[Utah]
INDEMNITY
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November 29, 1999
Promus Hotels, Inc.
755 Crossover Lane
Memphis, Tennessee 38117-4900
Attention: General Counsel
Loan: Purchase money financings aggregating $64,185,000
Borrower: Apple Suites, Inc.
Premises: 844 East North Union Avenue, Midvale, Utah
Dear Sirs:
Except to the extent of any existing liability of you and/or
your affiliates for Corrective Work with respect to Hazardous Materials
currently in, on or under the Property, for good and valuable consideration in
hand received, the undersigned, and if there are two or more signers, each of
us, hereby jointly and severally covenants and agrees for your benefit, in
addition to, and not in limitation of, any other rights and remedies available
to you at law or in equity, as follows:
1. Definitions: The following terms shall be defined as set forth below.
(a) Corrective Work: The removal, relocation, elimination, remediation
or encapsulation of Hazardous Materials from all or any portion of
the Property and (to the extent provided in Subparagraph 2(b)
hereof) surrounding areas and, to the extent thereby required, the
reconstruction and rehabilitation of the Property pursuant to, and
in compliance with, Governmental Requirements;
(b) Governmental Requirements: Any present and future (i) federal,
state or local laws, rules or regulations and (ii) judicial or
administrative interpretation thereof, including any judicial or
administrative orders or judgments;
(c) Hazardous Materials: (i) Asbestos and polychlorinated biphenyls
and (ii) hazardous or toxic materials, wastes and substances which
are defined, determined or identified as such (including petroleum
products if they are defined, determined or identified as such)
in,
or subject to, any Governmental Requirements, in each case in
amounts in violation of applicable Governmental Requirements;
(d) Indemnified Losses: Incurred damages, losses, liabilities, costs
and expenses of Corrective Work, including, without limitation,
obligations, penalties, fines, impositions, fees, levies, lien
removal or bonding costs, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses
(including, without limitation, attorneys' and experts' reasonable
fees and disbursements) of any kind and nature whatsoever,
including interest thereon;
(e) Loan Documents: The documents comprising the total documentation
pertaining to the Loan indicated above made to, or for the benefit
of, the above-named Borrower, including, without limitation, and
as applicable, any loan agreement, building loan or construction
loan agreement, note, mortgage, deed of trust, security agreement,
assignment of leases and rents, any guaranty or guaranties
(whether of payment and/or performance), pledge agreement,
commitments, letters of credit, assignment of partnership
interests, and all other instruments and documents evidencing,
securing, or collateral to, the Loan;
(f) Property: The land more particularly described in Exhibit A hereto
attached and as indicated above, together with the buildings,
improvements, structures and betterments now or hereafter existing
thereon or thereunder.
2. (a) Except as hereinafter limited in Paragraph 9 and Subparagraphs 2(b)
and 2(c), the undersigned covenant and agree, at their sole cost and
expense, to indemnify, protect and save you harmless against and from
any and all Indemnified Losses which may at any time be imposed upon,
incurred by or asserted or awarded against you arising from, out of,
attributable to or by reason of, the:
(i) nonperformance or delayed performance and completion of
Corrective Work; or
(ii) enforcement of this Indemnity or the assertion by the
undersigned of any defense to its obligations hereunder (except the
successful defense of actual performance not subject to further
appeal);
whether the Indemnified Losses arise before, during or after,
enforcement of the remedies and rights available to you under the Loan
Documents, including the acquisition of title to all or any portion of
the Property by
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you or your successors or affiliates (as such terms are defined in
Paragraph 8(a) hereof).
(b) The Indemnified Losses shall not extend to the costs of Corrective
Work pertaining to surrounding areas if the applicable Hazardous
Materials did not originate from any portion of the Property, unless
the removal of the Hazardous Materials from the surrounding areas by
Borrower is necessitated by Governmental Requirements.
(c) If you, or any of your successors or affiliates, take
(i) title to the Property at a foreclosure sale, at a sale pursuant
to a power of sale under a mortgage or deed of trust, or by deed in
lieu of foreclosure, or by exercise of other remedial rights; or
(ii) possession, custody and control of the Property as a
mortgagee-in-possession or through court designated receiver and
Borrower, and its successors or affiliates, never reacquire such
possession, custody and control,
then the Indemnified Losses shall not include or apply to Hazardous
Materials which are initially placed on, in or under all or any portion
of the Property at any time thereafter.
