Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 1 of 29 PageID #: 1270
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`SUSAN MOSES, on behalf of herself and all
`others similarly situated,
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`Plaintiff,
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`Case No. 1:14-cv-03131 (SMG)
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`v.
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`APPLE HOSPITALITY REIT INC.,
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`Defendant.
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`[PROPOSED] ORDER PRELIMINARILY APPROVING CLASS ACTION
`SETTLEMENT, PRELIMINARILY CERTIFYING SETTLEMENT CLASS, AND
`APPOINTING INTERIM CLASS COUNSEL
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`GOLD, STEVEN M., U.S. Magistrate Judge:
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`WHEREAS, the above-titled putative class action (the “Class Action” or the “Litigation”)
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`is pending before the Court;
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`WHEREAS, Plaintiff and Defendant have entered into a Stipulation of Settlement dated
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`August 25, 2017 which is subject to review and approval under Rule 23 of the Federal Rules of
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`Civil Procedure and which, together with the exhibits thereto, sets forth the terms and conditions
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`for the proposed settlement of the Litigation (the “Settlement”) and the dismissal of the
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`Litigation with prejudice;
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`WHEREAS, the Court has read and considered the Stipulation of Settlement1 and
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`exhibits thereto, and the accompanying documents;
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`1 Unless otherwise stated, all capitalized terms used herein have the meanings defined in the Stipulation of
`Settlement.
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`1
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 2 of 29 PageID #: 1271
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`WHEREAS, the Counsel for Plaintiff have submitted, and the Court has reviewed, a
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`motion and accompanying memorandum of law supporting preliminary approval of the proposed
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`Settlement; and
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`WHEREAS, the Parties to the Settlement have consented to the entry of this Order, the
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`Court:
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`NOW, THEREFORE, HEREBY ORDERS, ADJUDGES AND DECREES THAT:
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`1.
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`Pursuant to Rule 23(a) and Rule 23(b)(3) of the Federal Rules of Civil
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`Procedure, and for the purposes of the Settlement only, the Court preliminarily certifies the
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`following Settlement Class (the “Class”): Any person in the United States who participated in the
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`DRIPs for Apple REIT Seven and/or Apple REIT Eight from July 17, 2007 to June 27, 2013
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`inclusive2.
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`2.
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`Pursuant to Fed. R. Civ. P. 23, and for purposes of this Settlement only, the Court
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`hereby preliminarily appoints Susan Moses as class representative of the Class (“Class
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`Representative”).
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`3.
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`The Court preliminarily finds that the prerequisites for maintaining a class action
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`under Rule 23(a) of the Federal Rules of Civil Procedure have been satisfied for the Settlement
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`Class in that: (a) the number of Class members is so numerous that joinder of all members is
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`impracticable; (b) there are questions of law and fact common to each member of the Class; (c)
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`the claims of the Class Representative are typical of the claims of the members of the Class she
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`seeks to represent; and (d) Plaintiff will fairly and adequately represent the interests of the Class.
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`2Excluded from the proposed Class are: (a) Defendant, any entity in which Defendant has a controlling interest or
`which has a controlling interest in Defendant; (b) Defendant’s legal representatives, predecessors, successors and
`assigns; and (c) any persons who affirmatively exclude themselves from the Class pursuant to the procedures
`described in the Notice.
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`2
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 3 of 29 PageID #: 1272
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`4.
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`Plaintiff also satisfies Federal Rule of Civil Procedure 23(b)(3). Common
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`questions of law and fact predominate and a class action is the superior method available to fairly
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`and efficiently litigate this class action involving the sale of securities.
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`5.
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`Having considered the factors set forth in Fed. R. Civ. P. 23(g)(1) and the
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`qualifications of Plaintiff’s counsel submitted to the Court, the Court hereby preliminarily
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`appoints Salas Wang LLC, Eccleston Law, LLC, and Law Office of Christopher J. Gray, P.C. as
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`Interim Class Counsel.
