OPTION AGREEMENT AND RIGHT OF FIRST OFFER/REFUSAL
THIS AGREEMENT made this day of June, 1996, by and between BROADWAY
MORRISON LIMITED PARTNERSHIP, a Texas limited partnership ("Seller"), and
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Seller owns the percentage interest set forth opposite its name on
Schedule 1 in Broadmorr Joint Venture, a joint venture in the form of an Idaho
general partnership ("Broadmorr") which owns the leasehold interest in the
parcel or parcels of land set forth on Exhibit "A-1" (the "Partnership
WHEREAS, the beneficial owner of a majority of the limited partnership
interests of Buyer will be American General Hospitality Corporation (the
"REIT"), a corporation organized under the laws of the State of Maryland which
intends to be qualified as a real estate investment trust under the Internal
Revenue Code and an affiliate of the REIT will be the sole general partner of
WHEREAS, Broadmorr is currently developing a 167 room hotel in Boise, Idaho
(the "Hotel"); and
WHEREAS, Seller desires to grant and Buyer desires to accept certain
options and rights of first offer and refusal regarding the Partnership Interest
on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the payment of One Dollar ($1.00) to
each other, and of the mutual promises contained in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer covenant and agree, intending to be legally
bound, as follows:
I. Purchase Option.
Seller hereby grants to Buyer the option to purchase the Partnership
Interest of Seller set forth on Schedule 1 opposite Seller's name (the "Purchase
Option"), for the price and otherwise on the terms and conditions set forth in
Exhibit "A". The Purchase Option may be exercised only by written notice of
exercise (an "Exercise Notice") sent to Seller not later than two (2) years from
the date (the "Trigger Date") Seller notifies Buyer that the Hotel has opened
for business (the "Option Term"). If Buyer shall timely exercise such option,
then the Exercise Notice shall constitute an agreement of sale for the
Partnership Interest on the terms and conditions of Exhibit "A" hereto, except
to the extent such terms and conditions are altered by a subsequent written
agreement of the parties.
II. Right of First Offer/Refusal for Partnership Interest.
(a) If during the Option Term (i) Seller desires to Transfer (as
hereinafter defined) its Partnership Interest or (ii) Seller receives a bona
fide offer to Transfer such Partnership Interest, then prior to offering such
Offered Property (as hereinafter defined) for Transfer, or accepting an offer
for such Offered Property for Transfer, Seller shall give Buyer notice (the
"Offer Notice") specifying the purchase price and the other material terms and
conditions pursuant to which Seller is willing to Transfer the Offered Property.
As used herein, a "Transfer" is to sell, convey, assign, exchange or otherwise
transfer to an unrelated third-party all or any part of such Partnership
Interest or interest therein (such Partnership Interest or interest therein
intended to be transferred is herein called an "Offered Property").
(b) Upon the giving of the Offer Notice, Buyer shall have the right (the
"Right of First Offer"), exercisable by notice (the "Acceptance Notice")
delivered to Seller no later than thirty (30) days after the giving of the Offer
Notice and after Seller's delivery to Buyer of copies of all of the Development
Related Agreements, License Agreement, Leases and Service Agreements ( all the
foregoing agreements, as defined in Exhibit "A") pertaining to the Offered
Property and other requested materials (including a true and correct copy of the
joint venture and partnership agreements and tax returns for the three year
period prior to the Offer Notice for Seller and for Broadmorr, or for such
shorter period for which tax returns have actually been filed), to acquire the
Offered Property in accordance with the terms and conditions of the Offer
(c) If Buyer delivers an Acceptance Notice within the prescribed time
period, then the Acceptance Notice, together with the Offer Notice, shall be
deemed to be an agreement of sale and purchase, on the terms and conditions of
the Offer Notice and of Exhibit "A" hereto (to the extent not in conflict with
the terms of the Offer Notice), except to the extent such terms and conditions
are altered by a subsequent written agreement of the parties.
(d) If Buyer does not deliver to Seller either (i) an Acceptance Notice
with respect to the Offered Property or (ii) an Exercise Notice pursuant to
Paragraph I hereof with respect to the entire Partnership Interest, in either
case within the prescribed thirty (30) day period described above, Seller shall
be entitled to Transfer the Offered Property to an unrelated third party free of
any rights of Buyer under this Agreement on terms no less favorable to Seller
than those specified in the Offer Notice, and upon such Transfer, Buyer's rights
under this Agreement with respect to the Offered Property shall automatically
terminate. If Seller does not enter into a binding agreement to consummate such
Transfer (which agreement will be deemed binding notwithstanding customary
conditions to the obligations of parties thereunder) within six (6) months after
the expiration of the time for Buyer to give an Acceptance Notice or if Seller
does not complete such Transfer within three (3) months after the expiration of
the time for consummating the offer set forth in the Offer Notice (or, if no
such time is specified in the Offer Notice then within nine (9) months after the
expiration of the time for Buyer to give an Acceptance Notice), then Buyer's
rights hereunder with respect to such Offered Property shall be deemed
(e) The term "Transfer" as used in this Agreement shall not include the
grant of a mortgage or deed of trust or the creation of any security interest to
secure a bona fide loan, dedication to a governmental body or public utility or
any execution upon any mortgage, deed of trust, pledge agreement or security
interest, nor shall "Transfer" include any transfer by Seller to a party other
than an unrelated third party, provided, however, that any such transfer to a
party other than an unrelated third party shall be under and subject to the
rights of Buyer hereunder and the transferee shall assume and promise to observe
and perform the covenants and obligations of its transferror hereunder.
III. Access to Properties and Documents.
Seller shall from time to time, upon the request of Buyer, furnish to
Buyer, at Buyer's expense, copies of all Development Related Agreements, Leases,
Service Agreements and such other documents, instruments and records in Seller's
possession as Buyer may reasonably request, and Seller shall afford Buyer access
to the Hotel and to Seller's books and records pertaining thereto, for purposes
of inspecting same and causing surveys and audits to be performed, all at
Buyer's expense. Except for permitting access to the foregoing by its trustees,
employees, partners, attorneys, accountants and advisors, Buyer will use
reasonable efforts to preserve the confidentiality of any of the foregoing which
have not been made public by Seller.
