or convey to the Bank a Negative Pledge
 Agreement on Apple Eight Hospitality, Inc., hotel properties that will be
 defined “as the Borrowing Base Property Group” (the “Property Group”). The
 Property Group must have sufficient value to cover the BB&T Line Facility
 and any other unsecured debt at a ratio of value to debt of 2.0 times. The
 Borrower may exchange properties of equal or greater value if necessary for
 economic reasons in the future, but must be approved by the Bank in writing.
 The Property Group’s value to be determined by a quarterly measure of net
 operating income capped at ten percent (10%). All hotels in the Property
 Group must be within the BB&T footprint, which as of the date hereof
 includes the states and/or commonwealths of Indiana, Kentucky, Tennessee,
 Alabama, Georgia, Florida, West Virginia, Maryland, Virginia, North Carolina
 and South Carolina and the District of Columbia. All properties in the
 Property Group to be individually compliant with appropriate franchise
 agreements, environmental compliance, clear title, and other items deemed
 appropriate and necessary should the Bank find it necessary to become a
 secured lender. No individual property within the Property Group will have an
 assigned value in excess of forty million dollars ($40,000,000.00). The
 Negative Pledge Agreement shall be recorded in the land records at the county
 and/or city levels where the Property Group property is located.

 
	
 Corporate
 Resolution: A Corporate Resolution duly adopted by the
 Board of Directors of the Borrower authorizing the execution, delivery, and
 performance of the Loan Documents on or in a form provided by or acceptable
 to Bank. 

 
	
 Articles
 of Incorporation: A copy of the Articles of Incorporation
 and all other charter documents of the Borrower, all filed with and certified
 by the Secretary of State of the State of the Borrower’s incorporation.

 
	
 By-Laws:
 A copy of the By-Laws of the Borrower, certified by the Secretary of the Borrower
 as to their completeness and accuracy.

 
	
 Certificate
 of Incorporation: A copy of the Certificate of
 Incorporation as filed with the Secretary of State, Corporation Commission.

 
	
 Certificate
 of Incumbency: A certificate of the Secretary of the
 Borrower certifying the names and true signatures of the officers of the
 Borrower authorized to sign the Loan Documents.

 
	
 Certificate
 of Existence: A certification of the Secretary of State (or
 other government authority) of the State of the Borrower’s Incorporation or
 Organization as to the existence or good standing of the Borrower and its
 charter documents on file.

 
	
 Opinion
 of Counsel: An opinion of counsel for the Borrower
 satisfactory to the Bank and the Bank’s counsel.

 
	
 Guaranty:
 Unconditional joint and unlimited guarantee of payment of the Loan, including
 principal, interest, late fees, if any, and costs of collection, from the
 REIT Apple Eight Hospitality Massachusetts, Inc., Apple Eight Hospitality
 Midwest, LLC, Apple Eight Hospitality Ownership, Inc., and Apple Eight
 Hospitality Texas, LLC.

 
	
 Hazard
 Insurance: At closing, the Borrower shall provide the Bank
 a copy of the hazard insurance policies for the replacement cost of all
 properties in the Property Group.

 
	
 Term
 Loan: At closing, all conditions precedent to the closing
 of the Term Loan shall have been satisfied by the borrower parties
 thereunder.

 
	
 Additional
 Documents: Receipt by the Bank of other approvals,
 opinions, or documents as the Bank may reasonably request.

 


Section 2 Representations and Warranties


The Borrower and
Guarantor(s) represent and warrant to Bank that:


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 BB&T 

 
	
  LOAN AGREEMENT

 






	
  

 	
  

 
	
  

 	
 2.01. Financial
 Statements. The consolidated balance sheet of the REIT Guarantor
 and its subsidiaries, if any, and the related Statements of Income and
 Retained Earnings of the Guarantor and its subsidiaries, the accompanying
 footnotes together with the accountant’s opinion thereon, and all other
 financial information previously furnished to the Bank, are true and correct
 and fairly reflect the financial condition of the Guarantor and its
 subsidiaries as of the dates thereof, including all contingent liabilities of
 every type, and the financial condition of the Guarantor and its subsidiaries
 as stated therein has not changed materially and adversely since the date
 thereof.

 
	
  

 	
 2.02. Name,
 Capacity and Standing. The Borrower’s exact legal name is
 correctly stated in the initial paragraph of the Agreement. If the Borrower
 and/or any Guarantor is a corporation, general partnership, limited
 partnership, limited liability partnership, or limited liability company,
 each warrants and represents that it is duly organized and validly existing
 under the laws of its respective state of incorporation or organization; that
 it and/or its subsidiaries, if any, are duly qualified and in good standing
 in every other state in which the nature of their business shall require such
 qualification, and are each duly authorized by their board of directors,
 general partners or member/manager(s), respectively, to enter into and perform
 the obligations under the Loan Documents.

 
	
  

 	
 2.03. No
 Violation of Other Agreements. The execution of the Loan
 Documents, and the performance by the Borrower, by any and all pledgors
 (whether the Borrower or other owners of collateral property securing payment
 of the Loan (hereinafter sometimes referred to as the “Pledgor”)) or by the
 Guarantor(s) thereunder will not violate any provision, as applicable, of its
 articles of incorporation, by-laws, articles of organization, operating
 agreement, agreement of partnership, limited partnership or limited
 liability partnership, or, of any law, other agreement, indenture,
 note, or other instrument binding upon the Borrower, Pledgor or Guarantor(s),
 or give cause for the acceleration of any of the respective obligations of
 the Borrower or Guarantor(s).

 
	
  

 	
 2.04. Authority.
 All authority from and approval by any federal, state, or local governmental
 body, commission or agency necessary to the making, validity, or
 enforceability of this Agreement and the other Loan Documents has been
 obtained.

 
	
  

 	
 2.05. Asset
 Ownership. The Borrower and each Guarantor have good and
 marketable title to all of the properties and assets reflected on the balance
 sheets and financial statements furnished to the Bank, and all such
 properties and assets are free and clear of mortgages, deeds of trust,
 pledges, liens, and all other encumbrances except as otherwise disclosed by
 such financial statements. In addition, each other owner of collateral has
 good and marketable title to such collateral, free and clear of any liens,
 security interests and encumbrances, except as otherwise disclosed to Bank. 

 
	
  

 	
 2.06. Discharge
 of Liens and Taxes. The Borrower and its subsidiaries, if any, and
 each Guarantor have filed, paid, and/or discharged all taxes or other claims
 which may become a lien on any of their respective properties or assets,
 excepting to the extent that such items are being appropriately contested in
 good faith and for which an adequate reserve (in an amount acceptable to
 Bank) for the payment thereof is being maintained.

 
	
  

 	
 2.07. Regulations
 U and X. None of the Loan proceeds shall be used directly or
 indirectly for the purpose of purchasing or carrying any margin stock in
 violation of the provisions of Regulation U and Regulation X of the Board of
 Governors of the Federal Reserve System.

 
	
  

 	
 2.08. ERISA. Each
 employee benefit plan, as defined by the Employee Retirement Income Security
 Act of 1974, as amended (“ERISA”), maintained by the Borrower or by any
 subsidiary of the Borrower or Guarantor(s) meets, as of the date hereof, the
 minimum funding standards of Section 302 of ERISA, all applicable
 requirements of ERISA and of the Internal Revenue Code of 1986, as amended,
 and no “Reportable Event” nor “Prohibited Transaction” (as defined by ERISA)
 has occurred with respect to any such plan.

 
	
  

 	
 2.09. Litigation.
 There is no claim, action, suit or proceeding pending,
 threatened or reasonably anticipated before any court, commission,
 administrative agency, whether State or Federal, or arbitration which will
 materially adversely affect the financial condition, operations, properties,
 or business of the Borrower or its subsidiaries, if any, or the Guarantor(s),
 or the ability of the Borrower or the Guarantor(s) to perform their
 obligations under the Loan Documents.

 
	
  

 	
 2.10. Other
 Agreements. The representations and warranties made by Borrower to
 Bank in the other Loan Documents are true and correct in all respects on the
 date hereof. 

 
	
  

 	
 2.11. Binding
 and Enforceable. The Loan Documents, when executed, shall constitute
 valid and binding obligations of the Borrower and Guarantors respectively, the
 execution of such Loan Documents has been duly authorized by the parties
 thereto, and are enforceable in accordance with their terms, except as may be
 limited by bankruptcy, insolvency, moratorium, or similar laws affecting
 creditors’ rights generally.

 
	
  

 	
 2.12. Commercial
 Purpose. The Loan(s) are not “consumer transactions”, as defined
 in the Virginia Uniform Commercial Code, and none of the collateral was or
 will be purchased or held primarily for personal, family or household
 purposes. 

 
	
  

 	
  

 
	
 Section 3 Affirmative Covenants

 
	
  

 	
  

 
	
 The Borrower covenants
 and agrees that from the date hereof and until payment in full of all
 indebtedness and performance of all obligations owed under the Loan
 Documents, Borrower shall:

 
	
  

 	
 3.01. Maintain
 Existence and Current Legal Form of Business. (a) Maintain its
 existence and good standing in the state of its incorporation or
 organization, (b) maintain its current legal form of business indicated
 above, and, (c) as applicable, qualify and remain qualified as a foreign
 corporation, general partnership, limited partnership, limited liability
 partnership or limited liability company in each jurisdiction in which such
 qualification is required.

 
	
  

 	
 3.02. Maintain
 Records. Keep adequate records and books of account, in which
 complete entries will be made in accordance with GAAP consistently applied,
 reflecting all financial transactions of the Borrower.

 
	
  

 	
 3.03. Maintain
 Properties. Maintain, keep, and preserve all of its properties
 (tangible and intangible) including the collateral necessary or useful in the
 conduct of its business in good working order and condition, ordinary wear
 and tear excepted.

 
	
  

 	
 3.04. Conduct of
 Business. Continue to engage in an efficient, prudent, and
 economical manner in a business of the same general type as now conducted.

 
	
  

 	
 3.05. Maintain
 Insurance. Maintain insurance with financially sound and reputable
 insurance companies or associations in such amounts and covering such risks
 as are usually carried by companies engaged in the same or a similar
 business, and business interruption insurance if required by Bank, which
 insurance may provide for reasonable deductible(s).

 
	
  

 	
 3.06. Comply
 With Laws. Comply in all respects with all applicable laws, rules,
 regulations, and orders including, without limitation, paying before the
 delinquency of all taxes, assessments, and governmental charges imposed upon
 it or upon its property, and all Environmental Laws.

 
	
  

 	
 3.07. Right of
 Inspection. Permit the officers and authorized agents of the Bank,
 at any reasonable time or times in the Bank’s sole discretion, to examine and
 make copies of the records and books of account of, to visit the properties
 of the Borrower, and to discuss such matters with any officers, directors,
 managers, members or partners, limited or general of the Borrower, and the
 Borrower’s independent accountant as the Bank deems necessary and proper.

 
	
  

 	
 3.08.  Reporting
 Requirements. Furnish to the Bank: 

 



	
  

 	
  

 
	
  

 	
 Quarterly Financial Statements (10-Q):
 Quarterly financial statement for the REIT as soon as available and not more
 than Forty-five (45) days after the end of each quarter, balance sheets,
 statements of income, cash flow, and retained earnings for the period ended
 and a statement of changes in the financial position, all in reasonable
 detail, and all prepared in accordance with GAAP consistently applied and
 certified as true and correct by an officer, general partner or manager (or
 member(s)) of the REIT Guarantor, as appropriate.

 
	
  

 	
 Annual Financial Statements (10-K): Consolidated
 fiscal year-end financial statement for the REIT, Inc., as soon as available
 and not more than One Hundred Twenty (120) days after the end of each fiscal
 year, balance sheets, statements of income, and retained earnings for the
 period ended and a statement of changes in the financial position of the REIT
 Guarantor, all in reasonable detail, and all prepared in accordance with GAAP
 consistently applied. The financial statements must be of the following
 quality or better: Audited.

 
	
  

 	
 Notice of Litigation: Promptly after the
 receipt by the Borrower, or by any Guarantor of which Borrower has knowledge,
 of notice or complaint of any action, suit, and proceeding before any court
 or administrative agency of any type which, if determined adversely, could
 have a material adverse effect on the financial condition, properties, or
 operations of the Borrower or Guarantor, as appropriate.

 



-
2 -









	
  

 
	
 BB&T 

 
	
  Loan Agreement

 






	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Tax Returns: As soon as available each year,
 complete copies (including all schedules) of all state and federal tax
 returns filed by Borrower.

 
	
  

 	
  

 	
 Notice of Default: Promptly upon
 discovery or knowledge thereof, notice of the existence of any event of
 default under this Agreement or any other Loan Documents.

 
	
  

 	
  

 	
 USA Patriot Act Verification
 Information: Information
 or documentation, including but not limited to the legal name, address, tax
 identification number, driver’s license, and date of birth (if the Borrower
 is an individual) of the Borrower sufficient for the Bank to verify the
 identity of the Borrower in accordance with the USA Patriot Act. Borrower
 shall notify Bank promptly of any change in such information.

 
	
  

 	
  

 	
 Other Information: Such other information
 as the Bank may from time to time reasonably request.

 
	
  

 	
 3.09.

 	
 Deposit Accounts. Borrower and related
 companies agree to maintain their existing deposit relationship with the
 Bank. Borrower will open an operating account to support this term loan
 facility.

 
	
  

 	
 3.10.

 	
 Affirmative Covenants from other Loan Documents.
 All affirmative covenants contained in any Deed of Trust, Security Agreement,
 Assignment of Leases and Rents, or other security document executed by the
 Borrower which are described in Section 1 hereof are hereby incorporated by
 reference herein.

 





	
  

 
	
 Section
 4 Guarantor(s) Covenants

 
	
  

 
	
 Each Guarantor
 covenants and agrees that from the date hereof and until payment in full of
 all indebtedness and performance of all obligations owed under the Loan
 Documents, Guarantor shall:

 
	
 4.01. Maintain
 Existence and Current Legal Form of Business. If Guarantor is a
 corporation, partnership, limited partnership, limited liability partnership
 or limited liability company, (a) maintain its existence and good standing in
 the state of its incorporation or organization, (b) maintain its current
 legal form of business as shown on the guaranty agreement provided by
 Guarantor to Bank in connection with the Loan, (c) without the Bank’s prior
 written consent, change Guarantor’s name, or enter into any merger, consolidation,
 reorganization or exchange of stock, ownership interests or assets, and (d)
 as applicable, qualify and remain qualified as a foreign corporation, general
 partnership, limited partnership, limited liability partnership or limited
 liability company in each jurisdiction in which such qualification is
 required. 