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`6.
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`The Court preliminarily concludes that the Settlement was negotiated in good
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`faith and is fair, reasonable and adequate, subject to proof to this Court’s satisfaction in
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`connection with Final Approval. See Fed. R. Civ. P. 23(e). Accordingly, the Court hereby
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`preliminarily approves the Settlement.
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`7.
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`The Court reserves the authority to approve the Settlement with or without
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`modification and with or without further notice of any kind. The Court further reserves the
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`authority to enter its Final Order and Judgment approving the Settlement and dismissing the
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`Claims against Defendant on the merits and with prejudice regardless of whether it has awarded
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`attorneys’ fees and expenses.
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`8.
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`A Final Fairness Hearing (which, from time to time, and without further notice to
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`the Class other than by filing a notice on the docket in the Class Action in advance of the Final
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`Fairness Hearing, may be continued or adjourned by order of this Court) will be held by this
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`Court on January 16, 2018 at 4:30 p.m. for the following purposes:
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`(a)
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`to finally determine whether the Class satisfies the applicable prerequisites
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`for certification under Fed. R. Civ. P. 23(a) and 23(b)(3);
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`3
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 4 of 29 PageID #: 1273
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`(b)
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`to finally determine whether the Settlement should be approved by the
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`Court as fair, reasonable and adequate and in the best interests of the Class;
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`(c)
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`to determine whether a Final Order and Judgment should be entered
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`pursuant to the Stipulation of Settlement, dismissing the Class Action with prejudice as against
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`the Plaintiff and the Class;
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`(d)
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`to determine whether the proposed Plan of Allocation of the settlement
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`fund set forth in the Notice is fair and reasonable, and should be approved by the Court;
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`(e)
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`to consider any request by counsel for an award of attorneys’ fees and
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`reimbursement of litigation expenses;
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`(f)
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`to hear and determine any objections to the Settlement or to any request by
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`counsel for an award of attorneys’ fees and reimbursement of litigation expenses; and
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`(g)
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`to rule on such other matters as the Court may deem appropriate.
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`9.
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`The Court approves the substance and requirements of the Notice, in the form
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`annexed as Appendix “A” hereto.
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`10. No later than October 10, 2017, Interim Class Counsel shall mail, or cause to be
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`mailed, the Notice to those Class members who can be identified through reasonable effort. Not
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`later than October 20, 2017, Interim Class Counsel shall also cause a summary notice in the form
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`annexed hereto as Appendix “B” to be published via PR Newswire or another national wire
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`service and shall establish a website that will (at a minimum) provide Class members with access
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`to this Order, the Stipulation of Settlement, the Notice, and all of the papers before the Court on
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`this motion.
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`11.
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`The Court finds that mailing and dissemination of the Notice, as described herein,
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`constitutes the best notice practicable under the circumstances and is due and sufficient notice of
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`4
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 5 of 29 PageID #: 1274
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`the matters set forth in the Notice to all Class Members, and fully satisfies the requirements of
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`due process and of Rule 23 of the Federal Rules of Civil Procedure.
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`12.
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`The Court will consider any objections, and comments in support of or in
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`opposition to the Settlement, the Plan of Allocation, or any request by counsel for an award of
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`attorneys’ fees and reimbursement of litigation expenses, only if such comments and any
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`supporting papers are in writing and filed with the Clerk of the Court, United States District
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`Court for the Eastern District of New York, 225 Cadman Plaza East, Room 130, Brooklyn, NY
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`11201, and copies of all such papers are served, on or before December 29, 2017 upon each of
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`the following by U.S. Mail and e-mail:
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`Jeffrey M. Salas
`SALAS WANG, LLC
`73 West Monroe, Suite 219
`Chicago, IL 60603
`(312) 803-4963
`(312) 244-3151 (fax)
`jsalas@salaswang.com
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`James J. Eccleston
`Stephany D. McLaughlin
`ECCLESTON LAW, LLC
`55 West Monroe, Suite 610
`Chicago, IL 60603
`(312) 332-0000
`(312) 332-0003 (fax)
`jeccleston@ecclestonlaw.com
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`Christopher J. Gray
`Michael J. Giarrusso
`LAW OFFICE OF CHRISTOPHER J. GRAY, P.C.
