Release and Indemnification Agreement dated November 29, 2012 by and among Apple REIT Six, Inc., BRE Select Hotels Holdings LP, BRE Select Hotels Corp, Glade M. Knight, Apple Six Advisors, Inc., Apple Six Realty Group, Inc., Apple Suites Realty Group, Inc. and Bryan Peery

 

This RELEASE AND INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of the 29th day of November 2012, by and among Apple REIT Six, Inc., a Virginia corporation (the “Company”), BRE Select Hotels Holdings LP, a Delaware limited partnership (“Buyer”), BRE Select Hotels Corp, a Delaware corporation and wholly-owned Subsidiary of Buyer (“Acquisition Sub”), Glade M. Knight, an individual (“Knight”), Apple Six Advisors, Inc., a Virginia corporation (“A6A”), Apple Six Realty Group, Inc., a Virginia corporation (“A6RG”), Apple Suites Realty Group Inc., a Virginia corporation (“ASRG”), and Bryan Peery, an individual (“Peery”).  The signatories to this Agreement will be referred to jointly as the “Parties.”

 

 

A. The Division of Enforcement of the Securities and Exchange Commission is investigating the Company, Knight, Peery and certain other Persons (the “Investigation”) in a proceeding captioned In the Matter of David Lerner Associates, Inc., File No. HO-11082.

 

B. The Merger Agreement, the articles of incorporation, bylaws or other organizational documents of the Company and its Subsidiaries, the Advisory Agreement between the Company and A6A dated as of April 23, 2004 and the Property Acquisition/Disposition Agreement between the Company and A6RG dated as of April 23, 2004 (collectively, the “Documents”) may provide for indemnification of one or more of the Releasing Parties.

 

C. Buyer, Acquisition Sub and the Company are concurrently herewith entering into an Agreement and Plan of Merger dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”).

 

D. Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, the Company will merge with and into Acquisition Sub and Acquisition Sub will be the surviving corporation in such merger (the “Merger”).

 

E. In order to induce Buyer to enter into the Merger Agreement and proceed with the Merger, the Knight Parties and Peery desire to enter into this Agreement.

 

F. The Parties hereto intend, among other things, to acknowledge and agree that from and after consummation of the Merger, (i) any obligations of the Company, Buyer, Acquisition Sub or their respective Affiliates to indemnify any of the Knight Parties or Peery relating to the Investigation are released, waived, and extinguished, whether these indemnification obligations arise under the Documents or otherwise and (ii) the Knight Parties will indemnify the Company, Buyer, Acquisition Sub and certain other Persons who are Released Parties for certain Losses arising out of or relating to the Investigation to the extent directly attributable to the Knight Parties or Peery and are incurred on or after the date of this Agreement, subject to the terms set forth herein.

 

In consideration of the terms and conditions set forth herein, the Parties hereby agree as follows:

 

1. Definitions.  For purposes of this Agreement:

 

 

 

 

2. Releases and Waivers.

 

 

 

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

 

 

3. Indemnification.

 

 

4. Cooperation.  From and after the date of this Agreement, all Parties (other than Buyer and Acquisition Sub) shall keep Buyer and its representatives informed of the status of, and any developments regarding, the Investigation and the Class Action including promptly furnishing Buyer with copies of all submissions, filings and substantive correspondence (not including transmittal letters and other routine matters) received or made by any such Party or its representatives and responding to reasonable requests by Buyer for information regarding the Investigation or the Class Action.  From and after the consummation of the Merger, (i) the Releasing Parties shall make available to the Company, and its attorneys and other representatives, all books and records of the Releasing Parties relating to the Investigation and the Class Action, except for attorney work product prepared by the Knight Parties’ counsel and Peery’s counsel and attorney-client privileged materials as between the Knight Parties and its counsel and Peery and its counsel, and (ii) without limiting any Party’s right, as to itself, to settle or compromise the Investigation or the Class Action, the Company and the Releasing Parties, as the case may be, shall render to each other such assistance as may be reasonably required of each other and cooperate in good faith with each other in order to ensure the proper and adequate defense of the Investigation and the Class Action.

 

5. Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State without giving effect to the principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

 

6. Exclusive Jurisdiction and Forum.  In any action or proceeding between any of the parties arising out of or relating to this Agreement, each of the parties consents to exclusive jurisdiction in the Court of Chancery of the State of Delaware (and any courts from which appeals from judgments of that court are heard), or to the extent such court does not have subject matter jurisdiction, any federal court located in Delaware (and any courts from which appeals from judgments of that court are heard).  Each of the parties agrees that a final judgment (subject to any appeals therefrom) in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Each of the parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objections it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any such Delaware state or federal court in accordance with the provisions of this Section 6.  Each of the Parties irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

7. Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE OF ANY OF THE OTHER PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY OF THE OTHER PARTIES WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

8. Amendments.  This Agreement may not be altered or amended except in a writing executed by all Parties.

 

9. Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable shall be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality or enforceability of the remaining provisions hereof.

 

10. Termination. This Agreement shall automatically terminate upon the termination of the Merger Agreement in accordance with its terms.