 
	
 4.02. Maintain
 Properties - Liquid Assets. If the Guarantor is a corporation,
 partnership, limited partnership, limited liability partnership, limited
 liability limited partnership, or limited liability company, it shall not,
 without the prior written consent of Bank, sell, transfer or otherwise
 dispose of all or substantially all of Guarantor’s properties (tangible or
 intangible), except in the ordinary course of business. Liquid Assets includes
 but is not limited to all securities and/or securities accounts, bonds,
 mutual funds, certificates of deposit, money market accounts, U.S. Treasuries
 and other federal agency instruments, hedge funds, derivative accounts and
 other investment instruments.

 
	
 4.03. Comply
 With Laws. Comply in all respects with all applicable laws, rules,
 regulations, and orders including, without limitation, paying before the
 delinquency of all taxes, assessments, and governmental charges imposed or
 assessed upon Guarantor or upon Guarantor’s property, and all Environmental
 Laws.

 
	
 4.04. Reporting
 Requirements. Furnish to the Bank:

 



	
  

 	
  

 
	
  

 	
 Notice of Litigation: Promptly after the
 receipt by Guarantor, or by Borrower of which Guarantor has knowledge, of
 notice of any action, suit, and proceeding before any court or governmental
 agency of any type which, if determined adversely, could have a material
 adverse effect on the financial condition, properties, or operations of the
 Guarantor or Borrower, as appropriate. 

 



	
  

 
	
 4.05. Transfer
 of Ownership. Not, without the prior written consent of the Bank:
 If Guarantor is a corporation, (a) issue, transfer or sell any new class of
 stock, or (b) issue, transfer or sell, in the aggregate, from its treasury
 stock and/or currently authorized but unissued shares of any class of stock,
 more than 50% of the total number of all such issued and outstanding shares
 as of the date of this Agreement; or, if Guarantor is a general partnership,
 limited partnership, limited liability partnership or limited liability
 company, issue, transfer or sell any interest in Guarantor.

 
	
 4.06. Tax
 Returns: As soon as available each year, furnish complete copies
 (including all schedules) of all state and federal tax returns filed by
 Guarantor.

 
	
 4.07. Other
 Information: Furnish such other information as the Bank may from
 time to time reasonably request.

 
	
  

 
	
 Section
 5 Financial Covenants

 
	
  

 
	
 The Borrower covenants
 and agrees that from the date hereof until payment in full of all
 indebtedness and the performance of all obligations under the Loan Documents,
 the Borrower shall at all times maintain the following financial covenants
 and ratios all in accordance with GAAP unless otherwise specified (all
 covenants to be calculated based on the consolidated results of the REIT):

 





	
  

 	
  

 
	
  

 	
 Tangible Net Worth. A minimum tangible
 net worth of not less than $700,000,000.00 (at all times). Tangible Net Worth
 is defined as net worth, plus obligations contractually subordinated to debts
 owed to Bank, minus goodwill, contract rights, and assets representing claims
 on stockholders or affiliated entities.

 
	
  

 	
 Debt to Worth. A ratio of total
 liabilities to tangible net worth of not greater than .50 to 1.0.

 
	
  

 	
 Debt Service Coverage Ratio. Global Cash
 Flow Coverage Ratio which is defined as Global annual NOI to annual Global
 Debt Service, shall be 1.50 times Debt Service. Global Annual NOI is defined
 as net income before taxes plus interest expense plus depreciation expense
 plus amortization expense. Annual Global Debt Service is defined as a current
 portion of long term debt plus interest expense.

 
	
  

 	
 Quarterly Global Net Operating Income to Debt Service plus
 Dividends Ratio. Ratio is to be no less than 60% for the
 fourth (4th) quarter 2010, 65% for the first (1st)
 quarter 2011, 70% for the second (2nd) quarter 2011, 75% for the
 third (3rd) quarter 2011, 80% for the fourth (4th)
 quarter 2011, 90% for the first (1st) quarter 2012 and 100% for
 the second (2nd) quarter 2012 and all quarters subsequent.
 Covenant to be calculated using the trailing twelve (12) months each quarter.
 For purposes of this calculation, Dividends shall mean dividends paid to
 unitholders of the REIT less proceeds received by the REIT pursuant to its
 dividend reinvestment plan, plus amounts paid to unitholders by the REIT
 pursuant to its share redemption program. 

 
	
  

 	
 Officer Compliance Certificate. Certificate must be completed on an annual
 basis.

 
	
  

 	
  

 
	
 Section
 6 Negative Covenants

 





The Borrower covenants
and agrees that from the date hereof and until payment in full of all
indebtedness and performance of all obligations under the Loan Documents, the
Borrower shall not, without the prior written consent of the Bank:


	
  

 	
  

 
	
  

 	
 6.01. Liens. Create,
 incur, assume, or suffer to exist any lien upon or with respect to the any
 property in the Borrowing Base Property Group, , except:

 




	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Liens and security
 interests in favor of the Bank;

 
	
  

 	
 (b)

 	
 Liens for taxes not yet
 due and payable or otherwise being contested in good faith and for which
 appropriate reserves are maintained;

 
	
  

 	
 (c)

 	
 Other liens imposed by
 law not yet due and payable, or otherwise being contested in good faith and
 for which appropriate reserves are maintained;

 
	
  

 	
 (d)

 	
 purchase money security
 interests either outstanding on the date hereof on any property hereafter
 acquired, provided that such lien shall attach only to the property acquired.

 
	
  

 	
 (e)

 	
 Liens on assets not
 already encumbered except as outlined in the negative pledge agreement.

 


- 3 -









	
  

 
	
 BB&T 

 
	
  Loan Agreement

 






	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.02. Debt. Create,
 incur, assume, or suffer to exist any debt, except:

 
	
  

 	
  

 	
 (a)

 	
 Debt to the Bank;

 
	
  

 	
  

 	
 (b)

 	
 Debt outstanding on the
 date hereof and shown on the most recent financial statements submitted to
 the Bank;

 
	
  

 	
  

 	
 (c)

 	
 Accounts payable to
 trade creditors incurred in the ordinary course of business;

 
	
  

 	
  

 	
 (d)

 	
 Debt secured by
 purchase money security interests as outlined above in Section 6.01 (d);

 
	
  

 	
  

 	
 (e)

 	
 Additional funded debt
 in excess of $10,000,000.00, with the exception of permanent market debt up
 to $25,000,000.00 with the proceeds being used to payoff Branch Banking and
 Trust Company $25,000,000.00 term loan credit facility.

 



	
  

 	
  

 
	
  

 	
 6.03. Change of
 Legal Form of Business; Purchase of Assets. Change Borrower’s name
 or the legal form of Borrower’s business as shown above, whether by merger,
 consolidation, conversion or otherwise, and Borrower shall not purchase all
 or substantially all of the assets or business to sell any of its assets of
 any Person other than in the ordinary course of business without prior Bank
 consent. This loan condition surrounds the sale of the REIT, and/or the
 acquisition/merger with another real estate investment trust, but not the
 acquisition or sale of individual real estate properties held by the REIT or
 related subsidiaries. The Borrower must notify the Bank if they sell the
 REIT.

 
	
  

 	
 6.04. Dividends
 or Distributions; Acquisition of Capital Stock or Other Ownership Interests.
 Declare or pay any dividends or distributions of any kind, or purchase or
 redeem, retire, or otherwise acquire any of Borrower’s capital stock or other
 ownership interests, now or hereafter outstanding in any fiscal year of the
 Borrower, except as outlined above under Section 5, Financial Covenants,
 Quarterly Global Net Operating Income to Debt Service plus Dividends Ratio
 section.

 
	
  

 	
 6.05. Leases. Create, incur, assume, or suffer
 to exist any leases, except:

 



	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Leases outstanding on
 the date hereof and showing on the most recent financial statement submitted
 to the Bank;

 
	
  

 	
  

 	
 (b)

 	
 Leases with total lease
 payments less than $1 million.

 




	
  

 	
  

 
	
  

 	
 6.06.  Guaranties. Assume, guarantee,
 endorse, or otherwise be or become directly or contingently liable for
 obligations of any Person, except guaranties by endorsement of negotiable
 instruments for deposit or collection or similar transactions in the ordinary
 course of business.

 
	
  

 	
 6.07. Disposition
 of Assets. Sell, lease, or otherwise dispose of any of the
 properties in the Property Group except as permitted or otherwise not
 prohibited in or by the Negative Pledge Agreement.

 
	
  

 	
 6.08. Transfer
 of Ownership. If Borrower is a corporation, (a) issue, transfer or
 sell any new class of stock, or (b) issue, transfer or sell, in the
 aggregate, from its treasury stock and/or currently authorized but unissued
 shares of any class of stock, more than 50% of the total number of all such
 issued and outstanding shares as of the date of this Agreement to a
 non-affiliate. If Borrower is a general partnership, limited partnership,
 limited liability partnership or limited liability company, issue, transfer
 or sell any interest in Borrower to a non-affiliate.

 
	
  

 	
 6.09. Negative
 Covenants from other Loan Documents. All negative covenants
 contained in any Deed of Trust, Security Agreement, Assignment of Leases or
 Rents, or other security document executed by the Borrower which are
 described in Section 1 hereof are hereby incorporated by reference herein. 

 
	
  

 	
  

 
	
 Section 7 Hazardous Materials and Compliance with
 Environmental Laws

 
	
  

 	
  

 
	
  

 	
 7.01. Investigation.
 Borrower hereby certifies that it has exercised due diligence to ascertain
 whether its real property, including without limitation the Property Group,
 is or has been affected by the presence of asbestos, oil, petroleum or other
 hydrocarbons, urea formaldehyde, PCBs, hazardous or nuclear waste, toxic
 chemicals and substances, or other hazardous materials (collectively,
 “Hazardous Materials”), as defined in applicable Environmental Laws. Borrower
 represents and warrants that there are no such Hazardous Materials
 contaminating its real property, nor have any such materials been released on
 or stored on or improperly disposed of on its real property during its
 ownership, occupancy or operation thereof. Borrower hereby agrees that,
 except in strict compliance with applicable Environmental Laws, it shall not
 knowingly permit any release, storage or contamination as long as any
 indebtedness or obligations to Bank under the Loan Documents remains unpaid
 or unfulfilled. In addition, Borrower does not have or use any underground
 storage tanks on any of its real property, including the Property Group which
 are not registered with the appropriate Federal and/or State agencies and
 which are not properly equipped and maintained in accordance with all
 Environmental Laws. If requested by Bank, Borrower shall provide Bank with
 all necessary and reasonable assistance required for purposes of determining
 the existence of Hazardous Materials on any property within the Property
 Group, including allowing Bank access to such property, and access to
 Borrower’s employees having knowledge of, and to files and records within
 Borrower’s control relating to the existence, storage, or release of
 Hazardous Materials on the subject property.

 
	
  

 	
 7.02. Compliance.
 Borrower agrees to comply with all applicable Environmental Laws, including,
 without limitation, all those relating to Hazardous Materials. Borrower
 further agrees to provide Bank, and all appropriate Federal and State
 authorities, with immediate notice in writing of any release of Hazardous
 Materials on any property within the Property Group and to pursue diligently
 to completion all appropriate and/or required remedial action in the event of
 such release.

 
	
  

 	
 7.03. Remedial
 Action. Borrower agrees to indemnify and hold Bank harmless from
 any and all loss or liability arising out of any violation of the
 representations, covenants, and obligations contained in this Section 7, or
 resulting from the recording of the Deed(s) of Trust.

 
	
  

 	
  

 
	
 Section 8 Events of Default

 
	
  

 	
  

 
	
 The following shall be
 “Events of Default” by Borrower or any Guarantor:

 
	
  

 	
 8.01. The failure to
 make prompt payment of any installment of principal or interest on any of the
 Note(s) when due or payable.

 
	
  

 	
 8.02. Should any
 representation or warranty made in the Loan Documents prove to be false or
 misleading in any material respect.

 
	
  

 	
 8.03. Should any
 report, certificate, financial statement, or other document furnished prior
 to the execution of or pursuant to the terms of this Agreement prove to be
 false or misleading in any material respect.

 
	
  

 	
 8.04. Should the
 Borrower or any Guarantor default on the performance of any other obligation
 of indebtedness when due or in the performance of any obligation incurred in
 connection with money borrowed.

 
	
  

 	
 8.05. Should the
 Borrower, any Guarantor or any Pledgor breach any covenant, condition, or
 agreement made under any of the Loan Documents.

 
	
  

 	
 8.06. Should a
 custodian be appointed for or take possession of any or all of the assets of
 the Borrower or any Guarantor, or should the Borrower or any Guarantor either
 voluntarily or involuntarily become subject to any insolvency proceeding,
 including becoming a debtor under the United States Bankruptcy Code, any
 proceeding to dissolve the Borrower or any Guarantor, any proceeding to have
 a receiver appointed, or should the Borrower or any Guarantor make an
 assignment for the benefit of creditors, or should there be an attachment,
 execution, or other judicial seizure of all or any portion of the Borrower’s
 or any Guarantor’s assets, including an action or proceeding to seize any
 funds on deposit with the Bank, and such seizure is not discharged within 30
 days.

 
	
  

 	
 8.07. Should final
 judgment for the payment of money in excess of $1,000,000 be rendered against
 the Borrower or any Guarantor which is not covered by insurance and shall
 remain undischarged for a period of 30 days unless such judgment or execution
 thereon be effectively stayed.

 
	
  

 	
 8.08. Upon the death
 of, or termination of existence of, or dissolution of, any Borrower, Pledgor or
 Guarantor.

 
	
  

 	
 8.09. Should any lien
 or security interest granted to Bank to secure payment of the Note(s)
 terminate, fail for any reason to have the priority agreed to by Bank on the
 date granted, or become unperfected or invalid for any reason.

 
	
  

 	
  

 
	
 Section 9 Remedies Upon Default

 
	
  

 	
  

 
	
 Upon the occurrence of
 any of the above listed Events of Default, the Bank may at any time thereafter,
 at its option, take any or all of the following actions, at the same or at
 different times:

 


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 BB&T 

 
	
  LOAN AGREEMENT

 






	
  

 	
  

 
	
  

 	
 9.01. Declare the
 balance(s) of the Note(s) to be immediately due and payable, both as to
 principal and interest, late fees, and all other amounts/expenditures without
 presentment, demand, protest, or notice of any kind, all of which are hereby
 expressly waived by Borrower and each Guarantor, and such balance(s) shall
 accrue interest at the Default Rate as provided herein until paid in full;

 
	
  

 	
 9.02. Require the
 Borrower or Guarantor(s) to pledge additional collateral to the Bank from the
 Borrower’s or any Guarantor’s assets and properties, the acceptability and
 sufficiency of such collateral to be determined in the Bank’s sole
 discretion;

 
	
  

 	
 9.03. Take immediate
 possession of and foreclose upon any or all collateral which may be granted
 to the Bank as security for the indebtedness and obligations of Borrower or
 any Guarantor under the Loan Documents; provided, however, it is understood
 that this Agreement is not a Deed of Trust or mortgage;

 
	
  

 	
 9.04. Exercise any and
 all other rights and remedies available to the Bank under the terms of the
 Loan Documents and applicable law, including the Virginia Uniform Commercial
 Code;

 
	
  

 	
 9.05. Any obligation of
 the Bank to advance funds to the Borrower or any other Person under the terms
 of under the Note(s) and all other obligations, if any, of the Bank under the
 Loan Documents shall immediately cease and terminate unless and until Bank
 shall reinstate such obligation in writing.