`360 Lexington Avenue, 14th Floor
`New York, New York 10017
`(212) 838-3221
`(212) 937-3139 (fax)
`chris@investorlawyers.net
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`5
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`

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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 6 of 29 PageID #: 1275
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` Any replies to any objections or comments shall be filed and served no later than January 5,
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`2018.
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`13.
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`Attendance at the Final Fairness Hearing is not necessary; however, persons
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`wishing to be heard orally with respect to the approval of the Settlement, the Plan of Allocation,
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`and/or any request by counsel for an award of attorneys’ fees and reimbursement of litigation
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`expenses, are required to indicate in their written comments or objections their intention to
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`appear at the Final Fairness Hearing.
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`14.
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`Persons who intend to object to the Settlement, the Plan of Allocation, and/or any
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`request by counsel for an award of attorneys’ fees and reimbursement of litigation expenses and
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`desire to present evidence at the Final Fairness Hearing must include in their written objections
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`the identity of any witnesses they may call to testify and exhibits they intend to introduce into
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`evidence at the Final Fairness Hearing. Class members do not need to appear at the hearing or
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`take any action to indicate their approval.
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`15.
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`Any person or entity who fails to object in the manner provided above shall be
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`deemed to have waived such objection (including the right to appeal), and absent good cause
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`found by the Court shall forever be barred from making any such objection in the Class Action
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`or any other action or proceeding or otherwise contesting any aspect of the Settlement, but shall
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`otherwise be bound by the Final Order and Judgment to be entered and the releases to be given.
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`16. All parties are hereby notified that final approval of the Settlement would result in
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`the dismissal, with prejudice, of all claims in the Litigation.
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`17.
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`This Order, the Stipulation of Settlement, and any negotiations, discussions, or
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`proceedings in connection with this Settlement shall not be offered or received against Defendant
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`as evidence of, or deemed to be any admission or confession by Defendant, of the truth of any of
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`6
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 7 of 29 PageID #: 1276
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`the claims, allegations, facts, subjects, or issues that were or could have been set forth or raised
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`in the Litigation.
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`SO ORDERED.
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`Dated: Brooklyn, New York
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`September __, 2017
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`____________________________
` STEVEN M. GOLD
` United States Magistrate Judge
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`7
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`19
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 8 of 29 PageID #: 1277
`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 8 of 29 PageID #: 1277
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`APPENDIX ''A''
`APPENDIX “A”
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`

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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 9 of 29 PageID #: 1278
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`SUSAN MOSES, on behalf of herself and all
`others similarly situated,
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`Plaintiff,
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`
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`Case No. 1:14-cv-03131 (SMG)
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`
`
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`v.
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`APPLE HOSPITALITY REIT, INC.,
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`Defendant.
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`NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION
`AND PLAN OF ALLOCATION
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`TO: ALL PERSONS IN THE UNITED STATES WHO ACQUIRED SHARES OF
`APPLE REIT SEVEN AND/OR APPLE REIT EIGHT PURSUANT TO THE
`APPLE REITS’ DISTRIBUTION REINVESTMENT PLANS (“DRIPs”)
`BETWEEN JULY 17, 2007 AND JUNE 27, 2013, INCLUSIVE.
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`PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.
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`YOUR RIGHTS MAY BE AFFECTED BY THE LEGAL PROCEEDINGS IN
`THIS ACTION.
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`IF YOU WISH TO COMMENT IN FAVOR OF THE SETTLEMENT OR
`OBJECT TO THE SETTLEMENT, YOU MUST FOLLOW THE DIRECTIONS
`IN THIS NOTICE.
