Agreement and Plan of Merger, dated as of August 7, 2013, among Apple REIT Seven, Inc., Apple REIT Eight, Inc., Apple REIT Nine, Inc., Apple Seven Acquisition Sub, Inc. and Apple REIT Eight Acquisition Sub, Inc. (Apple Nine hereby agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request)

effective being the “Effective Time”), it being understood that the parties to the Mergers shall cause the Effective Time to occur on the Closing Date.

without shareholder approval upon a Listing Date (the “Apple Nine Bylaws Amendment,” and collectively with the Apple Nine Articles Amendments, the “Apple Nine Amendments”).

Shares, the “Apple Eight Units”) (other than the Merger Dissenting Shares or any Shares to be cancelled pursuant to Section 2.1(a)(v)) shall be converted into the right to receive .85 (the “Apple Eight Unit Ratio”) Apple Nine Common Shares (the “Apple Eight Unit Consideration”), and (b) each issued and outstanding Series B Convertible Preferred Share, no par value, of Apple Eight (the “Apple Eight Series B Shares”) shall be converted into the right to receive a number of  Apple Nine Common Shares equal to (1) 24.17104 multiplied by (2) the Apple Eight Unit Ratio (the “Apple Eight Series B Consideration,” and together with the Apple Eight Unit Consideration, the “Apple Eight Consideration”). For purposes of this Agreement, “Merger Consideration” shall mean the aggregate of the Apple Seven Consideration and the Apple Eight Consideration.

Consideration shall be appropriately and proportionately adjusted to provide to the holders of Shares and Apple Nine Common Shares the same economic effect as contemplated by this Agreement prior to such event.

Exchange Agent to Apple Nine, upon demand, and any holders of Shares that have not been surrendered as contemplated by this Section 2.2 shall thereafter look only to Apple Nine for delivery of the Merger Consideration, subject to applicable abandoned property, escheat and other similar laws.

the Apple REITs, the Acquisition Subsidiaries and the Surviving Corporations and their respective officers and directors shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to consummate the Mergers and to carry out the purposes and intent of this Agreement.

business as now being conducted.  Each Subsidiary of such Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties makes such qualification, licensing or good standing necessary, other than in such jurisdictions where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, would not have a Material Adverse Effect on such Company.  Except for interests in the Subsidiaries of such Company and investments in short-term investment securities, neither such Company nor any Subsidiary of such Company owns directly or indirectly any capital stock or other interest (equity or debt) in any other Person.

the voting, sale, transfer or registration of any capital stock or other equity securities of the Company or any Subsidiary of such Company.

governmental filings and other matters referred to in the following sentence, any Laws applicable to such Company or any Subsidiary of such Company, or their respective properties or assets, other than, in the case of clause (B) or (C), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate would not (1) have a Material Adverse Effect on such Company or (2) reasonably be expected to otherwise prevent such Company from performing its obligations under this Agreement or the transactions contemplated hereby.

to the extent such statements have been modified or superseded by SEC Documents of such Company later filed by such Company.  Such Company does not have any outstanding and unresolved comments from the SEC with respect to any of the SEC Documents of such Company.  No Subsidiary of such Company is subject to the periodic reporting requirements of the Exchange Act or is otherwise required to file any forms, reports, schedules statements or other documents with the SEC, any foreign Governmental Entity that performs a similar function to that of the SEC or any securities exchange or quotation service.  Such Company has made available to the other Apple REITs copies of all material correspondence between the SEC, on the one hand, and such Company and any of the Subsidiaries of such Company, on the other hand, since January 1, 2010 through the date of this Agreement.  At all applicable times, such Company has complied in all material respects with the applicable certification requirements of the Sarbanes-Oxley Act of 2002 and rules and regulations promulgated thereunder, as amended from time to time (the “Sarbanes-Oxley Act”).