IV. Merger into Agreement of Sale.
If Buyer gives an Exercise Notice or an Acceptance Notice then Buyer's
rights under this Agreement with respect to the Partnership Interest which are
the subject of the agreement of sale resulting from such Exercise Notice or
Acceptance Notice shall be deemed merged into such Agreement of Sale and shall
V. Continuing Rights.
The exercise or the non-exercise by Buyer of the Right of First
Offer/Refusal to acquire less than all of the Partnership Interest pursuant to
the terms of this Agreement shall not affect Buyer's continuing rights under
this Agreement as to that portion of the Partnership Interest which was not the
subject matter of a prior Offer Notice.
(a) Each notice to be given pursuant to this Agreement shall be in
writing and shall be deemed to have been properly given or served by deposit of
such with the United States Postal Service certified mail, return receipt
requested, postage prepaid or with a nationally recognized overnight courier for
next business day delivery and addressed as hereinafter provided .
(b) Any such notice shall be effective upon the earlier of (i) actual
receipt or refusal to accept delivery by addressee or (ii) two business days
after deposit thereof at any main or branch of the United States Postal Service
or (iii) the first business day after deposit with nationally recognized
overnight courier. Rejection or other refusal to accept or the inability to
of a changed address or status of which no written notice was given shall be
deemed to be receipt of the particular notice sent. By giving to the other party
entitled to notice hereunder a notice pursuant to the provisions of this
Section, the party entitled to notice shall have the right from time to time
during the term of this Agreement to change the address(es) thereof and to
specify as the address(es) thereof any other address(es) within the United
States of America.
The address for Seller for all purposes under this Agreement shall be the
Broadway Morrison Limited Partnership
c/o American General Hospitality, Inc.
3860 W. Northwest Highway, Suite 300
Dallas, Texas 75220
Attention: Bruce G. Wiles
with a copy to:
Battle Fowler, L.L.P.
75 East 55th Street
New York, New York 10022
Attention: Peter M. Fass, Esq.
The address for Buyer for all purposes under this Agreement shall be the
American General Hospitality Operating Partnership, L.P.
c/o American General Hospitality, Inc.
3860 W. Northwest Highway, Suite 300
Dallas, Texas 75220
Attention: Bruce G. Wiles
with a copy to:
Battle Fowler, L.L.P.
75 East 55th Street
New York, New York 10022
Attention: Peter M. Fass, Esq.
This Agreement is and shall be subject and subordinate at all times to the
lien of any mortgage, deed of trust and/or other encumbrance affecting the
Partnership Interests, or any part thereof permitted under Paragraph II(e) (such
liens and matters of record are collectively referred to as a "Prior Interest"),
all automatically and without the necessity of any further action on the part of
Buyer to effectuate such subordination. Buyer shall, at Seller's request,
execute, acknowledge and deliver such further instruments evidencing such
subordination as shall be desired by Seller or the holder of a Prior Interest.
VIII. Term. This Agreement shall expire on the earlier to occur of (i)
ten (10) years from the date hereof, or (ii) the expiration of the Option Term,
each subject to the applicable extension if, during the Option Term, Buyer
either delivers to Seller an Exercise Notice, or receives from Seller an Offer
Notice with respect to the entire Partnership Interest, followed in the case of
an Offer Notice by an Acceptance Notice within the applicable thirty (30) day
period, whereupon the resulting agreement of sale shall expire upon closing of
the transaction pursuant thereto (subject to the survival of any provisions
which are stated to survive each Closing).
IX. Consequences of a Sale of the Hotel. Not less than forty-five (45)
days prior to any Transfer by Broadmorr of its real estate and personal property
comprising the Hotel to a third party unrelated to Seller (whether or not such
Transfer may be to a party related to one or more other partners in Broadmorr),
Seller shall give notice to Buyer ("Pending Sale Notice") of the proposed
Transfer and all material terms and conditions of the proposed Transfer, and,
unless Buyer shall issue an Exercise Notice within thirty (30) days following
receipt by Buyer of the Pending Sale Notice, the proceeds of such Transfer
distributable to Seller will be retained by it; provided, however, that if such
Transfer is of less than all or substantially all of the Hotel, then the options
and rights of Buyer hereunder shall remain in effect; and provided further that
if Seller shall fail to give a Pending Sale Notice required hereunder, then
Seller shall be obligated to pay to Buyer, contemporaneous with its receipt of
its pro rata share of the net sales proceeds of such sale (as determined under
the terms of the joint venture agreement of Broadmorr), the amount by which the
pro rata share of the net sales proceeds exceeds the amount which would have
been the Purchase Price if the Option had been exercised and Closing had
X. Successors and Assigns.
(a) The terms and provisions of this Agreement shall be binding upon
Seller, and its successors and assigns, and shall inure to the benefit of Buyer
and its successors.
(b) Buyer shall have no right to assign or pledge its rights under this
Agreement, but Buyer may direct that the conveyance of the Hotel at Closing be
made to an affiliate of Buyer.
(a) This Agreement and the obligations of the parties shall be interpreted,
construed and enforced in accordance with the internal law of Idaho, without
regard to the conflicts of law principles thereof.
(b) If any provision of this Agreement shall be invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provisions to any other circumstance shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
(c) This Agreement constitutes the entire Agreement of Seller and Buyer
with respect to the subject matter hereof. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
(d) All personal pronouns used in this Agreement, with the use in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural; and the plural shall include the singular.
Titles of Paragraphs in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
(e) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall comprise
but a single instrument.
(f) All exhibits and schedules attached to this Agreement are incorporated
by reference into and made a part of this Agreement.
XII. Consent of Other Partners of Broadmorr.
Buyer hereby acknowledges that the exercise by Buyer of its rights
hereunder may require approval of one or more partners of Broadmorr other than
Seller and by one or more of the partners constituting Seller (the "Broadway
Morrison Partners"). Seller will not seek such approval until receipt of an
Exercise Notice or an Acceptance Notice, as applicable, but thereafter Seller
promises to use commercially reasonable efforts to obtain such approvals, but
Seller shall not be required to pay money or other consideration to obtain such
approvals except that Seller will pay normal fees and expenses of counsel and
such normal overhead costs as may be necessary. The obligations of Seller and
Buyer to consummate Closing shall be conditioned upon the grant of such
approvals of other partners of Broadmorr and the Broadway Morrison Partners as
may be necessary under the agreements governing Broadmorr and Seller,
IN WITNESS WHEREOF, intending to be legally bound, the parties have caused
this Agreement to be executed on the day and year first above written.