 
	
  

 	
  

 
	
 Section
 10 Miscellaneous Provisions

 
	
  

 	
  

 
	
  

 	
 10.01. Definitions.

 
	
  

 	
           “Default
 Rate” shall mean a rate of interest equal to Bank’s Prime
 Rate plus five percent (5%) per annum (not to exceed the legal maximum rate)
 from and after the date of an Event of Default hereunder which shall apply,
 in the Bank’s sole discretion, to all sums owing, including principal and
 interest, on such date.

 
	
  

 	
           “Environmental
 Laws” shall mean all applicable federal and state laws and
 regulations which affect or may affect the Mortgaged Property, including
 without limitation the Comprehensive Environmental Response, Compensation,
 and Liability Act (42 U.S.C. Sections 9601 et seq.), the Resource
 Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the Federal
 Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.), the Clean Air
 Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
 U.S.C. Section 2601 et seq.), the Virginia Waste Management Act (Sections
 10.1-1400 through 1457 of the Code of Virginia, The Chesapeake Bay
 Preservation Act (Sections 10.1-2100 through 10.1-2115), Storage Tanks
 Section 62.4-44.34:8 et seq., and all other state and local laws protecting
 the environment and dealing with the release and disposal of hazardous waste
 and materials, as such laws or regulations have been amended or may be
 amended.
 “Loan Documents” shall mean this Agreement including any schedule
 attached hereto, the Note(s), the Deed(s) of Trust, the Mortgage(s), the
 Security Agreement(s), the Assignment(s) of Leases and Rents, all UCC
 Financing Statements, the Guaranty Agreement(s), and all other documents,
 certificates, and instruments executed in connection therewith, and all
 renewals, extensions, modifications, substitutions, and replacements thereto
 and therefore.

 
	
  

 	
           “Person”
 shall mean an individual, partnership, corporation, trust, unincorporated
 organization, limited liability company, limited liability partnership,
 association, joint venture, or a government agency or political subdivision
 thereof.

 
	
  

 	
           “GAAP”
 shall mean generally accepted accounting principles as established by the
 Financial Accounting Standards Board or the American Institute of Certified
 Public Accountants, as amended and supplemented from time to time.

 
	
  

 	
           “Prime
 Rate” shall mean the rate of interest per annum announced
 by the Bank from time to time and adopted as its Prime Rate, which is one of
 several rate indexes employed by the Bank when extending credit, and may not
 necessarily be the Bank’s lowest lending rate.

 
	
  

 	
 10.02. Non-impairment.
 If any one or more provisions contained in the Loan Documents shall be held
 invalid, illegal, or unenforceable in any respect, the validity, legality,
 and enforceability of the remaining provisions contained therein shall not in
 any way be affected or impaired thereby and shall otherwise remain in full
 force and effect.

 
	
  

 	
 10.03. Applicable
 Law. The Loan Documents shall be construed in accordance with and
 governed by the laws of the Commonwealth of Virginia.

 
	
  

 	
 10.04. Waiver.
 Neither the failure or any delay on the part of the Bank in exercising any
 right, power or privilege granted in the Loan Documents shall operate as a
 waiver thereof, nor shall any single or partial exercise thereof preclude any
 other or further exercise of any other right, power, or privilege which may
 be provided by law.

 
	
  

 	
 10.05. Modification.
 No modification, amendment, or waiver of any provision of any of the Loan
 Documents shall be effective unless in writing and signed by the Borrower and
 Bank.

 
	
  

 	
 10.06. Payment
 Amount Adjustment. In the event that any Loan(s) referenced herein
 has a variable (floating) interest rate and the interest rate increases,
 Bank, at its sole discretion, may at any time adjust the Borrower’s payment
 amount(s) to prevent the amount of interest accrued in a given period to
 exceed the periodic payment amount or to cause the Loan(s) to be repaid
 within the same period of time as originally agreed upon.

 
	
  

 	
 10.07 Stamps and
 Fees. The Borrower shall pay all federal or state stamps, taxes,
 or other fees or charges, if any are payable or are determined to be payable
 by reason of the execution, delivery, or issuance of the Loan Documents or
 any security granted to the Bank; and the Borrower and Guarantor agree to
 indemnify and hold harmless the Bank against any and all liability in respect
 thereof.

 
	
  

 	
 10.08. Attorneys’
 Fees. In the event the Borrower or any Pledgor or Guarantor shall
 default in any of its obligations hereunder and the Bank believes it
 necessary to employ an attorney to assist in the enforcement or collection of
 the indebtedness of the Borrower to the Bank, to enforce the terms and
 provisions of the Loan Documents, to modify the Loan Documents, or in the
 event the Bank voluntarily or otherwise should become a party to any suit or
 legal proceeding (including a proceeding conducted under the Bankruptcy
 Code), the Borrower and Guarantors agree to pay the reasonable attorneys’
 fees of the Bank and all related costs of collection or enforcement that may
 be incurred by the Bank. The Borrower and Guarantor shall be liable for such
 attorneys’ fees and costs whether or not any suit or proceeding is actually
 commenced.

 
	
  

 	
 10.09. Bank
 Making Required Payments. In the event Borrower shall fail to
 maintain insurance, pay taxes or assessments, costs and expenses which
 Borrower is, under any of the terms hereof or of any Loan Documents, required
 to pay, or fail to keep any of the properties and assets constituting
 collateral free from new security interests, liens, or encumbrances, except
 as permitted herein, Bank may at its election make expenditures for any or
 all such purposes and the amounts expended together with interest thereon at
 the Default Rate, shall become immediately due and payable to Bank, and shall
 have benefit of and be secured by the collateral; provided, however, the
 Bank shall be under no duty or obligation to make any such payments or
 expenditures.

 
	
  

 	
 10.10. Right of
 Offset. Any indebtedness owing from Bank to Borrower may be set off
 and applied by Bank on any indebtedness or liability of Borrower to Bank, at
 any time and from time to time after maturity, whether by acceleration or
 otherwise, and without demand or notice to Borrower. Bank may sell
 participations in or make assignments of any Loan made under this Agreement,
 and Borrower agrees that any such participant or assignee shall have the same
 right of setoff as is granted to the Bank herein.

 
	
  

 	
 10.11. UCC
 Authorization. Borrower authorizes Bank to file such UCC Financing
 Statements describing the collateral in any location deemed necessary and
 appropriate by Bank.

 
	
  

 	
 10.12. Modification
 and Renewal Fees. Bank may, at its option, charge any fees for
 modification, renewal, extension, or amendment of any terms of the Note(s)
 permitted by law.

 
	
  

 	
 10.13. Conflicting
 Provisions. If provisions of this Agreement shall conflict with
 any terms or provisions of any of the Note(s) or security document(s) or
 any schedule attached hereto, the provisions of such Note(s) or security
 document(s) or any schedule attached hereto, as appropriate, shall take
 priority over any provisions in this Agreement.

 
	
  

 	
 10.14. Notices.
 Any notice permitted or required by the provisions of this Agreement shall be
 deemed to have been given when delivered in writing to the City Executive or
 any Vice President of the Bank at its offices in Richmond, Virginia, and to
 the Vice President of the Borrower at its offices in Richmond, Virginia when
 sent by certified mail and return receipt requested.

 
	
  

 	
 10.15. Consent to
 Jurisdiction. Borrower hereby irrevocably agrees that any legal
 action or proceeding arising out of or relating to this Agreement may be
 instituted in the Circuit Court of Fairfax County, Virginia, or the United
 States District Court for the Eastern District of 

 


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 BB&T 

 
	
  LOAN AGREEMENT

 






	
  

 	
  

 
	
  

 	
 Virginia, or in such other
 appropriate court and venue as Bank may choose in its sole discretion.
 Borrower consents to the jurisdiction of such courts and waives any objection
 relating to the basis for personal or in rem jurisdiction or to venue which
 Borrower may now or hereafter have in any such legal action or proceedings.

 
	
  

 	
 10.16. Counterparts.
 This Agreement may be executed by one or more parties on any
 number of separate counterparts and all of such counterparts taken together
 shall be deemed to constitute one and the same instrument.

 
	
  

 	
 10.17. Entire
 Agreement. The Loan Documents embody the entire agreement between
 Borrower and Bank with respect to the Loans, and there are no oral or parol
 agreements existing between Bank and Borrower with respect to the Loans which
 are not expressly set forth in the Loan Documents. 

 
	
  

 	
 10.18. Indemnification.
 The Borrower and the Guarantors hereby jointly and severally agree to and do
 hereby indemnify and defend the Bank, its affiliates, their successors and
 assigns and their respective directors, officer, employees and shareholders,
 and do hereby hold each of them harmless from and against, any loss,
 liability, lawsuit, proceeding, cost expense or damage (including reasonable
 in-house and outside counsel fees, whether suit is brought or not) arising
 from or otherwise relating to the closing, disbursement, administration, or
 repayment of the Loans, including without limitation: (i) the failure to make
 any payment to the Bank promptly when due, whether under the Notes evidencing
 the Loans or otherwise; (ii) the breach of any representations or warranties
 to the Bank contained in this agreement or in any other loan documents now or
 hereafter executed in connection with the Loans; or (iii) the violation of
 any covenants or agreements made for the benefit of the Bank and contained in
 any of the loan documents; provided, however, that the foregoing
 indemnification shall not be deemed to cover any loss which is finally
 determined by a court of competent jurisdiction to result solely from the
 Bank’s gross negligence or willful misconduct. 

 
	
  

 	
 10.19. WAIVER OF JURY TRIAL. UNLESS EXPRESSLY PROHIBITED BY
 APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF
 ANY MATTERS OR CLAIMS ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN
 DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE
 RELATIONSHIP BETWEEN THE UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL
 INDUCEMENT FOR BANK TO MAKE THE LOAN AND ENTER INTO THIS AGREEMENT. FURTHER,
 THE UNDERSIGNED HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR
 BANK’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT
 SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION. NO
 REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S COUNSEL, HAS THE AUTHORITY TO
 WAIVE, CONDITION OR MODIFY THIS PROVISION.

 


 [SIGNATURES ON FOLLOWING PAGE]


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BB&T


LOAN AGREEMENT


Signature Page


IN WITNESS WHEREOF, the Bank, Borrower and Guarantor(s) have caused
this Agreement to be duly executed under seal all as of the date first above
written.


Borrower is a Corporation:


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality, Inc.

 	
  

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Name of Corporation

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery

 	
  

 
	
  

 	
  

 	
 Title:

 	
 Vice
 President

 	
  

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Additional Co-Borrowers or Guarantors:

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Massachusetts, Inc. 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple REIT Eight, Inc.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Executive Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Ownership, Inc.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Midwest, LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Texas, LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WITNESS:

 	
  

 	
 BRANCH BANKING AND TRUST COMPANY

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	

 


 	
  

 	
  

 	

 


 	

 


 
	
  

 	
  

 	
  

 	
 Carl B. Frye, Jr.

 	
  

 
	
  

 	
  

 	
 Title:

 	
 Senior Vice President

 	
  

 
	
  

 	
  

 	
  

 	

 


 	

 


 



- 7 -









BB&T


Loan Agreement





	
  

 	
  

 	
  

 
	
  

 	
 953-2140754/00002

 	
  

 
	
  

 	

 


 	
  

 
	
  

 	
 Account
 Number

 	
  

 



This
Loan Agreement (the “Agreement”) is made this 28th day of October, 2010 by and
between BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
(“Bank”), and: 


Apple
Eight Hospitality, Inc., a Virginia corporation (“Borrower”), having its chief
executive office at 814 E. Main St., Richmond, Virginia. 


Apple
REIT Eight, Inc. (“the REIT”), Apple Eight Hospitality Massachusetts, Inc.,
Apple Eight Hospitality Midwest, LLC, Apple Eight Hospitality Ownership, Inc.,
and Apple Eight Hospitality Texas, LLC (individually “Guarantor” and
collectively the “Guarantors”). 


The
Borrower has applied to Bank for and the Bank has agreed to make, subject to
the terms of this Agreement, the following loan(s) (hereinafter referred to,
singularly or collectively, if more than one, as “Loan”): 


Term Loan (“Term Loan”) in the principal amount of $25,000,000.00 shall be used
for working capital, property renovations, capital expenditure funding and
completion of property acquisitions, which shall be evidenced by the Borrower’s
Promissory Note dated of even date hereof and shall be payable in consecutive
monthly interest payments commencing on November 28th, 2010, and continuing on
the same day each month thereafter with one final payment of principal and
accrued interest due at maturity. The Term Loan shall bear interest at the one
month LIBOR rate plus two and twenty-five one-hundredths of a percent (2.25%)
per annum, and adjusted monthly on the note date and the rate will have a floor
of three and fifty one-hundredths of a percent (3.50%). The interest shall be
computed and charged for the actual number of days elapsed on the basis of a
year consisting of three hundred sixty (360) days. The Term Loan shall mature
on October 28th, 2012, when the entire unpaid principal balance then
outstanding plus accrued interest thereon shall be paid in full. Prepayment Compensation: None


Section 1 Conditions Precedent 


	
  

 	
  

 
	
 The
 Bank shall not be obligated to make any disbursement of Loan proceeds until
 all of the following conditions have been satisfied by proper evidence,
 execution, and/or delivery to the Bank of the following items in addition to
 this Agreement, all in form and substance satisfactory to the Bank and the
 Bank’s counsel in their sole discretion: 

 
	
 USA Patriot Act Verification Information: Information or documentation, including but
 not limited to the legal name, address, tax identification number, driver’s
 license, and date of birth (if the Borrower is an individual) of the Borrower
 sufficient for the Bank to verify the identity of the Borrower in accordance
 with the USA Patriot Act. Borrower shall notify Bank promptly of any change
 in such information. 

 
	
 Note(s): The Note(s) evidencing the Loans(s) duly executed by the Borrower. 

 
	
 Deed(s) of Trust: The Credit Line Deed(s) of Trust in which
 Apple Eight Hospitality Ownership, Inc. (the “Mortgagor”) shall grant to a
 Trustee for the benefit of bank a first Deed of Trust lien on the specified
 real property and improvements thereon (“Mortgaged Property”). The Mortgaged
 Property shall be cross-collateralized with the $75,000,000.00 line of credit
 facility to Apple Eight Hospitality, Inc. (the “Revolving Facility”). 

 
	
 Assignment of Leases and Rents: The Assignment of Leases and Rents in which
 the Mortgagor shall assign to Bank all existing and thereafter arising leases
 on the Mortgaged Property and the rents and profits therefrom. 

