[Florida]
COMFORT LETTER
--------------
November 29, 1999
Apple Suites, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx
Re: Homewood Suites(R) hotel located at
0000 Xxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxx (the "Hotel")
Gentlemen:
Promus Hotels, Inc. ("Promus Hotels") is about to execute with
respect to the Hotel a License Agreement and the Rider, Attachment and Exhibits
referenced therein (the "License Agreement"), dated the date hereof, pertaining
to the licensing of Apple Suites Management, Inc., a Virginia corporation
("Lessee"), to operate the Hotel as a Homewood Suites(R) hotel, and Promus
Hotels Florida, Inc. ("Promus Florida"; Promus Hotels and Promus Florida
individually and collectively as the context requires hereinafter referred to as
"Promus") is about to execute a management agreement of even date herewith (the
"Management Agreement") with respect to the operation of the Hotel by Promus
Florida, as Manager. In addition, Promus Hotels has loaned to Apple Suites, Inc.
("Fee Owner") the sum of $64,185,000 (the "Acquisition Loan") as purchase money
financing for the acquisition of certain properties (the "Properties") conveyed
pursuant to the Purchase Agreement (as defined in the Management Agreement),
that certain Agreement of Sale dated August 6, 1999 by and among Hampton Inns,
Inc., Promus Florida and Promus Hotels, as sellers, and Fee Owner, as buyer, as
the same has been amended, and that certain Agreement of Sale dated October 5,
1999 between Hampton Inns, Inc., as seller, and Fee Owner, as buyer, as the same
has been amended, which Acquisition Loan is evidenced by (i) a note of Fee Owner
dated September 20, 1999 in the amount of $26,625,000, (ii) a note of Fee Owner
dated October 5, 1999 in the amount of $7,350,000 and (iii) a note of Fee Owner
of even date herewith in the amount of $30,210,000 and is secured by, among
other things, mortgage(s), deed(s) of trust or deed(s) to secure debt dated
September 20, 1999, October 5, 1999 or of even date herewith from Fee Owner or
its wholly-owned subsidiary which encumbers some or all of the Properties, which
may include the Hotel (the documents evidencing and securing the Acquisition
Loan herein referred to as the "Acquisition Mortgage Documents").
Lessee is the owner of a leasehold estate in the Hotel pursuant to a Master
Hotel Lease Agreement dated September 20, 1999 (as supplemented, amended and
modified, the "Percentage Lease") with Fee Owner. Although the License Agreement
is non-assignable, and is not subject to any collateral assignment, Lessee and
Fee Owner have requested that Promus enter into this letter agreement with Fee
Owner with respect to, among other things, Fee Owner's rights with regard to the
License Agreement, and Promus has requested that Fee Owner enter into this
letter agreement with Promus with respect to, among other things, the Management
Agreement and its continuing rights to operate the Hotel for the term of the
Management Agreement, subject to the terms thereof and hereof, and to confirm
certain understandings with respect to the Acquisition Loan. No third party
beneficiaries (other than Fee Owner) are intended or implied. Fee Owner has
requested that Xxxxxx inform you of the procedures Xxxxxx agrees to follow in
the event Xxxxxx commits a breach under the provisions of the License Agreement.
So long as Fee Owner is the owner of the Hotel, and the
License Agreement is in effect, Promus will notify Fee Owner by certified mail
at the above address (or such other address as you may specify in a written
notice to Promus pursuant hereto) of any default as a result of any breach of
the License Agreement or Management Agreement by Lessee, provided, however, that
to the extent the default is a default under, or termination of, the Percentage
Lease or a default under the Acquisition Loan, Promus shall have no obligation
to notify Fee Owner as contemplated above. This notice will be in the form of a
copy of the notice of such default that is sent to Lessee. In the notice, Promus
will give Fee Owner (i) ten (10) days to cure or cause to be cured monetary
defaults identified in Promus's default notice and (ii) thirty (30) days to cure
or cause to be cured the non-monetary breach(es) identified in Promus's default
notice, provided, however, that to the extent the default identified in Promus's
default notice is not capable of being cured by Fee Owner (i.e., the bankruptcy
of Lessee or a transfer in violation of the License Agreement), Fee Owner will
not be afforded an opportunity to cure such incurable defaults. If a breach
identified in the notice is of a curable non-monetary nature which is not
reasonably capable of being cured within such thirty (30) day period, Promus
shall extend the cure period for such length of time as Promus in its sole
discretion reasonably determines is necessary for such breach to be cured (not
to exceed in any event an additional period of ninety (90) days).
