Document:

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                                                                    EXHIBIT 10.3

                         SECOND AMENDMENT AND JOINDER

                          Dated as of August 31, 2001

                                      to

PURCHASE AGREEMENT dated May 18, 2001 between RESIDENCE INN III LLC, as Seller,
                 and APPLE HOSPITALITY TWO INC., as Purchaser,

                               Entered into by:

                            RESIDENCE INN III LLC,
                                 as "Company,"

                          APPLE HOSPITALITY TWO INC.,
                                as "Apple," and

                MARRIOTT RESIDENCE INN USA LIMITED PARTNERSHIP
                         as "Controlling Partnership,"

                               and Joined in by

                         CRESTLINE CAPITAL CORPORATION
                                as "Crestline,"

                                 CC USAGP LLC
                             as "General Partner,"

                       CCMH DESERT SPRINGS CORPORATION,
                           as "Desert Springs," and

                                 CCRI USA LLC
                                   as "CCRI"
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                         SECOND AMENDMENT AND JOINDER

     THIS SECOND AMENDMENT AND JOINDER (this "Agreement") is executed as of the
31st day of August, 2001 (the "Amendment Date") by RESIDENCE INN III LLC, a
Delaware limited liability company (the "Company"), MARRIOTT RESIDENCE INN USA
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Controlling
Partnership"), CCRI USA LLC, a Delaware limited liability company ("CCRI"), the
holder of a 94% limited partnership interest in the Controlling Partnership,
CCMH DESERT SPRINGS CORPORATION, a Delaware corporation ("Desert Springs"), the
holder of a 1% limited partnership interest in the Controlling Partnership, CC
USAGP LLC, a Delaware limited liability company (the "General Partner"), the
holder of a 5% general partnership interest (the sole general partnership
interest) in the Controlling Partnership, CRESTLINE CAPITAL CORPORATION, a
Maryland corporation ("Crestline" and together with the General Partner, CCRI
and Desert Springs, individually, a "Selling Entity" and collectively, the
"Selling Entities"), the holder of 100% of the shares of the Independent Member
(as hereinafter defined) and APPLE HOSPITALITY TWO INC., a Virginia corporation
("Apple"), on behalf of itself and affiliates of Apple that will be designated
to purchase the Controlling Interests (as hereinafter defined).

                                   ARTICLE I
                    Definitions; Original Agreement Amended
                    ---------------------------------------

     1.1   Definitions.  All terms defined in the Original Agreement (as defined
           -----------
below), as amended and affected by the First Amendment (as defined below), have
the same meanings when used in this Agreement as are given them in the Original
Agreement, as amended and affected by the First Amendment (except where this
Agreement establishes a contrary definition).  The term "Meriden Lease" shall be
deemed amended to include the affects thereon of the letter agreement dated
December 13, 1999 between the Meriden Landlord and the Controlling Partnership,
a true and complete copy of which letter has been provided to Apple. In
addition, the following terms used in this Agreement have the meanings given to
them in the Sections or Articles of this Agreement listed below:

Agreement                    Introduction
Amendment Date               Introduction
Apple                        Introduction
Apple Indemnified Parties    Section 11.3
Assignment of Interests      Section 7.7
CCRI                         Introduction
CCRI Interests               Section 1.3
Claims                       Section 11.3
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Crestline                    Introduction
Crestline Interests          Section 1.3
Closing                      Section 5.1
Closing Date                 Section 5.1
Company                      Introduction
Company LLC Agreement        Section 3.3(a)
Controlling Interests        Section 1.3
Controlling Partnership      Introduction
Desert Springs               Introduction
Desert Springs Interests     Section 1.3
Equity Interests             Section 1.2(b)
Extension Deposit            Section 2.3
First Amendment              Section 1.2(b)
GAAP                         Section 3.12
General Partner              Introduction
GP Interests                 Section 1.3
HPT                          Section 3.2(c)
HPT Letter                   Section 3.2(c)
IM Charter Documents         Section 3.3(b)
Independent Member           Section 1.3
Independent Member Shares    Section 1.3
Knowledge Individual         Section 3.14
Loan Documents               Section 3.2
LP Agreement                 Section 3.3(a)
Material Adverse Change      Section 3.12
Material Adverse Effect      Section 3.12
Minute Books                 Section 3.13
Organizational Documents     Section 3.2
Original Agreement           Section 1.2(a)
Other Loan Documents         Section 3.2
Purchase Price               Section 2.2
Selling Entities             Introduction
Selling Entity               Introduction

     1.2   Original Agreement; First Amendment.  (a) The Company, as seller, and
           -----------------------------------
Apple, as purchaser, are parties to that certain Purchase Agreement dated as of
May 18, 2001 (the "Original Agreement") pursuant to which the Company agreed to
sell to Apple, and Apple agreed to buy, subject to the terms and conditions set
forth in the Original Agreement, ten (10) Residence Inn by Marriott hotel
properties and other assets more fully described in the Original Agreement as
the "Property."

           (b) The Original Agreement was amended by that certain Amendment and
Joinder, dated as of July 30, 2001, by and among the Company, the Controlling
Partnership and Apple (the "First Amendment"), pursuant to

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which the Controlling Partnership agreed to sell to Apple, and Apple agreed to
buy, subject to the terms and conditions set forth in the Original Agreement, as
amended and affected by the First Amendment, all of the Controlling
Partnership's equity member interests in the Company (the "Equity Interests").

   1.3   Purchase of Controlling Interests in Lieu of Equity Interests.  The
         -------------------------------------------------------------
Lender, as a condition to its consent to the transactions contemplated by the
Original Agreement, as amended and affected by the First Amendment, has required
that, instead of purchasing the Equity Interests, Apple (or affiliates thereof)
purchase (i) the entire general partnership interest in the Controlling
Partnership owned by the General Partner (the "GP Interests"), (ii) all of the
limited partnership interests in the Controlling Partnership owned by CCRI (the
"CCRI Interests"), (iii) all of the limited partnership interests in the
Controlling Partnership owned by Desert Springs (the "Desert Springs Interests")
and (iv) one hundred percent (100%) of the shares of stock (the "Independent
Member Shares") in Crestline Res III Corporation (the "Independent Member"),
which is the non-equity independent member of the Company.  The GP Interests,
the CCRI Interests, the Desert Springs Interests and the Independent Member
Shares are sometimes hereinafter referred to as the "Controlling Interests").

   1.4   Amendment and Joinder.  The General Partner, CCRI, Desert Springs and
         ---------------------
Crestline hereby join in the Original Agreement, as amended and affected by the
First Amendment, for the purposes stated herein, and the parties hereto hereby
further amend the Original Agreement, as amended and affected by the First
Amendment, in the manner described below.  Except as amended hereby or as
otherwise specified herein, the Original Agreement, as amended and affected by
the First Amendment, remains in full force and effect.

                                  ARTICLE II
             Purchase of the Controlling Interests; Purchase Price
             -----------------------------------------------------

   2.1   Purchase of Interests.  In lieu of Apple's purchase of the Equity
         ---------------------
Interests from the Controlling Partnership, Apple agrees to purchase and assume
(or cause affiliates of Apple to purchase and assume) from each of the Selling
Entities, and the Selling Entities agree to sell and convey to Apple (or its
designated affiliates), in lieu of the sale of the Inns as contemplated by the
Original Agreement, or of the Equity Interests in the Company, as contemplated
by the First Amendment, all of the Controlling Interests.

   2.2   Purchase Price. The purchase price for the Controlling Interests (the
         --------------
"Purchase Price") shall be the amount by which (a) ONE HUNDRED NINETEEN MILLION
DOLLARS ($119,000,000.00) (as adjusted pursuant to Article 13 below) exceeds (b)
the principal balance on the Closing Date of the Existing Debt.  The Purchase
Price (as increased or decreased by the net amount of the adjustments

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described in Article 13 and less the amount of the credit referred to in Section
2.3 of the Original Agreement) is based on an agreed allocation of the values
ascribed to the individual Inns (assuming the absence of debt) as more fully
reflected on Exhibit D attached hereto. Payment of the Purchase Price shall be
             ---------
made in cash on the Closing Date by wire transfer of immediately available funds
to the Escrow Agent, for allocation among the Selling Entities in such
proportions as the Selling Entities may agree at Closing.

   2.3   Additional Deposit.  Within one (1) business day after the date hereof,
         ------------------
Apple shall deliver to Crestline, for the benefit of the Selling Entities, an
additional  deposit in the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00)
(the "Extension Deposit"), which shall be deemed to be fully earned and
nonrefundable as of the date hereof and shall be deemed to be included in the
term "Deposits."  The terms of the escrow pursuant to which the Deposits are
held shall be modified to provide that they are held for the benefit of Apple
and the Selling Entities, not Apple and the Company and/or the Controlling
Partnership.  All rights of the Company and/or the Controlling Partnership in
and to the portion of the Deposits remaining in escrow are hereby assigned to
the Selling Entities, and any payment of the Deposit that is owed to the Selling
Entities shall be delivered to such account as the Selling Entities may
instruct.  To the extent the amount of the Initial Deposit that has been fully
earned by the Company and/or the Controlling Partnership pursuant to the terms
of the Original Agreement, as amended and affected by the First Amendment, has
not been previously distributed by the Company to the Controlling Partnership
and by the Controlling Partnership to the Selling Entities as a dividend or
similar distribution, on or before the Closing Date it will be distributed by
the Company to the Controlling Partnership, and by the Controlling Partnership
to the Selling Entities in accordance with the terms of the partnership
agreement of the Controlling Partnership.

                                  ARTICLE III
        The Selling Entities' Representations, Warranties and Covenants
        ---------------------------------------------------------------

   In order to induce Apple to enter into this Agreement and to consummate the
transactions contemplated hereby, the following representations and warranties
are made to, and the following covenants made with, Apple (and the affiliates of
Apple that may be designated to acquire the Controlling Interests):

   3.1   Good Standing.  (a)  The General Partner represents and warrants that
         -------------
(i) it is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, is authorized to conduct
the business in which it is now engaged, and is duly qualified and in good
standing in Delaware and in all states where the ownership of its assets or the
conduct of its business makes such qualification necessary and (ii) the
Controlling Partnership is a limited partnership duly organized, validly
existing and in good standing under

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the laws of the State of Delaware, is authorized to conduct the business in
which it is now engaged, and is duly qualified and in good standing in Delaware
and in all states where the ownership of its assets or the conduct of its
business makes such qualification necessary (except solely to the extent that
failure to file the franchise tax return in Texas referred to in Section 6.5
below has caused the Company to not be in good standing in Texas).

          (b) CCRI represents and warrants that it is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, is authorized to conduct the business in which it is now
engaged, and is duly qualified and in good standing in Delaware and in all
states where the ownership of its assets or the conduct of its business makes
such qualification necessary.

          (c) Desert Springs represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is authorized to conduct the business in which it is now
engaged, and is duly qualified and in good standing in Delaware and in all
states where the ownership of its assets or the conduct of its business makes
such qualification necessary.

          (d) Crestline represents and warrants that (i) it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland, is authorized to conduct the business in which it is now
engaged, and is duly qualified and in good standing in Maryland and in all
states where the ownership of its assets or the conduct of its business makes
such qualification necessary and (ii) the Independent Member is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, is authorized to conduct the business in which it is now
engaged, and is duly qualified and in good standing in Delaware and in all
states where the ownership of its assets or the conduct of its business makes
such qualification necessary.

   3.2    Title to Interests.  (a)  The General Partner represents and warrants
          ------------------
that (i) the Controlling Partnership is the sole equity member of the Company,
(ii) the Independent Member is the sole non-equity member of the Company, (iii)
the General Partner is the owner of a five percent (5%) general partnership
interest in the Controlling Partnership (which is the only general partnership
interest in the Controlling Partnership), (iv) CCRI is the owner of a ninety-
four percent (94%) limited partnership interest in the Controlling Partnership,
(v) Desert Springs is the owner of a one percent (1%) limited partnership
interest in the Controlling Partnership and (vi) no other person or entity holds
any ownership interest in the Company, the Controlling Partnership or the
Independent Member (including, in each case, any options, warrants or other
rights by which any person may acquire any such ownership interests).

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         (b) Crestline represents that it is the sole shareholder of the
Independent Member.  No other person or entity holds any ownership interest in
the Independent Member (including, in each case, any options, warrants or other
rights by which any person may acquire any such ownership interests).

         (c) Except for (i) any restrictions that are set forth in the
certificate of formation, certificate of incorporation or certificate of limited
partnership or in the limited liability company agreement, bylaws or limited
partnership agreement of the Controlling Partnership, the General Partner, CCRI,
Desert Springs, the Independent Member or Crestline, as applicable
(collectively, the "Organizational Documents"), each as in effect on the date of
this Agreement and (ii) the restrictions set forth in the Loan Agreement and the
other Loan Documents, to the extent copies of such other Loan Documents have
been provided to Apple (the "Other Loan Documents"), (1) the General Partner
represents and warrants that the GP Interests are, and shall at Closing be
transferred, free and clear of any and all Encumbrances, (2) CCRI represents and
warrants that the CCRI Interests are, and shall at Closing be transferred, free
and clear of any and all Encumbrances, (3) Desert Springs represents and
warrants that the Desert Springs Interests are, and shall at Closing be
transferred, free and clear of any and all Encumbrances and (4) Crestline
represents and warrants that the Independent Member Shares are, and shall at
Closing be transferred, free and clear of any and all Encumbrances.

         (d) The General Partner represents and warrants that, subject to
restrictions of the kind referred to in clauses (i) and (ii) of Section 3.2(c)
hereof, the General Partner has the complete and unrestricted power and right to
sell, assign, transfer and deliver the GP Interests to Apple (or its designated
affiliates), and there are no agreements or understandings between the General
Partner or its affiliates, on the one hand, and any other person or entity, on
the other hand, with respect to the ownership, voting rights, sale or
disposition of the GP Interests other than those set forth in the Organizational
Documents or in the Loan Agreement and the Other Loan Documents (except the
terms of the provisions of the letter agreement dated August 19, 1999 (the "HPT
Letter") between Crestline and Hospitality Properties Trust ("HPT") giving HPT a
right of first refusal in the event of a transfer of the GP Interests, which
right HPT has waived.)

         (e) CCRI represents and warrants that, subject to restrictions of the
kind referred to in clauses (i) and (ii) of Section 3.2(c) hereof, CCRI has the
complete and unrestricted power and right to sell, assign, transfer and deliver
the CCRI Interests to Apple (or its designated affiliates), and there are no
agreements or understandings between CCRI or its affiliates, on the one hand,
and any other person or entity, on the other hand, with respect to the
ownership, voting rights, sale or disposition of the CCRI Interests other than
those set forth in the

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Organizational Documents or in the Loan Agreement and the Other Loan Documents.

         (f) Desert Springs represents and warrants that, subject to
restrictions of the kind referred to in clauses (i) and (ii) of Section 3.2(c)
hereof, Desert Springs has the complete and unrestricted power and right to
sell, assign, transfer and deliver the Desert Springs Interests to Apple (or its
designated affiliates), and there are no agreements or understandings between
Desert Springs or its affiliates, on the one hand, and any other person or
entity, on the other hand, with respect to the ownership, voting rights, sale or
disposition of the Desert Springs Interests other than those set forth in the
Organizational Documents or in the Loan Agreement and the Other Loan Documents.