 
	
 Security Agreement(s): Security Agreement(s) in which Borrower and
 any other owner (a “Debtor”) of personal property collateral shall grant to
 Bank a first priority security interest in the personal property specified
 therein. (If Bank has or will have a security interest in any collateral
 which is inferior to the security interest of another creditor, Borrower must
 fully disclose to Bank any and all prior security interests, and Bank must
 specifically approve any such security interest which will continue during
 the Loan.) 

 
	
 UCC Financing Statements: Copies of UCC Financing Statements duly
 filed in Borrower’s or other owner’s state of incorporation, organization or
 residence, and in all jurisdictions necessary, or in the opinion of the Bank
 desirable, to perfect the security interests granted in the Security
 Agreement(s), and certified copies of Information Requests identifying all
 previous financing statements on record for the Borrower or other owner, as
 appropriate from all jurisdictions indicating that no security interest has
 previously been granted in any of the collateral described in the Security
 Agreement(s), unless prior approval has been given by the Bank. 

 
	
 Commitment Fee: A non-refundable commitment fee (or balance
 thereof) of 31,250.00 payable to the Bank at closing of the Term Loan which
 shall be deemed fully earned whether or not the $25,000,000.00 Term Loan
 closes, unless failure to close is due solely to the Bank’s gross negligence
 or willful misconduct. In addition, the Borrower shall pay any and all
 attorney’s and related legal fees, recording fees, appraisal fees, documentary
 stamp and intangible taxes, and other costs incurred by the Bank in
 connection with the making, documenting and closing of the Term Loan. 

 
	
 Corporate Resolution: A Corporate Resolution duly adopted by the
 Board of Directors of the Borrower authorizing the execution, delivery, and
 performance of the Loan Documents on or in a form provided by or acceptable
 to Bank. 

 
	
 Articles of Incorporation: A copy of the Articles of Incorporation and
 all other charter documents of the Borrower, all filed with and certified by
 the Secretary of State of the State of the Borrower’s incorporation. 

 
	
 By-Laws: A copy of the By-Laws of the Borrower, certified by the Secretary of
 the Borrower as to their completeness and accuracy. 

 
	
 Certificate of Incorporation: A copy of the Certificate of Incorporation
 as filed with the Secretary of State, Corporation Commission. 

 
	
 Certificate of Incumbency: A certificate of the Secretary of the
 Borrower certifying the names and true signatures of the officers of the
 Borrower authorized to sign the Loan Documents. 

 
	
 Certificate of Existence: A certification of the Secretary of State
 (or other government authority) of the State of the Borrower’s Incorporation
 or Organization as to the existence or good standing of the Borrower and its
 charter documents on file. 

 
	
 Opinion of Counsel: An opinion of counsel for the Borrower
 satisfactory to the Bank and the Bank’s counsel. 

 
	
 Guaranty: Unconditional joint and unlimited guarantee
 of payment of the Loan, including principal, interest, late fees, if any, and
 costs of collection, from the REIT, Apple Eight Hospitality Massachusetts,
 Inc., Apple Eight Hospitality Midwest, LLC, Apple Eight Hospitality
 Ownership, Inc., and Apple Eight Hospitality Texas, LLC. 

 
	
 Hazard Insurance: At closing, the Borrower shall provide the Bank a copy of the hazard
 insurance policies for the replacement cost of all properties in the Property
 Group. 

 
	
 Title Insurance: A Standard CLTA mortgage policy from a company or companies approved
 by the Bank, providing coverage for the aggregate principal amount of the
 Note(s) and insuring the appropriate lien priority of the Deed(s) of Trust
 and which shall not contain any title exceptions or policy exclusions not
 approved by the Bank and Bank’s counsel. 

 
	
 Environmental Audit Report: A favorable “Phase I” unedited
 environmental audit covering the Mortgaged Property from an independent
 environmental engineering firm satisfactory to Bank which reflects that no
 hazardous waste, toxic substances, or other hazardous materials have contaminated
 the Mortgaged Property or, if the Mortgaged Property has been so
 contaminated, that it has been satisfactorily cleaned up in accordance with
 all Environmental Laws. The Bank shall be fully authorized to discuss all
 aspects of the audit with the engineering firm. 

 
	
 Appraisal(s): Two (2) copies of an appraisal ordered by the Bank of the estimated
 market value of the real and/or personal property offered as collateral for
 the Loan(s) referenced herein. The appraisal(s) must be addressed to the Bank
 and must conform to the Uniform Standards of Professional Appraisal Practice
 (“USPAP”) adopted by the Appraisal Standards Board of the Appraisal
 Foundation. Any deviation from the USPAP must be explained in the
 appraisal(s). The appraiser(s) must be licensed and/or certified if required
 by applicable Federal Deposit Insurance Corporation regulations or state
 laws. 

 
	
 Survey: A current plat of survey of the Mortgaged Property, prepared and
 certified by a registered land surveyor or a civil engineer. 

 
	
 Flood Hazard Certification: Evidence satisfactory to Bank and Bank’s
 counsel as to whether the Mortgaged Property is located within an area
 identified as having “special flood hazards” as such term is used in the
 Federal Flood Disaster Protection Act of 1973. 

 



- 1 -









BB&T


Loan Agreement


Additional Documents: Receipt by the Bank of other approvals,
opinions, or documents as the Bank may reasonably request. 


Section 2 Representations and Warranties 


	
  

 	
  

 	
  

 
	
 The Borrower and
 Guarantor(s) represent and warrant to Bank that:

 
	
  

 	
 2.01.
 Financial Statements. The
 consolidated balance sheet of the REIT and its subsidiaries, if any, and the
 related Statements of Income and Retained Earnings of the Guarantor and its
 subsidiaries, the accompanying footnotes together with the accountant’s
 opinion thereon, and all other financial information previously furnished to
 the Bank, are true and correct and fairly reflect the financial condition of
 the Guarantor and its subsidiaries as of the dates thereof, including all
 contingent liabilities of every type, and the financial condition of the
 Guarantor and its subsidiaries as stated therein has not changed materially
 and adversely since the date thereof. 

 
	
  

 	
 2.02.
 Name, Capacity and Standing. The
 Borrower’s exact legal name is correctly stated in the initial paragraph of
 the Agreement. If the Borrower and/or any Guarantor is a corporation, general
 partnership, limited partnership, limited liability partnership, or limited
 liability company, each warrants and represents that it is duly organized and
 validly existing under the laws of its respective state of incorporation or
 organization; that it and/or its subsidiaries, if any, are duly qualified and
 in good standing in every other state in which the nature of their business
 shall require such qualification, and are each duly authorized by their board
 of directors, general partners or member/manager(s), respectively, to enter
 into and perform the obligations under the Loan Documents. 

 
	
  

 	
 2.03.
 No Violation of Other Agreements.
 The execution of the Loan Documents, and the performance by the Borrower, by
 any and all pledgors (whether the Borrower or other owners of collateral
 property securing payment of the Loan (hereinafter sometimes referred to as
 the “Pledgor”)) or by the Guarantor(s) thereunder will not violate any
 provision, as applicable, of its articles of incorporation, by-laws, articles
 of organization, operating agreement, agreement of partnership, limited
 partnership or limited liability partnership, or, of any law, other
 agreement, indenture, note, or other instrument binding upon the Borrower,
 Pledgor or Guarantor(s), or give cause for the acceleration of any of the
 respective obligations of the Borrower or Guarantor(s). 

 
	
  

 	
 2.04.
 Authority. All authority from
 and approval by any federal, state, or local governmental body, commission or
 agency necessary to the making, validity, or enforceability of this Agreement
 and the other Loan Documents has been obtained. 

 
	
  

 	
 2.05.
 Asset Ownership. The Borrower
 and each Guarantor have good and marketable title to all of the properties
 and assets reflected on the balance sheets and financial statements furnished
 to the Bank, and all such properties and assets are free and clear of
 mortgages, deeds of trust, pledges, liens, and all other encumbrances except
 as otherwise disclosed by such financial statements. In addition, each other
 owner of collateral has good and marketable title to such collateral, free
 and clear of any liens, security interests and encumbrances, except as
 otherwise disclosed to Bank. 

 
	
  

 	
 2.06.
 Discharge of Liens and Taxes.
 The Borrower and its subsidiaries, if any, and each Guarantor have filed,
 paid, and/or discharged all taxes or other claims which may become a lien on
 any of their respective properties or assets, excepting to the extent that such
 items are being appropriately contested in good faith and for which an
 adequate reserve (in an amount acceptable to Bank) for the payment thereof is
 being maintained. 

 
	
  

 	
 2.07.
 Regulations U and X. None of the
 Loan proceeds shall be used directly or indirectly for the purpose of
 purchasing or carrying any margin stock in violation of the provisions of
 Regulation U and Regulation X of the Board of Governors of the Federal
 Reserve System. 

 
	
  

 	
 2.08.
 ERISA. Each employee benefit
 plan, as defined by the Employee Retirement Income Security Act of 1974, as
 amended (“ERISA”), maintained by the Borrower or by any subsidiary of the
 Borrower or Guarantor(s) meets, as of the date hereof, the minimum funding
 standards of Section 302 of ERISA, all applicable requirements of ERISA and
 of the Internal Revenue Code of 1986, as amended, and no “Reportable Event”
 nor “Prohibited Transaction” (as defined by ERISA) has occurred with respect
 to any such plan. 

 
	
  

 	
 2.09.
 Litigation. There is no claim,
 action, suit or proceeding pending, threatened or reasonably anticipated
 before any court, commission, administrative agency, whether State or
 Federal, or arbitration which will materially adversely affect the financial
 condition, operations, properties, or business of the Borrower or its
 subsidiaries, if any, or the Guarantor(s), or the ability of the Borrower or
 the Guarantor(s) to perform their obligations under the Loan Documents. 

 
	
  

 	
 2.10. Other Agreements. The representations and
 warranties made by Borrower to Bank in the other Loan Documents are true and
 correct in all respects on the date hereof. 

 
	
  

 	
 2.11.
 Binding and Enforceable. The
 Loan Documents, when executed, shall constitute valid and binding obligations
 of the Borrower and Guarantors respectively, the execution of such Loan
 Documents has been duly authorized by the parties thereto, and are
 enforceable in accordance with their terms, except as may be limited by
 bankruptcy, insolvency, moratorium, or similar laws affecting creditors’
 rights generally. 

 
	
  

 	
 2.12.
 Commercial Purpose. The Loan(s)
 are not “consumer transactions”, as defined in the Virginia Uniform
 Commercial Code, and none of the collateral was or will be purchased or held
 primarily for personal, family or household purposes. 

 
	
  

 
	
 Section 3
 Affirmative Covenants

 
	
  

 
	
 The
 Borrower covenants and agrees that from the date hereof and until payment in
 full of all indebtedness and performance of all obligations owed under the
 Loan Documents, Borrower shall: 

 
	
  

 	
 3.01.
 Maintain Existence and Current Legal Form
 of Business. (a) Maintain its existence and good standing in the
 state of its incorporation or organization, (b) maintain its current legal
 form of business indicated above, and, (c) as applicable, qualify and remain
 qualified as a foreign corporation, general partnership, limited partnership,
 limited liability partnership or limited liability company in each
 jurisdiction in which such qualification is required. 

 
	
  

 	
 3.02. Maintain Records. Keep adequate records
 and books of account, in which complete entries will be made in accordance
 with GAAP consistently applied, reflecting all financial transactions of the
 Borrower. 

 
	
  

 	
 3.03.
 Maintain Properties. Maintain,
 keep, and preserve all of its properties (tangible and intangible) including
 the collateral necessary or useful in the conduct of its business in good
 working order and condition, ordinary wear and tear excepted. 

 
	
  

 	
 3.04. Conduct of Business. Continue to engage
 in an efficient, prudent, and economical manner in a business of the same
 general type as now conducted. 

 
	
  

 	
 3.05.
 Maintain Insurance. Maintain
 insurance with financially sound and reputable insurance companies or
 associations in such amounts and covering such risks as are usually carried
 by companies engaged in the same or a similar business, and business
 interruption insurance if required by Bank, which insurance may provide for
 reasonable deductible(s). 

 
	
  

 	
 3.06.
 Comply With Laws. Comply in all
 respects with all applicable laws, rules, regulations, and orders including,
 without limitation, paying before the delinquency of all taxes, assessments,
 and governmental charges imposed upon it or upon its property, and all
 Environmental Laws. 

 
	
  

 	
 3.07.
 Right of Inspection. Permit the
 officers and authorized agents of the Bank, at any reasonable time or times
 in the Bank’s sole discretion, to examine and make copies of the records and
 books of account of, to visit the properties of the Borrower, and to discuss
 such matters with any officers, directors, managers, members or partners,
 limited or general of the Borrower, and the Borrower’s independent accountant
 as the Bank deems necessary and proper. 

 
	
  

 	
 3.08.

 	
 Reporting Requirements. Furnish to the Bank:

 
	
  

 	
  

 	
 Quarterly Financial Statements (10-Q): Quarterly financial statement for the REIT,
 as soon as available and not more than Forty-five (45) days after the end of
 each quarter, balance sheets, statements of income, cash flow, and retained
 earnings for the period ended and a statement of changes in the financial
 position, all in reasonable detail, and all prepared in accordance with GAAP
 consistently applied and certified as true and correct by an officer, general
 partner or manager (or member(s)) of the REIT Guarantor, as appropriate. 

 
	
  

 	
  

 	
 Annual Financial Statements (10-K): Consolidated fiscal year-end financial
 statement for the REIT, as soon as available and not more than One Hundred
 Twenty (120) days after the end of each fiscal year, balance sheets,
 statements of income, and retained earnings for 

 


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 the
 period ended and a statement of changes in the financial position of the REIT
 Guarantor, all in reasonable detail, and all prepared in accordance with GAAP
 consistently applied. The financial statements must be of the following
 quality or better: Audited. 

 
	
  

 	
  

 	
 Notice of Litigation: Promptly after the receipt by the Borrower,
 or by any Guarantor of which Borrower has knowledge, of notice or complaint
 of any action, suit, and proceeding before any court or administrative agency
 of any type which, if determined adversely, could have a material adverse effect
 on the financial condition, properties, or operations of the Borrower or
 Guarantor, as appropriate. 

 
	
  

 	
  

 	
 Tax Returns: As soon as available each year, complete copies (including all
 schedules) of all state and federal tax returns filed by Borrower. 

 
	
  

 	
  

 	
 Notice
of Default: Promptly upon discovery or knowledge thereof, notice of the
existence of any event of default under this Agreement or any other Loan
Documents.  

 
	
  

 	
  

 	
 USA Patriot Act Verification Information: Information or documentation, including but
 not limited to the legal name, address, tax identification number, driver’s
 license, and date of birth (if the Borrower is an individual) of the Borrower
 sufficient for the Bank to verify the identity of the Borrower in accordance
 with the USA Patriot Act. Borrower shall notify Bank promptly of any change
 in such information. 