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership, by its general
By: AGH GP, Inc., a Nevada Corporation
BROADWAY MORRISON LIMITED PARTNERSHIP, a Texas limited
partnership, by its sole general partner and Managing
By: Virtual Hospitality, Inc., a Texas Corporation
OPTION TERMS AND CONDITIONS
XIII. Sale of Partnership Interest.
Seller shall sell, transfer and assign to Buyer and Buyer shall
purchase from Seller, upon the terms and conditions hereinafter set forth all of
Seller's right and interest in and to the Partnership Interest, including,
without limitation, all right, title and interest of Seller in and to (i) all
distributions by Broadmorr from and after the Closing Date (defined below) of
cash or other assets from operations, capital transactions, sales, refinancings,
liquidation or any other source, which interest in such distributions shall not
be subordinate to any superior right to distributions or payments of any type to
any partners of Seller or affiliates of Seller or partners of Seller, including
return of capital, and (ii) all profits and losses incurred by Broadmorr from
and after the Closing Date; and, (iii) all capital of Broadmorr. At Closing,
Seller shall deliver to Buyer duly executed originals of such amendments (the
"Joint Venture Amendments") to the joint venture agreement of Broadmorr as are
necessary to substitute Buyer or its designee as a joint venture partner of
Broadmorr in place and instead of Seller. Buyer will, at Closing, assume the
obligations of Seller as a venturer in Broadmorr pursuant to the joint venture
agreement and Joint Venture Amendments disclosed to Buyer from and after the
Closing Date, and Buyer will agree to defend, indemnify and hold harmless Seller
from and against any and every manner of loss, cost, damage or expense arising
by reason of any failure of Buyer to observe or perform any covenant or
obligation assumed by Buyer at Closing.
XIV. Purchase Price.
(a) The purchase price (the "Purchase Price") to be paid by Buyer to
Seller for the Partnership Interest shall be Seller's Share (hereafter defined)
of the Agreed Value. The Agreed Value shall be determined as follows:
(i) If the Exercise Notice is delivered prior to or on the first
anniversary of the Trigger Date, the Agreed Value shall be the Cost of
Developing the Hotel multiplied by 110%. For purposes of this
Paragraph 2 the "Cost of Developing the Hotel" shall mean the total
cost of constructing, furnishing and developing the hotel incurred
prior to the date the Hotel is issued a certificate of occupancy, or a
temporary certificate of occupancy. Seller shall certify to Buyer as
to the cost of Developing the Hotel in a writing (the "Cost
Certificate") delivered to Buyer within thirty (30) days of the
Trigger Date. If Buyer objects to such amount within ten (10) days of
Seller's receipt of the Cost Certificate and the parties are unable to
resolve such dispute within five (5) days thereafter, either party may
elect to submit the dispute to JAMS/Endispute, Inc. for resolution.
(ii) If the Exercise Notice is delivered after the first anniversary of the
Trigger Date and prior to the expiration of the Option Term, the
Agreed Value shall be the amount determined in the prior subparagraph,
increased by a percentage equal to the percentage increase in the U.S.
Department of Labor, Bureau of Labor Statistics, "United States City
Average for All Items Portion of the Consumer Price Index New Series
for Urban Consumers" (1982-84=100) ("CPI-U") measured for the twelve
(12) month period from the CPI-U published nearest to the Trigger Date
to the CPI-U on the next succeeding anniversary thereof. If during the
Option Term, the U.S. Department of Labor, Bureau of Labor Statistics,
ceases to publish a CPI-U, such other index or standard as will most
nearly accomplish the aim and purpose of said CPI-U and the use
thereof of the parties thereto, shall be selected by Seller in its
sole discretion in determining the amount of any such adjustment.
(b) The Purchase Price, less Seller's Share of the outstanding
principal balance of any existing mortgage, shall be paid by Buyer to Seller at
Closing by either of the following methods designated by Seller:
(i) The delivery to Seller of a bank treasurer's check of a member
bank of The New York Clearing House, payable to the order of Seller or, at
Seller's option, the Escrow Agent, by check or by wire or debit and credit
transfer of immediately available same day United States Federal Funds to one or
more accounts to be designated by Seller, or
(ii) Subject to any securities laws limitations, by the issuance of
limited partnership interests in Buyer (the "Operating Partnership Interests"),
which shall be exchangeable for common shares of beneficial interest ("Shares")
of the REIT, subject to the restrictions and on the basis to be established in
the limited partnership agreement of Buyer. The Operating Partnership Interests
will be divided into units ("OP Units") in the manner determined by the general
partner of Buyer. The number of Operating Partnership Interests to be issued to
Seller shall be that number of Operating Partnership Interests convertible into
Shares having a Share Value as of the day preceding the Closing Date equal to
the Purchase Price. For purposes of this Agreement, the term "Share Value" as
of a particular day shall mean the average of the closing prices that a Share
has traded for the five (5) trading days immediately preceding that particular
day on the New York Stock Exchange (or, if Shares are not then traded on the New
York Stock Exchange, then on the principal stock exchange on which Shares are
(c) The term "Seller's Share" shall mean the percentage interest in
Broadmorr transferred by Seller to Buyer at Closing hereunder.
(d) In the event Buyer elects to receive the Purchase Price in OP
Units (such event, a "Unit Election"):
(1) The OP Units to be issued to Seller shall be subject to a
Lock-Up Agreement to be executed at Closing by Buyer and Seller, substantially
in the form attached hereto
as Schedule 2, whereby Seller will not be permitted to transfer OP Units for one
year after Closing, except as otherwise permitted under such agreement; and
(2) At or prior to Closing, the REIT, Seller and the other
parties thereto shall enter into a Registration Rights Agreement and Exchange
Rights Agreement substantially in the forms attached hereto as Schedules 3 and
(a) Closing shall be held on the date designated by Buyer by at
least twenty (20) days prior written notice to Seller ("Closing Date") which
shall be not less than thirty (30) days and not more than ninety (90) days
following the Exercise Notice or the Acceptance Notice, except that in the case
of an Acceptance Notice, if the Offer Notice shall have specified a date for
Closing then the Closing Date shall be the date specified in the Offer Notice.
(b) Closing is the event ("Closing") during which, among other
things, Buyer shall pay the Purchase Price to Seller for the Hotel and Seller
shall deliver to Buyer the Assignment (defined below) and such other documents
or instruments as may be required pursuant to this Agreement (the "Closing
Documents"). Buyer and Seller will, at or prior to the Closing, execute and
deliver the Closing Documents required by Buyer and, pending the Closing,
deposit such Closing Documents in escrow with Chicago Title Insurance Company,
as escrow agent of Buyer (the "Escrow Agent").