In the event a default occurs under the Percentage Lease
(other than a default under the Acquisition Loan) and, as a consequence thereof,
Fee Owner elects to terminate the Percentage Lease, or remove Lessee from
possession of the Hotel without terminating the Percentage Lease or if Lessee
does not elect to extend the Percentage Lease term through the full term of the
License Agreement (any such event being referred to herein as a "Triggering
Event") while the License Agreement and/or the Management Agreement are in
effect, Fee Owner shall give Promus written notice of such termination
("Triggering Event Notice"). Fee Owner shall have a ninety (90) day period from
the date such Triggering Event Notice is given to elect to enter into a lease
agreement with a substitute lessee of the Hotel satisfying the conditions set
forth in Paragraph 1 below (a "Successor Lessee") and to obtain a new license
agreement for such Hotel in the name of such Successor Lessee, for a term equal
to the balance of the original term of the License Agreement and otherwise on
the terms and conditions set forth in the License Agreement,
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except that it shall be issued to Successor Lessee without the payment of any
application fee or transfer fee. Promus's obligations to issue a new license
agreement pursuant to this paragraph are subject to and conditioned upon the
satisfaction of the following:
1. Successor Lessee shall (i) be a "Permitted Transferee" (as
hereinafter defined) and (ii) either (y) be (1) at least fifty percent (50%)
owned by Fee Owner or persons that are its "Affiliates" (as hereinafter defined)
and (2) controlled by Fee Owner or its Affiliates or (z) have complied with the
requirements of Section 11 of the applicable License Agreement.
For purposes of this letter agreement the following terms
shall have the respective meanings assigned thereto:
(a) The term "Permitted Transferee" means a person or entity
that (i) has adequate financial resources to perform all of Lessee's
obligations under and in accordance with the terms of the License
Agreement, the Percentage Lease, and/or the Management Agreement,
(ii) is not the franchisor or an operator of a chain of hotels
(i.e., a group of hotels marketed under the same brand name) which
competes with the Homewood Suites(R)system of hotels, and (iii)
enjoys a favorable reputation for integrity in his or its community;
provided, however, that an entity the stock of which is not traded
on a national stock exchange shall not qualify as a "Permitted
Transferee" unless (A) all officers, directors, managing members and
general partners of such entity and all persons having, directly or
indirectly, a ten percent (10%) or more equity or profit-sharing
interest in such entity would qualify as Permitted Transferees under
clauses (ii) and (iii) of this sentence, and (B) all officers,
directors, managing members and general partners of any entity
having, directly or indirectly, a ten percent (10%) or more equity
or profit-sharing interest in such entity, the stock of which is not
traded on a national stock exchange, would qualify as Permitted
Transferees under clauses (ii) and (iii) of this sentence. For
purposes of the foregoing, it is agreed that any person or entity
who or which, because of reputation or past conduct, has been denied
or would be likely to be denied a gaming license by any governmental
authority shall not qualify as a "Permitted Transferee".
(b) The term "Affiliate" means, with respect to any person or
entity, any other person or entity which, directly or indirectly,
controls, is controlled by, or is under common control with, such
first person or entity. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), shall mean the
possession, directly or indirectly, of the power (i) to vote more
than fifty percent (50%) of the securities having ordinary voting
power for the election of directors of the controlled person, or
(ii) to direct or cause the direction of the management and policies
of the controlled person, whether through the ownership of voting
shares or by contract or otherwise, and shall be deemed to include
the directors and executive officers of Fee Owner.
2. Successor Xxxxxx shall also enter into a management
agreement with Promus covering the Hotel for a term equal to the balance of the
original term of the
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Management Agreement covering the Hotel and otherwise on the terms and
conditions set forth in such Management Agreement.