procedures are effective in timely alerting such Company’s principal executive officer and principal financial officer to information required to be included in such Company’s periodic reports required under the Exchange Act.  Since the enactment of the Sarbanes-Oxley Act, neither such Company nor any Subsidiary of such Company has made any prohibited loans to any director or executive officer of such Company (as defined in Rule 3b-7 under the Exchange Act).

accounting principles, (ix) the entering into or amendment of any employment, consulting, severance, retention, change in control, tax gross-up, deferred compensation, special or stay bonus, or any other agreement between such Company and any officer or any director of a Subsidiary of such Company or other employee or contractor of such Company, (x) any increase in the amount of compensation, bonus or other benefits payable to any current or former director, trustee, officer or other employee (other than in the ordinary course of business consistent with past practices), of such Company or its Subsidiaries, (xi) any grant of severance or termination pay or benefits (or any increase in the amount of such pay or benefits) to any current or former director, trustee, officer or other employee of such Company or the Subsidiaries of such Company that would be payable at or after the Effective Time, (xii) any material incurrence, assumption or guarantee by such Company or any Subsidiary of such Company of any indebtedness, (xiii) any creation or assumption by such Company or any Subsidiary of such Company of any Lien in an amount, individually or in the aggregate, in excess of $500,000 on any asset, (xiv) any material commitment, contractual obligation (including any Franchise Agreement of such Company or any Management Agreement Documents of such Company, any lease (capital or otherwise) or any letter of intent), borrowing, guaranty, capital expenditure (outside the ordinary course) or transaction entered into by such Company or by any Subsidiary of such Company, or (xv) any making of any material loan, advance or capital contribution to or investment in any Person.

are not required to, be reflected only on the books and records of such Company) reserves or accrued liabilities or expenses that are adequate for the payment of all material Taxes for which such Company or any Subsidiary of such Company is liable but which are not yet due and payable.  Such Company has incurred no liability for any Taxes under Sections 857(b), 860(c) or 4981 of the Code or Treasury Regulation Sections 1.337(d)-5, 1.337(d)-6 or 1.337(d)-7 (other than built-in gain to Apple Eight in connection with the purchase of its Subsidiaries interest in Apple Hospitality Air LLC from a subsidiary of Apple Six), including, without limitation, any Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code and the excise tax on redetermined rents, redetermined deductions, and excess interest under Section 857(b)(7) of the Code; and neither such Company nor any of its Subsidiaries has incurred any material liability for Taxes other than in the ordinary course of business and other than transfer or similar Taxes arising in connection with the sale of property.  No material deficiencies for Taxes have been asserted or assessed in writing by a Governmental Entity against such Company or any of its Subsidiaries, and no requests for waivers of the time to assess any such Taxes have been granted and remain in effect or are pending.  No material claim is pending or proposed by any Governmental Entity in any jurisdiction where such Company or any Subsidiary of such Company do not file Tax Returns that such Company or any Subsidiary of such Company is or may be subject to taxation by such jurisdiction, nor are there any facts that could reasonably be expected to give rise to such a claim.  Copies of all material Tax Returns with respect to taxable years commencing on or after the taxable year ending December 31, 2008 have been delivered to or made available to representatives of the other Apple REITs.  For purposes of this Agreement, “Taxes” shall mean any U.S. federal, state, local or foreign income, gross receipts, license, payroll, employment withholding, property, sales, excise or other tax or governmental charges of any nature whatsoever, together with any penalties, interest or additions thereto and “Tax Return” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

Section 856(i) of the Code, a taxable REIT subsidiary under Section 856(l) of the Code or as a REIT.

assets of such Company or to carry on the business of such Company as it is now being conducted by such Company, except where the failure to have such Permits, individually or in the aggregate, would not have a Material Adverse Effect on such Company.  All such Permits of such Company are in full force and effect.  Neither such Company nor any Subsidiary of such Company has received notice that any suspension, modification or revocation of any Permit is pending or, to the Knowledge of such Company, threatened nor, to the Knowledge of such Company, do grounds exist for any such action, except for such suspensions, modifications or revocations, individually or in the aggregate, as would not have a Material Adverse Effect on such Company.