         (g) Crestline represents and warrants that, subject to restrictions of
the kind referred to in clauses (i) and (ii) of Section 3.2(c) hereof, Crestline
has the complete and unrestricted power and right to sell, assign, transfer and
deliver the Independent Member Shares to Apple (or its designated affiliates),
and there are no agreements or understandings between Crestline or its
affiliates, on the one hand, and any other person or entity, on the other hand,
with respect to the ownership, voting rights, sale or disposition of the
Independent Member Shares other than those set forth in the Organizational
Documents or in the Loan Agreement and the Other Loan Documents.

     3.3 No Subsidiaries; No Agreements.  (a) The General Partner represents and
         ------------------------------
warrants that (i) the Company has no subsidiaries, owns no assets other than the
Property, and conducts no business other than as specifically permitted pursuant
to the Company's limited liability company operating agreement (the "Company LLC
Agreement"), a true and complete copy of which is attached hereto as Exhibit A,
                                                                     ---------
(ii) the Controlling Partnership has no subsidiaries other than the Company,
owns no assets other than the Equity Interests and conducts no business other
than as specifically permitted pursuant to its agreement of limited partnership
(the "LP Agreement"), a true and complete copy of which is attached hereto as
Exhibit B, (iii) the Company and the Controlling Partnership are in compliance
---------
in all material respects with the terms of the Company LLC Agreement, including,
but not limited to, Section 5.03 and Sections 10.1, 10.2 and 10.3 thereof, (iv)
the General Partner, CCRI, Desert Springs and the Controlling Partnership are in
compliance in all material respects with the Controlling Partnership's
Organizational Documents and (v) there are no existing agreements (and will not
be any agreements prior to Closing) between (A) the Company, on the one hand,
and the Controlling Partnership, on the other hand, or (B) the Company or the
Controlling Partnership, on the on hand, and one or more of the General Partner,
the Controlling Partnership, CCRI, Desert Springs, the Independent Member,
Crestline or any of Crestline's other affiliates, on the other hand, that are

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not set forth in the Organizational Documents or in the Loan Agreement or the
Other Loan Documents.

         (b) Crestline represents and warrants that (i) the Independent Member
has no subsidiaries, owns no assets (other than the non-equity membership
interest in the Company), has no debts or liabilities, and conducts no business
other than as specifically provided in its certificate of incorporation or
bylaws (the "IM Charter Documents"), a true and complete copy of each of which
is attached hereto as Exhibit C, (ii) Crestline and the Independent Member are
                      ---------
in compliance in all material respects with the terms of the Independent
Member's Organizational Documents and (iii) there are no existing agreements
(and will not be any agreements prior to Closing) between the Independent Member
or Crestline, on the one hand, and the Company or the Controlling Partnership,
on the other hand, that are not set forth in the Organizational Documents or in
the Loan Agreement or the Other Loan Documents.

   3.4   Due Authorization.  (a) The General Partner represents and warrants
         -----------------
that (i) the execution, delivery and performance of this Agreement by the
General Partner, the Controlling Partnership and the Company (and the
consummation by each such entity of the transactions contemplated hereby) have
been duly and validly authorized by all requisite actions on the part of the
General Partner and such other entities, none of which actions have been
modified or rescinded, and all of which actions are in full force and effect and
(ii) this Agreement and the Original Agreement, as amended and affected by the
First Amendment, and as further amended and affected by this Agreement, each
constitutes a valid and binding obligation of the General Partner, the
Controlling Partnership and the Company, enforceable against each such entity in
accordance with its terms.

         (b) CCRI represents and warrants that (i) the execution, delivery and
performance of this Agreement by CCRI and the consummation by CCRI of the
transactions contemplated hereby have been duly and validly authorized by all
requisite limited liability company actions on the part of CCRI, none of which
actions have been modified or rescinded, and all of which actions are in full
force and effect and (ii) this Agreement constitutes a valid and binding
obligation of CCRI, enforceable against CCRI in accordance with its terms.

         (c) Desert Springs represents and warrants that (i) the execution,
delivery and performance of this Agreement by Desert Springs and the
consummation by Desert Springs of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate actions on the part of
Desert Springs, none of which actions have been modified or rescinded, and all
of which actions are in full force and effect and (ii) this Agreement
constitutes a valid and binding obligation of Desert Springs, enforceable
against Desert Springs in accordance with its terms.

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         (d) Crestline represents and warrants that (i) the execution, delivery
and performance of this Agreement by Crestline and the consummation by Crestline
of the transactions contemplated hereby have been duly and validly authorized by
all requisite corporate actions on the part of Crestline, none of which actions
have been modified or rescinded, and all of which actions are in full force and
effect and (ii) this Agreement constitutes a valid and binding obligation of
Crestline, enforceable against Crestline in accordance with its terms.

   3.5   No Violations or Defaults.  To the knowledge of the General Partner,
         -------------------------
neither the General Partner, the Controlling Partnership nor the Company has
made any distributions in violation of the terms of the Loan Agreement, the
Other Loan Documents or the Organizational Documents.

   3.6   Litigation.  (a)  The Company, the General Partner and the Controlling
         ----------
Partnership represent and warrant that there are no actions, suits,
arbitrations, governmental investigations or other proceedings pending or, to
the knowledge of such entity, threatened against the Company, the General
Partner or the Controlling Partnership, or affecting the GP Interests or the
Property (or any portion thereof) before any court or governmental authority, an
adverse determination of which might adversely affect (i) the financial
condition or operations of the Company, the General Partner or the Controlling
Partnership, (ii) the ability of the Company, the General Partner or the
Controlling Partnership to enter into or perform this Agreement, (iii) the
Company's title to the Property (or any material portion thereof), (iv) the
Controlling Partnership's title to the Equity Interests or (v) the General
Partner's title to the GP Interests.

         (b) CCRI represents and warrants that there are no actions, suits,
arbitrations, governmental investigations or other proceedings pending or, to
the knowledge of CCRI, threatened against CCRI, or affecting the CCRI Interests
(or any portion thereof) before any court or governmental authority, an adverse
determination of which might adversely affect (i) the ability of CCRI to enter
into or perform this Agreement or (ii) CCRI's title to the CCRI Interests.

         (c) Desert Springs represents and warrants that there are no actions,
suits, arbitrations, governmental investigations or other proceedings pending
or, to the knowledge of Desert Springs, threatened against Desert Springs, or
affecting the Desert Springs Interests (or any portion thereof) before any court
or governmental authority, an adverse determination of which might adversely
affect (i) the ability of Desert Springs to enter into or perform this Agreement
or (ii) Desert Springs' title to the Desert Springs Interests.

         (e) Crestline represents and warrants that there are no actions, suits,
arbitrations, governmental investigations or other proceedings pending or, to

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the knowledge of Crestline, threatened against Crestline, or affecting the
Independent Member Shares (or any portion thereof) before any court or
governmental authority, an adverse determination of which might adversely affect
(i) the ability of Crestline to enter into or perform this Agreement or (ii)
Crestline's title to the Independent Member Shares or the Independent Member's
non-equity member interest in the Company.

     3.7  Representations in Original Agreement.  Nothing in this Agreement
          -------------------------------------
shall in any way affect or limit the effectiveness of any of the representations
and warranties made by the Company in the Original Agreement or by the Company
and the Controlling Partnership in the First Amendment.  The acknowledgements,
agreements, waivers and releases made by Apple in Section 3.15 of the Original
Agreement run to the benefit of the General Partner, CCRI, Desert Springs and
Crestline to the same extent as if each was specifically named as the "Seller"
in that section.

     3.8  Financial Information.  With respect to the financial information
          ---------------------
described in Section 3.16 of the Original Agreement, the General Partner
represents and warrants that, to the knowledge of the General Partner, all such
information has been prepared in accordance with generally accepted accounting
principles applied consistently with past practices and fairly presents the
results of operations of the Inns for the periods represented thereby, and has
been relied upon by the General Partner in conducting the business of the
Controlling Partnership and in the ordinary course of business of the General
Partner's ownership of the GP Interests. As the sole asset of the Controlling
Partnership is the Company, the financial condition of the Controlling
Partnership is substantially identical to that of the Company on the date
hereof.

     3.9  Solvency.  (a) Each Selling Entity represents that it is not insolvent
          --------
within the meaning of the Bankruptcy Code, nor has such Selling Entity ceased to
pay its debts as they become due, nor filed or taken any action to file a
voluntary petition, case or proceeding under any section or chapter of the
Bankruptcy Code, or under any similar law or statute of the United States or any
state thereof, relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of its debts; and no such petition, case or proceeding
has been filed against such Selling Entity which has not been dismissed, vacated
or stayed on appeal; and such Selling Entity has not been adjudicated as a
bankrupt or insolvent or consented to, nor filed an answer admitting or failing
reasonably to contest an allegation of bankruptcy or insolvency; such Selling
Entity has not sought, or consented to or acquiesced in, the appointment of any
receiver, trustee, liquidator or other custodian of it or a material part of its
assets, and has not made or taken any action to make a general assignment for
the benefit of creditors; nor has any arrangement, attachment or execution been
levied and or any tax lien or other governmental or

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similar lien been filed, against it or any material part of its properties,
which has not been duly and fully discharged prior to the date hereof.

          (b)  The General Partner represents that neither the Controlling
Partnership nor the Company is insolvent within the meaning of the Bankruptcy
Code, nor has either such entity ceased to pay its debts as they become due, nor
filed or taken any action to file a voluntary petition, case or proceeding under
any section or chapter of the Bankruptcy Code, or under any similar law or
statute of the United States or any state thereof, relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of its
debts; and no such petition, case or proceeding has been filed against either
such entity which has not been dismissed, vacated or stayed on appeal; and
neither such entity has been adjudicated as a bankrupt or insolvent or consented
to, nor filed an answer admitting or failing reasonably to contest an allegation
of bankruptcy or insolvency; neither such entity has sought, or consented to or
acquiesced in, the appointment of any receiver, trustee, liquidator or other
custodian of it or a material part of its assets, and has not made or taken any
action to make a general assignment for the benefit of creditors; nor has any
arrangement, attachment or execution been levied and or any tax lien or other
governmental or similar lien been filed, against it or any material part of its
properties, which has not been duly and fully discharged prior to the date
hereof.

          (c)  Crestline represents that the Independent Member is not insolvent
within the meaning of the Bankruptcy Code, nor has the Independent Member ceased
to pay its debts as they become due, nor filed or taken any action to file a
voluntary petition, case or proceeding under any section or chapter of the
Bankruptcy Code, or under any similar law or statute of the United States or any
state thereof, relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of its debts; and no such petition, case or proceeding
has been filed against the Independent Member which has not been dismissed,
vacated or stayed on appeal; and the Independent Member has not been adjudicated
as a bankrupt or insolvent or consented to, nor filed an answer admitting or
failing reasonably to contest an allegation of bankruptcy or insolvency; the
Independent Member has not sought, or consented to or acquiesced in, the
appointment of any receiver, trustee, liquidator or other custodian of it or a
material part of its assets, and has not made or taken any action to make a
general assignment for the benefit of creditors; nor has any arrangement,
attachment or execution been levied and or any tax lien or other governmental or
similar lien been filed, against it or any material part of its properties,
which has not been duly and fully discharged prior to the date hereof.

     3.10 Employees.  Neither the General Partner, the Company, the Controlling
          ---------
Partnership nor any Seller Entity other than Crestline has any employees.

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<PAGE>

     3.11 Tax Matters.  (a) The General Partner (as regards itself, the
          -----------
Controlling Partnership, the Company and the Inns), Crestline (as regards itself
and the Independent Member) and each other Selling Entity (as regards itself)
represents and warrants that (except for the matter disclosed in Section 6.5
hereof) no Taxing Authority has asserted in writing any tax deficiency, lien,
interest or penalty against the Company, the Controlling Partnership, the
Independent Member or any such Selling Entity, or against the Controlling
Interests owned by any such Selling Entity, or against any of the Inns, in each
case which has not been paid, and there is no pending audit or inquiry from any
Taxing Authority that might reasonably be expected to result in a material tax
deficiency, lien, interest, penalty or other assessment against any of the
foregoing, and to the knowledge of each such entity, no event has occurred and
no condition or circumstance exists that presents a material risk that any such
tax deficiency, lien, interest, penalty or other assessment will be imposed.

          (b)  The General Partner (as regards itself, the Controlling
Partnership and the Company) Crestline (as regards itself and the Independent
Member) and each other Selling Entity (as regards itself), represents and
warrants that such party (or an affiliate of such party) has timely filed or
caused to be timely filed (except as disclosed in Section 6.5 hereof) all
material Tax Returns required to be filed by such party, and such party has paid
(or an affiliate thereof has paid on its behalf) all Taxes required to be paid
as shown on such returns and all such Tax Returns were, when filed, complete and
accurate in all material respects, except where the failure to file such Tax
Returns, the failure to pay such Taxes and the failure of such Tax Returns to be
complete and accurate in all material respects could not be reasonably expected
to have a Material Adverse Effect, and no material deficiencies for any Taxes
have been or are currently being proposed, asserted or assessed in writing, or
to the knowledge of any entity making such representation and warranty,
threatened in writing by any taxing authority against or with respect to such
party.

     3.12 Compliance with GAAP.  The General Partner represents and warrants
          --------------------
that, except for liabilities and obligations set forth in the Financial
Statements, the Company and the Controlling Partnership have no liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise),
which are required by generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented, in accordance with the applicable
requirements of such generally accepted accounting principles ("GAAP") to be set
forth on a balance sheet of the Company or of the Controlling Partnership, as
applicable, or in the notes thereto and which, individually or in the aggregate,
would have a material adverse effect on the business, properties, assets,
financial condition or results of operations of the Company or of the
Controlling Partnership, taken as a whole, or

                                      12
<PAGE>

on the ability of the Company or of the Controlling Partnership to perform in
all material respects its obligations under the Original Agreement, as amended
and affected by the First Amendment, and as further amended and affected by this
Agreement, or under the Management Agreement (a "Material Adverse Effect"). The
General Partner represents and warrants that, except as previously disclosed in
writing to Apple, there has been no event or condition, following the date of
the most recent Financial Statements, in connection with the business,
operations or assets of the Company or the Controlling Partnership that,
individually or in the aggregate, would have a Material Adverse Effect (a
"Material Adverse Change").

     3.13 Corporate Documentation.  The General Partner (with respect to clause
          -----------------------
(i) below and, as regards subclause (ii) below, with respect to itself and the
Company) and Crestline (as regards subclause (ii) below with respect to the
Independent Member) (i) represents and warrants that copies of the Loan
Agreement and all Loan Documents have been delivered to Apple and (ii) covenants
that the original minute books of the Company and the Independent Member, and a
copy of the minute book of the General Partner as regards the administration of
the Controlling Partnership (collectively, the "Minute Books") shall be
delivered to Apple at Closing and shall contain all of the executed consents and
minutes of the proceedings of the members and managers of the Company, the
shareholder or the directors of the Independent Member and the partners of the
Controlling Partnership, as applicable, to the extent related to the Company
from the date of the formation of the Company, the Independent Member and/or the
Controlling Partnership to the date of the Closing.