If Fee Owner fails to provide a written notice to Promus of
Successor Xxxxxx's intention to obtain a new license within such ninety (90) day
period, the License Agreement shall, at Promus's option, terminate upon the date
of expiration of such ninety (90) day period, in which event Fee Owner shall pay
to Promus an amount, as liquidated damages, equal to the aggregate amount owed
under the License Agreement (including liquidated damages attributable to such
termination as provided in Paragraph 13 of the License Agreement) and the
Management Agreement.
If Fee Owner enters into a new lease with a Successor Lessee
who intends to obtain a new license, all existing breaches under the License
Agreement and the Management Agreement (collectively, the "Hotel Agreements") of
which Promus notifies Fee Owner must be cured on or before the final day of the
ninety (90) day period, provided, however, if such breach(es) are of the type
set forth in paragraph 13.d.(3) and (4) of the License Agreement or Section 9.01
of the Management Agreement and are not capable of being cured by Fee Owner or a
Successor Lessee within such ninety (90) day period, such breach(es) need not be
cured if Fee Owner or a Successor Lessee cures all other breaches of the Hotel
Agreements. With regard to any breaches of a non-monetary nature which are not
reasonably capable of being cured within said ninety (90) day period, Promus
shall extend the cure period for such period of time as Promus in its sole
discretion reasonably determines is necessary for such breaches to be cured.
In the event Fee Owner exercises its rights under the terms of
this letter agreement to enable a Successor Lessee to obtain a new license
agreement, Lessee shall not be released from its obligations under the
applicable Hotel Agreements accruing prior to the date such Successor Lessee
obtains a new license and enters into a new management agreement with Promus.
In addition, in the event the provisions of Internal Revenue
Code, as amended, applicable to real estate investment trusts ("REIT") are
amended to permit REITs, such as Fee Owner, to operate hotels or otherwise
render the structure embodied by the Percentage Lease to be obsolete as
economically unnecessary, Fee Owner may give Promus written notice thereof (the
"Tax Event Notice") and of Fee Owner's election to terminate the Percentage
Lease and of its desire to obtain a new license agreement for the Hotel in Fee
Owner's name for a term equal to the balance of the original term of the License
Agreement and otherwise on the terms and conditions set forth in the License
Agreement, except that it shall be issued to Fee Owner without the payment of
any application fee or transfer fee. The Tax Event Notice shall, in addition,
contain Xxxxxx's consent to the termination of the Management Agreement and the
License Agreement and acknowledgment of the provisions of the immediately
succeeding paragraph. Promus's obligations to issue a new license agreement
pursuant to this paragraph are subject to and conditioned upon the satisfaction
of the following:
1. Fee Owner shall be a "Permitted Transferee", except that
clause (i) thereof shall be amended to read "(i) has adequate financial
resources to perform all of
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owner's obligations under and in accordance with the terms of the License
Agreement and/or the Management Agreement".
2. Fee Owner shall also enter into a management agreement with
Promus covering the Hotel for a term equal to the balance of the original term
of the Management Agreement covering the Hotel and otherwise on the terms and
conditions set forth in the Management Agreement.
In the event Fee Owner exercises its right under the terms of
the immediately preceding paragraph of this letter agreement to enable it to
obtain a new license agreement, Lessee shall not be released from its
obligations under the applicable Hotel Agreements accruing prior to the date Fee
Owner obtains a new license and enters into a new management agreement with
Promus.
In connection with Xxxxxx's execution and delivery of the
License Agreement, Apple Suites, Inc. has executed and delivered for the benefit
of Promus that certain Guaranty of even date herewith with respect to the
License Agreement (the "Guaranty"). Promus acknowledges that, in the event of
actual conflict, the terms and provisions of this letter agreement shall control
over the terms and provisions of the Guaranty. Without limiting the generality
of the foregoing, and in order to provide Apple Suites, Inc. with the full
benefits intended by the provisions of the immediately preceding sentence,
Promus shall notify Apple Suites, Inc. by certified mail not less than ten (10)
days prior to Promus's execution and delivery of any amendment or modification
of the License Agreement or of its acceptance of any voluntary surrender or
termination by Lessee of the License Agreement, other than amendments or
modifications or surrender or termination which has been requested by Fee Owner
or Apple Suites, Inc. or to which Fee Owner is a party. Nothing in the foregoing
sentence shall be deemed or construed to limit or restrict Promus's rights to
terminate or exercise any other remedy under the License Agreement in the event
of a default by Lessee thereunder, subject to the other terms and provisions of
this letter agreement.