3. (a) So long as Borrower is in possession, custody and control of the
Property you agree that prior to the undertaking of Corrective Work by
you, the Borrower or the undersigned may at their sole cost and expense
contest the Governmental Requirements and/or perform any Corrective
Work, provided that at all times all of the following conditions are
continuously satisfied in full:
(i) no uncured event of default (other than as related to the
Hazardous Materials involved in such contest or Corrective Work)
exists under any of the Loan Documents;
(ii) you (and your agents, officers, directors, servants,
employees, contractors and shareholders) shall not be subject to
any criminal or other penalties, fines, costs or expenses, by
reason of such contest or Corrective Work or any delays in
connection therewith;
(iii) unless the undersigned has instituted a contest as permitted
hereunder with respect to any Corrective Work, the undersigned
shall commence the Corrective Work promptly after obtaining actual
knowledge of the Hazardous Materials on, in, under or affecting the
Property or any surrounding areas, but at least fifteen (15) days
prior to commencement of such Corrective Work, submit to you in
conformity with your reasonable requirements (which
3
requirements may not create conditions which violate Governmental
Requirements), reasonably detailed plans for such Corrective Work
complying with Governmental Requirements. If, within said fifteen
(15)-day period, you, in your reasonable judgment, reject such
plans, the undersigned shall promptly submit revised plans
conforming to your reasonable requirements to you for your
approval. If within fifteen (15) days from your receipt of the
original plans, or revised plans, you fail to approve or reject
such original plans, or revised plans, as the case may be, the same
shall be deemed accepted by you. All Corrective Work shall be
performed in compliance with such approved original or revised
plans;
(iv) a contest, if instituted, shall be instituted promptly after
the undersigned, or Borrower, obtains actual knowledge of an
action, suit, proceeding, or governmental order or directive which
asserts any obligation or liability affecting all or any portion of
the Property, or Borrower or any of the undersigned and diligently
prosecuted until a final judgment is obtained;
(v) Corrective Work shall be instituted promptly following an
unsuccessful nonappealable completion of the contest and shall be
diligently prosecuted until the Hazardous Materials involved in the
contest are removed, relocated, encapsulated and/or disposed of as
required by the Governmental Requirements;
(vi) the undersigned shall notify you within ten (10) days after
commencement of such contest or Corrective Work and shall render to
you a written monthly report detailing the progress thereof
including such information as you shall reasonably request; and
(vii) if you are named in any action or proceeding as a necessary
party or as a party defendant relating to matters covered by this
Indemnity, you agree to utilize counsel designated by the
undersigned, subject to your right of approval, not to be
unreasonably withheld or delayed. If you are not named in any such
action or proceeding, you, at your expense, shall have the right
(but not the obligation) to join in any action or proceeding in
which the undersigned or Borrower contests any Governmental
Requirements.
So long as all of such conditions are continuously satisfied, you agree
that you will not enter into any settlement agreement binding upon the
undersigned, or Borrower, without their prior consent, which consent
will not be unreasonably withheld or delayed.
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(b) Promptly after the receipt by you of written notice of any demand
or claim or the commencement of any action, suit or proceeding in
respect of any of the Indemnified Losses, you shall notify the
undersigned thereof in writing, but the failure by you promptly to give
such notice shall not relieve the undersigned of any of their
obligations under this Indemnity, except to the extent of prejudice to
any defense to such Indemnified Losses resulting from such delay.
4. The liability of the undersigned under this Indemnity shall in no way
be limited or impaired by (a) any amendment or modification of the Loan
Documents; (b) any extensions of time for performance required by any
of the Loan Documents; (c) any sale, assignment or foreclosure pursuant
to the Loan Documents or any sale or transfer of all or any part of the
Property; (d) any exculpatory provision in any of the Loan Documents
limiting your recourse to the Property or to any other security, or
limiting your rights to a deficiency judgment against Borrower, or the
undersigned; (e) the accuracy or inaccuracy of any representations or
warranties made to you under the Loan Documents; (f) the release of
Borrower or any other person from performance or observance of any of
the agreements, covenants, terms or conditions contained in any of the
Loan Documents by operation of law, your voluntary act, or otherwise;
(g) the release or substitution, in whole or in part, of any security
for the note or other evidence of debt issued pursuant to the Loan
Documents; (h) your failure to record or file any of the Loan Documents
(or your improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any security interest or lien given
as security for the note or other evidence of indebtedness under the
Loan Documents, (i) any other action or circumstance whatsoever which
constitutes, or might be construed to constitute, a legal or equitable
discharge or defense of Borrower or others for their obligations under
any of the Loan Documents or of the undersigned for their obligations
under this Indemnity or (j) the invalidity, irregularity or
unenforceability, in whole or in part, of any of the Loan Documents;
and in any of such cases, whether with or without notice to Borrower or
the undersigned and with or without consideration.