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`YOU MAY BE ELIGIBLE TO RECEIVE MONEY FROM THE SETTLEMENT
`OF THIS LAWSUIT.
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`TO RECEIVE MONEY FROM THIS LAWSUIT, YOU DO NOT NEED TO
`SUBMIT ANYTHING. AS SHOWN BELOW, YOU WILL RECEIVE A
`VERIFICATION FORM INDICATING YOUR CALCULATED NET AFFECTED
`SHARE BALANCE FROM THE SETTLEMENT ADMINISTRATOR AFTER
`FINAL APPROVAL OF THE SETTLEMENT. YOU MAY DISPUTE THIS
`INFORMATION WITH THE SETTLEMENT ADMINISTRATOR.
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 10 of 29 PageID #: 1279
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`I.
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`IF YOU DO NOT WISH TO PARTICIPATE IN THE SETTLEMENT, YOU MAY
`REQUEST TO BE EXCLUDED FROM THE SETTLEMENT BY SUBMITTING
`A VALID REQUEST FOR EXCLUSION THAT MUST BE POSTMARKED ON
`OR BEFORE DECEMBER 29, 2017. IF YOU RECEIVED THIS NOTICE ON
`BEHALF OF A SETTLEMENT CLASS MEMBER WHO IS DECEASED, YOU
`SHOULD PROVIDE THE NOTICE TO THE AUTHORIZED LEGAL
`REPRESENTATIVE OF THAT SETTLEMENT CLASS MEMBER.
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`THE PURPOSE OF THIS NOTICE
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`This Notice is being sent pursuant to Rule 23 of the Federal Rules of Civil Procedure and an
`Order of the United States District Court for the Eastern District of New York (the "District
`Court") to inform you: (a) of the pendency of a class action lawsuit currently pending in the
`District Court under the above caption (the “Action” or the "Class Action") against Apple
`Hospitality REIT, Inc. (“AHR” or “Defendant”); (b) that the Class Action has been preliminarily
`certified by the District Court to proceed as a class action on behalf of the Class of persons in the
`United States who acquired shares of Apple REIT Seven, Inc. (“A7”) and/or Apple REIT Eight,
`Inc. (“A8” or, jointly with A7, the “Apple REITs”) pursuant to the Apple REITs’ Distribution
`Reinvestment Plants (the “DRIPs”) between July 17, 2007 and June 27, 2013, inclusive
`(“Class”); and (c) that a proposed settlement (the "Settlement'') has been reached by Plaintiff and
`Defendant (the “Parties”) in the Action.
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`The District Court has preliminarily approved the Settlement, whose terms are set forth in the
`Settlement Agreement, which is available at www.AppleReitSettlement.com. You have received
`this Notice because Defendant's records indicate that you may be a member of the Class. This
`Notice is designed to inform you of your rights, how you can agree to or dispute the Verification
`Form, and how you can comment in favor of the Settlement or object to the Settlement.
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`If the Settlement is finally approved by the District Court, the Settlement will be binding upon
`you, unless you exclude yourself, even if you dispute the Verification Form and even if you
`object to the Settlement. If finally approved, the Settlement resolves the Class's claims asserted
`against the Defendant.
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`There will be a hearing on the Settlement (the "Settlement Hearing") before the Hon. Steven M.
`Gold, United States Magistrate Judge, at 4:30 p.m. on January 16, 2018, in Courtroom 13-D of
`the United States Courthouse, 225 Cadman Plaza East. Brooklyn, New York.
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`THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE
`COURT AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY
`OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES
`ASSERTED BY ANY OF THE PARTIES. IT IS BASED ON STATEMENTS OF THE
`PARTIES AND IS SENT FOR THE SOLE PURPOSE OF INFORMING YOU OF THE
`EXISTENCE OF THE LAWSUIT AND OF THE UPCOMING SETTLEMENT
`HEARING CONCERNING THE SETTLEMENT SO THAT YOU MAY MAKE
`APPROPRIATE DECISIONS AS TO STEPS YOU MAY, OR MAY NOT, WISH TO
`TAKE IN RELATION TO THE CLASS ACTION.