responsible party (“Prior Contamination”) and, to the Knowledge of such Company, no investigation, litigation or other proceeding is pending or threatened with respect thereto, except as may be related to the Prior Contamination.  For purposes of this Agreement, “Hazardous Substance” shall mean any element, pollutant, contaminant, waste, compound, substance or material of any nature whatsoever (including, without limitation, any product) that is listed, classified, defined in or regulated pursuant to any Environmental Law or the subject of regulatory action by any Governmental Entity pursuant to any Environmental Law, including, without limitation, any petroleum and petroleum derivatives, by-product or additive (including crude oil and any fraction thereof), asbestos, radon gas, urea formaldehyde, asbestos or asbestos-containing material, lead or lead-based paints or materials, pesticides, polychlorinated biphenyls, radioactive materials, toxic mold, volatile organic compound or hazardous air pollutant.  To the Knowledge of such Company, such Company has made available to the other Apple REITs true and complete copies of all environmental reports and audits that are within the possession of such Company or within the possession or control of its Subsidiaries, and to the Knowledge of such Company, no other environmental reports or audits exist with respect to such Company, any Subsidiary of such Company or any Property of such Company.

of the Properties of such Company or (2) zoning, building or similar laws, codes, ordinances, orders or regulations that are or will be violated by the continued maintenance, operation or use of any buildings or other improvements on any of the Properties of such Company or by the continued maintenance, operation or use of the parking areas.

such Company nor any Subsidiary of such Company is, nor has such Company or any Subsidiary of such Company been, in violation of any of the Organizational Documents of such Company applicable to it in any material respect.

or misappropriates the Intellectual Property rights of any third party except for any such infringement, misappropriation or claim that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on such Company; and (ii) such Company or a Subsidiary of such Company owns or is licensed to use or otherwise has the right to use all Intellectual Property as currently used in the operation of its respective business, in accordance with the terms of any applicable license agreement except where the failure to possess or have adequate rights to use such properties individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect on such Company.

Apple Nine Subsidiary that have been declared or authorized prior to the date of this Agreement have been paid in full.

hereby and thereby, including the Mergers and the Article Nine Amendments, and directed that this Agreement and the Apple Nine Amendments be submitted to a vote by the shareholders of Apple Nine.  The Board of Directors of Apple Nine has not subsequently rescinded or modified, in any way, its determinations and approvals discussed above.

Meeting for the Apple Nine Shareholder Approval, (2) the Form S-4 relating to the issuance of the Merger Consideration, and (3) such reports under the Exchange Act as may be required in connection with this Agreement, the Mergers and the other transactions contemplated by this Agreement, (B) the filing of Articles of Merger for the Mergers with the State Corporation Commission of the Commonwealth of Virginia, (C) such filings with Governmental Entities to satisfy the applicable requirements of the laws of states in which Apple Nine and any Apple Nine Subsidiary are qualified or licensed to do business, as set forth on Schedule 3.2(d)(iv) of the Apple Nine Disclosure Letter and (D) such other consents, approvals, orders, authorizations, registrations, declarations and filings (1) as are set forth on Schedule 3.2(d)(iii) of the Apple Nine Disclosure Letter or (2) which, if not obtained or made, would not reasonably be expected to prevent or delay in any material respect the consummation of the Mergers or the other transactions contemplated hereby or otherwise prevent Apple Nine from performing its obligations under this Agreement in any material respect.

X), were prepared in accordance with GAAP (except, in the case of unaudited interim financial statements, as permitted by Forms 10-Q or 8-K of the SEC) applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial condition of Apple Nine and its Subsidiaries taken as a whole as of the dates thereof and consolidated results of operations and cash flows for the periods then ended (subject, in the case of unaudited interim financial statements, to the absence of notes and normal year-end adjustments).  The books of account and other financial records of Apple Nine and its Subsidiaries are accurately reflected in all material respects in the financial statements included in the Apple Nine SEC Documents.  Apple Nine has no Apple Nine Subsidiary which is not consolidated for accounting purposes.