5. The undersigned (a) waive any right or claim of right to cause a
marshalling of the undersigned's assets or to cause you to proceed
against any of the security for the Loan Documents before proceeding
under this Indemnity or to cause you to proceed against the undersigned
in any particular order; (b) agree that any payments required to be
made hereunder shall become due on demand; (c) waive and relinquish all
rights and remedies accorded by applicable law to indemnitors or
guarantors, except any rights of subrogation which the undersigned may
have, provided that (i) the indemnity provided for hereunder shall
neither be contingent upon the existence of any such rights of
subrogation nor subject to any claims or defenses whatsoever which may
be asserted in connection with the enforcement or attempted enforcement
of such
5
subrogation rights including, without limitation, any claim that such
subrogation rights were abrogated by any of your acts, and (ii) the
undersigned postpone and subordinate (A) the exercise of any and all of
their rights of subrogation to your rights against the undersigned
under this Indemnity and (B) any rights of subrogation to any
collateral securing the Loan until the Loan shall have been paid in
full.
6. No delay on your part in exercising any right, power or privilege under
any of the Loan Documents shall operate as a waiver of any such
privilege, right or power.
7. Any one or more of the undersigned, or any other party liable upon or
in respect of this Indemnity or the Loan, may be released from
liability (in whole or in part) under this Indemnity or the Loan
Documents without affecting the liability hereunder of any of the
undersigned not so released.
8. (a) This Indemnity shall be binding upon the undersigned and their
respective heirs, personal representatives, successors and assigns and
shall inure to the benefit of and, where applicable, shall be binding
upon, you and your successors and affiliates, which acquire all or any
part of the Property by any sale, assignment or foreclosure under the
Loan Documents, by deed or other assignment in lieu of foreclosure, or
otherwise, including if you, or such successor, affiliate or
participant, is the successful bidder at a foreclosure or other
remedial sale. For purposes of this Indemnity your (i) "successors"
shall mean successors by merger, consolidation or acquisition of all or
a substantial part of your assets and business and (ii) "affiliates"
shall mean your parent, if any, or its successors as above defined and
any direct or indirect subsidiary or affiliate of your parent or its
successors as above defined.
(b) Except as provided in Subparagraph 8(a) above, the obligations of
the undersigned under this Indemnity shall not inure to the benefit of
(i) any other purchaser of the Property at a foreclosure sale or a sale
pursuant to a power of sale or other remedial rights under the Loan
Documents or (ii) any subsequent holder of the Loan Documents unless
such holder is your successor, affiliate or participant as hereinabove
defined.
9. (a) Except as provided in Subparagraph 9(b) hereof, this Indemnity
shall terminate and be of no further force and effect upon payment in
full by Borrower or guarantor of all principal, interest and other sums
and costs evidenced or secured by the Loan Documents, provided that at
the time of such full payment neither you, nor your successors or
affiliates, have, at any time, or in any manner, through exercise of
their remedial rights under the Loan Documents, participated in the
management or control of, taken possession of, or title to, the
Property or any portion thereof, whether by foreclosure, deed in lieu
of foreclosure, sale under power of sale pursuant to the Loan
Documents, or otherwise.
6
(b) Notwithstanding Subparagraph 9(a) above, the undersigned agree that
this Indemnity shall continue after full payment of the Loan with
respect to:
(i) litigation or administrative claims involving Indemnified
Losses pertaining to Hazardous Materials covered by this Indemnity
pending at the date of payment in full of the Loan, and
(ii) reasonable costs and expenses (including experts' and
attorneys' fees and disbursements) incurred or expended by you in
(A) enforcing Subparagraph 2(a)(ii) of this Indemnity or (B) any
litigation, arbitration, administrative claims or matters relating
to any Indemnified Losses subsequently arising within four (4)
years after the date of such full payment (hereinafter called
("Subsequent Claims") involving Hazardous Materials on, in or under
the Property, or if covered by this Indemnity, any surrounding
areas, but the undersigned's obligation under this Indemnity as to
Subsequent Claims is hereby limited and shall not extend to payment
of any monetary awards or damages against you but only to the costs
and expenses above mentioned. You agree to utilize counsel
designated by the undersigned (whether or not the undersigned are
also parties defendant in such matters) subject to your right of
approval, not to be unreasonably withheld or delayed.