     3.14 Knowledge.  Any and all references in this Agreement to the
          ---------
"knowledge" of the Company, the Controlling Partnership or any of the Selling
Entities, to things "known" to such entities or any similar phrases or
references, shall mean the actual and present knowledge, after making due
inquiry of the Manager and the appropriate executive employees at each Inn (i.e.
the General Manager, Chief Engineer, if any, and the Controller of such Inn), of
Larry K. Harvey, Senior Vice President, Controller and Treasurer of Crestline,
Tracy M. J. Colden, Senior Vice President and General Counsel of Crestline and
Phillip Borkowski, Director, Asset Management for Crestline (collectively the
"Knowledge Individual").  Neither the actual, present knowledge of any other
individual or entity, nor the constructive knowledge of any Knowledge Individual
or of any other individual or entity shall be imputed to any Knowledge
Individual.

     3.15 Prior Representations Unaffected.  Each of the Company and the
          --------------------------------
Controlling Partnership confirms that all representations and warranties made by
it in the Original Agreement, as amended and affected by the First Amendment,
are unaffected by this Agreement and are true and correct as of the date made.

                                      13
<PAGE>

                                  ARTICLE IV
             Purchaser's Representations, Warranties and Covenants
             -----------------------------------------------------

     In order to induce the Selling Entities to enter into this Agreement and to
consummate the transactions contemplated hereby, Apple represents and warrants
to, and covenants with, the Selling Entities as follows:

     4.1 Good Standing.  Apple is a corporation duly organized, validly existing
         -------------
and in good standing under the laws of Virginia, is authorized to conduct the
business in which it is now engaged and is, or as of the Closing Date shall be,
qualified to do business in Virginia and in all states where the ownership of
its assets or the conduct of its business makes such qualification necessary.

     4.2 Due Authorization.  The execution, delivery and performance of the
         -----------------
Original Agreement, as amended and affected by the First Amendment, and as
further amended and affected by this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate actions of Apple (none of which actions
have been modified or rescinded, and all of which actions are in full force and
effect).  This Agreement, and the Original Agreement, as amended and affected by
the First Amendment and by this Agreement, each constitutes a valid and binding
obligation of Apple, enforceable against Apple in accordance with its terms.

     4.3 No Violations or Defaults.  The execution, delivery and performance by
         -------------------------
Apple of this Agreement, the Original Agreement, as amended and affected by the
First Amendment and by this Agreement and the Closing Documents (and the
consummation by Apple of the transactions contemplated hereby and thereby) did
not and will not (i) to the knowledge of Apple, violate any law or any order of
any court or governmental authority with proper jurisdiction; (ii) result in a
material breach or default under any contract or other binding commitment of
Apple or any provision of the organizational documents of Apple; or (iii)
require any consent or approval or vote that has not been taken or given, or as
of the Closing Date shall not have been taken or given.

     4.4 Litigation.  There are no actions, suits, arbitrations, governmental
         ----------
investigations or other proceedings pending or, to the knowledge of Apple,
threatened against Apple before any court or governmental authority, an adverse
determination of which might adversely affect (i) the financial condition or
operations of Apple or (ii) Apple's ability to enter into or perform this
Agreement or the Original Agreement, as amended and affected by the First
Amendment and by this Agreement.

                                   ARTICLE V
                                    Closing
                                    -------

                                      14
<PAGE>

     Sections 5.1 and 5.2 of the Original Agreement, as amended and affected by
the First Amendment, are hereby deleted and replaced with the following:

     5.1  Closing.  The consummation of the purchase and sale of the Controlling
          -------
Interests as contemplated by this Agreement (the "Closing") shall take place at
the offices of Hogan & Hartson L.L.P., 555 13th Street N.W., Washington, D.C. on
the date (the "Closing Date") on or before September 30, 2001, unless the
Selling Entities and Apple mutually agree on an alternative date or alternative
location.  The parties agree to cooperate to cause the Closing to occur as soon
as practicable after all conditions to Closing have been satisfied.  The parties
have targeted September 7, 2001 as their preferred Closing Date and have agreed
that, if the Closing occurs on or after that date, and on or before September
30, 2001, the date as of which apportionments shall be calculated pursuant to
Article XIII of the Original Agreement, as affected by the First Amendment and
by this Agreement, shall be September 7, 2001, regardless of the actual date of
Closing.  If the Closing does not occur for any reason by September 30, 2001,
the provisions of Sections 7.11, 8.7 and/or Article X of this Agreement shall
apply, as applicable.  All of the deliveries of the Selling Entities and Apple,
the cash payment of the Purchase Price and sufficient additional cash necessary
for the parties to pay the costs contemplated by Section 5.2 shall be delivered
in escrow to the Escrow Agent.  All transactions at the Closing shall be
interdependent and are to be considered simultaneous, so that none are effective
until all are effective.

     5.2  Costs.  The Selling Entities, on the one hand (pro rata in accordance
          -----
with their interests), and Apple, on the other hand, each agree to pay fifty
percent (50%) of all (i) transfer and recording taxes and fees, if any,
connected with the transfer of the Controlling Interests, (ii) fees of the
Escrow Agent in connection with the Escrow Instructions and (iii) bulk sales
taxes and other personal property taxes associated with the Closing, if any.
Apple shall pay for the costs and premiums of title insurance, including,
without limitation, the costs and expenses of all endorsements thereto, all
surveys of the Inns prepared for the Closing and all environmental and
engineering reports.  Apple shall pay any fees relating to or in connection with
obtaining the Lender's consent to (a) the transfer of the Controlling Interests,
(b) the sublease of the Inns to Apple's designated affiliate(s) and (c) the
transfer of the Management Agreement to such affiliate(s) (including, without
limitation, the payment of the transfer fee under the Loan Agreement, the
Lender's attorneys' fees reasonably related to obtaining the Lender's consent to
the transfer of the Controlling Interests, to the extent payable by the
"Borrower" under the Loan Agreement or the Other Loan Documents, the costs and
expenses of the Lender's due diligence review, to the extent payable by the
"Borrower" under the Loan Agreement or the Other Loan Documents, and the costs
of preparing and/or recording amendments or modifications to the mortgages, UCC
filings or other loan documents affecting the Property, including any applicable
transfer, mortgage or

                                      15
<PAGE>

recording fees or taxes, but excluding the costs of the counsel to the Company
or the Selling Entities, if any, relating to the transfer of the Controlling
Interests). If and to the extent not waived by Manager, Apple shall cause the
Company to pay any and all sums required to be paid in connection with the
transactions contemplated hereby pursuant to Section 5.03 of the Management
Agreement. Except as otherwise provided for herein, each party shall pay its own
accountants and attorneys' fees incurred in connection with the preparation,
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby.

     5.3  Release of Claims.  By proceeding to Closing, the Selling Entities
          -----------------
will be irrevocably deemed to have released the Company, the Controlling
Partnership and the Independent Member from any claims or liabilities that the
Selling Entities may have against such parties relating to the period prior to
Closing.

                                  ARTICLE VI
                                Pending Closing
                                ---------------

     6.1  Covenants in Original Agreement.  Nothing in this Agreement shall
          -------------------------------
affect or limit the effectiveness of the covenants and agreements made by the
Company, the Controlling Partnership and/or Apple in Article VI of the Original
Agreement, as amended and otherwise affected by the First Amendment, and the
provisions of Article VI remain in full force and effect (except that the
Feasibility Period, the Title Review Period and the Special Survey Review Period
have lapsed, and neither the General Partner, the Controlling Partnership nor
the Company has any further obligations under Section 6.3 of the Original
Agreement).

     6.2  Covenants of the General Partner.  The General Partner agrees that, at
          --------------------------------
all times between the date of this Agreement and the Closing, it shall, by
virtue of its control of the Controlling Partnership (and therefore the
Company):

          (a)  Cause the Company to maintain its books and records as currently
maintained, and not change in any material manner any of the Company's methods,
principles or practices of accounting as reflected in the Financial Statements,
except as may be required by GAAP or applicable law and promptly disclosed in
writing to Apple prior to Closing;

          (b)  Cause the Controlling Partnership not to acquire, enter into any
option to acquire or exercise any option or contract to acquire, any asset other
than the Equity Interests, cause the Company not to acquire, enter into any
option to acquire, or exercise any option or contract to acquire, additional
real property (including, without limitation, any hotel property), and cause the
Company and the Controlling Partnership not to incur or assume additional
indebtedness, encumber any assets (except pursuant to or as permitted in the
Loan Agreement and the

                                      16
<PAGE>

Other Loan Documents) or commence construction of, or enter into any agreement
or commitment to develop or construct, other real estate or hotel projects,
except renovations or improvements currently ongoing or additional renovations
or improvements required pursuant to the Management Agreement or contemplated by
the Company's current capital improvements budget, as provided to Apple prior to
execution of the Original Agreement;

          (c)  Not amend, or permit the amendment of, the Organizational
Documents of the Controlling Partnership or of the Company (which are the same
today as they were on May 1, 2001), except as required by the Lender in
connection with the transfer of the Controlling Interests;

          (d)  Make no change in the number of membership interests or
partnership interests in the Company or the Controlling Partnership,
respectively, and not grant any rights, warrants or options to acquire any such
membership interests or partnership interests; and

          (e)  Cause the Company and the Controlling Partnership not to make any
loans, advances or capital contributions to, or investments in, any other person
or entity, other than, in the case of the Company, as contemplated by the
Management Agreement, the Loan Agreement or the Other Loan Documents.

     6.3  Covenants of Crestline.  Crestline agrees that, at all times between
          ----------------------
the date of this Agreement and the Closing, it shall, by virtue of its control
of the Independent Member:

          (a)  Not amend, or permit the amendment of, the Organizational
Documents of the Independent Member (which are the same today as they were on
May 1, 2001), except as required by the Lender in connection with the transfer
of the Controlling Interests;

          (b)  Make no change in the number of shares of stock in the
Independent Member and not grant any rights, warrants or options to acquire any
such membership interests or partnership interests; and

          (c)  Cause the Independent Member not to acquire any assets other than
its non-equity membership interest in the Company, or incur any debts or
liabilities, or make any loans, advances or capital contributions to, or
investments in, any other person or entity, other than as contemplated by the
Loan Agreement or the Other Loan Documents.

     6.4  Resignations.  On the Closing Date, the General Partner shall cause
          ------------
the directors, managers and officers of the Company, and Crestline shall cause
the

                                      17
<PAGE>

directors and officers of the Independent Member, to submit their resignations
from such positions, effective as of the Closing Date.

     6.5  Additional Covenants.  In addition to the foregoing, Crestline agrees
          --------------------
to use diligent efforts to cause all mortgage liens and UCC security interests
still reflected by applicable public records to exist in favor of Massachusetts
Mutual Life Insurance Company to be released and terminated of record on or
before the date that is 90 days after the Closing Date (and Crestline represents
and warrants that the indebtedness secured thereby has been repaid in full).
The Company has received a notice from applicable taxing authorities in Texas
(a) stating that the Company became delinquent in its obligation to file its
state franchise tax return on June 5, 2001 and (b) requiring the Company to make
such filing and pay any delinquent taxes and penalties by September 24, 2001.
Crestline agrees to cause such filing and payment to be made prior to Closing
and Crestline agrees to make any other payments that are required in order to
put the Company back in good standing in Texas.  The General Partner shall,
subsequent to the Closing Date be responsible for the obligations of the
"Seller" under Sections 6.4, 6.5 and 6.7 of the Original Agreement.

                                  ARTICLE VII
            Conditions Precedent to Apple's Obligations at Closing
            ------------------------------------------------------

     Article VII of the Original Agreement, as amended and affected by the First
Amendment, is hereby deleted and replaced with this Article VII.  It shall be an
express precondition to the obligation of Apple (or its designated affiliates)
to purchase (or cause to be purchased) the Controlling Interests that each and
every one of the following conditions shall have been satisfied as of the
Closing Date (or waived in writing by Apple).

     7.1  Representations and Warranties.  Each of the representations and
          ------------------------------
warranties of the Company and the Controlling Partnership made in the Original
Agreement, as amended and affected by the First Amendment, and each of the
representations and warranties made in this Agreement by the Company, the
Controlling Partnership and each of the Selling Entities, shall be true and
accurate in all material respects as if made on and as of the Closing Date.
There shall be no Contracts, Equipment Leases or Space Leases not disclosed on
an Exhibit to the Original Agreement that, singularly or in the aggregate, would
materially alter the financial performance of the Inns or the Company from that
disclosed in the Financial Statements.

     7.2  Covenants of Seller.  The Company, the Controlling Partnership and the
          -------------------
Selling Entities shall have performed and complied in all material respects with
all covenants and conditions required by the Original Agreement, as amended and

                                      18
<PAGE>

affected by the First Amendment, or this Agreement to be performed or complied
with by such party at or prior to the Closing Date.

     7.3  Title.  The Title Company shall be unconditionally committed to issue
          -----
to the Company an owner's (or, with respect to the Meriden Parcel, a leasehold
owner's) policy of title insurance for each Inn in conformance with the Title
Commitments, in the amount of the Purchase Price allocable to such Inn as set
forth on Exhibit D attached hereto, pursuant to the standard stipulations and
         ---------
conditions of the most current form of ALTA Policy (or local equivalent) then
used in the state in which such Inn is located (omitting those standard
exceptions that are ordinarily and customarily omitted in each state, so long as
the Company, the Controlling Partnership or the General Partner, as the case may
be, provides the appropriate affidavits (including without limitation, any
affidavit reasonably requested by the Title Company to issue a so-called
"Fairway endorsement," where available) or other documentation reasonably
necessary for such omission pursuant to Section 9.9 hereof), subject to the
payment of the premiums therefor and delivery of the documents specified in
Section 9.9 below.

     7.4  Lender's Consent. Lender shall have, (i) consented to the transfer of
          ----------------
the Controlling Interests to Apple (or its designated affiliates) and the other
transactions contemplated herein (including, without limitation, the lease of
the Inns to a designated affiliate(s) providing for the operation of the Inns by
the lessee and the management of the Inns by the Manager) and (ii) confirmed
that (x) the Loan Agreement and the Other Loan Documents are in full force and
effect and has not been further amended, (y) that there are no defaults or
events that with notice or the passage of time, or both, would constitute a
default by the Company under the Loan Agreement or the Other Loan Documents and
(z) the Replacement Reserve Account, the Tax and Insurance Reserve Account, the
Debt Service Reserve Account and any Immediate Reserve Account (each such term
as defined in the Loan Agreement) maintained by the Lender are fully funded as
required by the Loan Agreement, no Debt Service Sweep (as defined in the Loan
Agreement) has occurred and is continuing, and such other information as Apple
may reasonably request from the Lender.  Notwithstanding the foregoing sentence,
in the event that the Lender does not confirm the items listed in clauses (x)
and (y) of the first sentence hereof, the General Partner shall have the right,
in lieu of such confirmation by Lender, to provide Apple with an estoppel
certificate confirming such items.

     7.5  Manager's Consent.  Manager shall have confirmed that there are no
          -----------------
property improvement plan items that must be undertaken in connection with the
transfer of ownership of the Controlling Interests and related transactions
contemplated hereby, and, if required under the Management Agreement, Manager
shall have consented to (i) the transfer of the Controlling Interests to Apple
(or its designated affiliates) and (ii) the assignment of the Management
Agreement to the designated lessee of the Inns (and/or Manager shall have agreed
to enter into a new management agreement with Apple (or its designated
affiliate) on substantially the

                                      19
<PAGE>

same material terms and conditions as are contained in the Management Agreement
(mutatis mutandis)).