Effect on Apple Nine, nor has there been any occurrence or circumstance that, individually or in the aggregate, has had, or would with the passage of time reasonably be expected to result in, a Material Adverse Effect on Apple Nine, (ii) except for regular monthly distributions (in the case of Apple Nine) not in excess of the per share amount as set forth on Schedule 3.2(f) of the Apple Nine Disclosure Letter with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any outstanding security of Apple Nine or any Apple Nine Subsidiary, (iii) any split, combination or reclassification of any of Apple Nine’s capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for, or giving the right to acquire by exchange or exercise, shares of its beneficial interest or any issuance of an ownership interest in, any Apple Nine Subsidiary except as contemplated by this Agreement, (iv) any issuance of Apple Nine Stock Options except in the ordinary course of business or restricted shares of the capital stock of Apple Nine, (v) any amendment of any term of any outstanding security of Apple Nine or any Apple Nine Subsidiary, (vi) any repurchase, redemption or other acquisition by Apple Nine or any Apple Nine Subsidiary of any outstanding shares, stock or other securities of, or other ownership interests in, Apple Nine or any Apple Nine Subsidiary, (vii) any damage or destruction to or loss of any of Apple Nine Properties, not covered by insurance, that, individually or in the aggregate, has or would have a Material Adverse Effect on Apple Nine, (viii) any change in accounting methods, principles or practices or any change in any tax method or election that, individually or in the aggregate, has or would have a Material Adverse Effect on Apple Nine by Apple Nine or any Apple Nine Subsidiary materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP or regulatory accounting principles, (ix) the entering into or amendment of any employment, consulting, severance, retention, change in control, tax gross-up, deferred compensation, special or stay bonus, or any other agreement between Apple Nine and any officer or any Apple Nine Subsidiary director or other employee or contractor of Apple Nine, (x) any increase in the amount of compensation, bonus or other benefits payable to any current or former director, trustee, officer or other employee (other than in the ordinary course of business consistent with past practices), of Apple Nine or its Subsidiaries, (xi) any grant of severance or termination pay or benefits (or any increase in the amount of such pay or benefits) to any current or former director, trustee, officer or other employee of Apple Nine or its Subsidiaries that would be payable at or after the Effective Time, (xii) any material incurrence, assumption or guarantee by Apple Nine or Apple Nine Subsidiary of any indebtedness, (xiii) any creation or assumption by Apple Nine or any Apple Nine Subsidiary of any Lien in an amount, individually or in the aggregate, in excess of $500,000 on any asset, (xiv) any material commitment, contractual obligation (including any Apple Nine Franchise Agreement or any Apple Nine Management Agreement Documents, any lease (capital or otherwise) or any letter of intent), borrowing, guaranty, capital expenditure (outside the ordinary course) or transaction entered into by Apple Nine or by any Apple Nine Subsidiary, or (xv) any making of any material loan, advance or capital contribution to or investment in any Person.

arbitrator outstanding against Apple Nine or any Apple Nine Subsidiary.  Other than pursuant to the Apple Nine Organizational Documents, no Contract between Apple Nine or any Apple Nine Subsidiary and any current or former director, officer, employee or shareholder (or equivalent interest holder) exists that provides for indemnification.