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`2
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 11 of 29 PageID #: 1280
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`II.
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`BACKGROUND OF THE ACTION
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`The Class Action arises out of sales of shares in the Apple REITs by A7 and A8 pursuant to their
`respective DRIPs. As part of the DRIPs, Defendant represented to Plaintiff and the Class that the
`DRIP sale price “[would] be based on the fair market value of [the REITs’] units as of the
`reinvestment date as determined in good faith by [their] board[s] of directors from time to time.”1
`But Plaintiff alleges that, in reality, the $11.00 DRIP share sale price did not reflect a meaningful
`estimate of the underlying or realizable value of the units. The Apple REITs further agreed to
`price the DRIP shares utilizing the most recent price at which an unrelated person had purchased
`units of the Apple REITs or, if that price was not indicative of fair value, to utilize good faith
`judgment in determining the share price of the DRIP. Despite these agreements, throughout the
`life of the DRIPs, Apple REITs shares were consistently sold at an artificial price of $11 per
`share that did not reflect fair value. It was not until March of 2013 that Defendant, for the first
`time, admitted in public filings that—despite representations that the boards of the Apple REITs
`would use the stated calculations to determine fair market value—the DRIP price was not
`actually based on any appraisal or valuation of the shares.
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`Plaintiff alleges that as a result of Defendant’s misconduct, DRIP participants were overcharged
`for each share they received. By virtue of Defendant’s failure to follow the methodology in the
`S-3, Plaintiff and the Class were further damaged by receiving fewer Apple REITs shares in
`connection with the DRIPs than they would have received if the shares had been valued in good
`faith and in accordance with the methodology set forth in the Apple REITs’ respective Form S-
`3’s.
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`Plaintiff commenced this action on April 22, 2014 by filing a class action complaint against
`AHR and certain of its officers and directors in New York Supreme Court, Kings County.
`Defendant removed the action to this Court on May 19, 2014. Plaintiff filed an Amended
`Complaint on June 27, 2014. Defendant moved to dismiss the complaint, and Judge Irizarry
`granted Defendant’s motion to dismiss but granted Plaintiff leave to amend her complaint to add
`further detail to her claim for breach of contract in an Order dated March 9, 2015.
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`Plaintiff filed a Second Amended Complaint on April 6, 2015, and Defendant again filed a
`motion to dismiss. On September 30, 2016, Judge Irizarry issued a Memorandum Opinion
`granting in part and denying in part Defendant’s Motion to Dismiss Plaintiff’s Second Amended
`Complaint.
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`In January 2017, the Parties engaged in a private mediation with Hon. Theodore H. Katz, U.S.
`Magistrate Judge (Ret.) and reached an agreement in principle to settle the Class Action on the
`terms that have now been preliminarily approved by the Court.
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`1See Apple REIT Seven, Inc., Registration Statement (Form S-3), at 9 (July 17, 2007); Apple REIT Eight, Inc.,
`Registration Statement (Form S-3), at 8 (Apr. 23, 2008).
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`3
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 12 of 29 PageID #: 1281
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`III. SUMMARY OF SETTLEMENT TERMS AND FREQUENTLY ASKED
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`QUESTIONS (FAQS)
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`Defendant will pay $5,500,000.00 in cash to resolve the claims of Plaintiff and the Class. The
`Class (and each member of the Class) is limited solely to the Settlement Fund for the satisfaction
`of all Released Claims against all Released Parties (which include Defendant and its
`predecessors Apple REIT Seven, Inc. and Apple REIT Eight, Inc. and affiliates, including but
`not limited to Apple Seven Advisors, Inc., Apple Eight Advisors, Inc., and Apple Fund
`Management, LLC, and the Apple REITs’ present and former directors, partners, principals,
`officers, employees, agents, trustees, attorneys, insurers, reinsurers, parents, subsidiaries,
`affiliates, divisions, representatives, predecessors, administrators, and assigns).