     7.6  Consent of Meriden Landlord.  The Meriden Landlord shall have
          ---------------------------

consented to the transfer (if required) of the Controlling Interests from the
Selling Entities to Apple (or its designated affiliates) and the sublease of the
Meriden Parcel by the Company to its designated lessee.

     7.7  Assignments of Interest; Transfer of Stock.  Each of the Selling
          ------------------------------------------
Entities other than Crestline shall have delivered an Assignment and Assumption
of Interests substantially in the form set forth as Exhibit E attached hereto
                                                    ---------
(the "Assignment of Interests"), dated as of the Closing Date, conveying the
Controlling Interests owned by such Selling Entity to Apple (or its designated
affiliates) as required hereunder and Crestline shall have delivered the
original stock certificate(s) evidencing the ownership of 100% of the
Independent Member Shares, accompanied by a blank stock power for each such
certificate executed by Crestline.

     7.8  Seller Deliveries.  The Selling Entities shall have delivered all of
          -----------------
the other documents required from them pursuant to Article IX hereof.

     7.9  Material Adverse Change.  On the Closing Date, there shall have been
          -----------------------
no Material Adverse Change since the Contract Date or Amendment Date (as
applicable), and Apple (or its designated affiliates) shall have received a
certificate of the chief financial officer or principal accounting officer of
Crestline, in such capacity, certifying to such effect.

     7.10 Failure of Condition.  In the event of the failure of any condition
          --------------------
precedent set forth in this Article 7, the provisions of Section 7.9 of the
Original Agreement, as amended and affected by the First Amendment, shall apply
with the same effect as if (i) the term "Article 7" as used therein were a
reference to this Article VII, (ii) the term "this Agreement" as used therein
were a reference to the Original Agreement, as amended and affected by the First
Amendment, and as further amended and affected by this Agreement, (iii) the term
"Purchaser" as used therein were a reference to Apple, and (iv) the term
"Seller" as used therein were a reference to the Selling Entities.
Notwithstanding anything to the contrary contained in Section 7.9 of the
Original Agreement, as amended and affected by the First Amendment, the Selling
Entities shall not be required to return any part of the Initial Deposit or the
Extension Deposit, each of which has been fully earned as of the date hereof.

                                 ARTICLE VIII
            Conditions Precedent to Seller's Obligations at Closing
            -------------------------------------------------------

                                      20
<PAGE>

     Article VIII of the Original Agreement, as amended and affected by the
First Amendment, is hereby deleted and replaced by this Article VIII. It shall
be an express precondition to the obligation of the Selling Entities to sell the
Controlling Interests that each and every one of the following conditions shall
have been satisfied as of the Closing Date (or waived in writing by the Selling
Entities).

     8.1  Representations and Warranties.  Each of Apple's representations and
          ------------------------------
warranties made in the Original Agreement, as amended and affected by the First
Amendment, and in this Agreement shall be true and accurate in all material
respects as if made on and as of the Closing Date.

     8.2  Assignment of Interest.  Apple (or its designated affiliates) shall
          ----------------------
have delivered to each of the Selling Entities an Assignment of Interests
relating to the transfer of the Controlling Interests owned by such Selling
Entity, dated as of the Closing Date, accepting and assuming the Controlling
Interests from the Selling Entities as required hereunder.

     8.3  Lender Approval.  Lender shall have consented to the transfer of the
          ---------------
Controlling Interests to Apple (or its designated affiliates) and the other
transactions contemplated herein and Apple shall have paid or provided for the
payment of all costs associated with the obtaining of such consent that are
required to be paid by Apple pursuant to Section 5.2 hereof.

     8.4  Consent of Meriden Landlord.  The Meriden Landlord shall have
          ---------------------------
consented to the transfer (if required) of the Controlling Interests from the
Selling Entities to Apple (or its designated affiliates), and the sublease of
the Meriden Parcel by the Company to its designated lessee.

     8.5  Manager's Consent.  If required under the Management Agreement,
          -----------------
Manager shall have consented to (i) the transfer of the Controlling Interests to
Apple (or its designated affiliates), (ii) the assignment of the Management
Agreement to the designated lessee of the Inns (and/or Manager shall have agreed
to enter into a new management agreement with Apple (or its designated
affiliates) on substantially the same material terms and conditions as are
contained in the Management Agreement (mutatis mutandis)) and (iii) Crestline
shall have been released by the Manager from any and all obligations set forth
in (A) that certain letter agreement dated December 29, 1999 by and between the
Company, Manager and Crestline, (B) that certain letter agreement dated December
29, 1999 by and between Crestline and Manager, and (C) that certain letter
agreement dated September 11, 2000 by and between the Company, Crestline and
Manager.

     8.6  Purchaser Deliveries.  Apple shall have delivered all of the other
          --------------------
documents required from it pursuant to Article IX hereof.

                                      21
<PAGE>

     8.7  Failure of Condition.  In the event of the failure of any condition
          --------------------
precedent set forth in this Article 8, the provisions of Section 8.8 of the
Original Agreement, as amended and affected by the First Agreement, shall apply
with the same effect as if (i) the term "Article 8" as used therein were a
reference to this Article VIII, (ii) the term "this Agreement" as used therein
were a reference to the Original Agreement, as amended and affected by the First
Amendment and by this Agreement, (iii) the term "Purchaser" as used therein were
a reference to Apple and (iv) the term "Seller" as used therein were a reference
to the Selling Entities.

                                  ARTICLE IX
                              Closing Deliveries
                              ------------------

     In addition to the documentation described in Article VII, the parties
specified below shall deliver or cause to be delivered the following documents
(in lieu of any documentation referred to in Article IX of the Original
Agreement, as amended and affected by the First Amendment).

     9.1 Meriden Estoppel Certificate.  The Selling Entities shall cause to be
         ----------------------------
delivered to Apple (or its designated affiliates) the Meriden Estoppel, as
contemplated by Section 9.6 of the Original Agreement, as amended and affected
by the First Amendment.

     9.2 Purchase Price.  Apple shall deliver (or cause to be delivered) the
         --------------
Purchase Price payable in the manner provided for in this Agreement.

     9.3 Possession Keys.  The General Partner shall cause all keys in
         ---------------
possession of the Company, the Controlling Partnership or the General Partner,
including, without limitation, keys or codes for all security systems, rooms and
offices, to be delivered to Apple (or its designated affiliates).

     9.4 Minute Books.  The General Partner shall cause the Minute Books to be
         ------------
delivered to Apple (or its designated affiliate).

     9.5 Other Documents.  Apple and the Selling Entities shall deliver (or
         ---------------
cause to be delivered) such other documents and instruments as may be reasonably
requested by the Selling Entities, Apple (or its designated affiliates) or the
Title Company to effectuate the transactions contemplated by this Agreement and
to induce the Title Company to insure title to the Inns as described herein,
including but not limited to affidavits in favor of the Title Company from the
General Partner (i) that the Company has not done or caused to be done any work
on the Property that has not been paid for and as to which mechanics' liens may
be filed against the Property following Closing and (ii) as to parties in
possession of the Property under any Space Leases.   At Apple's request, the
General Partner will deliver to Apple at Closing (a) copies of unaudited
financial statements of the Controlling Partnership,

                                      22
<PAGE>

for the most recent period for which they are available, showing the financial
condition of the Controlling Partnership to substantially identical to that of
the Company for the same period and (b) a certification from a financial officer
of the General Partner that there has been no Material Adverse Change in such
financial condition since the dates of such financial statements.

                                   ARTICLE X
                                    Default
                                    -------

     Article X of the Original Agreement, as amended and affected by the First
Amendment, is hereby deleted in its entirety and the following is inserted in
its place:

     10.1 Purchaser's Default.  If Apple fails to consummate the purchase and
          -------------------
sale contemplated herein after all conditions precedent to the obligation of
Apple to do so have been satisfied or waived in writing by Apple, the Escrow
Agent shall pay the Deposit to the Selling Entities in accordance with the
Escrow Instructions, as full and complete liquidated damages, and as the
exclusive and sole right and remedy of the Selling Entities, whereupon the
Original Agreement, as amended and affected by the First Amendment, and as
further amended and affected by this Agreement shall terminate, and neither
party shall have any further obligations or liabilities to the other party
(except for such obligations and liabilities as expressly survive the
termination hereof or thereof).

     10.2 Seller's Default.  If any of the Selling Entities, the Controlling
          ----------------
Partnership or the Company fails to consummate the transaction in accordance
with the terms of the Original Agreement, as amended and affected by the First
Amendment, and as further amended and affected by this Agreement, and Apple is
otherwise willing and able to proceed as contemplated hereunder, Apple shall be
entitled to (i) have the Deposit returned to Apple by the Escrow Agent in
accordance with the Escrow Instructions, whereupon the Original Agreement, as
amended and affected by the First Amendment, and this Agreement shall terminate,
and neither party shall have any further obligations or liabilities to the other
party (except for such obligations and liabilities as expressly survive the
termination hereof or thereof), or (ii) pursue such remedies against the Selling
Entities, the Controlling Partnership or the Company as shall be permitted by
applicable law.

                                  ARTICLE XI
                     Survival; Indemnification Obligations
                     -------------------------------------

     11.1 Generally.  Except as otherwise expressly provided herein, and except
          ---------
with respect to covenants and agreements that the Original Agreement, as amended
and affected by the First Amendment and by this Agreement or the Closing
Documents provide are to be performed after Closing, the respective

                                      23
<PAGE>

representations, warranties, obligations, covenants and agreements of the
Company, the Controlling Partnership, the Selling Entities and Apple contained
herein and in the Original Agreement, as amended and affected hereby and by the
First Amendment, shall not survive the Closing, and no action may be brought on
any such representation, warranty, obligation, covenant or agreement.

     11.2 Survival.  The representations and warranties of the Selling Entities
          --------
and Apple contained herein or in the Original Agreement, as amended and affected
hereby and by the First Amendment, shall survive Closing for a period of twelve
(12) months.  Notwithstanding any other provision of the Original Agreement, as
amended and affected hereby and by the First Amendment, or any other provision
of this Agreement to the contrary, if on the Closing Date Apple has evidence
(whether written or otherwise; with the exception that any disclosures regarding
the inaccuracy of any of such representations or warranties that are made at
Closing must be in writing) that one or more of the representations and
warranties made by the Company, the Controlling Partnership or any of the
Selling Entities is inaccurate as of the date made, and if Apple proceeds to
Closing anyway, Apple shall have no right or remedy after the Closing with
respect to such inaccuracy.

     11.3 Agreement to Indemnify.  (a)  Each Selling Entity shall hold harmless,
          ----------------------
indemnify and defend Apple, its affiliates, successors and assigns (the "Apple
Indemnified Parties"), against any and all obligations, claims, losses, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees and other legal expenses and other charges) (all of the foregoing being
referred to below in this Agreement as "Claims"), but specifically excluding any
claims, losses, damages, liabilities and expenses related or connected to, in
any way, the payment of obligations pursuant to Section 5.03 of the Management
Agreement, arising out of the breach by such Selling Entity (or, with respect to
the indemnity obligations of the General Partner, a breach by the Company or the
Controlling Partnership) of its representations and warranties under the
Original Agreement, as amended and affected by the First Amendment (and CCRI and
Desert Springs shall be jointly and severally liable with the General Partner
for breaches of representations and warranties by the General Partner with
respect to the Inns, the Company or the Controlling Partnership); Crestline
shall hold harmless and indemnify the Apple Indemnified Parties against (i) all
Claims brought by Crestline or any of its affiliates, or by any pre-Closing
managers and officers of the Company or the Controlling Partnership, against the
Company or the Controlling Partnership, as applicable, to the extent relating to
the period prior to the Closing, (ii) all Claims arising out of or relating to
the Residence Inn located in Raleigh, North Carolina, which was formerly owned
by the Controlling Partnership and (iii) all Claims relating to the matters
disclosed in Section 6.5 hereof.  The General Partner hereby assumes the
indemnity agreements made by the Company and/or the Controlling Partnership in
Section 11.3 of the Original Agreement, as amended and affected by the First
Amendment (which is unaffected by this

                                      24
<PAGE>

Agreement), and Apple agrees that the indemnification agreements made by it for
the benefit of the Controlling Partnership in that Section 11.3 shall instead be
for the benefit of the Selling Entities. The Selling Entities' indemnity
obligations hereunder shall be primary obligations of each such Selling Entity,
and Apple may proceed immediately against the Selling Entities without being
required to bring any proceeding or take any action against the Company;
provided, however, that no claim may be prosecuted by any party under this 11.3
-----------------
(meaning both subsections (a) and (b) hereof), or under Section 11.3 of the
Original Agreement, as affected hereby and by the First Amendment, unless
written notice of such claim is delivered by the party seeking to prosecute such
claim to the party or parties against whom such claim is to be prosecuted prior
to the date that is eighteen (18) months after the Closing Date.

          (b)  In addition, and notwithstanding any provisions of this Agreement
to the contrary, (i) each Selling Entity shall hold harmless, indemnify and
defend the Apple Indemnified Parties, against any and all Claims, connected with
the Controlling Interests owned by such Selling Entity to the extent relating to
the period during which such Selling Entity owned the Controlling Interests; and
(ii) Apple shall hold harmless, indemnify and defend the Selling Entities and
their affiliates, successors and assigns, against any and all obligations,
claims, losses, damages, liabilities, debts obligations and expenses (including,
without limitation, reasonable attorneys' fees and other charges) connected with
the Controlling Interests to the extent relating to the period during which
Apple (or its affiliates) owns the Controlling Interests.

     11.4 Indemnification Regarding Assumed Obligations.  Whenever it is
          ---------------------------------------------
provided in this Agreement that an obligation of one party will be assumed by
the other party on or after the Closing, the party so assuming such liability
also shall be deemed to have agreed to indemnify, defend and hold harmless the
other party and its affiliates, successors and assigns, from all claims, losses,
damages, liabilities, costs and expenses (including reasonable attorneys' fees
and other legal expenses and other charges) to the extent arising from any
failure of the assuming party to perform the obligation so assumed after the
Closing and from all third party claims brought against the other party to the
extent relating to the period from and after assumption of the liability on
which the claim is based.

     11.5 Notice and Cooperation on Indemnification.  The provisions of Section
          -----------------------------------------
11.5 of the Original Agreement, as amended and affected by the First Amendment,
shall apply with equal weight to the indemnification obligations of the parties
to this Agreement, to the same extent as if the parties to this Agreement were
named parties to the Original Agreement, as amended and affected by the First
Amendment.

                                      25
<PAGE>

     11.6 No Right of Contribution.  In the event any claim is brought against
          ------------------------
any of the Selling Entities pursuant to the indemnification provisions herein
relating to the period prior to the date of Closing, the Selling Entities agree
that they shall have no right of contribution from the Company or the
Controlling Partnership with respect to such claim.