the meaning of Section 856 of the Code and has satisfied the requirements to qualify as a REIT for such years, (B) has operated, and intends to continue to operate, in such a manner as to qualify as a REIT upon closing of the transactions contemplated hereby, and (C) has not taken or omitted to take any action which could reasonably be expected to result in a challenge by the IRS to its status as a REIT, and, to Apple Nine’s Knowledge, no such challenge is pending or threatened in writing.  Each Apple Nine Subsidiary that files Tax Returns as a partnership (or is a disregarded entity), for U.S. federal income tax purposes has, since inception, been classified for federal income tax purposes as a partnership (or as a disregarded entity) and not as a corporation or as an association taxable as a corporation, or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code that is treated as a corporation for U.S. federal income tax purposes under Section 7704(a) of the Code.  Each Apple Nine Subsidiary which is a corporation has been since its formation classified as a qualified REIT subsidiary under Section 856(i) of the Code, a taxable REIT subsidiary under Section 856(l) of the Code or as a REIT.

connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Apple Nine or any Acquisition Subsidiary.  Apple Nine has provided or made available to the other Apple REITs true and correct copies of any and all contracts and agreements pursuant to which any financial advisor would be entitled to receive any brokerage, finder’s or other fee or commission from Apple Nine or any Acquisition Subsidiary in connection with this Agreement, the Mergers or any of the transactions contemplated hereby.

breach or violation of, or a default under, any Apple Nine Material Contract (in each case, with or without notice or lapse of time or both).  Each Apple Nine Material Contract is valid, binding and enforceable in accordance with its terms and is in full force and effect.  Apple Nine has made available to the Companies true and complete copies of all Apple Nine Material Contracts, including any amendments or supplements thereto.

Nine nor any Apple Nine Subsidiary is in breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, under the policy; (C) as of the date hereof no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation; (D) as of the date hereof no notice of cancellation or termination has been received; and (E) the policy is sufficient for compliance with all material requirements of Law and the express requirements of all Apple Nine Material Contracts to which Apple Nine or its Subsidiaries are parties or otherwise bound.  Apple Nine and its Subsidiaries maintain policies or binders of insurance covering risks and events and in amounts adequate for their respective businesses and operations to the extent customary in the industry in which they operate, and no such policies will terminate as a result of the consummation of the transactions contemplated by this Agreement.

such properties individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect on Apple Nine.

use commercially reasonable efforts (i) to preserve intact its current business organization, goodwill, ongoing businesses and its status as a REIT within the meaning of the Code, (ii) to preserve its current beneficial relationships with any Person with which such Company has material business relationships (including, without limitation, customers, suppliers, directors, officers and other employees if any), and (iii) to keep available the services of its officers and key employees, if any. Without limiting the generality of the foregoing, the following additional restrictions shall apply during the period from the date of this Agreement to the Effective Time, except as set forth on Schedule 4.1 of the Disclosure Letter of such Company, or as otherwise contemplated by this Agreement, each Company agrees, as to itself, that it shall not, and shall cause each of its Subsidiaries, not to (and not to authorize or commit or agree to), unless each of the other Apple REITs, with the approval of their respective Special Committees, shall otherwise consent in writing:

its Subsidiaries under any Material Contract of Apply Nine, or enter into any contract or agreement that would have been a Material Contract of Apple Nine had it been entered into prior to this Agreement, except in the ordinary course of business consistent with past practice;