(c) In the event Buyer makes a Unit Election, the following
deliveries shall be made at the Closing:
(1) Buyer shall cause to be delivered to the Escrow Agent,
(x) a certificate of the general partner of Buyer (the "General Partner")
certifying that Seller has been or will be, effective as of the Closing,
admitted as a limited partner of Buyer and that Buyer's books and records
indicate or will indicate that Seller is the holder of the number of OP Units
that represents the Purchase Price and (y) if such OP Units are represented by
certificates, a certificate or certificates in the name of Seller representing
the number of OP Units to which Seller is entitled; and
(2) upon receipt of the consideration set forth in clause
(1) above, the Escrow Agent will release the Closing Documents to Buyer and
deliver to Seller, the certificates, if any, representing Seller's OP Units and,
if requested by Seller, a copy of the General Partner's certificate referred to
in clause (1).
(d) Notwithstanding any other provision of this Agreement, Buyer
may, in its sole discretion, elect not to consummate the contribution of the
Partnership Interest as follows:
(1) in the event that Seller either identifies in its
Assignment a breach of or other exception with respect to any of the
representations, warranties or covenants contained in Paragraph 5 or has
otherwise breached this Agreement,
(2) in the event that all authorizations, consents or
approvals of any governmental or administrative agency or authority or any third
party necessary in order to consummate the contribution of the Partnership
Interest have not been delivered, or there exists an order or judgment
enjoining, restraining or prohibiting, or assessing substantial damages in
respect of such consummation, or there shall be any action or proceeding
instituted or threatened in writing to enjoin, restrain, prohibit or assess
substantial damages in respect of such consummation, or
(3) in the event Buyer and Seller shall not have agreed to
lease the Hotel to a lessee acceptable to both parties,
then, Buyer shall, in lieu of the delivery with respect to Seller pursuant to
clause (c)(1) above, either (A) in the case of an election not to consummate the
contribution of the Partnership Interest, notify the Escrow Agent of such
election and direct the Escrow Agent to return Seller's Closing Documents to
Seller, or (B) in all other cases, equitably adjust the delivery with respect to
Seller pursuant to clause (c)(1) above, if applicable, to reflect the portion of
the Partnership Interest with respect to which the contribution is actually
being consummated, which adjustment shall be determined in Buyer's reasonable
discretion, and shall in all events be binding upon Seller.
4. Documents to Be Delivered at the Closing.
At or prior to the Closing, Seller shall execute, acknowledge
where deemed desirable or necessary by Buyer, and deliver to the Escrow Agent,
in addition to any other documents mentioned elsewhere herein, the following:
(a) An assignment of the Partnership Interest (the
"Assignment"), which assignment shall be in a form reasonably satisfactory to
Buyer and Seller, shall contain a warranty of title that Seller owns the
Partnership Interest free and clear of all Encumbrances (as defined below) and
shall either (i) reaffirm the accuracy of all representations and warranties and
the satisfaction of all covenants contained in Paragraph 5 hereof, or (ii) if
such reaffirmation cannot be made, identify those representations, warranties
and/or covenants contained in Paragraph 5 hereof which Seller can no longer make
or comply with, represent that Seller has used reasonable efforts to take such
actions as would permit Seller to make such representations and warranties
and/or to comply with such covenants, and reaffirm the accuracy of all other
representations and warranties and the satisfaction of all other covenants
contained in Paragraph 5 hereof.
(b) A certified copy of all appropriate corporate resolutions or
partnership or trust actions authorizing the execution, delivery and performance
by Seller of this Agreement and the Closing Documents.
(c) A written certification ("FIRPTA Certificate") dated no earlier
than ninety (90) days prior to the date of Closing, which certification shall be
in compliance with the Act and the regulations thereunder that are imposed by
the Foreign Investment in Real Property Tax Act ("FIRPTA") and certifying that
the Seller is not a person or entity subject to withholding under FIRPTA and the
Act, and containing Seller's tax identification number and address.
Alternatively, Seller hereby certifies in compliance with FIRPTA (i) that it is
not a foreign person, foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in the Act of FIRPTA, (ii) that its
Taxpayer Identification Number is as set forth in Schedule 1 (or will be
furnished prior to Closing), (iii) that his, her, or its address set forth in
Schedule 1 is correct, (iv) that it understands that this certification may be
disclosed to the Internal Revenue Service, (v) that any false statement
contained herein could be punished by fine, imprisonment, or both, and (vi) that
it, under penalties of perjury, hereby declares that it has examined this
certification and to the best of its knowledge and belief it is true, correct,
and complete. An affidavit establishing an exemption from the withholding
requirements of the), as amended. In the event Seller fails to provide such an
affidavit, Buyer shall be entitled to withhold from the Purchase Price and pay
to the Internal Revenue Service the sums required to be withheld pursuant to
FIRPTA (and the amount so withheld shall be paid by Buyer to the Internal
Revenue Service, in order for Buyer to comply with the provisions of Section
1445 of the Internal Revenue Code of 1986 or successor similar legislation, as
the same may be amended hereafter).
(d) Any state, county and city documentary stamp declarations or
transfer or "gains" tax forms required in connection with the transfer of any of
the Partnership Interest.
(e) Estoppel letters and required consents from the ground lessor.
(f) The Lock-up Agreement, the Exchange Rights Agreement, the limited
partnership agreement for Buyer (the "Partnership Agreement") and the
Registration Rights Agreement.
(g) Any other documents, agreements or instruments as Buyer shall
reasonably request in order to assign, transfer and convey the Partnership
Interest to Buyer as a contribution to capital and to otherwise effectuate the
transactions contemplated hereby, including filings with any applicable
governmental jurisdiction in which Buyer is required to file its partnership
5. Representations, Warranties and Covenants of Seller
As a material inducement to Buyer to enter into the Agreement and to
consummate the transactions contemplated hereby, Seller shall make to Buyer each
of the representations and warranties set forth in this Paragraph 5. As a
condition to Buyer's obligation to consummate the contribution of the
Partnership Interest to Buyer, such representations and warranties must be true
as of the Closing Date.
(a) Title to the Partnership Interests. Seller owns beneficially and
of record, free and clear of any claim, lien, pledge (except for pledges
relating to the debt or equity financing of the Hotel (any such pledge, a
"Permitted Pledge")), voting agreement, option, charge, security
interest, mortgage, deed of trust, encumbrance, right of assignment, purchase
right or other rights of any nature whatsoever (collectively, "Encumbrances"),
and has full power and authority to convey free and clear of any Encumbrances,
its Partnership Interest and, upon delivery of an Assignment by Seller conveying
its Partnership Interest and delivery of the Purchase Price by Buyer for the
Partnership Interest as herein provided, Buyer will acquire as a contribution to
capital good and valid title thereto, free and clear of any Encumbrance, except
Encumbrances created in favor of Buyer by the transactions contemplated hereby.