                                  ARTICLE XII
                           Casualty or Condemnation
                           ------------------------

     Nothing in this Agreement in any way limits the provisions of Article XII
of the Original Agreement, as amended and affected by the First Amendment, and,
following the Closing, the General Partner shall be responsible for any
noncompliance by the Company with such provisions. Any right to terminate the
Original Agreement, as amended and affected by the First Amendment, set forth in
such Article XII shall apply to the Original Agreement, as amended and affected
by the First Amendment, and as further amended and affected by this Agreement,
with the same consequences.

                                 ARTICLE XIII

                            Apportionments; Credits
                            -----------------------

     The apportionments described in Article XIII of the Original Agreement, as
amended and affected by the First Amendment, shall be made when indicated
(including the indication set forth in Section 5.1 hereof, if applicable), and
the Purchase Price hereunder shall be adjusted accordingly.  Apple (or its
designees) shall receive a credit on the settlement statement in the aggregate
amount of $750,000 as consideration for Apple's indirectly assuming the payment
obligations pursuant to Section 5.03 of the Management Agreement.  The term
"Seller" as used in said Article XIII shall mean the General Partner.

                                  ARTICLE XIV
                                 Miscellaneous
                                 -------------

          14.1 Article XIV Incorporated; "Agreement" Modified.  The provisions
               ----------------------------------------------
of Article XIV of the Original Agreement, as amended and affected by the First
Amendment, are hereby incorporated by this reference as if set forth in full
herein.  The term "Agreement" as used in said Article XIV shall mean the
Original Agreement, as amended and affected by the First Amendment, and as
further amended and affected by this Agreement, the term "Purchaser" shall mean
Apple and the term "Seller" shall mean the Selling Entities.

                                      26
<PAGE>

          14.2 Other Documentation.  Apple and the Selling Entities agree to
               -------------------
execute an amendatory escrow agreement with the Escrow Agent within a reasonable
time period after the date hereof.

                                      27
<PAGE>

     IN WITNESS WHEREOF, the Selling Entities, the Controlling Partnership, the
Company and Apple have caused this Agreement to be executed as of the Amendment
Date indicated above.

                                       COMPANY
                                       -------

                                       RESIDENCE INN III LLC

ATTEST/WITNESS:

____________________                   By: /s/ Tracy M.J. Colden
                                          -----------------------------
                                          Tracy M. J. Colden, Vice President

                                       CONTROLLING PARTNERSHIP
                                       -----------------------

                                       MARRIOTT RESIDENCE INN USA
                                       LIMITED PARTNERSHIP

                                       By:   CC USAGP LLC, its general
                                             partner

ATTEST/WITNESS:

____________________                   By: /s/ Tracy M.J. Colden
                                          -----------------------------
                                          Tracy M. J. Colden, Vice President

                                       GENERAL PARTNER
                                       ---------------

                                       CC USAGP LLC

ATTEST/WITNESS:

____________________                   By: /s/ Tracy M.J. Colden
                                          -----------------------------
                                          Tracy M. J. Colden, Vice President
<PAGE>

                                       CCRI
                                       ----

                                       CCRI USA LLC

ATTEST/WITNESS:

 /s/ Susan Levenson                    By: /s/ Tracy M.J. Colden
----------------------                    ------------------------------
                                          Tracy M. J. Colden, Vice President

                                       DESERT SPRINGS
                                       --------------

                                       CCMH DESERT SPRINGS
                                       CORPORATION

ATTEST/WITNESS:

 /s/ Susan Levenson                    By: /s/ Tracy M.J. Colden
----------------------                    -----------------------------
                                          Tracy M. J. Colden, Vice President

                                       CRESTLINE
                                       ---------

                                       CRESTLINE CAPITAL CORPORATION

ATTEST/WITNESS:

 /s/ Susan Levenson                    By: /s/ Tracy M.J. Colden
----------------------                    ------------------------------
                                          Tracy M. J. Colden, Senior Vice
                                          President

                                       APPLE
                                       -----

ATTEST/WITNESS                         APPLE HOSPITALITY TWO INC.

 /s/ Jennifer Ruckert                  By: /s/ Glade M. Knight
-----------------------                   ------------------------------
                                          Glade M. Knight, President & CEO
<PAGE>

                                    EXHIBITS
A  Company LLC Agreement
B  LP Agreement
C  IM Charter Documents
D  Purchase Price Allocation
E  Form of Assignment of Interests
<PAGE>

                                   Exhibit A
                                   ---------

                             Company LLC Agreement

                                   [omitted]
<PAGE>

                                   Exhibit B
                                   ---------

                                 LP Agreement

                                   [omitted]
<PAGE>

                                   Exhibit C
                                   ---------

                             IM Charter Documents

                                   [omitted]
<PAGE>

                                   Exhibit D
                                   ---------

                         Allocation of Purchase Price

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Property                Real                  Personal            Intangible              Total
--------                ----                  --------            ----------              -----
                        Property              Property            Property
                        --------              --------            --------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
<S>                    <C>                <C>                  <C>                  <C>
Montgomery                  $ 5,442,558           $  340,168          $    89,445         $  5,872,189
------------------------------------------------------------------------------------------------------
Bakersfield                 $ 7,742,287           $  403,433          $ 1,106,193         $  9,251,913
------------------------------------------------------------------------------------------------------
Pleasant Hill               $15,465,301           $  479,552          $ 5,370,319         $ 21,315,173
------------------------------------------------------------------------------------------------------
San Ramon                   $14,085,687           $  403,433          $ 4,127,970         $ 18,617,089
------------------------------------------------------------------------------------------------------
Meriden                     $ 6,946,870           $  381,656          $ 1,585,268         $  8,913,793
------------------------------------------------------------------------------------------------------
Hapeville                   $ 7,710,287           $  244,675          $ 3,924,512         $ 11,879,474
------------------------------------------------------------------------------------------------------
Tewksbury                   $11,458,812           $  449,613          $ 5,187,530         $ 17,095,955
------------------------------------------------------------------------------------------------------
Blue Ash                    $ 5,668,490           $  369,507          $   869,129         $  6,907,127
------------------------------------------------------------------------------------------------------
Clear Lake                  $ 6,283,657           $  418,657          $ 2,966,943         $  9,669,256
------------------------------------------------------------------------------------------------------
Las Colinas                 $ 6,863,088           $  526,639          $ 2,088,304           $9,478.031
                            -----------           ----------          -----------         ------------
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
TOTAL                       $87,667,037           $4.017,350          $27,315,614         $119,000,000
------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                   Exhibit E
                                   ---------

                        Form of Assignment of Interests

                      ASSIGNMENT AND ASSUMPTION AGREEMENT

          This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made
and entered into on ___________ ____, 2000, between _________, a _______________
("Assignor") and __________, a __________ ("Assignee").

                                   RECITALS

          A.   Reference is made to the Amended and Restated Agreement of
Limited Partnership of Marriott Residence Inn USA Limited Partnership (the
"Partnership"), dated ____________ __, _____, as the same may have been amended
from time to time (the "Partnership Agreement"). Assignor owns a _____ percent
(__%) ___________ partnership interest in the Partnership [(the sole general
partnership interest in the Partnership)] (the "Interest")

          B.   Assignor desires to (i) assign the Interest, and all of
Assignor's right, title and interest therein, to the Assignee and (ii) withdraw
as a partner in the Partnership.

          C.   Assignee desires to accept such assignment.

          NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                                   AGREEMENT

          1.   Assignment.  Assignor hereby assigns, grants, transfers and
               ----------
conveys to Assignee the Interest, and all of the Assignee's right, title and
interest therein, free and clear of all liens and encumbrances.

          2.   Assumption. Assignee accepts the foregoing assignment and assumes
               ----------
and agrees to perform and to pay or discharge any and all obligations of the
Assignor under the Partnership Agreement relating to the period from and after
the date hereof and to be bound by the terms of the Partnership Agreement and
the certificate of limited partnership of the Partnership from and after such
date.

          3.   Withdrawal from the Partnership.  Assignor hereby withdraws from
               -------------------------------
the Partnership.
<PAGE>

          3.   Representations and Warranties of Assignor.  All of the
               ------------------------------------------
representations and warranties relating to the Interest and the Partnership set
forth in that certain Second Amendment and Joinder, dated as of __________ __,
2001 by and between the Partnership, the Assignor, the Assignee and other
parties thereto are true and correct as of the date hereof. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite limited partnership actions on the part of the Assignor, none of which
actions have been modified or rescinded, and all of which actions are in full
force and effect.  This Agreement constitutes a valid and binding obligation of
the Assignor, enforceable against the Assignor in accordance with its terms.

          4.   Representations and Warranties of Assignee. The execution,
               ------------------------------------------
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite limited partnership actions on the part of the Assignee, none of which
actions have been modified or rescinded, and all of which actions are in full
force and effect.  This Agreement constitutes a valid and binding obligation of
the Assignee, enforceable against the Assignee in accordance with its terms.

          5.   Severability. Any provision of this Agreement which is prohibited
               ------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          6.   Governing Law; Successors and Assigns.  This Agreement shall be
               -------------------------------------
governed by and shall be construed and enforced in accordance with the laws of
the State of Maryland, without regard to conflicts of law principles.  This
Agreement shall be binding upon the successors and permitted assigns of Assignor
and Assignee.  Neither this Assignment nor anything set forth herein is intended
to, nor shall it, confer any rights on any person or entity other than the
parties hereto and all third party rights are expressly negated.

          7.   Counterparts. This Agreement may be executed in separate
               ------------
counterparts, the signatures on which may be by facsimile, none of which need
contain the signatures of all parties, each of which shall be deemed to be an
original, and all of which taken together constitute one and the same
instrument.  It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
<PAGE>

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

                                 ASSIGNOR:

                                 By:________________________________
                                 Name:______________________________
                                 Title:_____________________________

                                 ASSIGNEE:

                                 By:________________________________
                                 Name:______________________________
                                 Title:_____________________________<PAGE>

                                                                    EXHIBIT 10.4

                 CONSENT AND AMENDMENT AGREEMENT WITH RELEASE

     THIS CONSENT AND AMENDMENT AGREEMENT WITH RELEASE ("Agreement"), is made as
of September 28, 2001, by and between Wells Fargo Bank Minnesota, N.A., as
Trustee for the Registered Certificateholders of Banc of America Commercial
Mortgage Inc. Commercial Mortgage Pass-Through Certificates, Series 2000-2, by
and through its authorized master servicer ORIX Capital Markets, LLC, a Delaware
limited liability company (f/k/a ORIX Real Estate Capital Markets, LLC, a
Delaware limited liability company) (collectively, "Lender"), and Residence Inn
III, LLC, a Delaware limited liability company ("Borrower") with reference to
the following agreed upon facts:

                                   RECITALS
                                   --------

     A.   On or about December 29, 1999, Lender's predecessor in interest, Bank
of America, N.A., a national banking association ("Original Lender"), made a
loan to Borrower in the original principal amount of Fifty-Five Million Five
Hundred Eighty-Eight Thousand and No/100 Dollars ($55,588,000.00) (the "Loan"),
pursuant to the terms of that certain Loan Agreement dated December 29, 1999, by
Borrower, in favor of Original Lender (the "Loan Agreement").

     B.   The Loan is evidenced by that certain Promissory Note dated December
29, 1999, executed by Borrower, as maker, in favor of Original Lender, as
holder, in the original face amount of Fifty-Five Million Five Hundred Eighty-
Eight Thousand and No/100 Dollars ($55,588,000.00) (the "Note"), and is secured
by, among other documents:

          1.   that certain Mortgage, Assignment of Leases and Rents, Security
               Agreement and Fixture Filing (the "Massachusetts Mortgage") dated
               as of December 29, 1999, executed by Borrower, in favor of
               Original Lender, and filed in the Registry District of Middlesex
               County, State of Massachusetts, on January 7, 2000, as Document
               No. 187647, in Book 176, Page 91 (and recorded with Deeds, Book
               10613, Page 245), encumbering that certain 130-unit hotel
               described in the attached Exhibit "A" and commonly known as 1775
               Andover Street, Tewksbury, Massachusetts (the "Massachusetts
               Property");

          2.   that certain Mortgage, Assignment of Leases and Rents, Security
               Agreement and Fixture Filing (the "Alabama Mortgage") dated as of
               December 29, 1999, executed by Borrower, in favor of Original
               Lender, and recorded in the Official Records of Montgomery
               County, State of Alabama, on January 4, 2000, in Real Property
               Book 2070, Page 0203, encumbering that certain 94-unit hotel
               described on the attached Exhibit
<PAGE>

               "B" and commonly known as 1200 Hilmar Court, Montgomery, Alabama
               (the "Alabama Property");

          3.   that certain Deed of Trust, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Bakersfield
               Mortgage") dated as of December 29, 1999, executed by Borrower,
               in favor of Original Lender, and recorded in the Official Records
               of Kern County, State of California, on January 4, 2000, as
               Instrument No. 0200000535, encumbering that certain 114-unit
               hotel described on the attached Exhibit "C" and commonly known as
               4241 Chester Lane, Bakersfield, California (the "Bakersfield
               Property");

          4.   that certain Deed of Trust, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Pleasant Hill
               Mortgage") dated as of December 29, 1999, executed by Borrower,
               in favor of Original Lender, and recorded in the Official Records
               of Contra Costa County, State of California, on January 4, 2000,
               as Instrument No. 00-0000775, encumbering that certain 126-unit
               hotel described on the attached Exhibit "D" and commonly known as
               700 Ellinwood Way, Pleasant Hill, California (the "Pleasant Hill
               Property");

          5.   that certain Deed of Trust, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "San Ramon Mortgage")
               dated as of December 29, 1999, executed by Borrower, in favor of
               Original Lender, and recorded in the Official Records of Contra
               Costa County, State of California, on January 4, 2000, as
               Instrument No. 00-0000777, encumbering that certain 106-unit
               hotel described on the attached Exhibit "E" and commonly known as
               1071 Market Place, San Ramon, California (the "San Ramon
               Property");

          6.   that certain Leasehold Mortgage, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Connecticut
               Mortgage") dated as of December 29, 1999, executed by Borrower,
               in favor of Original Lender, and recorded in the Official Records
               of Meridan County, State of Connecticut, on January 3, 2000, in
               Volume 2534, Page 30, encumbering Borrower's leasehold interest
               in that certain 106-unit hotel described on the attached Exhibit
               "F" and commonly known as 390 Bee Street, Meridan, Connecticut
               (which leasehold interest is referred to herein as the
               "Connecticut Property");

          7.   that certain Deed to Secure Debt, Assignment of Leases and Rents
               and Security Agreement (the "Georgia Mortgage") dated as of
               December 29, 1999, executed by Borrower, in favor of Original
               Lender, and recorded in the Official Records of Fulton County,
               State of Georgia, on February 28, 2000, in Deed Book 28610, Page
               144, encumbering that certain 126-unit hotel described on the
               attached Exhibit "G" and commonly known as 3401 International
               Boulevard, Hapeville, Georgia (the "Georgia Property");

                                       2
<PAGE>

          8.   that certain Open-End Mortgage, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Ohio Mortgage") dated
               as of December 29, 1999, executed by Borrower, in favor of
               Original Lender, and recorded in the Official Records of Hamilton
               County, State of Ohio, on January 10, 2000, in Book 8166, Page
               460, encumbering that certain 118-unit hotel described on the
               attached Exhibit "H" and commonly known as 11401 Reed Hartman
               Highway, Blue Ash, Ohio (the "Ohio Property");

          9.   that certain Deed of Trust, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Irving Mortgage")
               dated as of December 29, 1999, executed by Borrower, in favor of
               Original Lender, and recorded in the Official Records of Dallas
               County, State of Texas, on January 5, 2000, as Document No.
               856105, in Volume 2000003, Page 820, encumbering that certain
               120-unit hotel described on the attached Exhibit "I" and commonly
               known as 950 Walnut Hill, Irving, Texas (the "Irving Property");
               and

          10.  that certain Deed of Trust, Assignment of Leases and Rents,
               Security Agreement and Fixture Filing (the "Houston Mortgage")
               dated as of December 29, 1999, executed by Borrower, in favor of
               Original Lender, and recorded in the Official Records of Harris
               County, State of Texas, on January 3, 2000, as Document No.
               U153854, encumbering that certain 110-unit hotel described on the
               attached Exhibit "J" and commonly known as 525 Bay Area
               Boulevard, Houston, Texas (the "Houston Property").