Form S-4 shall also serve as the proxy statement with respect to the Apple Nine Amendments and a joint proxy statement with respect to the Shareholder Meeting of each of the Apple REITs in connection with the Mergers (the “Proxy Statement/Prospectus”).  Each of the Companies and Apple Nine shall furnish all information concerning such party and its Affiliates to the others (including the respective Special Committees), and provide such other assistance, as may be reasonably requested by the Apple REITs (including the respective Special Committees) in connection with the preparation, filing and distribution of the Form S-4 and Proxy Statement/Prospectus.  The Form S-4 and Proxy Statement/Prospectus shall include all information reasonably requested by such other party to be included therein.  The respective parties will cause the Proxy Statement/Prospectus and the Form S-4 to comply as to form in all material respects with the applicable provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder.  Each of the Companies and Apple Nine shall use commercially reasonable efforts to have the Form S-4 declared effective under the Securities Act as promptly as reasonably practicable and to keep the Form S-4 effective as long as necessary to the consummate the transactions contemplated herein.  Apple Nine will cause the Proxy Statement/Prospectus to be mailed to Apple Nine’s shareholders, and each Company will cause the Proxy Statement/Prospectus to be mailed to its respective shareholders, in each case, as promptly as reasonably practicable after the Form S-4 is declared effective under the Securities Act.   Apple Nine shall use its best efforts to obtain, prior to the effective date of the Form S-4, all necessary state securities law or “Blue Sky” permits or approvals required to carry out the transactions contemplated by this Agreement.  Except for annual, quarterly and current reports filed or furnished with the SEC under the Exchange Act, which may be incorporated by reference therein (but subject to Section 5.5), no filing of, or amendment or supplement to, the Form S-4 or the Proxy Statement/Prospectus will be made by Apple Nine or the Companies, as applicable, without the other’s prior consent (which shall not be unreasonably withheld, delayed or conditioned) and without providing the other the opportunity to review and comment thereon.   Apple Nine will advise each of the Companies, promptly after it receives notice thereof, of the time when the Form S-4 has become effective or any supplement or amendment has been filed, the issuance of any stop order, the suspension of the qualification of the Apple Nine Common Shares issuable in connection with the Mergers for offering or sale in any jurisdiction, or any oral or written request by the SEC for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments thereon and responses thereto or requests by the SEC for additional information, and will promptly provide the others with copies of any written communication from the SEC or any state securities commission.  Each of the Companies and Apple Nine shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Proxy Statement/Prospectus and Form S-4.  If at any time prior to the Effective Time any information relating to Apple Nine or the Companies, or any of their respective affiliates, officers or directors, should be discovered by Apple Nine or any Company which should be set forth in an amendment or supplement to (i) the Form S-4 so that it would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or (ii) the Proxy Statement/Prospectus, so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by law, disseminated to the

 

 

respective shareholders of Apple Nine and the Companies.  All filings by each of the Apple REITs with the SEC in connection with the transactions contemplated hereby, including all mailings to any of the Apple REITs’ shareholders in connection with the Mergers and transactions contemplated by this Agreement, shall be subject to the reasonable prior review and comment from each of the other Apple REITs (including the respective Special Committees).

any of the Apple REITs pursuant to this Section 5.2 or otherwise shall affect any representations or warranties or conditions or rights of any of the Apple REITs contained in this Agreement.

opportunity to participate in any meeting with any Governmental Entity in respect of any filing, investigation or other inquiry in connection with the transactions contemplated hereby.

contemplated by this Agreement, by each individual who will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to any of the Companies immediately prior to the Effective Time to be exempt under Rule 16b-3 promulgated under the Exchange Act and (b) any acquisitions of Apple Nine Common Shares (including derivative securities with respect to Apple Nine Common Shares) resulting from the Mergers and the other transactions contemplated by this Agreement, by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Apple Nine to be exempt under Rule 16b-3 promulgated under the Exchange Act.

same extent as such representations and warranties are so qualified) signed on behalf of each Company by such Company’s chief executive officer or chief financial officer to such effect. This condition shall be deemed satisfied notwithstanding any failure of a representation or warranty of any Company set forth in clause (ii) above to be true and correct as of the Closing Date if such failure (without giving effect to any “materiality” or “Material Adverse Effect” qualification or standard contained in any such representation or warranty), either individually or in the aggregate with any other such failures, would not be reasonably likely to result in a Material Adverse Effect on such Company.