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`Under the proposed Plan of Allocation, the proposed Settlement Administrator will calculate
`each Class Member's “Allowed Payment Amount” (share of the Net Settlement Fund) in the
`following matter:
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`85% of the Net Settlement Fund will be allocated to DRIP shares purchased between July 22,
`2011 and January 13, 2012 for Apple REIT Seven and between July 22, 2011 and February 19,
`2013 for Apple REIT Eight less any shares redeemed.
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`15% of the Net Settlement Fund will be allocated to DRIP shares purchased between July 17,
`2007 and July 21, 2011 as well as January 14, 2012 to June 27, 2013 for Apple REIT Seven and
`April 23, 2008 to July 21, 2011 as well as February 20, 2013 to June 27, 2013 for Apple REIT
`Eight less any shares redeemed.
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`The Plan is not a part of or a condition of approval of the Settlement. Under the Agreement, the
`Net Settlement Fund may be distributed in accordance with the proposed Plan or such other plan
`as the Court may approve.
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`Why Did I Get This Notice?
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`This Notice is being sent to you pursuant to an Order of the District Court because you, someone
`in your family, or an investment account for which you serve as a custodian may have acquired
`shares of the Apple REITs pursuant to the Apple REITs’ DRIPs between July 17, 2007 and June
`27, 2013. The District Court has directed us to send you this Notice because, as a potential Class
`Member, you have a right to know about your options before the District Court rules on the
`proposed Settlement. Additionally, you have the right to understand how a class action lawsuit
`may generally affect your legal rights. If the District Court approves the Settlement and the Plan
`of Allocation (or some other plan of allocation), the Settlement Administrator selected by the
`Parties and approved by the Court will make payments pursuant to the Settlement and the court-
`approved Plan of Allocation after any objections and appeals are resolved. This Notice is also
`being sent to inform you of a hearing to be held by the District Court to consider the fairness,
`reasonableness, and adequacy of the Settlement, the proposed Plan of Allocation, and the Fee and
`Expense Application.
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`In a class action lawsuit, the court selects one or more people, known as class representatives, to
`sue on behalf of all people with similar claims, commonly known as the class or the class members.
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`4
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`Case 1:14-cv-03131-SMG Document 68 Filed 09/19/17 Page 13 of 29 PageID #: 1282
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`A class action lawsuit is a type of lawsuit in which the claims of a number of individuals are
`resolved together, thus providing the class members with both consistency and efficiency. Once
`the class is certified, the court must resolve all issues on behalf of the class members, except for
`any Persons who choose to exclude themselves from the class. In this case, the District Court has
`appointed Susan Moses to serve as Class Representative, and has appointed the law firms of Salas
`Wang LLC, Eccleston Law, LLC, and Law Office of Christopher J. Gray, P.C. to serve as Interim
`Class Counsel. The District Court has also preliminarily certified this case to proceed as a class
`action, for settlement purposes only.
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`This Notice does not express any opinion by the District Court concerning the merits of any claim
`in the Class Action. The District Court must decide whether to approve the Settlement. If the
`Court approves the Settlement and the Plan of Allocation, payments to Class Members will be
`made after any appeals are resolved.
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`What Does The Settlement Provide?
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`Defendant shall cause to be delivered to Class Counsel, a check or wire transfer in the amount of
`$5,500,000.00, which will earn interest for the benefit of the Class (the “Settlement Fund”), and
`all Class Members who do not validly exclude themselves from the Class. The claims of all Class
`Members who do not timely exclude themselves will be released.
`
`
`Am I Included In The Settlement?