The Partnership Interest has been validly issued and Seller has funded (or will
fund before the same is past due) all capital contributions and advances to
Broadmorr that are required to be funded or advanced prior to the date hereof
and the date of the Closing. There are no agreements, instruments or
understandings with respect to the Partnership Interest except as set forth in
the joint venture agreement of Broadmorr. Seller has no interest, either direct
or indirect, in Broadmorr except for the Partnership Interest. No Permitted
Pledge will be in existence as of the date of the Closing, and Seller shall
provide, at the Closing, such documentary evidence of the release of any
Permitted Pledge as Buyer may reasonably request.
(b) Organization; Authority; No Conflicts. Seller is a limited
partnership, duly organized, validly existing and in good standing under the
laws of the state of its organization. Seller has full right, authority, power
and capacity: (i) to execute and deliver this Agreement, each Closing Document
and each other agreement, document and instrument to be executed and delivered
by or on behalf of Seller pursuant to this Agreement; (ii) to perform the
transactions contemplated hereby and thereby; and (iii) to transfer, assign,
convey and deliver all of the Partnership Interest to Buyer in accordance with
this Agreement. All applicable corporate, partnership or trust action necessary
for Seller to execute and deliver this Agreement, the Closing Documents and each
other agreement, document and instrument executed by or on behalf of Seller
pursuant to this Agreement, and to perform the transactions contemplated hereby
and thereby, has been taken, or will be taken prior to the Closing Date. This
Agreement, each Closing Document and each other agreement, document and
instrument executed and delivered by or on behalf of Seller pursuant to this
Agreement constitutes, or when executed and delivered will constitute, the
legal, valid and binding obligation of Seller, each enforceable in accordance
with its respective terms. Except for any breaches, violations or defaults
which will be waived or cured, or discharged or repaid prior to or
contemporaneously with the Closing, the execution, delivery and performance of
this Agreement, the Closing Documents and each other agreement, document and
instrument to be executed and delivered by or on behalf of Seller: (x) does not
and will not violate Seller's charter and/or bylaws, partnership agreement or
declaration of trust, as applicable; (y) does not and will not violate any
foreign, federal, state, local or other laws applicable to Seller or require
Seller to obtain any approval, consent or waiver of, or make any filing with,
any person or authority (governmental or otherwise) that has not been obtained
or made and which does not remain in effect; and (z) does not and will not
result in a breach or a violation of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of, any indenture, deed
of trust, mortgage, loan or credit agreement or any other agreement, contract,
instrument, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which Seller is a party or by
which the property of Seller is bound or affected, or result in the creation of
any Encumbrance on any of the property or assets of Broadmorr.
(c) Litigation. Seller knows of no litigation or proceeding, either
judicial or administrative, pending or overtly threatened, affecting all or any
portion of the Partnership Interest or Seller's ability to consummate the
transactions contemplated hereby. Seller knows of no outstanding order, writ,
injunction or decree of any court, government, governmental entity or authority
or arbitration against or affecting all or any portion of the Partnership
Interest, which in any such case would impair Seller's ability to enter into and
perform all of its obligations under this Agreement.
(d) Bankruptcy. Neither Broadmorr, to the best of Seller's knowledge,
nor Seller (i) is in receivership or dissolution, (ii) has made a currently
effective general assignment for the benefit of creditors or is currently
subject to a written admission of its inability to pay its debts as they mature,
or (iii) is currently an adjudicated bankrupt or currently has on file a
petition in voluntary bankruptcy or a petition or answer seeking reorganization
or an arrangement with creditors under the Federal bankruptcy law or any other
similar law or statute of the United States or any jurisdiction and no such
petition is currently on file against Seller or Broadmorr.
(e) No Other Agreements. Seller has made no agreement with, and will
not enter into any agreement with, and has no obligation (absolute or
contingent) to, any other person or entity to sell, transfer, dispose of or in
any way encumber any of the Partnership Interest or restricting in any way
Seller's ability to contribute the Partnership Interest to Buyer or to enter
into any agreement with respect to the Partnership Interest.
(f) No Brokers. Seller has not entered into, and covenants that it
will not enter into, any agreement, arrangement or understanding with any person
or entity which will result in the obligation of Buyer to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
(g) Survival. It is a condition to the Closing that the
representations, warranties and covenants of Seller set forth in this Section 5
shall be true and correct on the Closing Date and shall survive the Closing for
a period of one (1) year from the date of the Closing, and shall expire at such
time, except for claims asserted by written notice given by or on behalf of
Buyer at any time during the one year period to Seller alleging a breach of any
representation or warranty.
(h) Investment Representations and Warranties.
In the event Seller makes a Unit Election, the following
Investment representations, and warranties shall apply:
(1) Seller has received and reviewed a copy of the Private
Placement Memorandum (the "Private Placement Memorandum") prepared in connection
with the contribution of the Partnership Interest to Buyer (which Private
Placement Memorandum includes a draft Registration Statement, the Summary of
Partnership Agreement Provisions (the "Partnership Summary") and the Summary of
Tax Matters (the "Tax Matters Summary"), and understands the risks of, and other
considerations relating to, an investment in OP Units. Seller, by reason of its
business and financial experience, together with the business and financial
experience of those persons, if any, retained by it to represent or advise it
with respect to its investment in OP Units, (i) has such knowledge,
sophistication and experience in financial and business matters and in making
investment decisions of this type that it is capable of evaluating the merits
and risks of and of making an informed investment decision with respect to an
investment in OP Units, (ii) is capable of protecting its own interest or has
engaged representatives or advisors to assist it in protecting its interests and
(iii) is capable of bearing the economic risk of such investment. Seller is an
"accredited investor" as defined in Rule 501 of the regulations promulgated
under the Securities Act. If Seller has retained or retains a person to
represent or advise it with respect to its investment in OP Units, Seller will
advise Buyer of such retention and, at Buyer's request, Seller shall, prior to
or at the Closing, (i) acknowledge in writing such representation and (ii) cause
such representative or advisor to deliver a certificate to Buyer containing such
representations as may be reasonably requested by Buyer.