(ii) each of the representations and warranties of the other Company set forth in Section 3.1(a), Section 3.1(c), Section 3.1(d)(i) and Section 3.1(j) of this Agreement shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date, except to the extent the representation or warranty is expressly limited by its terms to another date and (iii) the other representations and warranties of Apple Nine and the Acquisition Subsidiaries, and the other Company, set forth in this Agreement shall be true and correct as of the Closing Date, as though made on and as of the Closing Date, except to the extent the representation or warranty is expressly limited by its terms to another date, and each of the Companies shall have received a certificate (which certificate may be qualified by knowledge to the same extent as such representations and warranties are so qualified) signed on behalf of the other Apple REITs by the chief executive officer or the chief financial officer of the other Apple REITs to such effect with regard to its own representations and warranties, and for Apple Nine, the representations and warranties of itself and the Acquisition Subsidiaries. This condition shall be deemed satisfied notwithstanding any failure of a representation or warranty of each of the other Apple REITs set forth in clause (iii) above to be true and correct as of the Closing Date if such failure (without giving effect to any materiality qualification or standard contained in any such representation or warranty), either individually or in the aggregate with any other such failures, would not be reasonably likely to result in a Material Adverse Effect on Apple Nine or a Material Adverse Effect on the other Company, as the case may be.

assumptions and customary representations made by Apple Nine and its Subsidiaries, and such opinion shall be subject to such changes or modifications as may be deemed necessary or appropriate by MW (or such counsel rendering the opinion and as shall be reasonably satisfactory to the Companies).

the definitive agreement proposed to be entered into with respect to the Superior Competing Transaction, and (ii) during the Notice Period, the Target Party shall negotiate in good faith with the Non-Target Parties (to the extent the Non-Target Parties desire to do so) to make such adjustments to the terms and conditions of this Agreement such that such Acquisition Proposal would no longer constitute a Superior Competing Transaction and provided further, however, that after the expiration of such five Business Day period and prior to the termination of this Agreement pursuant to this Section 8.1(f), the Target Special Committee shall have confirmed (after taking into account any such adjustments to the terms and conditions of this Agreement) that the Acquisition Proposal continues to be a Superior Competing Transaction.

proximately contributed to the occurrence of such judgment, injunction, order, decree or action shall not be entitled to exercise its right to terminate under this Section 8.1(c);

(C) by any other Apple REIT pursuant to a willful or intentional breach by Apple Eight under Section 8.1(b), in either case such that the conditions to closing set forth in Section 6.2(a) and Section 6.3(a), as applicable, cannot be satisfied, if (x) a Competing Transaction shall have been made or proposed to Apple Eight or otherwise publicly announced and has not been publicly withdrawn prior to such termination, and (y) within 12 months following the date of such termination, Apple Eight enters into an agreement providing for the implementation of a Competing Transaction which is consummated or shall consummate a Competing Transaction (whether or not such Competing Transaction was the same Competing Transaction as that referred to in clause (x) above), in which case the Apple Eight Termination Fee shall be paid within two Business Days of Apple Eight consummating such Competing Transaction, as applicable.

counsel indicating that such Apple REIT has received a ruling from the IRS described in Section 8.4(b) or (B) an opinion from such Apple REIT’s outside counsel as described in Section 8.4(b), an amount equal to the Termination Fee less the amount payable under clause (1) above. To secure the Apple REIT’s obligation to pay these amounts, it shall deposit into escrow an amount in cash equal to the Termination Fee with an escrow agent selected by all the Apple REITs and on such terms (subject to Section 8.4(b)) as shall be mutually agreed upon by the Apple REITs and the escrow agent. The payment or deposit into escrow of an Apple REIT pursuant to this Section 8.4(a) shall be made at the time such Apple REIT is obligated to pay each of the other Apple REITs such amount pursuant to Section 8.3 by wire transfer.

David W. Bonser, Esq.

consents to submit itself (without making such submission exclusive) to the personal jurisdiction of any federal court located in the Commonwealth of Virginia or any Virginia state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances.

(v) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this Agreement, (vi) earthquakes or other natural disasters, which circumstance, development, effect, event, Liability or change, in the case of each of clause (i), (ii), (v) and (vi), does not affect such Apple REIT or the Subsidiaries of such Apple REIT in a materially disproportionate manner relative to other participants in the hotel industry or (B) the ability of such Apple REIT to perform its obligations under this Agreement.