With reference to Licensee's representation in the last
sentence of Section 1(a) of the License Agreement, Promus acknowledges that the
Percentage Lease is for a base term of less than twenty (20) years and that only
upon exercising all extension options available to Licensee, including certain
options requiring negotiation of fair market rental, will the term of the
Percentage Lease extend to the full twenty (20) years of the term of the License
Agreement. Fee Owner and Lessee acknowledge that the failure for any reason to
exercise the extension options will result in the application of the liquidated
damages provisions of Paragraph 13.f of the License Agreement if, upon the
termination of the Percentage Lease, Fee Owner or a Successor Lessee does not
obtain a new license agreement for the Hotel for a term equal to the balance of
the original term of the License Agreement, as contemplated herein.
Xxxxxx xxxxxx confirms for the benefit of Fee Owner and Lessee
that the License Agreement shall be read with the following clarifications:
(i) with respect to the provisions of Paragraph 1.d. of the
License Agreement relating to the requirement to use particular
Supplies or that particular
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Supplies be purchased from Promus or a source designated by Promus,
such requirements shall only be imposed on the licensee under the
License Agreement to the extent Promus is imposing such requirements
on substantially all of its licensees of the System, but that with
respect to other Supplies if Lessee determines that it can purchase
Supplies of a quality at least equal to that which Promus is
requiring at a price lower than the price then being charged by
Promus or its designated supplier, Lessee may purchase such Supplies
from its vendor;
(ii) with respect to the provisions of Paragraph 6.a.(19) of
the License Agreement, such provisions are not intended to preclude
Lessee or any member of an affiliated group from owning licensed
hotels of other, even competing, brands, but from owning a hotel
brand, tradename, system or chain;
(iii) with respect to the provisions of Paragraph 11 of the
License Agreement relating to change in ownership or a transfer of
the hotel, the provisions are intended to apply only to Xxxxxx's
beneficial or equity interests or its interest in the hotel; and
(iv) with respect to the language of the second sentence of
Paragraph 13.f. of the License Agreement reading "If this Agreement
is terminated other than by the expiration of the term described in
Paragraph 13.a.,", this language is not intended to modify other
provisions of the License Agreement relating to whether or not
liquidated damages are payable under other circumstances and
accordingly shall be read as if preceded by the phrase "Subject to
the other provisions of this Agreement". In addition, liquidated
damages shall not be payable if the License Agreement is terminated
as a result of Promus's default under the License Agreement.
Promus acknowledges that, in the event of actual conflict
between this letter agreement and the License Agreement, the terms and
provisions of this letter agreement shall control over the terms and provisions
of the License Agreement. Without limiting the generality of the foregoing, (i)
no transfer of any interest in Fee Owner, or of fee ownership of the Hotel to an
affiliate of Fee Owner, shall constitute a prohibited change of ownership under
the License Agreement, subject, however, to the penultimate paragraph of this
letter agreement, (ii) no transfer of the leasehold interest of Lessee in the
Hotel to a Successor Lessee shall constitute a prohibited change of ownership
under the License Agreement, and (iii) in no event shall the initial Licensee be
liable for liquidated damages as the result of termination of the Percentage
Lease or default under the License Agreement if a Successor Lessee is supplied
by Fee Owner or Fee Owner enters into a new License Agreement following a Tax
Event Notice, and all prior curable defaults under the License Agreement are
cured by Fee Owner, as contemplated herein.