 
	
  

 	
  

 	
 Other Information: Such other information as the Bank may from time to time reasonably
 request. 

 
	
  

 	
 3.09.

 	
 Deposit Accounts. Borrower and related companies agree to maintain their existing
 deposit relationship with the Bank. Borrower will open an operating account
 to support this term loan facility. 

 
	
  

 	
 3.10.

 	
 Affirmative Covenants from other Loan Documents. All affirmative covenants contained in any
 Deed of Trust, Security Agreement, Assignment of Leases and Rents, or other
 security document executed by the Borrower which are described in Section 1
 hereof are hereby incorporated by reference herein. 

 



Section 4 Guarantor(s) Covenants 


	
  

 	
  

 
	
 Each
 Guarantor covenants and agrees that from the date hereof and until payment in
 full of all indebtedness and performance of all obligations owed under the
 Loan Documents, Guarantor shall: 

 
	
 4.01.
 Maintain Existence and Current Legal Form
 of Business. If Guarantor is a corporation, partnership, limited
 partnership, limited liability partnership or limited liability company, (a)
 maintain its existence and good standing in the state of its incorporation or
 organization, (b) maintain its current legal form of business as shown on the
 guaranty agreement provided by Guarantor to Bank in connection with the Loan,
 (c) without the Bank’s prior written consent, change Guarantor’s name, or
 enter into any merger, consolidation, reorganization or exchange of stock,
 ownership interests or assets, and (d) as applicable, qualify and remain
 qualified as a foreign corporation, general partnership, limited partnership,
 limited liability partnership or limited liability company in each
 jurisdiction in which such qualification is required. 

 
	
 4.02.Maintain Properties -
 Liquid Assets. If the Guarantor is a corporation,
 partnership, limited partnership, limited liability partnership, limited
 liability limited partnership, or limited liability company, it shall not,
 without the prior written consent of Bank, sell, transfer or otherwise
 dispose of all or substantially all of Guarantor’s properties (tangible or
 intangible), except in the ordinary course of business. Liquid Assets
 includes but is not limited to all securities and/or securities accounts,
 bonds, mutual funds, certificates of deposit, money market accounts, U.S.
 Treasuries and other federal agency instruments, hedge funds, derivative
 accounts and other investment instruments. 

 
	
 4.03.Comply With Laws. Comply in all respects
 with all applicable laws, rules, regulations, and orders including, without
 limitation, paying before the delinquency of all taxes, assessments, and
 governmental charges imposed or assessed upon Guarantor or upon Guarantor’s
 property, and all Environmental Laws. 

 
	
 4.04.

 	
 Reporting Requirements. Furnish to the Bank: 

 
	
  

 	
 Notice of Litigation: Promptly after the receipt by Guarantor, or
 by Borrower of which Guarantor has knowledge, of notice of any action, suit,
 and proceeding before any court or governmental agency of any type which, if
 determined adversely, could have a material adverse effect on the financial
 condition, properties, or operations of the Guarantor or Borrower, as
 appropriate. 

 
	
 4.05.Transfer of Ownership. Not, without the
 prior written consent of the Bank: If Guarantor is a corporation, (a) issue, transfer
 or sell any new class of stock, or (b) issue, transfer or sell, in the
 aggregate, from its treasury stock and/or currently authorized but unissued
 shares of any class of stock, more than 50% of the total number of all such
 issued and outstanding shares as of the date of this Agreement; or, if
 Guarantor is a general partnership, limited partnership, limited liability
 partnership or limited liability company, issue, transfer or sell any
 interest in Guarantor. 

 
	
 4.06.Tax Returns: As soon as available each
 year, furnish complete copies (including all schedules) of all state and
 federal tax returns filed by Guarantor. 

 
	
 4.07.Other Information: Furnish such other
 information as the Bank may from time to time reasonably request. 

 
	
  

 
	
 Section 5 Financial Covenants 

 


The
Borrower covenants and agrees that from the date hereof until payment in full
of all indebtedness and the performance of all obligations under the Loan
Documents, the Borrower shall at all times maintain the following financial
covenants and ratios all in accordance with GAAP unless otherwise specified
(all covenants to be calculated based on the consolidated results of the REIT):



	
  

 	
  

 
	
  

 	
 Tangible Net Worth. A minimum tangible net worth of not less
 than $700,000,000.00 (at all times). Tangible Net Worth is defined as net
 worth, plus obligations contractually subordinated to debts owed to Bank,
 minus goodwill, contract rights, and assets representing claims on
 stockholders or affiliated entities. 

 
	
  

 	
 Debt to Worth. A ratio of total liabilities to tangible net worth of not greater
 than .50 to 1.0. 

 
	
  

 	
 Debt Service Coverage Ratio. Global Cash Flow Coverage Ratio which is
 defined as Global annual NOI to annual Global Debt Service, shall be 1.50
 times Debt Service. Global Annual NOI is defined as net income before taxes
 plus interest expense plus depreciation expense plus amortization expense.
 Annual Global Debt Service is defined as a current portion of long term debt
 plus interest expense. 

 
	
  

 	
 Quarterly Global Net Operating Income to Debt Service plus
 Dividends Ratio.
 Ratio is to be no less than 60% for the fourth (4th) quarter 2010,
 65% for the first (1st) quarter 2011, 70% for the second (2nd)
 quarter 2011, 75% for the third (3rd) quarter 2011, 80% for the
 fourth (4th) quarter 2011, 90% for the first (1st)
 quarter 2012 and 100% for the second (2nd) quarter 2012 and all
 quarters subsequent. Covenant to be calculated using the trailing twelve (12)
 months each quarter. For purposes of this calculation, Dividends shall mean
 dividends paid to unitholders of the REIT less proceeds received by the REIT
 pursuant to its dividend reinvestment plan, plus amounts paid to unitholders
 by the REIT pursuant to its share redemption program.

 
	
  

 	
 Officer Compliance Certificate. Certificate must be completed on an annual
 basis. 

 



Section 6 Negative Covenants 


The
Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all obligations under the Loan
Documents, the Borrower shall not, without the prior written consent of the
Bank: 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.01.
 Liens. Create, incur, assume, or
 suffer to exist any lien upon or with respect to the Mortgaged Property, any
 of Borrower’s properties contained in the Borrowing Base Property Group (as
 defined in the Revolving Facility Loan Agreement), , except: 

 
	
  

 	
  

 	
 (a) 

 	
 Liens
 and security interests in favor of the Bank;

 
	
  

 	
  

 	
 (b) 

 	
 Liens
 for taxes not yet due and payable or otherwise being contested in good faith
 and for which appropriate reserves are maintained;

 


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 (c)

 	
 Other
 liens imposed by law not yet due and payable, or otherwise being contested in
 good faith and for which appropriate reserves are maintained;

 
	
  

 	
  

 	
 (d)

 	
 purchase
 money security interests either outstanding on the date hereof on any
 property hereafter acquired, provided that such lien shall attach only to the
 property acquired. 

 
	
  

 	
  

 	
 (e)

 	
 Liens
 on assets not already encumbered except as outlined in the negative pledge
 agreement.

 
	
  

 	
 6.02.
 Debt. Create, incur, assume, or
 suffer to exist any debt, except: 

 
	
  

 	
  

 	
 (a)

 	
 Debt to the Bank; 

 
	
  

 	
  

 	
 (b)

 	
 Debt
 outstanding on the date hereof and shown on the most recent financial
 statements submitted to the Bank; 

 
	
  

 	
  

 	
 (c)

 	
 Accounts payable to trade
 creditors incurred in the ordinary course of business; 

 
	
  

 	
  

 	
 (d)

 	
 Debt
 secured by purchase money security interests as outlined above in Section
 6.01 (d); 

 
	
  

 	
  

 	
 (e)

 	
 Additional
 funded debt in excess of $10,000,000.00, with the exception of permanent
 market debt up to $25,000,000.00 with the proceeds being used to payoff
 Branch Banking and Trust Company $25,000,000.00 term loan credit facility. 

 
	
  

 	
 6.03.
 Change of Legal Form of Business; Purchase
 of Assets. Change Borrower’s name or the legal form of Borrower’s
 business as shown above, whether by merger, consolidation, conversion or
 otherwise, and Borrower shall not purchase all or substantially all of the
 assets or business to sell any of its assets of any Person other than in the
 ordinary course of business without prior Bank consent. This loan condition
 surrounds the sale of the REIT, and/or the acquisition/merger with another
 real estate investment trust, but not the acquisition or sale of individual
 real estate properties held by the REIT, or related subsidiaries. The
 Borrower must notify the Bank if they sell REIT. 

 
	
  

 	
 6.04.
 Dividends or Distributions; Acquisition of
 Capital Stock or Other Ownership Interests. Declare or pay any
 dividends or distributions of any kind, or purchase or redeem, retire, or
 otherwise acquire any of Borrower’s capital stock or other ownership
 interests, now or hereafter outstanding in any fiscal year of the Borrower,
 except as outlined above under Section 5, Financial Covenants, Quarterly Net
 Operating Income to Debt Service plus Dividends Ratio section. 

 
	
  

 	
 6.05.
 Leases. Create, incur, assume,
 or suffer to exist any leases, except:

 
	
  

 	
  

 	
 (a)

 	
 Leases outstanding on the date
 hereof and showing on the most recent financial statement submitted to the
 Bank; 

 
	
  

 	
  

 	
 (b)

 	
 Leases with total lease payments less than $1 million.

 
	
  

 	
 6.06.
 Guaranties. Assume, guarantee,
 endorse, or otherwise be or become directly or contingently liable for
 obligations of any Person, except guaranties by endorsement of negotiable
 instruments for deposit or collection or similar transactions in the ordinary
 course of business. 

 
	
  

 	
 6.07.
 Disposition of Assets. Sell, lease,
 or otherwise dispose of any of the properties in the Property Group except as
 set forth in the Negative Pledge Agreement. 

 
	
  

 	
 6.08.
 Transfer of Ownership. If
 Borrower is a corporation, (a) issue, transfer or sell any new class of
 stock, or (b) issue, transfer or sell, in the aggregate, from its treasury
 stock and/or currently authorized but unissued shares of any class of stock,
 more than 50% of the total number of all such issued and outstanding shares
 as of the date of this Agreement to a non-affiliate. If Borrower is a general
 partnership, limited partnership, limited liability partnership or limited
 liability company, issue, transfer or sell any interest in Borrower to a
 non-affiliate. 

 
	
  

 	
 6.09.
 Negative Covenants from other Loan
 Documents. All negative covenants contained in any Deed of Trust,
 Security Agreement, Assignment of Leases or Rents, or other security document
 executed by the Borrower which are described in Section 1 hereof are hereby
 incorporated by reference herein. 

 



Section 7 Hazardous Materials and Compliance with
Environmental Laws 


	
  

 	
  

 
	
  

 	
 7.01.
 Investigation. Borrower hereby
 certifies that it has exercised due diligence to ascertain whether its real
 property, including without limitation the Property Group, is or has been
 affected by the presence of asbestos, oil, petroleum or other hydrocarbons,
 urea formaldehyde, PCBs, hazardous or nuclear waste, toxic chemicals and
 substances, or other hazardous materials (collectively, “Hazardous
 Materials”), as defined in applicable Environmental Laws. Borrower represents
 and warrants that there are no such Hazardous Materials contaminating its
 real property, nor have any such materials been released on or stored on or
 improperly disposed of on its real property during its ownership, occupancy
 or operation thereof. Borrower hereby agrees that, except in strict
 compliance with applicable Environmental Laws, it shall not knowingly permit
 any release, storage or contamination as long as any indebtedness or
 obligations to Bank under the Loan Documents remains unpaid or unfulfilled.
 In addition, Borrower does not have or use any underground storage tanks on
 any of its real property, including the Property Group which are not
 registered with the appropriate Federal and/or State agencies and which are
 not properly equipped and maintained in accordance with all Environmental
 Laws. If requested by Bank, Borrower shall provide Bank with all necessary
 and reasonable assistance required for purposes of determining the existence
 of Hazardous Materials on any property within the Property Group, including
 allowing Bank access to such property, and access to Borrower’s employees
 having knowledge of, and to files and records within Borrower’s control
 relating to the existence, storage, or release of Hazardous Materials on the
 subject property. 

 
	
  

 	
 7.02.
 Compliance. Borrower agrees to
 comply with all applicable Environmental Laws, including, without limitation,
 all those relating to Hazardous Materials. Borrower further agrees to provide
 Bank, and all appropriate Federal and State authorities, with immediate
 notice in writing of any release of Hazardous Materials on any property
 within the Property Group and to pursue diligently to completion all
 appropriate and/or required remedial action in the event of such release. 

 
	
  

 	
 7.03.
 Remedial Action. Borrower agrees
 to indemnify and hold Bank harmless from any and all loss or liability
 arising out of any violation of the representations, covenants, and
 obligations contained in this Section 7, or resulting from the recording of
 the Deed(s) of Trust. 

 
	
  

 
	
 Section 8 Events of Default 

 
	
  

 
	
 The
 following shall be “Events of Default” by Borrower or any Guarantor: 

 
	
  

 	
 8.01.
 The failure to make prompt payment of any installment of principal or
 interest on any of the Note(s) when due or payable. 

 
	
  

 	
 8.02.
 Should any representation or warranty made in the Loan Documents prove to be
 false or misleading in any material respect. 

 
	
  

 	
 8.03.
 Should any report, certificate, financial statement, or other document
 furnished prior to the execution of or pursuant to the terms of this
 Agreement prove to be false or misleading in any material respect. 

 
	
  

 	
 8.04.
 Should the Borrower or any Guarantor default on the performance of any other
 obligation of indebtedness when due or in the performance of any obligation
 incurred in connection with money borrowed. 

 
	
  

 	
 8.05.
 Should the Borrower, any Guarantor or any Pledgor breach any covenant,
 condition, or agreement made under any of the Loan Documents. 

 
	
  

 	
 8.06.
 Should a custodian be appointed for or take possession of any or all of the
 assets of the Borrower or any Guarantor, or should the Borrower or any
 Guarantor either voluntarily or involuntarily become subject to any
 insolvency proceeding, including becoming a debtor under the United States
 Bankruptcy Code, any proceeding to dissolve the Borrower or any Guarantor,
 any proceeding to have a receiver appointed, or should the Borrower or any
 Guarantor make an assignment for the benefit of creditors, or should there be
 an attachment, execution, or other judicial seizure of all or any portion of
 the Borrower’s or any Guarantor’s assets, including an action or proceeding
 to seize any funds on deposit with the Bank, and such seizure is not
 discharged within 30 days. 

 
	
  

 	
 8.07.
 Should final judgment for the payment of money in excess of $1,000,000 be
 rendered against the Borrower or any Guarantor which is not covered by
 insurance and shall remain undischarged for a period of 30 days unless such
 judgment or execution thereon be effectively stayed. 