     C.   The Massachusetts Mortgage, the Alabama Mortgage, the Bakersfield
Mortgage, the Pleasant Hill Mortgage, the San Ramon Mortgage, the Connecticut
Mortgage, the Georgia Mortgage, the Ohio Mortgage, the Irving Mortgage and the
Houston Mortgage are hereinafter sometimes referred to collectively as the
"Mortgages". The Massachusetts Property, the Alabama Property, the Bakersfield
Property, the Pleasant Hill Property, the San Ramon Property, the Connecticut
Property, the Georgia Property, the Ohio Property, the Irving Property, and the
Houston Property are hereinafter sometimes referred to individually as a
"Property," and collectively as the "Properties."

     D.   The Mortgages, the Note and the Loan Agreement, along with any and all
other agreements, certificates or other documents evidencing the Loan shall
hereinafter collectively be defined as the "Loan Documents."

     E.   Lender is the current owner, mortgagee (or beneficiary, as the case
may be) and assignee of each of the Loan Documents.

     F.   Borrower and Apple Hospitality Two, Inc., a Virginia corporation
("AHT"), have entered into that certain Purchase Agreement dated May 18, 2001,
as amended by (i) that certain Amendment and Joinder dated July 30, 2001, by and
among Borrower, AHT and the Partnership, and (ii) that certain Second Amendment
and Joinder dated as of August 31, 2001, by and among Borrower, AHT, the
Partnership, Crestline, Capital Corporation, a Maryland corporation

                                       3
<PAGE>

("Crestline Capital"), CC USAGP LLC, a Delaware limited liability company ("CC
USAGP"), CCMH Desert Springs Corporation, a Delaware corporation ("CCMH Desert
Springs"), and CCRI USA LLC, a Delaware limited liability company ("CCRI USA")
(the "Purchase Agreement"); pursuant to the Purchase Agreement, on the date
hereof:

          1.   CC USAGP, CCMH Desert Springs and CCRI USA transferred all of
               their respective partnership interests in the Partnership to (i)
               AHT Res III GP, Inc., a Virginia corporation ("AHT GP"), and (ii)
               AHT Res III LP, Inc., a Virginia corporation ("AHT LP"), as a
               result of which AHT GP owns a one percent (1%) partnership
               interest in the Partnership as the sole general partner of the
               Partnership, and AHT LP owns a ninety-nine percent (99%)
               partnership interest in the Partnership as the sole limited
               partner of the Partnership (and AHT owns one hundred percent
               (100%) of the stock shares in each of AHT GP and AHT LP); and

          2.   Crestline Capital transferred one hundred percent (100%) of its
               stock shares in Crestline RES III to AHT, as a result of which
               AHT is the sole shareholder of Crestline RES III.

     G.   Borrower and Apple Hospitality Management, Inc., a Virginia
corporation ("AHM") have entered into that certain Master Hotel Lease Agreement
of even date herewith, pursuant to the terms of which Borrower shall lease the
Properties to AHM.

     H.   Article 7 of the Loan Agreement provides that an Event of Default
shall occur if Borrower shall fail to comply with, observe or perform any
covenant or agreement in any of the Loan Documents. Borrower acknowledges the
existence and enforceability of Article 7 of the Loan Agreement as well as
Lender's ability to declare an Event of Default under the circumstances
described above, absent consent thereto from Lender, and has requested Lender's
consent to (i) the transfer of partnership interests in the Partnership, (ii)
the transfer of shares of stock in Crestline RES III , (iii) the assignment by
Borrower of all of its rights and obligations under that certain Management
Agreement dated December 29, 1999, executed by Residence Inn by Marriott, Inc.,
a Delaware corporation ("Marriott"), as Manager, and Borrower, as owner (the
"Management Agreement") to AHM, (iv) the subsequent amendment and restatement of
such Management Agreement pursuant to that certain Amended and Restated
Management Agreement dated September 28, 2001, executed by Marriott, as Manager,
and AHM, as Lessee (collectively, the "Transfer"), and (v) the leasing of the
Properties from Borrower to AHM (the "Leasing").

     I.   Lender has agreed to consent to the Transfer, the Leasing, and certain
related amendments to the Loan Agreement subject to the terms and conditions of
this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby covenant and agree as follows:

                                       4
<PAGE>

                                   AGREEMENT
                                   ---------

     1.   Recitals.  The Recitals set forth above are incorporated by reference
          --------
herein. Borrower acknowledges that the Recitals are not mere recitals but are
representations of fact which are being relied upon by Lender in consenting to
the Transfer and the Leasing.

     2.   Reaffirmation.  Borrower acknowledges, represents and warrants that
          -------------
the terms and conditions of the Loan Documents are in full force and effect,
without waiver, modification (except as specifically set forth herein) or offset
of any kind whatsoever.

     3.   Conditions Precedent to Lender's Consent.  Lender hereby consents to
          ----------------------------------------
the Transfer, the Leasing, and certain related amendments to the Loan Agreement
upon Borrower's timely, full and complete satisfaction of the following
conditions precedent (the "Closing"):

     (a)  the full and complete execution and delivery to Lender of the
following documents, each of even date herewith:

          (i)   this Agreement;
         (ii)   a Certificate of Limited Liability Company and Authorization to
                Sign;
        (iii)   a Certificate of Partnership and Authorization to Sign;
         (iv)   Borrower's Financial Certificate;
          (v)   Borrower Principal's Financial Certificate (Apple Hospitality
                Two, Inc.) (the "AHT Financial Certificate");
         (vi)   Borrower Principal's Financial Certificate (Apple Suites
                Advisors, Inc.) (the "Apple Suites Financial Certificate");
        (vii)   Acknowledgment and Agreement of the Borrower Principals to
                Personal Liability for the Exceptions to Non-Recourse;
       (viii)   Environmental Indemnity Agreement (the "Environmental
                Indemnity"), to be executed by AHT and Apple Suites; and
         (ix)   Nondisturbance Agreement and Consent of Management (the
                "Management Agreement Subordination"), to be executed by Lender,
                AHM, Borrower and Marriott.

     (b)  Lender's review and approval of the organizational documents of
Borrower and its constituent members;

     (c)  the delivery to Lender of a lender's policy form of "Fairway
Endorsement" or its equivalent to each of the Lender's title policies for the
Properties, if available;

     (d)  the delivery to Lender of satisfactory evidence of the currency of the
Required Insurance;

     (e)  the full release and reconveyance of any other monetary liens or
monetary encumbrances against the Properties other than the Mortgages and other
Permitted Encumbrances (as defined in the Loan Agreement);

     (f)  Lender's receipt and approval of an opinion letter from counsel for
Borrower, the Partnership, Crestline RES III, AHT and Apple Suites Advisors,
Inc., a Virginia corporation

                                       5
<PAGE>

("Apple Suites") (i) that the above-referenced entities are validly existing and
duly organized, (ii) that the undersigned parties are duly authorized to enter
into this Agreement and all transactions contemplated hereby, (iii) that this
Agreement and of all documents required by Lender in connection herewith is duly
executed, and (iv) that in the event of a bankruptcy proceeding involving
certain affiliates of Borrower, the assets of Borrower (including the
Properties) will not be substantively consolidated with the assets of such
affiliate;

     (g)  the payment of Lender's assumption fee in the amount of 0.5% of the
then outstanding principal balance of the Loan, and all other third party
payments, fees, costs and expenses incurred in connection with this Agreement,
which sum will not be applied to the outstanding principal, interest or other
sums due Lender under the Note or other Loan Documents;

     (h)  the deposit with Lender into the Debt Service Escrow an additional
monthly debt service payment in the amount of $489,067.76 to be used in
accordance with the terms of the Loan Documents; and

     (i)  Borrower's and/or other persons' or entities' execution and delivery
of such other certificates or documents as Lender may reasonably require.

     4.   Assumption Fee; Expenses.  As consideration for Lender's consent to
          ------------------------
the Transfer and the Leasing, Borrower covenants and agrees to pay to Lender at
Closing:

     (a)  0.5% of the then outstanding principal balance of the Loan, which
represents the assumption fee to be paid to Lender for consenting to the
Transfer and the Leasing (Lender acknowledges that it has received $25,000 as a
non-refundable deposit which will be applied to the assumption fee at Closing);
and

     (b)  $80.00, which represents Lender's out-of-pocket costs for financial
reports relating to the Transfer and the Leasing.

     Borrower shall, at or prior to Closing, pay the cost of any escrow, title
insurance, filing or recording fees applicable to this transaction, including
without limitation, Lender's reasonable attorneys' fees and costs, estimated at
$25,000.

     5.   Representations and Warranties by Borrower. Borrower represents and
          ------------------------------------------
warrants to Lender, and acknowledges that Lender is relying thereon, as follows:

     (a)  each of the Mortgages constitute a valid and enforceable first
priority lien against the applicable Property encumbered thereby. There are no
monetary liens against the Properties other than the Mortgages and other
Permitted Encumbrances, including any liens for outstanding current property
taxes;

     (b)  that, as of September 10, 2001, (i) the current outstanding principal
balance of the Note is $53,256,401.74; (ii) the current effective interest rate
of the Note is 8.08% per annum; (iii) the current effective monthly principal
and interest installment payment under the Note is $489,067.76, which is due and
payable on the first day of each and every calendar month; (iv) the current
effective monthly escrow payment to Lender for taxes on the Properties is

                                       6
<PAGE>

$116,955.34, which is due and payable on the first day of each and every
calendar month; (v) the current effective monthly escrow payment to Lender for
insurance on the Properties is $0; (vi) all installment payments due under the
Note through and including September 1, 2001, have been paid current; (vii)
there are no defenses or claims of setoffs with respect to any such sums or
other amounts owing under the Note or any other Loan Documents; (viii) to
Borrower's knowledge, no payment default exists of any amount due and owing
under the Loan Documents and no late charges are currently owing thereunder; and
(ix) there are currently no outstanding default notices issued pursuant to the
Loan Documents.

     (c)  that, as of September 18, 2001, in accordance with the Loan Documents,
the following balances for impounds, reserves and escrow accounts are on deposit
with Lender:

            (i)   Tax Impound                              $  813,228.98
           (ii)   Insurance Impound                        $        0.00
          (iii)   Replacement Reserve                      $1,681,648.34
           (iv)   Repair Escrow Reserve                    $  387,762.28
            (v)   Debt Service Escrow                      $1,058,302.88

     (d)  the execution and delivery by Borrower of this Agreement and the
Management Agreement Subordination and the performance by Borrower of all of its
obligations hereunder have been duly authorized;

     (e)  the execution and delivery by AHT and Apple Suites of (i) the Borrower
Principals' Consent attached hereto, (ii) the Personal Liability Acknowledgment,
and (iii) the Environmental Indemnity Agreement have been duly authorized;

     (f)  the execution and delivery by AHT of the AHT Financial Certificate
have been duly authorized;

     (g)  the execution and delivery by Apple Suites of the Apple Suites
Financial Certificate has been duly authorized;

     (h)  the execution and delivery by the Partnership of the Reaffirmation and
Consent of Original Borrower Principal attached hereto has been duly authorized;

     (i)  the execution and delivery by Crestline Capital of the Consent of
Original Borrower Principal attached hereto has been duly authorized;

     (j)  the execution by Borrower of this Agreement shall not constitute a
breach of any provision contained in Borrower's organizational or formation
documents, nor does Borrower's execution hereof constitute an event of default
under any agreement to which Borrower is now or may hereafter become a party;

     (k)  from and after the Transfer and Leasing: (i) no entity will have an
ownership interest in the Properties other than Borrower and AHM; (ii) the
Partnership shall be the sole equity member of Borrower, and Crestline RES III
shall be the sole non-equity member of Borrower; (iii) AHT GP shall be the sole
general partner of the Partnership (iv) AHT LP shall be

                                       7
<PAGE>

the sole limited partner of the Partnership, and (v) AHT shall be the sole
shareholder of Crestline RES III;

     (l)  the execution and delivery by Borrower of this Agreement and the
performance by Borrower of all of its obligations hereunder does not and will
not violate any provision of any laws, or of any order, writ, judgment,
injunction, decree, determination or award;

     (m)  the execution and delivery by Borrower of this Agreement and the
performance by Borrower of all of its obligations hereunder does not and will
not result in a breach of or constitute a default under, cause or permit the
acceleration of any obligation owed under, or require any consent (other than
that of Lender or Marriott (which consent has been obtained)) under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which its property is bound or
affected;

     (n)  the consent of Lender to the Transfer and the Leasing shall not be
deemed an agreement by Lender to accept additional changes to the Loan
Documents, to waive any defaults under or breaches of the Loan Documents,
whether now or hereafter existing, or to waive any of its rights under the Loan
Documents;

     (o)  this Agreement constitutes a legal, valid and binding obligation of
Borrower in favor of Lender subject to all laws, including equitable principles,
insolvency laws, and other matters applying to creditors.

     6.   Modification of Loan Agreement.  All references in the Loan Agreement
          ------------------------------
and the other Loan Documents to Crestline Capital, including references in
Sections 5.1(m), 5.2(c)(i-ii) and 9.3(b) of the Loan Agreement, shall hereafter
be references to "Apple Hospitality Two, Inc., a Virginia corporation", and AHT
hereby affirms all of the obligations of Crestline Capital under the Loan
Agreement.

     7.   Lender's Consent to Transfer and the Leasing; Release of Crestline
          ------------------------------------------------------------------
Capital.  Subject to the satisfaction of all of the conditions precedent
-------
described in Section 3 above, and except as expressly provided herein, Lender
consents to the Transfer and the Leasing and agrees to release and forever
discharge Crestline Capital and its affiliates, officers, directors and
employees from any and all further obligations and liabilities of any kind it
may now or hereafter have under the Loan Documents, except for (a) any
environmental or other damage to the Properties occurring prior to Closing for
which Crestline Capital would be liable or responsible pursuant to that certain
Environmental Indemnity Agreement dated as of December 29, 1999 by and among
Borrower, Crestline Capital and the Partnership in favor of the Original Lender,
and (b) any acts arising from fraudulent or tortious conduct, including
intentional or negligent misrepresentation of financial data presented to Lender
by or on behalf of Crestline Capital (the "Release").