(2) Seller understands that an investment in Buyer involves
substantial risks. Seller has been given the opportunity to make a thorough
investigation of the proposed activities of Buyer and has been furnished with
materials relating to Buyer and its proposed activities, including, without
limitation, the Private Placement Memorandum, the Partnership Summary and the
Tax Matters Summary. Seller has been afforded the opportunity to obtain any
additional information requested by it. Seller has had an opportunity to ask
questions of and receive answers from representatives of Buyer concerning Buyer
and its proposed activities and the terms and conditions of an investment in OP
Units. Seller has relied and is making its investment decision based upon the
Private Placement Memorandum, the Partnership Summary, the Tax Matters Summary
and other written information provided to Seller by or on behalf of Buyer
and/or, as applicable, Seller's position as a director and/or executive officer
of the Company.
(3) The OP Units to be issued to Seller at the Closing will be
acquired by Seller for its own account, for investment only and not with a view
to, or with any intention of, a distribution or resale thereof, in whole or in
part, or the grant of any participation therein. Seller was not formed for the
specific purpose of acquiring an interest in Buyer.
(4) Seller acknowledges that (i) the OP Units to be issued to Seller
at the Closing have not been registered under the Securities Act or state
securities laws by reason of a specific exemption or exemptions from
registration under the Securities Act and applicable state securities laws and,
if such OP Units are represented by certificates, such certificates will bear a
legend to such effect, (ii) the Company's and Buyer's reliance on such
exemptions is predicated in part on the accuracy and completeness of the
representations and warranties of Seller contained herein, (iii) the OP Units to
be issued to Seller at the Closing may not be resold or otherwise distributed
unless registered under the Securities Act and applicable state securities laws,
or unless an exemption from registration is available, (iv) there is no public
market for such OP Units, and (v) Buyer has no obligation or intention to
register such OP Units under the Securities Act or any state securities laws or
to take any action that would make available any exemption from the registration
requirements of such laws, except as provided in the Registration Rights
Agreement. Seller hereby acknowledges that because of the restrictions on
transfer or assignment of such OP Units to be issued hereunder which will be set
forth in the Partnership Agreement and in the Lock-
up Agreement, Seller may have to bear the economic risk of the investment
commitment evidenced by this Agreement and any OP Units issued hereunder for an
indefinite period of time, although (x) under the terms of the Exchange Rights
Agreement, as it will be in effect at the time of the initial public offering
(the "IPO"), OP Units will be exchangeable at the request of the holder thereof
at any time after the first anniversary of their issuance for cash based on
their fair market value or, at the option of the Company, for shares of common
stock (the "Common Stock") and (y) the holder of any such Common Stock issued
upon exchange of OP Units will be afforded certain rights to have such Common
Stock registered under the Securities Act and applicable state securities laws
pursuant to the Registration Rights Agreement.
(5) The Units are being acquired for Seller's investment and not for
resale to others. Seller agrees that it will not sell or otherwise transfer the
Units unless they are registered under the Securities Act or unless an exemption
from such registration is available. Seller represents that it has adequate
means of providing for its current needs and possible contingencies, and that it
has no need for liquidity of the investment.
(6) It is understood that all documents, records and books pertaining
to the investment have been made available for inspection by Seller's attorney
or the Seller's accountant or Seller's offeree representative and Seller, and
that the books and records of Buyer will be available upon reasonable notice,
for inspection by Seller at reasonable hours at its principle place of business.
(7) The address set forth under Seller's name in Schedule 1 is the
address of Seller's principal place of business or, if a natural person, the
address of Seller's residence, and Seller has no present intention of becoming a
resident of any country, state or jurisdiction other than the country and state
in which such principal place of business or residence is sited.
(i) Covenant to Remedy Breaches. Each Seller covenants to use all
reasonable efforts within its control (i) to prevent the breach of any
representation or warranty of Seller hereunder, (ii) to satisfy all covenants of
Seller hereunder and (iii) to promptly clear any breach of a representation,
warranty or covenant of Seller hereunder upon its learning of same.
6. Representations, Warranties and Covenants of Buyer
As a material inducement to each Seller to enter into this Agreement and
to consummate the transactions contemplated, Buyer shall make to Seller each of
the representations and warranties set forth in this Paragraph 6, which
representations and warranties shall be true as of the date of execution and as
of the Closing.
(a) Authority. Buyer is a limited partnership duly organized, validly
existing and in good standing under the laws of the state of Delaware. Buyer has
full right, authority, power and capacity: (i) to execute and deliver this
Agreement, each Closing Document to which it is a party and each other
agreement, document and instrument to be executed and delivered by or on behalf
it pursuant to this Agreement; (ii) to perform the transactions contemplated
hereby and thereby; and (iii) to issue OP Units to each Seller pursuant to and
in accordance with the terms of this Agreement. This Agreement, each Closing
Document to which Buyer is a party and each agreement, document and instrument
executed and delivered by Buyer pursuant to this Agreement constitutes, or when
executed and delivered will constitute, the legal, valid and binding obligation
of Buyer, each enforceable in accordance with its respective terms. The
execution, delivery and performance of this Agreement, each Closing Document to
which Buyer is a party and each such agreement, document and instrument by
Buyer: (x) does not and will not violate the Partnership Agreement; (y) does not
and will not violate any foreign, federal, state, local or other laws applicable
to Buyer or require Buyer to obtain any approval, consent or waiver of, or make
any filing with, any person or authority (government or otherwise) that has not
been obtained or made and which does not remain in effect; and (z) does not and
will not result in a breach or a violation of, constitute a default under,
accelerate any obligation under or give rise to a right of termination of, any
indenture, deed of trust, mortgage, loan or credit agreement, any other material
agreement, contract, instrument, lease, permit or authorization, or any order,
writ, judgment, injunction, decree, determination or arbitration award to which
Buyer is a party or by which the property of Buyer is bound or affected.
(b) No Brokers. Buyer has not entered into, and covenants that it
will not enter into, any agreement, arrangement or understanding with any person
or entity which will result in the obligation of any Seller to pay any finder's
fee, brokerage commission or similar payment in connection with the transactions
(c) Investment Representations and Warranties.
In the event Seller makes a Unit Election, the following
Investment representations, and warranties shall apply:
(1) The Units to be issued to Seller at Closing will have
been duly and validly authorized and issued, free of any preemptive or similar
rights, and be fully paid and nonassessable, without any obligation to restore
capital except as required by the Delaware Revised Uniform Limited Partnership
Act (the "Delaware Act"). As a holder thereof, Seller shall be admitted as a
limited partner of the Partnership entitled to all of the rights and protections
of a limited partner under the Delaware Act and the provisions of the
Partnership Agreement, with the same rights, preferences and privileges as all
existing limited partners on a pari passu basis.