 
	
  

 	
 8.08.
 Upon the death of, or termination of existence of, or dissolution of, any
 Borrower, Pledgor or Guarantor. 

 
	
  

 	
 8.09.
 Should any lien or security interest granted to Bank to secure payment of the
 Note(s) terminate, fail for any reason to have the priority agreed to by Bank
 on the date granted, or become unperfected or invalid for any reason. 

 


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Section 9 Remedies Upon Default 


	
  

 	
  

 
	
 Upon
 the occurrence of any of the above listed Events of Default, the Bank may at
 any time thereafter, at its option, take any or all of the following actions,
 at the same or at different times: 

 
	
  

 	
 9.01.
 Declare the balance(s) of the Note(s) to be immediately due and payable, both
 as to principal and interest, late fees, and all other amounts/expenditures
 without presentment, demand, protest, or notice of any kind, all of which are
 hereby expressly waived by Borrower and each Guarantor, and such balance(s)
 shall accrue interest at the Default Rate as provided herein until paid in
 full; 

 
	
  

 	
 9.02.
 Require the Borrower or Guarantor(s) to pledge additional collateral to the
 Bank from the Borrower’s or any Guarantor’s assets and properties, the
 acceptability and sufficiency of such collateral to be determined in the
 Bank’s sole discretion; 

 
	
  

 	
 9.03.
 Take immediate possession of and foreclose upon any or all collateral which
 may be granted to the Bank as security for the indebtedness and obligations
 of Borrower or any Guarantor under the Loan Documents; provided, however, it
 is understood that this Agreement is not a Deed of Trust or mortgage; 

 
	
  

 	
 9.04.
 Exercise any and all other rights and remedies available to the Bank under
 the terms of the Loan Documents and applicable law, including the Virginia
 Uniform Commercial Code; 

 
	
  

 	
 9.05.
 Any obligation of the Bank to advance funds to the Borrower or any other
 Person under the terms of under the Note(s) and all other obligations, if
 any, of the Bank under the Loan Documents shall immediately cease and
 terminate unless and until Bank shall reinstate such obligation in writing. 

 
	
  

 	
  

 
	
 Section 10 Miscellaneous Provisions 

 
	
  

 	
  

 
	
  

 	
 10.01.
 Definitions. 

 
	
  

 	
           “Default
Rate” shall mean a rate of interest equal to Bank’s Prime Rate plus five
percent (5%) per annum (not to exceed the legal maximum rate) from and after
the date of an Event of Default hereunder which shall apply, in the Bank’s
sole discretion, to all sums owing, including principal and interest, on such
date.  

 
	
  

 	
           “Environmental
 Laws” shall mean all
 applicable federal and state laws and regulations which affect or may affect
 the Mortgaged Property, including without limitation the Comprehensive
 Environmental Response, Compensation, and Liability Act (42 U.S.C. Sections
 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections
 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Sections
 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
 Substances Control Act (15 U.S.C. Section 2601 et seq.), the Virginia Waste
 Management Act (Sections 10.1-1400 through 1457 of the Code of Virginia, The
 Chesapeake Bay Preservation Act (Sections 10.1-2100 through 10.1-2115),
 Storage Tanks Section 62.4-44.34:8 et seq., and all other state and local
 laws protecting the environment and dealing with the release and disposal of
 hazardous waste and materials, as such laws or regulations have been amended
 or may be amended. “Loan Documents”
 shall mean this Agreement including any schedule attached hereto, the
 Note(s), the Deed(s) of Trust, the Mortgage(s), the Security Agreement(s),
 the Assignment(s) of Leases and Rents, all UCC Financing Statements, the
 Guaranty Agreement(s), and all other documents, certificates, and instruments
 executed in connection therewith, and all renewals, extensions,
 modifications, substitutions, and replacements thereto and therefore. 

 
	
  

 	
           “Person” shall mean an individual, partnership,
 corporation, trust, unincorporated organization, limited liability company,
 limited liability partnership, association, joint venture, or a government
 agency or political subdivision thereof. 

 
	
  

 	
           “GAAP” shall mean generally accepted accounting
 principles as established by the Financial Accounting Standards Board or the
 American Institute of Certified Public Accountants, as amended and
 supplemented from time to time. 

 
	
  

 	
           “Prime
 Rate” shall mean the
 rate of interest per annum announced by the Bank from time to time and
 adopted as its Prime Rate, which is one of several rate indexes employed by
 the Bank when extending credit, and may not necessarily be the Bank’s lowest
 lending rate. 

 
	
  

 	
 10.02.
 Non-impairment. If any one or
 more provisions contained in the Loan Documents shall be held invalid,
 illegal, or unenforceable in any respect, the validity, legality, and
 enforceability of the remaining provisions contained therein shall not in any
 way be affected or impaired thereby and shall otherwise remain in full force
 and effect. 

 
	
  

 	
 10.03.
 Applicable Law. The Loan
 Documents shall be construed in accordance with and governed by the laws of
 the Commonwealth of Virginia. 

 
	
  

 	
 10.04.
 Waiver. Neither the failure or
 any delay on the part of the Bank in exercising any right, power or privilege
 granted in the Loan Documents shall operate as a waiver thereof, nor shall
 any single or partial exercise thereof preclude any other or further exercise
 of any other right, power, or privilege which may be provided by law. 

 
	
  

 	
 10.05.
 Modification. No modification,
 amendment, or waiver of any provision of any of the Loan Documents shall be
 effective unless in writing and signed by the Borrower and Bank. 

 
	
  

 	
 10.06.
 Payment Amount Adjustment. In
 the event that any Loan(s) referenced herein has a variable (floating)
 interest rate and the interest rate increases, Bank, at its sole discretion,
 may at any time adjust the Borrower’s payment amount(s) to prevent the amount
 of interest accrued in a given period to exceed the periodic payment amount
 or to cause the Loan(s) to be repaid within the same period of time as
 originally agreed upon. 

 
	
  

 	
 10.07
 Stamps and Fees. The Borrower
 shall pay all federal or state stamps, taxes, or other fees or charges, if
 any are payable or are determined to be payable by reason of the execution,
 delivery, or issuance of the Loan Documents or any security granted to the
 Bank; and the Borrower and Guarantor agree to indemnify and hold harmless the
 Bank against any and all liability in respect thereof. 

 
	
  

 	
 10.08.
 Attorneys’ Fees. In the event
 the Borrower or any Pledgor or Guarantor shall default in any of its
 obligations hereunder and the Bank believes it necessary to employ an
 attorney to assist in the enforcement or collection of the indebtedness of
 the Borrower to the Bank, to enforce the terms and provisions of the Loan
 Documents, to modify the Loan Documents, or in the event the Bank voluntarily
 or otherwise should become a party to any suit or legal proceeding (including
 a proceeding conducted under the Bankruptcy Code), the Borrower and
 Guarantors agree to pay the reasonable attorneys’ fees of the Bank and all
 related costs of collection or enforcement that may be incurred by the Bank.
 The Borrower and Guarantor shall be liable for such attorneys’ fees and costs
 whether or not any suit or proceeding is actually commenced. 

 
	
  

 	
 10.09.
 Bank Making Required Payments.
 In the event Borrower shall fail to maintain insurance, pay taxes or
 assessments, costs and expenses which Borrower is, under any of the terms
 hereof or of any Loan Documents, required to pay, or fail to keep any of the
 properties and assets constituting collateral free from new security
 interests, liens, or encumbrances, except as permitted herein, Bank may at
 its election make expenditures for any or all such purposes and the amounts
 expended together with interest thereon at the Default Rate, shall become
 immediately due and payable to Bank, and shall have benefit of and be secured
 by the collateral; provided, however, the Bank shall be under no duty or
 obligation to make any such payments or expenditures. 

 
	
  

 	
 10.10.
 Right of Offset. Any
 indebtedness owing from Bank to Borrower may be set off and applied by Bank
 on any indebtedness or liability of Borrower to Bank, at any time and from
 time to time after maturity, whether by acceleration or otherwise, and
 without demand or notice to Borrower. Bank may sell participations in or make
 assignments of any Loan made under this Agreement, and Borrower agrees that
 any such participant or assignee shall have the same right of setoff as is
 granted to the Bank herein. 

 
	
  

 	
 10.11.
 UCC Authorization. Borrower
 authorizes Bank to file such UCC Financing Statements describing the
 collateral in any location deemed necessary and appropriate by Bank. 

 
	
  

 	
 10.12.
 Modification and Renewal Fees.
 Bank may, at its option, charge any fees for modification, renewal,
 extension, or amendment of any terms of the Note(s) permitted by law. 

 
	
  

 	
 10.13.
 Conflicting Provisions. If
 provisions of this Agreement shall conflict with any terms or provisions of
 any of the Note(s) or security document(s) or any schedule attached hereto,
 the provisions of such Note(s) or security document(s) or any schedule
 attached hereto, as appropriate, shall take priority over any provisions in
 this Agreement. 

 


- 5 -








BB&T


Loan Agreement





	
  

 	
  

 
	
  

 	
 10.14.
 Notices. Any notice permitted or
 required by the provisions of this Agreement shall be deemed to have been
 given when delivered in writing to the City Executive or any Vice President
 of the Bank at its offices in Richmond, Virginia, and to the Vice President
 of the Borrower at its offices in Richmond, Virginia when sent by certified
 mail and return receipt requested. 

 
	
  

 	
 10.15.
 Consent to Jurisdiction. Borrower
 hereby irrevocably agrees that any legal action or proceeding arising out of
 or relating to this Agreement may be instituted in the Circuit Court of
 Fairfax County, Virginia, or the United States District Court for the Eastern
 District of Virginia, or in such other appropriate court and venue as Bank
 may choose in its sole discretion. Borrower consents to the jurisdiction of
 such courts and waives any objection relating to the basis for personal or in
 rem jurisdiction or to venue which Borrower may now or hereafter have in any
 such legal action or proceedings. 

 
	
  

 	
 10.16.
 Counterparts. This Agreement may
 be executed by one or more parties on any number of separate counterparts and
 all of such counterparts taken together shall be deemed to constitute one and
 the same instrument. 

 
	
  

 	
 10.17.
 Entire Agreement. The Loan
 Documents embody the entire agreement between Borrower and Bank with respect
 to the Loans, and there are no oral or parol agreements existing between Bank
 and Borrower with respect to the Loans which are not expressly set forth in
 the Loan Documents. 

 
	
  

 	
 10.18.
 Indemnification. The Borrower
 and the Guarantors hereby jointly and severally agree to and do hereby
 indemnify and defend the Bank, its affiliates, their successors and assigns
 and their respective directors, officer, employees and shareholders, and do
 hereby hold each of them harmless from and against, any loss, liability,
 lawsuit, proceeding, cost expense or damage (including reasonable in-house
 and outside counsel fees, whether suit is brought or not) arising from or
 otherwise relating to the closing, disbursement, administration, or repayment
 of the Loans, including without limitation: (i) the failure to make any
 payment to the Bank promptly when due, whether under the Notes evidencing the
 Loans or otherwise; (ii) the breach of any representations or warranties to
 the Bank contained in this agreement or in any other loan documents now or
 hereafter executed in connection with the Loans; or (iii) the violation of
 any covenants or agreements made for the benefit of the Bank and contained in
 any of the loan documents; provided, however, that the foregoing
 indemnification shall not be deemed to cover any loss which is finally
 determined by a court of competent jurisdiction to result solely from the
 Bank’s gross negligence or willful misconduct. 

 
	
  

 	
 10.19.
 WAIVER OF JURY TRIAL. UNLESS EXPRESSLY
 PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL
 BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF THIS AGREEMENT OR ANY OF THE
 LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE
 RELATIONSHIP BETWEEN THE UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL
 INDUCEMENT FOR BANK TO MAKE THE LOAN AND ENTER INTO THIS AGREEMENT. FURTHER,
 THE UNDERSIGNED HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR
 BANK’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT
 SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION. NO
 REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S COUNSEL, HAS THE AUTHORITY TO
 WAIVE, CONDITION OR MODIFY THIS PROVISION. 

 


[SIGNATURES ON FOLLOWING PAGE]  


- 6 -








BB&T


Loan Agreement





SIGNATURE PAGE


IN WITNESS WHEREOF, the Bank,
Borrower and Guarantor(s) have caused this Agreement to be duly executed under
seal all as of the date first above written. 


Borrower is a Corporation:



	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality, Inc.

 	
  

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Name of Corporation

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery

 	
  

 
	
  

 	
  

 	
 Title:

 	
 Vice
 President

 	
  

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Additional Co-Borrowers or Guarantors:

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Massachusetts, Inc. 

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple REIT Eight, Inc.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Ownership, Inc.

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Executive Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Midwest, LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple Eight Hospitality Texas, LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
   (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WITNESS:

 	
  

 	
 BRANCH BANKING AND TRUST COMPANY

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 
	

 


 	
  

 	
  

 	

 


 	

 


 
	
  

 	
  

 	
  

 	
 Carl B. Frye, Jr.

 	
  

 
	
  

 	
  

 	
 Title:

 	
 Senior Vice President

 	
  

 
	
  

 	
  

 	
  

 	

 


 	

 


 


- 7 -






ADDENDUM TO PROMISSORY NOTE


THIS ADDENDUM TO PROMISSORY NOTE
(“Addendum”) is hereby made a part of the Promissory Note dated October 28,
2010 from APPLE EIGHT HOSPITALITY, INC. (“Borrower”)
payable to the order of Branch Banking and Trust Company (“Bank”) in the
principal amount of $75,000,000.00 (including all renewals, extensions,
modifications and substitutions therefore, the “Note”).


	
  

 	
  

 
	
 I.

 	
 DEFINITIONS

 



1.1 Adjusted LIBOR Rate means a rate of interest per annum,
subject to the Floor (defined below) equal to the sum obtained (rounded
upwards, if necessary, to the next higher 1/100th of 1.0%) by adding (i) the
One Month LIBOR plus (ii) 2.250 % per annum, which shall be adjusted monthly on
the 28th day of each month for each LIBOR Interest Period. If the 28th
day of any month falls on a date when the Bank is closed, the Adjusted LIBOR
Rate shall be determined as of the last preceding business day. The Adjusted
LIBOR Rate shall be adjusted for any change in the LIBOR Reserve Percentage so
that Bank shall receive the same yield. 


1.2 One Month LIBOR means the average rate (rounded upwards, if
necessary, to the next higher 1/100th of 1.0%) quoted on Bloomberg Screen BBAM1
or Page 3750 (or such replacement page) of the Telerate Service on the
determination date for deposits in U.S. Dollars offered in the London interbank
market for one month, or if the above method for determining the One Month
LIBOR shall not be available, the rate quoted in The Wall Street Journal, or a
rate determined by a substitute method of determination agreed on by Borrower
and Bank; provided, if such agreement is not reached within a reasonable period
of time (in Bank’s sole judgment), a rate reasonably determined by Bank in its
sole discretion as a rate being paid, as of the determination date, by first
class banking organizations (as determined by Bank) in the London interbank
market for U.S. Dollar deposits.