     8.   Limitation of Consent.  Lender's consent in this Agreement is strictly
          ---------------------
limited to the Transfer and the Leasing and this Agreement shall not constitute
a waiver or modification of any requirement of obtaining Lender's consent to any
further transfer of partnership interests in the Partnership or any future
transfer of any other interests in Borrower or its constituent members, or any
future transfer or leasing of the Properties or any portion thereof or interest

                                       8
<PAGE>

therein, nor shall it constitute a modification of the terms, provisions, or
requirements in the Loan Documents in any respect except as expressly provided
herein.  The Loan Documents are hereby ratified and except as expressly modified
in this Agreement, remain unmodified and are in full force and effect.

     9.   No Representations by Lender.  Borrower acknowledges and agrees that
          -----------------------------
Lender has made no representation or warranty, either express or implied,
regarding the Transfer or the Leasing or the Properties and has no
responsibility whatsoever with respect to the Properties, the condition of the
Properties or the use, occupancy or status of the Properties. To the extent
Borrower has any claims now or in the future which in any manner relate to the
Properties, the condition of the Properties, or the use, occupancy or status of
the Properties, the same shall not be asserted against Lender or its agents,
employees, professional consultants, affiliated entities, master servicers, sub-
servicers, special servicers, primary servicers, successors or assigns, or
asserted as a defense to any of the Loan Documents.

     10.  Effect of Agreement.  Upon the complete and timely satisfaction of the
          -------------------
conditions precedent set forth in Section 3 above, this Agreement and the other
documents being executed concurrently herewith shall be deemed to form a part of
the Loan Documents and the Release shall be deemed irrevocably granted (and
Crestline Capital is hereby made a third party beneficiary of this Section 10).
This Agreement shall not prejudice any present or future rights, remedies or
powers belonging or accruing to Lender under the Loan Documents (except as
affected by the Release), nor shall this Agreement impair the lien created by
the Mortgages.

     11.  No Effect on Liens or Priority.  Nothing in this Agreement shall in
          ------------------------------
any way release, diminish or affect the first position lien of the Mortgages or
any liens created by, or the agreements or covenants contained in, the Loan
Documents or the first-lien priority of any such liens. Borrower agrees that the
Note, the Mortgages and the other Loan Documents shall secure all other sums
that may be advanced in the future by Lender pursuant to the terms of the Loan
Documents.

     12.  Additional Representations and Warranties of Borrower.  Borrower
          -----------------------------------------------------
hereby represents and warrants that:

     (a)  Borrower is the owner of the Properties;

     (b)  any court or third-party approvals necessary for Borrower to enter
into this Agreement have been obtained;

     (c)  the entities and/or persons executing this Agreement on behalf of
Borrower are duly authorized to execute and deliver this Agreement;

     (d)  this Agreement and the Loan Documents are in full force and effect and
the transactions contemplated herein and therein constitute valid and binding
obligations enforceable by Lender in accordance with their terms and have not
been modified either orally or in writing;

     (e)  Lender has not waived any requirements of the Loan Documents or any of
Lender's rights thereunder;

                                       9
<PAGE>

     (f)  to Borrower's knowledge, no Event of Default (as defined in the
Mortgages) exists, nor does any event exist which, as a result of the passage of
time or the expiration of any cure period, or both, would constitute an Event of
Default; and

     (g)  all representations and warranties referred to herein shall be true as
of the date of this Agreement and Closing and shall survive closing.

     13.  Intentionally Omitted.

     14.  Release of Lender.  In consideration of Lender's agreement to enter
          -----------------
into this Agreement, Borrower, Crestline Capital, and each of the Partnership,
AHT and Apple Suites (each as a "Borrower Principal") (collectively, the
"Releasing Parties") hereby agree as follows:

     (a)  Releasing Parties jointly and severally release and forever discharge
Lender and its predecessors, successors, assigns, partners, directors, officers,
agents, attorneys, administrators, trustees, subsidiaries, affiliates,
beneficiaries, shareholders, representatives, master servicers, sub-servicers,
primary servicers, special servicers, servants and employees (the "Released
Parties") from any and all rights, proceedings, agreements, contracts,
judgments, debts, costs, expenses, promises, duties, claims, demands, cross-
actions, controversies, causes of action, damages, rights, liabilities and
obligations, at law or in equity whatsoever, known or unknown, suspected or
unsuspected, choate or inchoate, whether past, present or future, now held,
owned or possessed by Releasing Parties individually or collectively as against
the Released Parties from the beginning of time to the date of this Agreement
under common law or statutory right, known or unknown, arising, directly or
indirectly, proximately or remotely, out of the Properties, the Loan or any of
the Loan Documents, this Agreement or any of the documents, instruments or any
other transactions relating thereto or the transactions contemplated thereby
including, without limitation, any and all rights, proceedings, agreements,
contracts, judgments, debts, expenses, promises, duties, claims, demands, cross-
actions, controversies, causes of action, damages, rights, liability and
obligations whether based upon tort, fraud, breach of any duty of fair dealing,
breach of confidence, undue influence, duress, economic coercion, conflict of
interest, negligence, bad faith, intentional or negligent infliction of mental
distress, tortious interference with contractual relations, tortious
interference with corporate governance or prospective business advantage, breach
of contract, deceptive trade practices, libel, slander, conspiracy or any claim
for wrongfully accelerating the Note or wrongfully attempting to foreclose on
any collateral relating to the Note, contract or usury, but only to the extent
that the foregoing arise in connection with events which occurred prior to the
date of this Agreement (collectively, the "Released Claims");

     (b)  Without limiting the generality of the foregoing, this release shall
include the following matters: all aspects of this Agreement, the Loan Documents
and the negotiations between or on behalf of the Releasing Parties concerning
this Agreement and the other Loan Documents, including, but not limited to, all
meetings, telephone calls, correspondence and/or other contacts among or on
behalf of the Releasing Parties, on the one hand, and Lender, on the other hand,
incident to the attempts of said parties to reach an agreement, or in connection
with the Loan Documents;

                                       10
<PAGE>

     (c)  This release is intended to release all liability of any character
claimed for damages, of any type or nature, for injunctive or other relief, for
attorneys' fees, interest or any other liability whatsoever, whether statutory,
or contractual or tort in character, or of any other nature or character, now or
henceforth in any way related to any and all matters and dealings of any nature
whatsoever asserted or assertable by or on behalf of Releasing Parties against
Lender, and relating to the Properties or the Loan, including any loss, cost or
damage in connection with, or based upon, any breach of fiduciary duty, breach
of any duty of good faith or fair dealing, breach of confidence, breach of
funding commitment, breach of any other duty, breach of any statutory right,
fraud, usury, undue influence, duress, economic coercion, conflict of interest,
negligence, bad faith, malpractice, violations of the Racketeer Influenced and
Corrupt Organizations Act, intentional or negligent infliction of mental
distress, tortious interference with corporate or other governance or
prospective business advantage, breach of contract, deceptive trade practices,
libel, slander, defamation, conspiracy or any other cause of action, but only to
the extent that the foregoing arise in connection with events which occurred
prior to the date of execution and delivery hereof.

     (d)  Releasing Parties collectively and individually understand and agree
that this is a full, final and complete release and agree that this release may
be pleaded as an absolute and final bar to any or all suit or suits pending or
which may hereafter be filed or prosecuted by the Releasing Parties against the
Released Parties in respect of any of the matters released hereby, and that no
recovery on account of the matters described herein may hereafter be had from
Released Parties, and that the consideration given for this release is no
admission of liability and that neither Releasing Parties nor those claiming
under them will ever claim that it is.

     (e)  Each of Releasing Parties expressly acknowledges and waives any and
all rights and benefits conferred upon it by the provisions of Section 1542 of
the California Civil Code, which provides:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
          CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
          THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM,
          MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
          DEBTOR.

     Each of Releasing Parties acknowledges that the foregoing waiver of the
provisions of Section 1542 of the California Civil Code was separately bargained
for, and expressly consents that this Agreement shall be given full force and
effect in accordance with each and all of its express terms and provisions,
including those terms and provisions relating to unknown or unsuspected claims,
demands and causes of action, if any, to the same effect as those terms and
provisions relating to any other claims, demands and causes of action
hereinabove specified.

     (f)  The provisions, waivers and releases set forth in this Section 14 are
                                                                 ----------
binding upon Releasing Parties and their respective agents, employees,
representatives, officers, directors, general partners, limited partners, joint
shareholders, beneficiaries, trustees, administrators, subsidiaries, affiliates,
employees, servants and attorneys.

                                       11
<PAGE>

     15.  Notices.  All notices and other communications shall have been duly
          -------
given and shall be effective if (a) delivered by hand courier, (b) transmitted
via telecopy (or other facsimile device) to the number set forth in Exhibit C
                                                                    ---------
to the Loan Agreement, (c) delivered prepaid by a reputable national overnight
air courier service, or (d) sent by certified or registered mail, postage
prepaid in each case to the respective party at the address set forth in
Exhibit C of the Loan Agreement, or at such other address as such party may
---------
specify by written notice to the other party hereto and shall in each case be
effective upon delivery or refusal of the addressee to accept delivery.
No notice of change of address shall be effective except upon actual receipt.
This Section 15 shall not be construed in any way to affect or impair any
     ----------
waiver of notice or demand provided in any Loan Document or to require the
giving of notice or demand to or upon any Person in any situation or for any
reason. In addition to the foregoing, Lender and Borrower may, from time to
time, specify to the other party additional parties to whom copies of notices
shall be sent by providing to the other party written notice of the name,
address, telephone number and telecopy number of any such additional notice
party. Delivery to such additional parties shall not be required to cause
notices delivered to the principal parties to be effective. Each such additional
notice party shall be entitled to receive and/or give any notice required or
permitted to be given under the Loan Agreement or any other Loan Document.
Additionally, the Loan Agreement and the Mortgages are supplemented to include
the following addresses:

          Lender:

          Wells Fargo Bank Minnesota, N.A.
          c/o Bank of America, N.A.
          Capital Markets Servicing Group
          Mail Code: CA9-703-26-10
          P.O. Box 3609
          Los Angeles, California 90051-3609
          Attention: Servicing Manager

          Borrower:

          Residence Inn III LLC
          c/o Apple Hospitality Two, Inc.
          10 South Third Street
          Richmond, Virginia  23219
          Attention:  Glade Knight

          with a copy to:

          Jenkens & Gilchrist, P.C.
          1445 Ross Avenue
          Suite 3200
          Dallas, Texas  75202
          Attention:  Thomas E. Davis

     16.  Bankruptcy of Borrower.  Borrower, as a material inducement to Lender
          ----------------------
to enter into this Agreement, and in consideration of the mutual covenants
contained in this Agreement,

                                       12
<PAGE>

and for other good and valuable consideration, by its execution hereof covenants
and agrees that in the event Borrower shall (a) file any petition with any
bankruptcy court or be the subject of any petition under the United States
Bankruptcy Code (11 U.S.C. (S)101 et seq., the "Code"), (b) file or be the
                                  ------
subject of any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or other
relief for debtors, (c) have sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator, or liquidator, or (d) be the
subject of any order, judgment, or decree entered by any court of competent
jurisdiction approving a petition filed against such party for any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or relief for debtors, Lender shall
thereupon be entitled, and Borrower irrevocably consents, to the entry of an
order by a bankruptcy court granting to Lender relief from any automatic stay
imposed by Section 362 of the Code, or otherwise, on or against the exercise of
the rights and remedies otherwise available to Lender as provided in the Loan
Documents, this Agreement or as otherwise provided by law or in equity, and
Borrower hereby irrevocably waives its right to object to, attempt to enjoin or
otherwise interfere with such relief and the exercise and enforcement by Lender
of its rights and remedies following entry of such order. Without limiting the
generality of the immediately preceding sentence, Borrower agrees that Lender
will be entitled to and hereby consents to immediate relief from the automatic
stay imposed by the Code to allow Lender to take any and all actions necessary,
desirable or appropriate to enforce any rights Lender may have under the Loan
Documents, including, but not limited to, the right to possession of the
Properties, collection of rents, and/or the commencement or continuation of an
action to foreclose Lender's liens and security interests. Borrower further
agrees that the filing of any petition for relief under the Code by Borrower,
without unanimous consent of its limited liability company managers, which
postpones, prevents, delays, or otherwise hinders Lender's efforts to collect
the amounts due under the Note or to liquidate any of the collateral therefor
shall be deemed to have been filed in bad faith and, therefore, shall be subject
to prompt dismissal or conversion to a case under Chapter 7 of the Code upon
motion therefor by Lender. Further, Borrower agrees that it will not seek, apply
for or cause the entry of any order enjoining, staying, or otherwise prohibiting
or interfering with Lender's obtaining an order granting relief from the
automatic stay and enforcement of any rights which Lender may have under the
Loan Documents, including, but not limited to, Lender's right to possession of
the Properties, collection of rents and/or the commencement or continuation of
an action to foreclose Lender's liens and security interests under the Loan
Documents.

     17.  Compliance With Interest Law.  It is the intention of Borrower and
          ----------------------------
Lender to conform strictly to the Interest Law (herein defined). Accordingly,
Borrower and Lender agree that any provisions contained in the Note or in any of
the other Loan Documents to the contrary notwithstanding, the aggregate of all
interest, or consideration constituting interest under the Interest Law, that is
taken, reserved, contracted for, charged or received under the Note or under any
of the aforesaid documents or otherwise in connection with this loan transaction
shall under no circumstances exceed the maximum amount of interest allowed by
the Interest Law. If any excess interest is provided for in the Note or in any
of the other Loan Documents, then (a) the provisions of this paragraph shall
govern and control, (b) neither Borrower nor Borrower's successors or assigns
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the maximum amount of interest allowed by the Interest Law, (c) any
such excess

                                       13
<PAGE>

shall be deemed a mistake and canceled automatically and, if theretofore paid,
shall be credited against the indebtedness (or if the Note shall have been paid
in full, refunded to Borrower), and (d) the effective rate of interest shall be
automatically subject to reduction to the Maximum Legal Rate of Interest (as
hereinafter defined). To the extent permitted by the Interest Law, all sums paid
or agreed to be paid to Lender for the use, forbearance, or detention of the
indebtedness shall be amortized, prorated, allocated and spread throughout the
full term of the Note. For purposes of the Note, "Interest Law" shall mean any
present or future law of the State of Maryland (meaning the internal laws of
said state and not the laws of said state relating to choice of law), the United
States of America or any other jurisdiction, which has application to the
interest and other charges under the Note or under any of the other Loan
Documents and to the classification of Borrower under such law. For purposes of
the Note, the "Maximum Legal Rate of Interest" shall mean the maximum effective
contract rate of interest that Lender may from time to time, by agreement with
the Borrower, legally charge Borrower and in regard to which Borrower would be
prevented from successfully raising the claim or defense of usury under the
Interest Law as now or hereafter construed by courts of appropriate
jurisdiction.

     18.  Terms Generally.  (a) Each definition contained in this or any other
          ---------------
Article of this Agreement shall apply equally to both the singular and plural
form of the term defined.  Each pronoun shall include the masculine, the
feminine and neuter form, whichever is appropriate to the context.  The words
"included", "includes" and "including" shall each be deemed to be followed by
the phrase, "without limitation."  The words, "herein", "hereby", "hereof", and
"hereunder" shall each be deemed to refer to this entire Agreement and not to
any particular Article or Section hereof.  Notwithstanding the foregoing, if any
law is amended so as to broaden the meaning of any term defined in it, such
broader meaning shall apply subsequent to the effective date of such amendment.
Where a defined term derives its meaning from a statutory reference, any
regulatory definition is broader than the statutory reference and any reference
or citation to a statute or regulation shall be deemed to include any amendments
to that statute or regulation and judicial and administrative interpretations of
it, and (b) the following terms shall have the respective meanings ascribed to
them in the Uniform Commercial Code as enacted and in force in the State of
Maryland:  accessions, accounts, continuation statement, equipment, financing
statement, fixtures, general intangibles, personal property, proceeds, security
interest and security agreement.