10. This Indemnity shall continue to be effective, or be reinstated
automatically, as the case may be, if at any time payment, in whole or
in part, of any of the obligations indemnified against hereby is
rescinded or otherwise must be restored or returned by you (whether as
a preference, fraudulent conveyance or otherwise) upon or in connection
with the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower, any of the undersigned or any other person,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Borrower, any of the
undersigned or any other person or for a substantial part of
Borrower's, any of the undersigned's or any of such other person's
property, as the case may be, or otherwise, all as though such payment
had not been made. Each of the undersigned further agrees that in the
event any such payment is rescinded or must be restored or returned,
all costs and expenses (including, without limitation, legal fees and
expenses) incurred by you or on your behalf in defending or enforcing
such continuance or reinstatement, as the case may be, shall constitute
costs of enforcement which are covered by each of the undersigned's
indemnification obligations under this Indemnity.
11. Each of the undersigned represents and covenants to you that:
(i) if a corporation, partnership, venture, trust or limited
liability company, it is duly organized, validly existing and in
good
7
standing under the laws of the state of its formation and has full
power and authority to execute, deliver and perform this Indemnity;
each of the undersigned will preserve and maintain such legal
existence and good standing;
(ii) there are no actions, suits or proceedings pending or
threatened against or affecting Borrower or any of the undersigned,
at law, in equity or before or by any governmental authorities
except actions, suits or proceedings which are fully covered by
insurance or would, if adversely determined, not be likely to have
a material adverse effect on Borrower's or any of the undersigned's
business or financial condition; neither Borrower nor any of the
undersigned is in material default with respect to any order, writ,
injunction, decree or demand of any court or governmental
authorities;
(iii) the consummation of the transactions contemplated hereby and
the performance of this Indemnity have not resulted and will not
result in any breach of, or constitute a default under, any
mortgage, deed of trust, lease, bank loan or credit agreement,
corporate charter, by-laws, partnership agreement or other
instrument to which any of the undersigned is a party or by which
any of the undersigned may be bound or affected; and
(iv) each of the undersigned is in compliance with, and the
transactions contemplated by this Indemnity do not and will not
violate any provision of, or require any filing, registration,
consent or approval under, any federal, state or local law, rule,
regulation, ordinance, order, writ, judgment, injunction, decree,
determination or award (hereinafter, "Laws") presently in effect
having applicability to it; each of the undersigned will comply
promptly with all Laws now or hereafter in effect having
applicability to it.
12. You shall, at all times, at your discretion and expense, be free to
independently establish to your satisfaction the existence or
non-existence of any fact or facts, the existence or non-existence of
which is a condition of this Indemnity or any of its provisions.
13. This Indemnity may be executed in one or more counterparts, each of
which shall be deemed an original. Said counterparts shall constitute
but one and the same instrument and shall be binding upon each of the
undersigned as fully and completely as if all had signed but one
instrument. The joint and several liability of the undersigned shall be
unaffected by the failure of any of the undersigned to execute any or
all of the counterparts.
8
14. All notices hereunder shall be in writing and shall be deemed to have
been sufficiently given or served for all purposes when sent by
registered or certified mail, if to the undersigned at their respective
addresses stated on the signature page hereof and if to you, at your
address indicated above, or at such other address of which a party
shall have notified the party giving such notice in writing in
accordance with the foregoing requirements.
15. No provision of this Indemnity may be changed, waived, discharged or
terminated orally, by telephone or by any other means except by an
instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
16. THE UNDERSIGNED BY EXECUTION HEREOF, AND YOU, BY ACCEPTANCE HEREOF,
HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVE, IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING BROUGHT BY YOU ON THIS INDEMNITY, ANY AND
EVERY RIGHT THEY MAY HAVE TO A TRIAL BY JURY.
17. THIS INDEMNITY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TENNESSEE APPLICABLE TO THE
INTERPRETATION, CONSTRUCTION AND ENFORCEMENT OF INDEMNITIES (WITHOUT
GIVING EFFECT TO TENNESSEE'S PRINCIPLES OF CONFLICTS OF LAW). THE
EXISTENCE OF HAZARDOUS MATERIALS SHALL BE DETERMINED IN ACCORDANCE WITH
FEDERAL LAW AND STATE AND LOCAL LAWS OF THE STATE IN WHICH THE PROPERTY
IS LOCATED.