(2) Except as set forth in the Partnership Agreement, the
Lock-Up Agreement and the Supplemental Representations and Warranties Agreement
or any pledge agreement required to be executed thereunder, and subject to
federal and state securities laws, none of the Units, when delivered to Seller,
will be subject to any Encumbrance.
(3) At Closing, the REIT will have the full legal right,
power and authority to enter into the Registration Rights Agreement and the
Exchange Rights Agreement and to consummate the transactions contemplated
therein. The Registration Rights Agreement and the Exchange Rights Agreement
will be duly authorized by all necessary corporate action on the part of
and will constitute the valid and binding obligation of the REIT, enforceable in
accordance with its terms. Buyer will have the full right, power and authority
to enter into the Lock-Up Agreement and its execution will be duly authorized by
all necessary partnership action.
(4) The Partnership Agreement and any partnership amendment will
constitute valid and binding obligations of affiliates of the REIT who will be
partners therein, enforceable in accordance with their terms.
(5) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale and delivery by the Buyer of the Units, the valid authorization, issuance,
sale and delivery of any shares of Common Stock that may be issued by the REIT
upon any exchange of the Units, and the execution, delivery and performance of
the Registration Rights Agreement by the REIT (other than complying with
applicable securities laws and regulations), will have been made or obtained and
will be full force and effect.
(6) Neither the issuance or sale and delivery by Buyer of the Units,
nor the issuance, sale and delivery by REIT of any shares of Common Stock that
may be issued upon any exchange of the Units, nor the execution, delivery and
performance of the Registration Rights Agreement, will conflict with or result
in a breach or violation of any of the terms and provisions of, or (with or
without the giving of notice or passage of time or both) constitute a default
under the certificate of incorporation or by-laws of the REIT or the certificate
of limited partnership or the Partnership Agreement of Buyer; any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the REIT or Buyer is a party or to which any of them, any of
their respective properties or other assets or any hotel is subject; or any
applicable statute, judgment, decree, rule or regulation of any court or
governmental agency or body applicable to any of the foregoing or any of their
respective properties (other than compliance with the securities laws and
regulations); or result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the REIT or Buyer.
7. Further Assurances. The parties hereto will, at or prior to
the Closing, or at any time or from time to time thereafter, upon request of
either party, execute such additional instruments, documents or certificates as
either party deems reasonably necessary in order to effectuate the transactions
Distributions to the venturers of Broadmorr with respect to the fiscal
year of Broadmorr in which Closing occurs will be pro-rated between Seller and
Buyer on a per diem basis promptly following the close of such fiscal year and
the making of the final distribution with respect to such fiscal year by
Broadmorr. Buyer will be credited with the day of Closing, and will be entitled
to receive from Broadmorr all distributions made by it on and after the day of
Closing with respect to the Partnership Interest acquired by Buyer at Closing.
If either party has received distributions with respect to such fiscal year in
excess of such party's share determined on a per
diem basis, such party will pay such excess to the other promptly following the
close of such fiscal year and the determination of such excess.
9. Buyer's Default.
If Buyer defaults under this Agreement at or prior to Closing by
failing to complete Closing in accordance with the terms of this Agreement or in
any other respect, then on the date specified for Closing (or sooner in the
event of an anticipatory breach) Buyer's Purchase Option and Right of First
Offer with respect to the Partnership Interest shall terminate and Seller shall
have no further recourse against Buyer, provided, however, that if this
Agreement shall have resulted from the issuance by Seller of an Offer Notice and
the issuance by Buyer of an Acceptance Notice, then in addition to the
termination of Buyer's Purchase Option and Right of First Offer as to the
Partnership Interest, the liability of Buyer for default shall be the liability,
if any, specified in the Offer Notice.
10. Seller Default.
If Seller shall fail or be unable to perform in accordance with this
Agreement, then Buyer, shall have the right as its sole and exclusive remedies
to revoke the Exercise Notice or Acceptance Notice, or to obtain specific
performance of Seller's obligations hereunder and Seller expressly acknowledges
that its Partnership Interest is unique and that specific performance is an
appropriate remedy for Seller's default hereunder.
11. Fire or Other Casualty.
In the event that the Hotel shall be damaged or destroyed by fire,
vandalism or other casualty prior to the completion of Closing, Buyer may choose
to complete Closing hereunder or Buyer may withdraw its Acceptance Notice or
Exercise Notice. Following Buyer's Acceptance Notice or Exercise Notice, Seller
will cause Broadmorr to maintain in effect through Closing its policies of
property insurance with respect to the Hotel. Seller shall give Buyer written
notice of any such casualty within three (3) days after the occurrence thereof,
Buyer shall notify Seller of its election within ten (10) business days of
12. Preparation of Assignment.
The Assignment shall be prepared and, if necessary, recorded at the
expense of Buyer. At least ten (10) days prior to the Closing Date, Buyer shall
submit the Assignment to Seller.
13. Buyer's Right of Entry; Due Diligence Period.
(a) Buyer and Buyer's agents, consultants and representatives, shall
have the right, from time to time, after giving the Acceptance Notice or the
Exercise Notice, during usual business hours, to enter upon (with the approval
of Broadmorr, which approval Seller will use commercially reasonable efforts to
obtain, but Seller shall not be required to pay money or other consideration to
obtain such approvals except that Seller will pay normal fees and expenses of
counsel and such normal overhead costs as may be necessary) the Hotel for the
purpose of inspection, preparation of plans, making of test borings, taking of
measurements, making of surveys and generally for the reasonable ascertainment
of the condition of the Hotel; provided, however, that Buyer shall (i) give
Seller prior written notice of the time and place of such entry and permit a
representative of Seller to accompany Buyer; (ii) restore any or replace with
appropriate material any soil or other material removed during, such test
borings; (iii) indemnify, defend and save Seller harmless from and against any
and all liabilities which Seller may suffer by reason of such entry prior to
Closing; and (iv) not enter into any space leased to third parties or
communicate with any tenant without Seller's prior written consent. With
respect to environmental matters, at Buyer's sole option, such investigation may
include, without limitation, such testing of the soil, groundwater, building
components, tanks, containers and equipment at the Hotel, as applicable, as
Buyer or Buyer's agents, consultants or representatives shall deem necessary or
appropriate to confirm the condition of the Hotel and the compliance of the
operations conducted thereon.