Fee Owner and Xxxxxx agree with Xxxxxx as follows with respect
to the relationship of Xxxxxx and Xxxxxx under the Management Agreement:
(a) Pursuant to the terms of the Percentage Lease, Fee Owner
has agreed to pay, among other things, (i) land, building and
personal property taxes
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and assessments applicable to the Hotel, (ii) premiums and charges
for property casualty insurance coverages specified in Exhibit "D"
to the Management Agreement, (iii) expenditures for capital
replacements, (iv) expenditures for maintenance and repair of
underground utilities and structural elements of the Hotel and (v)
the payments of principal, interest and other sums payable under the
Acquisition Loan (collectively, "Fee Owner Costs"). To the extent
the Management Agreement obligates or authorizes Promus to pay any
Fee Owner Costs, Promus shall pay such Fee Owner Costs on behalf of
Lessee to the extent of funds in the Hotel's bank account(s)
(collectively, the "Hotel Accounts"), including, without limitation,
the Bank Account(s) and the Reserve Fund (as such terms are defined
in the Management Agreement) subject to any limitations contained in
the Management Agreement and Fee Owner and Lessee shall make such
adjustments and payments to each other as may be necessary from time
to time to take into account any such payments. Promus shall have no
duty, obligation or liability to Fee Owner (x) to make any
determination as to whether any expense required to be paid by
Promus under the Management Agreement is a Fee Owner Cost or a cost
of Lessee, or (y) to make any determination as to whether funds in
the Hotel Accounts belong to Fee Owner or Lessee, or (z) to require
that Fee Owner Costs be paid from funds which can be identified as
belonging to Fee Owner, or other costs and expenses required to be
paid by Lessee be paid from funds which can be identified as
belonging to Lessee; it being the intent of this provision that (i)
Fee Owner and Lessee shall look only to each other and not to Promus
with respect to moneys that may be owed one to the other as
consequence of Promus's performance of the Management Agreement and
(ii) Promus need only look to Lessee to pay operating costs,
including, without limitation, those designated herein as Fee Owner
Costs.
(b) Promus shall be permitted (and is hereby authorized) to
set off against any amounts owed to Promus by Lessee under the
Management Agreement and the License Agreement any funds held by
Promus pursuant to the Management Agreement, including amounts in
the Hotel Accounts, whether or not amounts are due to Fee Owner by
Lessee under the Percentage Lease.
(c) Fee Owner has approved the form of the Management
Agreement and License Agreement and agrees that Fee Owner's consent
or approval is not required with respect to the performance of any
of its rights, duties or obligations under the Management Agreement
or the License Agreement.
(d) Fee Owner hereby approves the deposit of funds into the
Reserve Account and the expenditure of funds from the Reserve
Account by Promus in accordance with the terms of the Management
Agreement.
(e) To the extent required by applicable laws, Fee Owner shall
obtain and maintain (or cooperate in obtaining and maintaining) any
licenses, permits or approvals of any governmental authority
necessary to operate and manage the Hotel in accordance with the
Management Agreement.
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(f) Fee Owner acknowledges and agrees that, unless it enters
into a license agreement pursuant to a Tax Event Notice, it has no
right to use the Homewood Suites(R) "System" except as expressly set
forth in the License Agreement nor any right to use the name
"Homewood Suites" or the Homewood Suites(R) "System" as a result of
Lessee entering into the Hotel Agreements.
(g) Fee Owner acknowledges and agrees that any amounts owed to
Promus under the License Agreement and the Management Agreement are
superior to any amounts owed by Lessee to Fee Owner under the
Percentage Lease, other than amounts owed in respect of the
Subordinated Management Fee, as defined in the Management Agreement,
to the extent Lessee applies amounts received in respect of Owner's
Basic Return, as defined in the Management Agreement, in respect of
amounts owed by Lessee to Fee Owner under the Percentage Lease.
(h) Fee Owner agrees not to amend or modify the Percentage
Lease in any manner that would (i) reduce the term of the Percentage
Lease, (ii) increase the amount of rent payable by Lessee thereunder
(except as contemplated by the provisions of the Percentage Lease),
or (iii) have a material adverse effect on any of the rights, duties
and privileges of Promus under the Management Agreement. Nothing in
this paragraph (h) shall be deemed or construed to limit or restrict
Fee Owner's rights to terminate or exercise any other remedy under
the Percentage Lease in the event of a default by Lessee thereunder.
(i) Fee Owner acknowledges and agrees that Xxxxxx has no duty
or obligation to comply with any of the terms of the Percentage
Lease and that Fee Owner will look solely to Lessee with respect to
such matters.