9
18. THE UNDERSIGNED IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY TENNESSEE STATE OR FEDERAL COURT SITTING IN THE CITY OF MEMPHIS,
STATE OF TENNESSEE, OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDEMNITY AND THE UNDERSIGNED AGREE AND CONSENT
THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION
OR PROCEEDING IN ANY ABOVE STATED COURT SITTING IN THE CITY OF MEMPHIS
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO THE UNDERSIGNED AT THEIR RESPECTIVE ADDRESSES INDICATED ON
THE SIGNATURE PAGE HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
Very truly yours,
Indemnitor: Address Of Indemnitor:
- ----------- ----------------------
APPLE SUITES, INC., a 306 East Main Street
Virginia corporation Richmond, Virginia 23219
Attention: Mr. Glade M. Knight
By /s/ Glade M. Knight With a copy to:
-----------------------------
Name: Glade M. Knight
Title: President Thomas E. Davis, Esq.
Jenkens & Gilchrist
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
This is to certify that this Indemnity was executed in my
presence on the date hereof by the parties whose signatures appear above in the
capacities indicated.
/s/ Cher M. A. Vela
------------------------------
Notary Public
My commission expires:
March 31, 2002
------------------------------
10
[Salt Lake City]
EXHIBIT "A"
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LEGAL DESCRIPTION OF PREMISES
-----------------------------
PARCEL 1:
Beginning at a point on the South right of way line of North Union Avenue, said
point being North 1610.42 feet and West 1313.30 feet from the center of Section
29, Township 2 South, Range 1 East, Salt Lake Base and Meridian, said point of
beginning also being South 86 deg. 36'20" West 362.84 feet and South 33.06 feet
from the Salt Lake County monument in the intersection of 900 East Street and
North Union Avenue; and running thence South 59.14 feet; thence South 27 deg.
15' West 392.70 feet; thence North 72 deg 00' West 272.80 feet; thence North 6
deg. 20'50" West 255.50 feet to the South right of way line of North Union
Avenue; thence North 71 deg. 47' 20" East along said South line 70.07 feet to a
point of a 730.94 foot radius curve to the right; thence Northeasterly along the
arc of said curve and right of way line 189.02 feet to a point of tangency;
thence North 86 deg. 36'20" East along said South right of way line 216.17 feet
to the point of beginning.
PROPERTY ADDRESS: 844-846 EAST NORTH UNION AVENUE
MIDVALE, UTAH 84047
PARCEL 2:
Beginning at a point South 970 feet, more or less, and South 86 deg. 30' West
223.9 feet from the Northwest corner of the East half of the Northwest quarter
of Section 29, Township 2 South, Range 1 East, Salt Lake Base and Meridian;
thence South 86 deg. West 147.68 feet, more or less; thence North 15 deg. 30'
East 117 feet, more or less; thence Easterly along curve to the right 102.13
feet, more or less; thence South 153.41 feet to the point of beginning.
PROPERTY ADDRESS: 801 EAST NORTH UNION AVENUE
MIDVALE, UTAH 84047
EXHIBIT "A" (continued)
-----------
AS SURVEYED, SOUTH PARCEL:
Beginning at a point on the South right of way line of North Union Avenue, said
point being North 1610.42 feet and West 1313.30 feet from the center of Section
29, Township 2 South, Range 1 East, Salt Lake Base and Meridian, said point of
beginning also being South 89 deg. 36'20" West 362.84 feet and South 33.06 feet
from the Salt Lake County Monument in the intersection of 900 East Street and
North Union Avenue; and running thence South 59.14 feet; thence South 27 deg.
15'00" West 392.70 feet; thence North 72 deg. 00' West 272.80 feet; thence North
6 deg. 20'50" West 255.50 feet to the South right of way line of North Union
Avenue; thence North 71 deg. 47'20" East along said South line 70.07 feet to a
point of a 730.94 foot radius curve to the right; thence Northeasterly along the
arc of said curve and right of way line 189.02 feet to a point of tangency;
thence North 86 deg. 36'20" East along said South right of way line 216.17 feet
to the pint of beginning.
AS SURVEYED, NORTH PARCEL:
Beginning at a point on the North right of way line of North Union Avenue and on
the arc of a 796.94 foot radius curve to the left, said point being South 965.80
feet and South 86 deg. 30'0" West 223.90 feet from the Northwest corner of the
East half of the Northwest quarter of Section 29, Township 2 South, Range 1
East, Salt Lake Base and Meridian; and running thence Southwesterly along said
North line and along the arc of said curve 145.17 feet (chord bears South 80
deg. 22'00" West 144.97 feet); thence North 16 deg. 15'00" East 156.93 feet
along a fence to a point on the arc of 749.51 foot radius curve to the right;
thence Northeasterly along the South line of Fort Union Boulevard and along the
arc of said curve 103.09 feet (chord bears North 76 deg. 32'32" East 103.01
feet); thence South 0 deg. 26'56" West 150.38 feet to the point of beginning.