1.3 LIBOR Advance means the advances made by Bank to Borrower
evidenced by this Note upon which the Adjusted LIBOR Rate of interest shall
apply.


1.4 LIBOR Interest Period means a period of one calendar month as
may be elected by the Borrower applicable to any LIBOR Advance which shall
begin on first day of any month notwithstanding the maturity date of this Note;
provided, however, that a LIBOR Interest Period may be less than one calendar
month in and only in the calendar month in which the Note originates or
matures.


1.5 LIBOR Reserve Percentage means the maximum aggregate rate at
which reserves (including, without limitation, any marginal supplemental or
emergency reserves) are required to be maintained under Regulation D by member
banks of the Federal Reserve System with respect to dollar funding in the
London interbank market. Without limiting the effect of the foregoing, the LIBOR
Reserve Percentage shall reflect any other reserves required to be maintained
by such member banks by reason of any applicable regulatory change against (i)
any category of liability which includes deposits by reference to which the
Adjusted LIBOR Rate is to be determined or (ii) any category of extensions of
credit or other assets related to LIBOR.


1.6 Standard Rate means, for any day, a rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1.0%) equal to the Bank’s
announced Prime Rate minus 1% per annum, and each change in the Standard Rate
shall be effective on the date any change in the Prime Rate is publicly
announced as being effective.


1.7 Floor means an interest rate of three and fifty one-hundredths
of a percent (3.50%) 


1









	
  

 	
  

 
	
 II.

 	
 LOAN BEARING ADJUSTED LIBOR RATE

 



2.1 Application of Adjusted LIBOR
Rate. The Adjusted LIBOR Rate shall apply to the entire principal balance
outstanding of a LIBOR Advance for any LIBOR Interest Period.


2.2 Adjusted LIBOR Based Rate
Protections.


          (a)
Inability to Determine Rate. In the event that Bank shall have
determined, which determination shall be final, conclusive and binding, that by
reason of circumstances occurring after the date of this Note affecting the
London interbank market, adequate and fair means do not exist for ascertaining
the One Month LIBOR on the basis provided for in this Note, Bank shall give
notice (by telephone confirmed in writing or by telecopy) to Borrower of such
determination, whereupon (i) no LIBOR Advance shall be made until Bank notifies
Borrower that the circumstances giving rise to such notice no longer exist, and
(ii) any request by Borrower for a LIBOR Advance shall be deemed to be a
request for an advance at the Standard Rate.


          (b)
Illegality. Impracticability. In the event that Bank shall determine,
which determination shall be final, conclusive and binding, that the making,
maintaining or continuance of any portion of a LIBOR Advance (i) has become
unlawful as a result of compliance by Bank with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any of the same
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause Bank material
hardship, as a result of contingencies occurring after the date of this Note
materially and adversely affect the London interbank market or Bank’s ability
to make LIBOR Advances generally, then, and in any such event, Bank shall give
notice (by telephone confirmed in writing or by telecopy) to Borrower of such
determination. Thereafter, (x) the obligation of Bank to make any LIBOR
Advances or to convert any portion of the loan to a LIBOR Advance shall be
suspended until such notice shall be withdrawn by Bank, and (y) any request by
Borrower for a LIBOR Advance shall be deemed to be a request for an advance at
the Standard Rate.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 APPLE EIGHT HOSPITALITY, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
     Bryan
 F. Peery

 
	
  

 	
  

 	
 Title:
   Vice President

 





2





COMMONWEALTH OF VIRGINIA 

CITY OF RICHMOND______________


On this 28th day of
October, 2010, before me, the undersigned Notary Public, personally appeared
Bryan F. Peery, and known to me to be the Vice President of Apple Eight
Hospitality, Inc., the company that
executed this instrument and acknowledged this instrument to be the free and
voluntary act and deed of the corporation, by authority of its Bylaws or by the
resolution of its board of directors, for the uses and purposes therein
mentioned, and on oath stated that he or she is authorized to execute this
instrument and in fact executed the instrument on behalf of the corporation.


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (SEAL)

 
	
  

 	

 


 	
  

 
	
  

 	
 Notary Public

 	
  

 
	
  

 	
 My Commission Expires: ______________

 
	
  

 	
 Notary Registration Number: ____________

 


3






ADDENDUM TO PROMISSORY NOTE


THIS ADDENDUM TO PROMISSORY NOTE
(“Addendum”) is hereby made a part of the Promissory Note dated October 28,
2010 from APPLE EIGHT HOSPITALITY, INC. (“Borrower”)
payable to the order of Branch Banking and Trust Company (“Bank”) in the
principal amount of $25,000,000.00 (including all renewals, extensions,
modifications and substitutions therefore, the “Note”).


	
  

 	
  

 
	
 I.

 	
 DEFINITIONS

 



1.1 Adjusted LIBOR Rate means a rate of interest per annum,
subject to the Floor (as defined below), equal to the sum obtained (rounded
upwards, if necessary, to the next higher 1/100th of 1.0%) by adding (i) the
One Month LIBOR plus (ii) 2.250 % per annum, which shall be adjusted monthly on
the 28th day of each month for each LIBOR Interest Period. If the 28th
day of any month falls on a date when the Bank is closed, the Adjusted LIBOR
Rate shall be determined as of the last preceding business day. The Adjusted
LIBOR Rate shall be adjusted for any change in the LIBOR Reserve Percentage so
that Bank shall receive the same yield.


1.2 One Month LIBOR means the average rate (rounded upwards, if
necessary, to the next higher 1/100th of 1.0%) quoted on Bloomberg Screen BBAM1
or Page 3750 (or such replacement page) of the Telerate Service on the
determination date for deposits in U.S. Dollars offered in the London interbank
market for one month, or if the above method for determining the One Month
LIBOR shall not be available, the rate quoted in The Wall Street Journal, or a
rate determined by a substitute method of determination agreed on by Borrower
and Bank; provided, if such agreement is not reached within a reasonable period
of time (in Bank’s sole judgment), a rate reasonably determined by Bank in its
sole discretion as a rate being paid, as of the determination date, by first
class banking organizations (as determined by Bank) in the London interbank
market for U.S. Dollar deposits.


1.3 LIBOR Advance means the advances made by Bank to Borrower
evidenced by this Note upon which the Adjusted LIBOR Rate of interest shall
apply.


1.4 LIBOR Interest Period means a period of one calendar month as
may be elected by the Borrower applicable to any LIBOR Advance which shall
begin on first day of any month notwithstanding the maturity date of this Note;
provided, however, that a LIBOR Interest Period may be less than one calendar
month in and only in the calendar month in which the Note originates or
matures.


1.5 LIBOR Reserve Percentage means the maximum aggregate rate at
which reserves (including, without limitation, any marginal supplemental or
emergency reserves) are required to be maintained under Regulation D by member
banks of the Federal Reserve System with respect to dollar funding in the
London interbank market. Without limiting the effect of the foregoing, the
LIBOR Reserve Percentage shall reflect any other reserves required to be
maintained by such member banks by reason of any applicable regulatory change
against (i) any category of liability which includes deposits by reference to
which the Adjusted LIBOR Rate is to be determined or (ii) any category of
extensions of credit or other assets related to LIBOR.


1.6 Standard Rate means, for any day, a rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1.0%) equal to the Bank’s
announced Prime Rate minus 1% per annum, and each change in the Standard Rate
shall be effective on the date any change in the Prime Rate is publicly
announced as being effective.


1





1.7 Floor means an interest rate
of three and fifty one-hundredths of a percent (3.50%) 


	
  

 	
  

 
	
 II.

 	
 LOAN BEARING ADJUSTED LIBOR RATE

 



2.1 Application of Adjusted LIBOR
Rate. The Adjusted LIBOR Rate shall apply to the entire principal balance
outstanding of a LIBOR Advance for any LIBOR Interest Period.


2.2 Adjusted LIBOR Based Rate
Protections.


          (a)
Inability to Determine Rate. In the event that Bank shall have
determined, which determination shall be final, conclusive and binding, that by
reason of circumstances occurring after the date of this Note affecting the
London interbank market, adequate and fair means do not exist for ascertaining
the One Month LIBOR on the basis provided for in this Note, Bank shall give
notice (by telephone confirmed in writing or by telecopy) to Borrower of such
determination, whereupon (i) no LIBOR Advance shall be made until Bank notifies
Borrower that the circumstances giving rise to such notice no longer exist, and
(ii) any request by Borrower for a LIBOR Advance shall be deemed to be a
request for an advance at the Standard Rate.


          (b)
Illegality. Impracticability. In the event that Bank shall determine,
which determination shall be final, conclusive and binding, that the making,
maintaining or continuance of any portion of a LIBOR Advance (i) has become
unlawful as a result of compliance by Bank with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any of the same
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause Bank material
hardship, as a result of contingencies occurring after the date of this Note
materially and adversely affect the London interbank market or Bank’s ability
to make LIBOR Advances generally, then, and in any such event, Bank shall give
notice (by telephone confirmed in writing or by telecopy) to Borrower of such
determination. Thereafter, (x) the obligation of Bank to make any LIBOR
Advances or to convert any portion of the loan to a LIBOR Advance shall be
suspended until such notice shall be withdrawn by Bank, and (y) any request by
Borrower for a LIBOR Advance shall be deemed to be a request for an advance at
the Standard Rate.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 APPLE EIGHT HOSPITALITY, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  (SEAL)

 
	
  

 	
  

 	
  

 	

 


 	
  

 
	
  

 	
  

 	
  

 	
     Bryan
 F. Peery

 
	
  

 	
  

 	
 Title:
   Vice President

 



2





COMMONWEALTH OF VIRGINIA 

CITY OF RICHMOND______________


On this 28th day of
October, 2010, before me, the undersigned Notary Public, personally appeared
Bryan F. Peery, and known to me to be the Vice President of Apple Eight
Hospitality Ownership, Inc., the company
that executed this instrument and acknowledged this instrument to be the free
and voluntary act and deed of the corporation, by authority of its Bylaws or by
the resolution of its board of directors, for the uses and purposes therein
mentioned, and on oath stated that he or she is authorized to execute this
instrument and in fact executed the instrument on behalf of the corporation.


	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (SEAL)

 
	
  

 	

 


 	
  

 
	
  

 	
 Notary Public

 	
  

 
	
  

 	
 My Commission Expires: ______________

 
	
  

 	
 Notary Registration Number: ____________

 


3






NEGATIVE PLEDGE AGREEMENT


THIS NEGATIVE PLEDGE
AGREEMENT (“Agreement”), made this 28th day of October, 2010, by
Apple Eight Hospitality, Inc., a Virginia corporation (the “Borrower”), in
favor of Branch Banking & Trust Company, a North Carolina banking
corporation (the “Bank”). Unless otherwise defined in this Agreement, defined
terms shall have the meaning as set forth and defined in the Commitment Letter
dated August 20, 2010 and the Commitment Letter dated August 23, 2010.


WITNESSETH:


	
  

 	
  

 
	
 1.

 	
 Definitions

 



          1.1
“Bank” means Branch Banking & Trust Company, a North Carolina banking
corporation.


          1.2
“Borrower” means Apple Eight Hospitality, Inc., a Virginia corporation.


          1.3
“Borrowing Base Property Group” shall mean the properties set forth on Exhibit
A hereto.


          1.4
“Capitalization Rate” means the rate of return used to derive the capital value
of an income stream.


          1.5
“Initial Value” means the aggregate purchase price of the properties in the
Borrowing Base Property Group.


          1.6
“Net Operating Income” means income before taxes plus interest plus
depreciation expense plus amortization expense as determined in accordance with
Generally Accepted Accounting Principles.


          1.7
“Ongoing Value” means the
lesser of the Initial Value or the aggregate Net Operating Income of the
properties in the Borrowing Base Property Group divided by a 10% Capitalization
Rate.


          1.8
“Value” means either Initial Value at the time of the execution of this
Agreement or Ongoing Value which shall be measured at or about 60 days
following the end of each of Apple REIT Eight, Inc’s fiscal quarter. 


          1.9
“REIT” shall mean Apple REIT Eight, Inc., a Virginia corporation


	
  

 	
  

 
	
 2.

 	
 Negative Pledge

 



          2.1
In consideration of and for the Line Facility in the amount of $75,000,000 of
even date (the “Line Facility”) and the Term Loan in the amount of $25,000,000
of even date (the “Term Loan”) extended to the Borrower, the Borrower hereby
covenants and agrees with the Bank that so long as any indebtedness under
either the Line Facility or the Term Loan by and between the Borrower and the
Bank, any note(s) executed and delivered in connection therewith, 





and any extensions, renewals or modifications thereof,
has not been satisfied, the Borrower shall not and shall not allow any of its
subsidiaries, without the prior written consent of the Bank, to breach any of
the following conditions: 


	
  

 	
  

 	
  

 
	
  

 	
 (a) The “Borrowing Base Property Group shall not, in
 the aggregate at any time fail to maintain sufficient Value to cover the Line
 Facility and any other unsecured debt at a ratio of Value to debt of 2.0,
 which shall be measured at or about 60 days following the end of each of the
 REIT’s fiscal quarter.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b) Borrower shall not and
 shall not allow any of its subsidiary to convey or otherwise transfer all or
 any part of any property in the Borrowing Base Property Group or any
 tenements, easements, hereditaments, privileges, minerals and mineral rights,
 water and water rights, buildings, fixtures and improvements now or hereafter
 erected or located in or on any property in the Borrowing Base Property
 Group, nor create, assume, incur or suffer to exist any pledge, mortgage,
 assignment or other lien or encumbrance of any kind, of or upon any property
 in the Borrowing Base Property Group or upon the income or profits therefrom
 except for: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i) liens for taxes, assessments and other
 governmental charges which are not delinquent or which are being contested in
 good faith by appropriate proceedings diligently conducted, against which
 adequate reserves have been established; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii) liens imposed by law in connection with
 transactions in the ordinary course of business, such as liens of mechanics
 and materialmen for sums not yet due or being contested in good faith and by
 appropriate proceedings diligently conducted, against which adequate reserves
 have been established; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii) zoning restrictions, licenses and minor
 encumbrances and irregularities in title, all of which in the aggregate do
 not materially detract from the value of the properties involved or
 materially impair their use in the operation of its business; or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv) leases entered into in the ordinary course of business. 

 
	
  

 	
  

 	
  

 
	
  

 	
 Without limiting the
 generality of the foregoing, if and to the extent that any unauthorized lien
 or encumbrance is recorded or docketed against, or attached to, any property
 in the Borrowing Base Property Group, whether voluntarily or involuntarily,
 the Borrower shall immediately cause the same to be released or satisfied in
 full. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c) Borrow shall be entitled to exchange properties
 in the Borrowing Base Property Group with other properties owned by the
 Borrower or one of its subsidiaries so long as Bank is provided prior written
 notice of the exchange.