(j) Fee Owner acknowledges and agrees that (i) no sale,
transfer or conveyance of Fee Owner's fee estate in the Hotel shall
terminate the Management Agreement, (ii) except as provided below,
neither the termination of the Percentage Lease nor the assignment
of Lessee's interest therein shall terminate the Management
Agreement, and (iii) no merger of the leasehold and fee simple
estates of the Hotel shall terminate the Management Agreement; it
being the intent of Fee Owner and Promus that the Management
Agreement shall continue in effect for the term of the Management
Agreement so long as the Hotel is operating as a Homewood
Suites(R)hotel pursuant to a license agreement and Manager is not in
default of its obligations under the Management Agreement (subject,
however, to any express rights of termination contained in the
Management Agreement).
(k) Fee Owner acknowledges and agrees that Manager shall have
a right to file a separate claim in any condemnation case in
accordance with Article VIII of the Management Agreement.
(l) Fee Owner agrees that so long as the License Agreement is
in effect the casualty insurance proceeds will be applied in the
manner provided in the License Agreement.
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(m) In the event that Fee Owner terminates the Percentage Lease and as a
consequence thereof Promus terminates the License Agreement and does
not enter into a new license agreement with any successor operator of
the Hotel, Promus and Fee Owner, subject to the payment of all amounts
owed under the Management Agreement and all amounts owed under the
Acquisition Loan, shall have the right to terminate the Management
Agreement covering the Hotel. Otherwise, the successor operator shall
assume in writing the remaining term of such Management Agreement.
Fee Owner and Lessee further agree with Promus with respect to
the Acquisition Loan that the Percentage Lease shall be subject and subordinate
to the lien of the Acquisition Mortgage Documents and to all of the terms,
conditions and provisions thereof, to all advances made or to be made
thereunder, and to any renewals, extensions, modifications or replacements
thereof, including any increases therein or supplements thereto. The foregoing
provisions shall be self-operative. However, Fee Owner and Xxxxxx agree to
execute and deliver to Promus such other instrument as Promus shall request in
order to effectuate said provisions.
It is acknowledged and agreed that (i) Promus shall be
entitled to rely upon any written notice or request by Fee Owner made pursuant
to the provisions hereof without requirement of investigating the accuracy or
authenticity of such written notice or any facts or allegations contained
therein, and (ii) Fee Owner shall be entitled to rely upon any written notice or
request by Promus made pursuant to the provisions hereof without requirement of
investigating the accuracy or authenticity of such written notice or any facts
or allegations contained therein.
You agree to notify Promus by certified mail at 000 Xxxxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxx 00000-4900, Attention: General Counsel (or such other
address as Promus may specify in a written notice to you) of any action
regarding the Hotel to: (a) terminate the Percentage Lease; (b) petition for
appointment of a Receiver or Trustee for Lessee to take any action under Federal
Bankruptcy law or similar state laws; or (c) take possession of the Hotel,
through a Successor Lessee or otherwise, without termination of the Percentage
Lease.
The rights, powers and interests of Promus hereunder may be
transferred and assigned by Xxxxxx, without the prior written consent of Fee
Owner, Lessee and, if applicable, any Successor Lessee, to any person to whom
the License Agreement and Management Agreement may be assigned. The rights and
obligations of Fee Owner, Lessee and, if applicable, Successor Lessee hereunder
are not transferable without the written consent of Promus.
Subject to the foregoing limitations, this letter agreement
shall extend to, and shall bind, the respective successors and assigns of
Promus, Fee Owner, Lessee and, if applicable, any Successor Lessee, provided,
however, that in the case of Fee Owner, this letter agreement shall not extend
to any transferee of Fee Owner's fee interest in the Hotel nor to Fee Owner if
Apple Suites, Inc. is not a publicly held REIT.
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Please indicate your agreement with the terms of this letter
agreement by signing and returning four executed copies to Xxxxxx. This letter
may be executed by original signature or by signature received by telecopy in
any number of counterparts, each of which shall be original and all of which
together shall constitute and be construed as one and the same instrument.
Very truly yours,
PROMUS HOTELS, INC.
By /s/ Xxx X. Xxxx
-----------------------
Xxx X. Xxxx
Executive Vice President
PROMUS HOTELS FLORIDA, INC.
By /s/ Xxx X. Xxxx
------------------------
Xxx X. Xxxx
Executive Vice President
cc: Franchise Administration
Accepted and Agreed:
APPLE SUITES, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
Acknowledged and Agreed:
APPLE SUITES MANAGEMENT, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