`
`
`You are included in the Class if you, or an investment account for which you serve as a custodian,
`acquired shares of the Apple REITs, specifically Apple REIT Seven, Inc. and Apple REIT Eight,
`Inc., pursuant to the Apple REITs’ DRIPs between July 17, 2007 and June 27, 2013, inclusive.
`
`PLEASE NOTE: RECEIPT OF THIS NOTICE DOES NOT MEAN THAT YOU ARE A
`CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE PROCEEDS
`FROM THE SETTLEMENT FUND. IF YOU ARE A CLASS MEMBER, YOU WILL
`RECEIVE A VERIFICATION FORM SUBSEQUENT TO THIS NOTICE IF THE COURT
`APPROVES THE SETTLEMENT. TO BE ELIGIBLE TO PARTICIPATE IN THE
`DISTRIBUTION OF PROCEEDS FROM THE SETTLEMENT, YOU NEED NOT
`RESPOND TO THIS NOTICE OR TO THE VERIFICATION FORM. IF YOU DO NOT
`RESPOND TO OR DISPUTE THE VERIFICATION FORM, YOU WILL BE DEEMED
`TO HAVE CONSENTED TO THE TERMS OF THE SETTLEMENT. IF YOU DISPUTE
`THE ACCOUNT INFORMATION INCLUDED WITH THE VERIFICATION FORM,
`YOU MAY RESPOND TO THE SETTLEMENT ADMINISTRATOR PURSUANT TO
`INSTRUCTIONS THAT WILL BE INCLUDED IN THE VERIFICATION FORM.
`
`
`What Might Happen If There Were No Settlement?
`
`
`If there were no Settlement, the litigation would proceed to judgment. If Plaintiff failed to establish
`any essential legal or factual element of her claims against the Defendant, neither she nor the Class
`would recover anything from the Defendant. Also, if the Defendant were successful in proving
`
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`any of its defenses, the Class could recover substantially less than the amounts provided in the
`Settlement, or nothing at all.
`
`
`What Is The Legal Effect Of The Settlement On My Rights?
`
`
`If you are a member of the Class, the Settlement will affect you. If the District Court grants final
`approval of the Settlement, the Class Action will be dismissed with prejudice and all Class
`Members will fully release and discharge the Defendant (and the other Released Parties) from all
`claims for relief arising out of or based on Plaintiff’s allegations. When a Party to the litigation
`“releases” claims, that means that Party cannot sue the Defendant or the other Released Parties for
`any of the claims covered by the release. If you are a Class Member and you agree to a Verification
`Form (by not disputing the amounts on that Form), you will receive a payment based upon the
`distribution formula described below or as otherwise approved by the Court.
`
` What If I Purchased Shares After The Class Period?
`
`The Class Period covered by the Settlement runs from July 17, 2007 until June 27, 2013
`inclusive, and the claims of all Settlement Class members concerning purchases of Apple REIT 7
`and/or Apple REIT 8 shares during that period will be released under the terms of the Settlement
`unless Settlement Class members affirmatively exclude themselves and opt out of the Settlement
`Class. The period June 28, 2013 through February 12, 2014, which was formerly defined as part
`of the class period in Plaintiff’s Second Amended Complaint, is not part of the Class Period
`covered by the Settlement. You will not receive any compensation for purchases of Apple REIT
`7 and/or Apple REIT 8 shares between June 28, 2013 and February 12, 2014 in connection with
`the Settlement, and if you wish to pursue claims concerning purchases during this period you
`would need to commence a separate legal action within the applicable statute of limitations.
`
`
`What Will I Receive From The Settlement?
`
`
`At this time, it is not possible to determine precisely how much each Class Member may receive
`from the Settlement. However, using a conservative estimate assuming that every Class Member
`participates, and assuming that a request for attorneys’ fees for the maximum potential sum
`permitted under the Settlement Agreement ($1.833 million) is granted, and that an application for
`reimbursement of expenses in the amount of $150,000 is granted, then Class Members would
`receive at least $1.26 per share for DRIP shares purchased between July 22, 2011 and January 13,
`2012 for Apple REIT Seven and between July 22, 2011 and February 19, 2013 for Apple REIT
`Eight. Class members would receive at least $0.02 per share for DRIP shares purchased between
`July 17, 2007 and July 21, 2011 as well as January 14, 2012 to June 27, 2013 for Apple REIT
`Seven and April 23, 2008 to July 21, 2011 as well as February 20, 2013 to June 27, 2013 for Apple
`REIT Eight.
`
`Pursuant to the Settlement, Defendant shall cause to be delivered to Lead Counsel a check or wire
`transfer in the amount of $5,500,000.00, which will be deposited into an interest-bearing escrow
`account. If the Settlement is approved by the District Court, the Net Settlement Fund (i.e., the
`Settlement Fund less: (a) all federal, state, and local taxes on any income earned by the Settlement
`Fund and the reasonable costs incurred in connection with determining the amount of and paying
`
`
`
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`taxes owed by the Settlement Fund (including reasonable expenses of tax attorneys and
`accountants); (b) the costs and expenses incurred in connection with providing Notice to Class
`Members and administering the Settlement on behalf of Class Members; and (c) any attorneys’
`fees and expenses awarded by the District Court) will be distributed to Class Members as set forth
`in the proposed Plan of Allocation, or such other plan as the District Court may approve.
`
`After approval of the Settlement by the District Court and upon satisfaction of the other conditions
`to the Settlement, the Net Settlement Fund will be distributed to Authorized Class Members in
`accordance with the Plan of Allocation approved by the District Court. Under the proposed Plan
`of Allocation, 85% of the Net Settlement Fund will be allocated to DRIP shares purchased between
`July 22, 2011 and January 13, 2012 for Apple REIT Seven and between July 22, 2011 and February
`19, 2013 for Apple REIT Eight less any shares redeemed. 15% of the Net Settlement Fund will be
`allocated to DRIP shares purchased between July 17, 2007 and July 21, 2011 as well as January
`14, 2012 to June 27, 2013 for Apple REIT Seven and April 23, 2008 to July 21, 2011 as well as
`February 20, 2013 to June 27, 2013 for Apple REIT Eight less any shares redeemed.
`
`The Net Settlement Fund will not be distributed until the District Court has approved a plan of
`allocation, and the time for any petition for rehearing, appeal, or review, whether by certiorari or
`otherwise, concerning the terms of the Settlement and the District Court’s approval thereof, has
`expired.
`
`Approval of the Settlement is independent from approval of the Plan of Allocation. Any
`determination with respect to the Plan of Allocation will not affect the Settlement, if approved.
`
`After this notice, but prior to payment, you will receive a communication that includes a Verification
`Form from the Settlement Administrator with your distribution amount and the basis for that
`calculation. Unless you dispute that amount with the Settlement Administrator within the time stated
`in the letter, you will receive payment based on that calculation.
`
`Unless the District Court otherwise orders, any Class Member who agrees to a valid Verification
`Form by not disputing the amount on the form prior to the date stated in the Verification Form,
`shall be fully and forever barred from receiving additional payments pursuant to the Settlement,
`but will in all other respects remain a Class Member and be subject to the provisions of the
`Settlement Agreement that is approved, including the terms of any judgment entered and releases
`given.
`
`The District Court has reserved jurisdiction to allow, disallow, or adjust the claim of any Class
`Member on equitable grounds.
`
`Each Class Member shall be deemed to have submitted to the jurisdiction of the District Court
`with respect to his, her, or its Verification Form. Upon request of the Settlement Administrator,
`each Person that agrees to a Verification Form shall subject his, her, or its Claim to investigation
`as to his, her, or its status as a Claimant and the allowable amount of his, her, or its Claim. Disputes
`will be handled by the Settlement Administrator upon proof submitted supporting