(b) Prior to permitting any party to enter the Hotel prior to Closing
for the purpose of performing any services or supplying any materials for which
such party could claim a mechanic's lien against the Hotel or any part thereof,
Buyer shall cause to be delivered releases of mechanic's liens in form
reasonably satisfactory to Seller.
(c) At any time prior to sixty (60) days following the Exercise Notice
(the "Due Diligence Period"), Buyer may revoke its Exercise Notice by written
notice to Seller, whereupon the Purchase Option and the Right of First
Offer/Refusal will terminate as to the Partnership Interest. If this Agreement
shall have resulted from the issuance by Seller of an Offer Notice and the
issuance by Buyer of an Acceptance Notice, then the Due Diligence Period, if
any, and Buyer's termination right, if any, shall be as set forth in the Offer
Notice. Within fifteen (15) days following the Acceptance Notice or the
Exercise Notice (or such shorter time, if any, as may have been provided for in
the Offer Notice), Seller will furnish to Buyer the Rent Roll and copies of all
of the leases and agreements to lease (the "Leases"), service agreements (the
"Service Agreements"), the Courtyard by Marriott License Agreement (the "License
Agreement") and all plans, specifications, permits and approvals, architects'
contracts, construction contracts (collectively, the "Development Related
Agreements") then in effect with respect to the Hotel as of the date of the
Acceptance Notice or the Exercise Notice, together with a certificate
representing and warranting that there are no material inaccuracies in the Rent
Roll and that the copies of the Leases, Service Agreements, License Agreement
and Development Related Agreements are true, correct and complete.
If any part or parts of the Hotel shall be taken by the exercise of
the power of eminent domain, this Agreement shall continue in full force and
effect and there shall be no adjustment of the Purchase Price. With respect to
any such taking after the date of this Agreement, Seller shall furnish to Buyer
a copy of the declaration of taking promptly after Seller's receipt thereof.
Buyer shall notify Seller of its election within ten (10) business days of
15. Condition of the Hotel.
(a) The entire agreement between Seller and Buyer with respect to the
Partnership Interest and the sale thereof is expressly set forth in this
Agreement, and the parties are not bound by any agreement, understandings,
provisions, conditions, representations or warranties other than as are
expressly set forth in this Agreement. Without in any manner limiting the
generality of the foregoing, Buyer acknowledges that at the expiration of the
Due Diligence Period, it and its representatives will have fully inspected the
Hotel and the Service Agreements and the Leases, will then be fully familiar
with the physical and financial condition thereof, and that the Partnership
Interest shall have been purchased by Buyer in an "as is" and "where is"
condition as a result of such inspection and investigations and not in reliance
on any agreement, understanding, condition, warranty or representation made by
Seller or any agent or employee of Seller (except as expressly elsewhere
provided in this Agreement) as to the condition thereof, as to any permitted use
thereof, or as to the income or expense in connection therewith, or as to any
other matter in connection therewith; and Buyer further acknowledges that no
Seller nor any party acting on behalf of Seller has made or shall be deemed to
have made any such agreement, condition, representation or warranty, except as
expressly set forth in this Agreement.
(b) Between the date of the Exercise Notice or the Acceptance Notice
and the Closing, Seller shall cause Broadmorr to make all repairs to the Hotel
required to maintain them in the same condition as they are as of the date of
the Acceptance Notice or the Exercise Notice, as said condition shall be changed
by wear and tear, eminent domain, damage by fire or other casualty, or
16. Buyer's Indemnity.
Subject to the limitation on liability set forth herein, Buyer agrees
to indemnify, defend (with counsel mutually acceptable to Buyer and Seller) and
hold Seller harmless against and with respect to the following:
(a) any loss or damage to Seller, subsequent to the Closing Date,
resulting from any inaccuracy in or breach of any representation or warranty of
Buyer or resulting from any breach or default by Buyer of any obligation of
Buyer under this Agreement or from liabilities incurred by Buyer, or the Hotel
after the Closing; and
(b) all costs and expenses, including reasonable attorneys' fees,
related to any actions, suits or judgments incident to any of the foregoing.
The provisions of this Section shall survive Closing.
17. Limitation on Liability.
The parties acknowledge that this Agreement and all documents, agreements,
understandings and arrangements relating to the transactions contemplated by
this Agreement to be executed or undertaken by Buyer which have been executed by
one or more officers of its general partner have been or will be so executed in
his/her capacity as an officer of its general partner, and not individually, and
none of the partners, officers or employees of Buyer nor any of the directors,
officers, shareholders or employees of its general partner or the REIT (in their
capacities as directors, officers, shareholders or employees of such
corporation) shall be bound or have any personal liability hereunder or
thereunder except as shall arise from the gross negligence or willful misconduct
thereof. Seller shall look solely to the assets of Buyer for satisfaction of any
liability of Buyer in respect of this Agreement and all documents, agreements,
understandings and arrangements relating to this transaction and will not seek
recourse or commence any action against any of the partners, officers or
employees of Buyer nor any of the director, officers, shareholders or employees
of the REIT or any of their personal assets for the performance or payment of
any obligation hereunder or thereunder except as shall arise from the gross
negligence or wilful misconduct thereof.
18. Seller's Indemnity.
Subject to the limitation on liability set forth in Section 5(g) hereof,
Seller agrees to indemnify, defend (with counsel mutually acceptable to Buyer
and Seller) and hold Buyer harmless against and with respect to any loss or
damage to Buyer subsequent to the Closing Date, resulting from any inaccuracy in
or breach of any representation or warranty of Seller or resulting from any
breach or default by Seller of any obligation of such Seller under this
Agreement, as well as all costs and expenses, including reasonable attorneys'
fees, related to any actions, suits or judgments incident to any of the
foregoing. The provisions of this Section survive Closing.
19. Notice of Claims.
Seller and Buyer, as applicable, shall promptly notify the other in the
event any claim is made against Seller or Buyer as to which the other party has
agreed to indemnify and the indemnitor shall thereupon undertake to defend and
hold the indemnitee harmless therefrom. This provision shall survive Closing.
Name of Seller Partnership Interest
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BROADWAY MORRISON LIMITED PARTNERSHIP 50%
Address of Seller
c/o Virtual Hospitality, Inc.
3860 W. Northwest Highway, Suite 300
Dallas, TX 75220
Attn: Bruce G. Wiles
Tax Identification Number