     19.  Securities Act of 1933.  Neither Borrower nor any agent acting for
          ----------------------
Borrower has offered the Note or any similar obligation of Borrower for sale to
or solicited any offers to buy the Note or any similar obligation of Borrower
from any person or party other than Lender, and neither Borrower nor any agent
acting for Borrower will take any action which would subject the sale of the
Note to the provisions of Section 5 of the Securities Act of 1933, as amended.

     20.  Compliance with ERISA.  Borrower is not and will not be an "employee
          ---------------------
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which is subject to plans for
                                   -----
purposes of Title I of ERISA, and none of the transactions contemplated hereby
will result in a "governmental plan" within the meaning of Section 3(32) of
ERISA and transactions by Borrower are not and will not be subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans.

                                       14
<PAGE>

     21.  Documentation Requirements, Sufficiency of Consents and Approvals.
          -----------------------------------------------------------------
Each written instrument required by this Agreement or any of the other Loan
Documents to be furnished to Lender shall be duly executed by the person or
party specified (or where no particular person or party is specified, by such
person or party as Lender shall require), duly acknowledged where required by
Lender and, in the case of affidavits and similar sworn instruments, duly sworn
to and subscribed before a notary public duly authorized to act in the premises
by governmental authority; shall be furnished to Lender in one or more copies as
required by Lender; and shall in all respects be in form and substance
reasonably satisfactory to Lender and its legal counsel. All title policies,
surveys, appraisals, and other evidence, information or documentation required
by Lender shall be in form and substance reasonably satisfactory to Lender and
its legal counsel in all respects.

     22.  Evidentiary Requirements.  Where evidence of the existence or non-
          ------------------------
existence of any circumstance or condition is required by this Agreement to be
furnished to Lender, such evidence shall in all respects be in form and
substance reasonably satisfactory to Lender.

     23.  Number, Order and Captions Immaterial.  The numbering, order and
          -------------------------------------
captions or headings of the several articles, sections and paragraphs of this
Agreement, the Note, the Mortgages and the other Loan Documents are for
convenience of reference only and shall not be considered in construing such
instruments.

     24.  Modifications.  Neither this Agreement, nor any term or provision
          -------------
hereof, may be changed, discharged or terminated, except by an instrument in
writing signed by the party against whom enforcement of the change, discharge or
termination is sought.

     25.  General Provisions.
          ------------------
               a.  Governing Law.  This Agreement shall be governed by the laws
                   -------------
          of the State of Maryland;

               b.  Severability.  In the event one or more provisions of this
                   ------------
          Agreement shall be invalid, illegal or unenforceable, the validity or
          enforceability of the remaining provisions shall not in any way be
          affected;

               c.  Rights Cumulative; Enforcement.  All of Lender's and
                   ------------------------------
          Borrower's rights, if any, under this Agreement shall be in addition
          to all of their respective rights under the Loan Documents, or
          available at law or in equity. This Agreement is subject to
          enforcement by Lender, at law or in equity, including, without
          limitation, actions for damages or specific performance;

               d.  Costs of Enforcement.  If any of the parties hereto shall
                   --------------------
          retain the services of an attorney or any other consultants in order
          to enforce this Agreement, or any portion hereof, the non-prevailing
          party(ies) agrees to pay the prevailing party(ies) any and all costs
          and expenses, including, without limitation, reasonable attorneys'
          fees, costs and disbursements, incurred by the prevailing party(ies)
          as a result thereof;

                                      15
<PAGE>

               e.  Counterparts.  This Agreement may be executed and
                   ------------
          acknowledged in any number of separate counterparts, each of which,
          when so executed and delivered, together shall be deemed an original,
          but all of which, collectively and separately, shall constitute one
          and the same agreement. All signatures need not be on the same
          counterpart. Each individual executing this Agreement in a
          representative capacity has been duly authorized to do so by all
          appropriate action;

               f.  Further Assurances.  Each of the parties hereto agrees to
                   ------------------
          execute and deliver all such documents and instruments, and do all
          such other acts and things, as may be reasonably required in the
          future to perfect, assure, confirm or effectuate the provisions of
          this Agreement;

               g.  Assignment.  This Agreement shall bind and inure to the
                   ----------
          benefit of the respective successors and assigns of each of the
          parties hereto; provided, however, Borrower may not assign this
          Agreement or any rights hereunder without Lender's prior written
          consent and any prohibited assignments shall be absolutely void.
          Lender reserves the right to sell, assign, transfer, negotiate or
          grant participations in all or any part of, or any interest in
          Lender's rights and benefits hereunder and under the Loan Documents,
          or any of them.

     26.  NO JURY TRIAL.  BORROWER AND LENDER HEREBY SEVERALLY, VOLUNTARILY,
          -------------
KNOWINGLY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF THE NEGOTIATION, DOCUMENTATION,
ENFORCEMENT OR TERMS OF THIS AGREEMENT, THE NOTE, MORTGAGES OR ANY OTHER LOAN
DOCUMENT OR CONCERNING THE OBLIGATIONS UNDER THIS AGREEMENT OR THE LOAN
DOCUMENTS AND/OR WITH REGARD TO THE PROPERTY OR PERTAINING TO ANY TRANSACTION
RELATED TO OR CONTEMPLATED IN THE MORTGAGES, REGARDLESS OF WHETHER SUCH ACTION
OR PROCEEDING CONCERNS ANY CONTRACTUAL OR TORTIOUS OR OTHER CLAIM. BORROWER
ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO LENDER'S
CONSENT TO THE TRANSFER AND THE LEASING AND THAT LENDER WOULD NOT HAVE CONSENTED
TO THE TRANSFER AND THE LEASING WITHOUT THIS JURY TRIAL WAIVER. BORROWER
REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD
AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS AGREEMENT AND
UNDERSTAND THE LEGAL EFFECT OF THIS JURY TRIAL WAIVER.

     27.  ENTIRE AGREEMENT.  THIS AGREEMENT AND THE LOAN DOCUMENTS CONTAIN THE
          ----------------
ENTIRE AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE
SUBJECT MATTER OF THIS AGREEMENT, THE TRANSFER AND THE LEASING OR LENDER'S
CONSENT TO THE TRANSFER AND THE LEASING AND SUPERSEDE ANY PRIOR WRITTEN OR ORAL
AGREEMENTS BETWEEN THEM CONCERNING SAID SUBJECT MATTER. THERE ARE NO
REPRESENTATIONS, AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS, ORAL OR WRITTEN,
BETWEEN AND/OR AMONG THE PARTIES HERETO RELATING

                                       16
<PAGE>

TO THE SUBJECT MATTER CONTAINED IN THIS AGREEMENT, WHICH ARE NOT FULLY EXPRESSED
HEREIN OR IN THE LOAN DOCUMENTS.

     28.  NO ORAL ARGUMENTS.  THE WRITTEN LOAN DOCUMENTS, INCLUDING THIS
          -----------------
AGREEMENT, REPRESENT THE FINAL AGREEMENT BETWEEN AND AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR
AMONG THE PARTIES.

                 [Remainder of Page Intentionally Left Blank]

                                       17
<PAGE>

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

BORROWER:

RESIDENCE INN III, LLC,
a Delaware limited liability company

By:  /s/ Glade M. Knight
   ------------------------------
Its: President
    -----------------------------

LENDER:

WELLS FARGO BANK MINNESOTA, N.A., as Trustee
for the Registered Certificateholders of Banc of America
Commercial Mortgage Inc. Commercial Mortgage Pass-Through
Certificates, Series 2000-2

By:  ORIX Capital Markets, LLC, a Delaware
     limited liability company (f/k/a ORIX Real
     Estate Capital Markets, LLC, a Delaware
     limited liability company), as Master Servicer

     By: /s/ [illegible]
        ---------------------------
          Its: Portfolio Manager
              ---------------------
<PAGE>

                                    JOINDER

     Crestline Capital hereby joins in the foregoing Agreement for the sole
purpose of (i) agreeing to the provisions of Section 14 thereof and (ii) making
the following representations and warranties for the benefit of Lender:

     Immediately prior to the consummation of the transactions described in
Recital F of the Agreement:

     1.  Marriott Residence Inn USA Limited Partnership, a Delaware limited
partnership (the "Partnership"), owned one hundred percent (100%) of the equity
membership interest in Borrower as the sole equity member of Borrower.

     2.  CC USAGP LLC, a Delaware limited liability company ("CC USAGP"), owned
a five percent (5%) partnership interest in the Partnership, as the sole general
partner of the Partnership;

     3.  CCMH Desert Springs Corporation, a Delaware corporation ("CCMG Desert
Springs"), owned a one percent (1%) partnership interest in the Partnership, as
a limited partner of the Partnership;

     4.  CCRI USA LLC, a Delaware limited liability company ("CCRI USA"), owned
a ninety-four percent (94%) partnership interest in the Partnership, as a
limited partner of the Partnership.

     5.  Crestline RES III Corporation, a Delaware corporation ("Crestline RES
III"), owned the sole non-equity member interest in Borrower; and

     6.  Crestline Capital owned one hundred percent (100%) of the stock shares
in Crestline RES III, as the sole shareholder of Crestline RES III.

     By accepting delivery of the foregoing Agreement and this Joinder, Lender
shall be irrevocably deemed to  have agreed to the full Release of Crestline
Capital as described in Sections 7 and 10 of the Agreement.

CRESTLINE CAPITAL CORPORATION,

a Maryland corporation

By: /s/ Larry K. Harvey
    --------------------------
Its: Senior Vice President
    --------------------------
<PAGE>

                                 Exhibits A-J

                             Property Descriptions

                                   [omitted]
<PAGE>

                         BORROWER PRINCIPALS' CONSENT

     Apple Hospitality Two, Inc., a Virginia corporation, and Apple Suites
Advisors, Inc., a Virginia corporation (collectively, "Borrower Principals")
hereby consent to the terms, conditions and provisions of the foregoing Consent
and Amendment Agreement with Release ("Agreement") and the transactions
contemplated by that Agreement.  Borrower Principals agree to be bound by the
provisions of the release set forth in Section 14 of the Agreement, the same as
though Borrower Principals had been a signatory to said Agreement.  Borrower
Principals hereby reaffirm the full force and effectiveness of the
Acknowledgment and Agreement of the Borrower Principals to Personal Liability
for the Exceptions to Non-Recourse executed by Borrower Principals on the date
hereof ("Acknowledgment").  In addition, Borrower Principals acknowledge that
their obligations under the Acknowledgment are separate and distinct from those
of Borrower on the Loan.

Dated September 28, 2001

APPLE HOSPITALITY TWO, INC.,
a Virginia corporation

By:  /s/ Glade M. Knight
     -------------------------------
     Glade M. Knight
     -------------------------------
     President
     -------------------------------

APPLE SUITES ADVISORS, INC.,
a Virginia corporation

By:  /s/ Glade M. Knight
     -------------------------------
     Glade M. Knight
     -------------------------------
     President
     -------------------------------
<PAGE>

          ACKNOWLEDGMENT AND AGREEMENT OF THE BORROWER PRINCIPALS TO
             PERSONAL LIABILITY FOR THE EXCEPTIONS TO NON-RECOURSE

     Apple Hospitality Two, Inc., a Virginia corporation ("AHT"), and Apple
Suites Advisors, Inc., a Virginia corporation ("Apple Suites") (each a "Borrower
Principal") hereby represent to the Lender that AHT has a direct or an indirect
ownership interest in the Borrower.

     BY SIGNING BELOW, each Borrower Principal understands, accepts and agrees
to the provisions of the Note, including without limitation, Sections 7 and 8 of
the Note.  No transfer of AHT's ownership interest in the Borrower or in any
other entity which directly or indirectly has an ownership interest in the
Borrower shall release either Borrower Principal from liability hereunder,
unless the Lender shall have approved the transfer.  No such Borrower Principal
shall exercise any right of subrogation against the Borrower by reason of any
payment by the Borrower Principal pursuant to the Note, including without
limitation, Sections 7 and 8 of the Note, prior to the full and final
satisfaction of the Note and all other obligations of the Borrower under the
Loan Documents.

     Notwithstanding any of the foregoing to the contrary, so long as no Event
of Default has occurred under any of the Loan Documents, if at any time after
twenty-four (24) months from the Closing, the Debt Service Coverage Ratio (as
defined in the Loan Agreement) for the Trailing Twelve Months (as hereinafter
defined) exceeds 2.50 to 1 (such time being referred to herein as the "Apple
Suites Release Date"), then, from and after the Apple Suites Release Date, Apple
Suites shall have no further liability under the Note, including without
limitation, Sections 7 and 8 of the Note (it being understood that Apple Suites
shall continue to be liable under Sections 7 and 8 of the Note for claims
arising prior to the Apple Suites Release Date).  For purposes hereof, "Trailing
Twelve Months" shall mean the twelve (12) month period ending with the last
calendar day of the month preceding the date that Apple Suites furnished Lender
with an approved written request for release from liability in accordance with
the terms of this paragraph.

Dated September 28, 2001

BORROWER PRINCIPALS
-------------------

APPLE HOSPITALITY TWO, INC.,
a Virginia corporation

By:  /s/ Glade M. Knight
     -----------------------------------
     Glade M. Knight
     -----------------------------------
     President
     -----------------------------------

APPLE SUITES ADVISORS, INC.,
a Virginia corporation

By:  /s/ Glade M. Knight
     -----------------------------------
     Glade M. Knight
     -----------------------------------
     President
     -----------------------------------
<PAGE>

           REAFFIRMATION AND CONSENT OF ORIGINAL BORROWER PRINCIPAL

     Marriott Residence Inn USA Limited Partnership, a Delaware limited
partnership, ("Borrower Principal") hereby consents to the terms, conditions and
provisions of the foregoing Consent and Amendment Agreement with Release
("Agreement") and the transactions contemplated by that Agreement.  Borrower
Principal agrees to be bound by the provisions of the release set forth in
Section 14 of the Agreement, the same as though Borrower Principal had been a
signatory to said Agreement.  Borrower Principal hereby reaffirms the full force
and effectiveness of the Acknowledgment and Agreement of the Borrower Principals
to Personal Liability for the Exceptions to Non-Recourse attached to the Note
dated December 29, 1999 ("Acknowledgment").  In addition, Borrower Principal
acknowledges that its obligations under the Acknowledgment are separate and
distinct from those of Borrower on the Loan.

Dated September 28, 2001

BORROWER PRINCIPAL
------------------

MARRIOTT RESIDENCE INN USA
LIMITED PARTNERSHIP
a Delaware limited partnership

By:  AHT Res III GP, Inc.,
     a Virginia corporation,
     Its general partner

     By: /s/ Glade M. Knight
         ----------------------------
         Glade M. Knight
         ----------------------------
         President
         ----------------------------

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