 


2









	
  

 	
  

 	
  

 
	
  

 	
 (d) No property in the Borrowing Base Property Group
 shall be outside of Bank’s Servicing Area. For purposes of this Agreement,
 Bank’s Servicing Area means the states and/or commonwealths of Indiana,
 Kentucky, Tennessee, Alabama, Georgia, Florida, West Virginia, Maryland,
 Virginia, North Carolina and South Carolina and the District of Columbia.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e) Each entity owning a property in the Borrowing
 Base Property Group shall be individually compliant with all applicable
 franchise agreements, environmental compliance, clear title and other items
 deemed appropriate and necessary should Bank find it necessary to become a
 secured lender.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f) No property in the
 Borrowing Base Property Group shall have a Value in excess of $40 million.

 



          2.2
Any breach of the pledges set forth in this Agreement shall be considered a
breach of any and all of the Loan Documents. Any and all cure periods and
remedies for such breach shall be the same as set forth in the Loan Documents.


	
  

 	
  

 
	
 3.

 	
 MISCELLANEOUS
 PROVISIONS

 



          3.1
Entire
Agreement. This Agreement, including any Addendums referenced herein
and attached hereto (which shall be deemed incorporated herein by this
reference), constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof, and supersedes, supplants, and renders
null and void any and all prior and contemporaneous negotiations, discussions,
proposals, agreements, understandings, representations or communications, oral
or written, of the parties hereto with respect to the subject matter hereof.


          3.2
Binding
Effect. This Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.


          3.3
Amendment.
This Agreement may be amended only by a writing duly executed by the authorized
representatives of the parties hereto which makes specific reference to this
Agreement.


          3.4
Notices.
All notices, requests, demands, consents, authorizations, claims, and other
communications hereunder must be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (a) upon
confirmation of facsimile, (b) one (1) business day following the date sent
when sent by overnight delivery and (c) five (5) business days following the
date mailed when mailed by registered or certified mail return receipt
requested and postage prepaid at the addresses set forth in the preamble to this
Agreement. Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and 


3





other communications hereunder are to be delivered by
giving the other parties notice in the manner herein set forth.


          3.5
Governing
Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia without regard to conflict of law
provisions.


          3.6
Waiver.
No party to this Agreement shall be deemed to have waived any of its rights,
powers or remedies under this Agreement unless such waiver is expressly set
forth in a writing signed by the waiving party. No written waiver of any
provision of this Agreement shall be deemed to be, or shall constitute, (i) a
waiver of any other provision of this Agreement, whether or not similar, or
(ii) a continuing or subsequent waiver of the same or another provision of this
Agreement. The failure of either party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other party of any of the provisions of this Agreement, will in no way
be construed to be a present or future waiver of any such provisions, or in any
way affect the validity of either party to enforce each and every such
provision thereafter.


          3.7
Captions.
The captions and headings of Sections and subsections contained in this
Agreement are provided for convenience of reference only and shall not be
considered a part hereof for purposes of interpreting this Agreement, and,
therefore, such captions and headings do not define, modify, limit, describe or
affect in any way the meaning or intent of this Agreement or any of its terms
or provisions.


          3.8
Gender,
Etc. Whenever the context shall require, the use of the masculine
gender herein shall be deemed to include the feminine gender and the neuter
gender, and the use of the singular or the plural herein shall be deemed to
include the plural or the singular, as the case may be.


          3.9
Severability.
If any Section or other provision of this Agreement, or the application of such
Section or provision, is held invalid, then the remainder of this Agreement,
and the application of such Section or provision to persons or circumstances
other than those with respect to which it is held invalid, shall not in any way
be affected or impaired thereby. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction or panel
of arbitrators to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision. The parties agree to
negotiate in good faith a substitute valid and enforceable provision that most
nearly effects the parties’ intent and to be bound by the mutually agreed
substitute provision.


          3.10
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together will constitute one and the
same instrument.


          3.11
Remedies.
All remedies shall be cumulative and not alternative and in addition to all
other rights and remedies available in law and in equity.


 [The
remainder of this page is intentionally left blank and followed by the
signature page.]


4





          WITNESS
the following signatures and seals as of the day and year first above written:


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 APPLE EIGHT HOSPITALITY,
 INC.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 	
 (SEAL)

 
	
  

 	
  

 	

 


 	
  

 
	
  

 	
 Name: Bryan F. Peery

 	
  

 
	
  

 	
 Its: Vice President

 	
  

 






	
  

 	
  

 
	
 COMMONWEALTH OF VIRGINIA

 	
 )

 
	
  

 	
 ) To-wit:

 
	
 CITY OF RICHMOND

 	
 )

 


          I,
_________________________, a Notary Public in and for the Commonwealth of
Virginia, City of Richmond, hereby certify that Bryan F. Peery, Vice President
of Apple Eight Hospitality, Inc., whose name is signed to the foregoing
Negative Pledge Agreement, has appeared before me and acknowledged the same in
my jurisdiction aforesaid.


          GIVEN
under my hand and seal this 28th day of October, 2010.


	
  

 	
  

 
	
  

 	

 


 
	
  

 	
 Notary Public

 
	
  

 	
 Notary No.:

 


5






GUARANTY
AGREEMENT


BRANCH BANKING AND TRUST COMPANY 

BB&T FINANCIAL, FSB


Dear Sirs:


          As
an inducement to Branch Banking and Trust Company and/or BB&T Financial,
FSB (collectively “Bank”) to extend credit to and to otherwise deal with APPLE
EIGHT HOSPITALITY, INC. (“Borrower”), and in consideration thereof, the
undersigned (and each of-the undersigned jointly and severally if more than
one) hereby absolutely and unconditionally guarantees to Bank and its
successors and assigns the due and punctual payment of any and all notes,
drafts, debts, obligations and liabilities, primary or secondary (whether by
way of endorsement or otherwise), of Borrower, at any time, now or hereafter,
incurred with or held by Bank, together with interest, as and when the same
become due and payable, whether by acceleration or otherwise, in accordance
with the terms of any such notes, drafts, debts, obligations or liabilities or
agreements evidencing any such indebtedness, obligation or liability including
all renewals, extensions and modifications thereof. The obligation of each of
the undersigned is a guarantee of payment and not of collection.


          Each
of the undersigned is Bank’s debtor for all indebtedness, obligations and
liabilities for which this Guaranty is made, and Bank shall also at all times
have a lien on and security interest in all stocks, bonds and other securities
of each of the undersigned at any time in Bank’s possession and the same shall
at Bank’s option be held, administered and disposed of as collateral to any
such indebtedness, obligation or liability of the Borrower, and Bank shall also
at all times have the right of set-off against any deposit account of each of
the undersigned with Bank in the same manner and to the same extent that the
right of set-off may exist against the Borrower.


          It
is understood that any such notes, drafts, debts, obligations and liabilities
may be accepted or created by or with Bank at any time and from time to time
without notice to each of the undersigned, and each of the undersigned hereby
expressly waives presentment, demand, protest, and notice of dishonor of any
such notes, drafts, debts, obligations and liabilities or other evidences of
any such indebtedness, obligation or liability. Bank may receive and accept
from time to time any securities or other property as a collateral to any such
notes, drafts, debts, obligations and liabilities, and may surrender,
compromise, exchange and release absolutely the same or any part thereof at any
time without notice to each of the undersigned and without in any manner
affecting the obligation and liability of each of the undersigned hereby
created. Each of the undersigned agrees that Bank shall have no obligation to
protect, perfect, secure or insure any security interests, liens or
encumbrances now or hereafter held for the indebtedness, obligations and
liabilities for which this Guaranty is made.


          This
obligation and liability on the part of each of the undersigned shall be a
primary, and not a secondary, obligation and liability, payable immediately
upon demand without recourse first having been had by Bank against the Borrower
or any other guarantor, person, firm or corporation, and without first
resorting to any property held by Bank as collateral security; and each of the
undersigned hereby waives the benefits of all provisions of law, including but
not limited to the provisions of Virginia Code 4.§49-25 and 49-26 or their
successors, for stay or delay of execution or sale of property or other
satisfaction of judgment against each of the undersigned on account of
obligation and liability hereunder until judgment be obtained therefor against
the Borrower and execution thereon returned unsatisfied, or until it is shown
that the Borrower has no property available for the satisfaction of the
indebtedness, obligation or liability guaranteed hereby, or until any other
proceedings can be had; and each of the undersigned hereby agrees to indemnify
the Bank for all costs of collection, including but not limited to the costs of
repossession, foreclosure, reasonable attorneys’ fees and court costs incurred
by the Bank in the event that the Bank should first be required by each of the
undersigned to resort to any property held by the Bank or In which the Bank has
a security interest or to obtain execution or other satisfaction of a Judgment
against the Borrower on account of Borrower’s obligation and liability for its
indebtedness guaranteed hereby; and each of the undersigned further agrees that
each of the undersigned is responsible for any obligation or debt, or portion
thereof, of 





the Borrower to the Bank
which has been paid by the Borrower to the Bank and which the Bank is
subsequently required to return to the Borrower or a trustee for the Borrower
in any bankruptcy or insolvency proceeding; and each of the undersigned further
agrees that none of the undersigned shall have any right of subrogation,
reimbursement or indemnity whatsoever, nor any right of recourse to security
for the debts and obligations of the Borrower to Bank unless and until all of
the debts and obligations of the Borrower to Bank have been paid in full. Each
of the undersigned hereby waives, to the extent avoidable under any provision
of the Bankruptcy Code, any right arising upon payment by each of the
undersigned of any obligation under this Guaranty to assert a claim against the
bankruptcy estate of the Borrower.


Check applicable box:


	
  

 	
  

 
	
 o

 	
 This Guaranty is
 unlimited and applies to all indebtedness of Borrower, whether now existing
 or hereafter arising.

 
	
 þ

	
 This Guaranty applies
 to all indebtedness of Borrower evidenced by its promissory notes dated
 October 28, 2010 (including all extensions, renewals, and modifications
 thereof) in the principal amount of $75,000,000 and October 28, 2010 (including
 all extensions, renewals, and modifications thereof) in the principal amount
 of $25,000,000.

 
	
 o

 	
 This Guaranty is
 limited to an amount of $______________ plus accrued interest, late fees,
 costs of collection (including attorneys fees) and all other obligations and
 indebtedness which may accrue or be incurred with respect to the Borrower’s
 promissory note/line number _______ dated ________________ (including all
 extensions, renewals, and modifications thereof) in the principal amount of
 $__________________.

 
	
 o

 	
 This Guaranty is
 limited to an amount of $_____________ plus accrued interest, late fees,
 costs of collection (including attorneys’ fees) and all other obligations and
 indebtedness which may accrue or be incurred with respect to the Borrower’s indebtedness
 and obligations to Bank.

 


          This
agreement shall inure to the benefit of Bank, its successors and assigns, and
the owners and holders of any of the indebtedness, obligations and liabilities
hereby guaranteed, and shall remain in force until a written notice revoking it
has been received by Bank; but such revocation shall not release any of the
undersigned from liability to Bank, its successors and assigns, or the owners
and holders of any of the indebtedness, obligations and liabilities hereby
guaranteed, for any indebtedness, obligation or liability of the Borrower which
is hereby guaranteed and then in existence or from any renewals, extensions or
modifications thereof in whole or in part, whether such renewals, extensions or
modifications are made before or after such revocation, with or without notice
to each of the undersigned. Each of the undersigned waives presentment, demand,
protest and notices of every kind and assents to any one or more extensions,
modifications, renewals or postponements of the time or amount of payment or
any other indulgences given to Borrower. Each of the undersigned shall be
responsible for and shall reimburse the Bank for all costs and expenses
(including reasonable attorneys’ fees) incurred by the Bank in connection with
the enforcement of this Guaranty or the protection or preservation of any right
or claim of the Bank in connection herewith, including without limitation costs
and expenses incurred by the Bank in connection with its attempts to collect the
indebtedness, obligations, and liabilities guaranteed hereby.


          If
the Borrower is a corporation, this instrument covers all indebtedness,
obligations and liabilities to Bank purporting to be made or undertaken on
behalf of such corporation by any such officer or agent of said corporation
without regard to the actual authority of such officer or agent. The term
“corporation” shall include associations of all kinds and all purported
corporations, whether correctly and legally chartered and organized.


          Each
of the undersigned covenants, warrants, and represents to the Bank that: (i)
this guaranty is enforceable against each of the undersigned in accordance with
its terms; (ii) the execution and delivery of this Guaranty does not violate or
constitute a breach of any agreement to which any of the undersigned is a
party; (it) that there is no litigation, claim, action or proceeding pending
or, to the best knowledge of each of the undersigned, threatened against any of
the undersigned which would materially adversely affect the financial condition
of the undersigned or his ability to fulfill his obligations hereunder; and
(iv) that each of the undersigned has knowledge of the Borrower’s financial
condition and affairs.







          This
Guaranty is made in and shall be construed in accordance with the laws and
judicial decisions of the Commonwealth of Virginia. The undersigned agrees that
any dispute arising out of this Guaranty shall be adjudicated in either the
state or federal courts of Virginia and in no other forum. For that purpose,
the undersigned hereby submits to the jurisdiction of the state and/or federal
courts of Virginia. The undersigned waives any defense that venue is not proper
for any action brought in any federal or state court in the Commonwealth of
Virginia.


[Signatures on
Following Page]





Witness the signature and seal of each of the
undersigned.


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 WITNESS:

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 Apple
 Eight Hospitality Massachusetts, 

 Inc.




 	
  

 	
 (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 Apple
 REIT Eight, Inc.




 	
  

 	
 (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 Apple
 Eight Hospitality Ownership, Inc.




 	
  

 	
 (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Bryan
 F. Peery, Vice President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Apple
 Eight Hospitality Midwest, LLC

 	
  

 	
  

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 	
 (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           Bryan
 F. Peery

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           Vice
 President

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Apple
 Eight Hospitality Texas, LLC

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
 Apple Eight Hospitality
 Ownership, Inc., its Sole Member

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
  

 	
  

 	
 (SEAL)

 
	

 


 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           Bryan
 F. Peery

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
           Vice
 President

 	
  

 	
  

 






	
  

 	
  

 	
  

 
	
  Date: October 28, 2010

 	
  

 	
  

 
	
  

 
	
 COMMONWEALTH OF VIRGINIA

 	
 )

 	
  

 
	
  

 	
  

 	
 ) To-wit:

 
	
 CITY OF RICHMOND

 	
 )

 	
  

 


          I,
_________________________, a Notary Public in and for the Commonwealth of
Virginia, City of Richmond, hereby certify that Bryan F. Peery, Vice President
of Apple Eight Hospitality, Inc., whose name is signed to the foregoing
Guaranty Agreement, has appeared before me and acknowledged the same in my
jurisdiction aforesaid.


          GIVEN
under my hand and seal this 28th day of October, 2010.


	
  

 	
  

 	
  

 
	
  

 	

 


 	
  

 
	
 Notary Public

 	
  

 	
  

 
	
           Notary
 No.: