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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) SEPTEMBER 9, 1997
AMERICAN GENERAL HOSPITALITY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MARYLAND 1-11903 75-2648842
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5605 MACARTHUR BLVD., SUITE 1200, IRVING, TEXAS 75038
(Address of principal executive offices) (Zip Code)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 550-6800
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ITEM 5. OTHER EVENTS
American General Hospitality Corporation (the "Registrant" or "Company"), on
September 9, 1997, entered into agreements for the sale of 2,671,705 shares of
common stock to various institutional investors advised by ABKB/LaSalle
Securities Limited Partnership and/or LaSalle Advisors Limited Partnership. The
agreement provides that 688,837 fully registered shares of common stock will be
sold at a price per share of $26.131 and 1,982,868 privately placed shares of
common stock will be sold at a price per share of $25.216. Gross proceeds from
the sale will total approximately $68 million. The sale of the shares is
scheduled to occur over time through January 31, 1998, at the option of the
Company, subject to the satisfaction of certain conditions, with an initial
required draw of $10 million to occur no later than October 16, 1997.
The Company may use the proceeds from the placement for repayment of debt or to
fund acquisitions or for the renovation of certain hotels.
ABKB/LaSalle Securities, Inc. is a leading institutional investor in real estate
securities, managing more than $2.5 billion in equity investments in public and
private companies. It is an affiliate of LaSalle Partners, a global real estate
investor and manager with more than $15 billion in real estate assets under
management, and offices in North America, Europe and Asia.
Smith Barney acted as an advisor to the Company in the transaction.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) The following are filed as Exhibits to this Report.
Exhibit No. Description
- ----------- -----------
2.1* Common Stock Purchase Agreement for 688,837 shares of common stock by
and between American General Hospitality Corporation, ABKB/LaSalle
Securities Limited Partnership, as agent for and for the benefit of
certain clients, dated September 9, 1997.
2.2* Common Stock Purchase Agreement for 1,982,868 shares of common stock by
and between American General Hospitality Corporation, ABKB/LaSalle
Securities Limited Partnership and LaSalle Advisors Limited
Partnership, as agent for and for the benefit of certain clients, dated
September 9, 1997.
*The Schedules and Exhibits have been omitted from this filing. The Registrant
agrees to supplementally provide the Securities and Exchange Commission with a
copy of such Schedules and Exhibits upon request.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 7, 1997
American General Hospitality Corporation
(Registrant)
By: /s/ KENNETH E. BARR
--------------------------------------
Kenneth E. Barr
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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COMMON STOCK PURCHASE AGREEMENT
688,837 SHARES OF COMMON STOCK
OF
AMERICAN GENERAL HOSPITALITY CORPORATION
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TABLE OF CONTENTS
PAGE
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I. PURCHASE AND SALE OF STOCK......................................... 1
1.1. Sale and Issuance of Common Stock ........................ 1
1.2. Closing................................................... 1
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................... 2
2.1. Registration of Common Stock.............................. 2
2.2. Organization, Good Standing and Qualification............. 3
2.3. Capitalization............................................ 4
2.4. Authorization; Enforcement................................ 5
2.5. Valid Issuance of Shares.................................. 5
2.6. Compliance with Other Instruments......................... 6
2.7. SEC Documents; Financial Statements; Other Information.... 6
2.8. Litigation................................................ 7
2.9. Title to Properties; Leasehold Interests.................. 7
2.10. Environmental Compliance.................................. 8
2.11. Taxes..................................................... 9
2.12. Employees; ERISA.......................................... 10
2.13. Legal Compliance.......................................... 10
2.14. Accountants............................................... 10
2.15. Insurance................................................. 11
2.16. Operating Partnership..................................... 11
2.17. Approval Rights........................................... 11
2.18. Investment Company........................................ 12
2.19. Cuba...................................................... 12
2.20. Affiliate Status.......................................... 12
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................... 12
3.1. Authorization............................................. 12
3.2. Enforcement............................................... 13
3.3. Approval; Consents........................................ 13
3.4. Current Holdings.......................................... 13
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS
AT CLOSING........................................................ 13
4.1. Representations and Warranties............................ 13
4.2. Performance............................................... 13
4.3. Compliance Certificate.................................... 14
4.4. Opinions of Company Counsel............................... 14
4.5. NYSE Listing.............................................. 14
4.6. No Material Change........................................ 14
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4.7. No Stop Order............................................. 14
4.8. Agreement with Steven Jorns and Bruce Wiles............... 14
4.9. Key Employees............................................. 15
4.10. Hart-Scott-Rodino Antitrust Improvement Act of 1976....... 15
V. CONDITIONS OF COMPANY'S OBLIGATIONS AT CLOSING.................... 15
5.1. Representations and Warranties............................ 15
5.2. Performance............................................... 15
5.3. Compliance Certificate.................................... 15
5.4. Hart-Scott-Rodino Antitrust Improvement Act of 1976....... 16
5.5. NYSE Listing.............................................. 16
VI. COVENANTS......................................................... 16
6.1. Opinion of Company Counsel for REIT Status................ 16
6.2. Stop Orders............................................... 16
6.3. Use of Proceeds........................................... 17
6.4. Confidentiality........................................... 17
6.5. Future Offerings.......................................... 17
6.6. Registration Rights....................................... 18
6.7. Hart-Scott-Rodino Antitrust Improvement Act of 1976....... 18
6.8. Preemptive Rights......................................... 18
VII. INDEMNIFICATION................................................... 18
7.1. Indemnification by Investor and the Company............... 18
7.2. Third-Party Claims........................................ 19
7.3. Survival.................................................. 20
VIII.MISCELLANEOUS..................................................... 20
8.1. Survival of Warranties................................... 20
8.2. Successors and Assigns................................... 20
8.3. Governing Law............................................ 20
8.4. Counterparts............................................. 20
8.5. Titles and Subtitles..................................... 20
8.6. Notices.................................................. 21
8.7. No Finder's Fees......................................... 21
8.8. Expenses................................................. 22
8.9. Amendments and Waivers................................... 22
8.10. Severability............................................. 22
8.11. Entire Agreement......................................... 22
8.12. Knowledge................................................ 23
8.13. Schedules................................................ 23
8.14. Cross-Default............................................ 23
Exhibit A.............................................................. 25
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this
9th day of September, 1997, by and between American General Hospitality
Corporation, a Maryland corporation (the "Company"), and ABKB/LaSalle Securities
Limited Partnership, a registered investment adviser (the "Investor"), as agent
for and for the benefit of certain clients (each a "Pecuniary Owner," and
collectively, the "Pecuniary Owners") listed on Exhibit A attached hereto.
THE PARTIES HEREBY AGREE AS FOLLOWS:
I. PURCHASE AND SALE OF STOCK.
1.1. SALE AND ISSUANCE OF COMMON STOCK.
Subject to the terms and conditions of this Agreement, the Investor agrees
to purchase at the Closing Date (as defined below), and the Company agrees to
sell and issue to the Investor on behalf of the Pecuniary Owners at the Closing
Date (as defined below), 688,837 fully registered shares (the "Shares") of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"), for an
aggregate purchase price of $17,999,999.65 (the "Purchase Price") based upon a
per-share price of $26.131 (the "Price").
1.2. CLOSING.
The transactions contemplated by this Agreement shall be funded from time
to time (each, a "Closing"), but in no event shall the combined funding for each
Closing contemplated by this Agreement and that certain Common Stock Purchase
Agreement, dated September 9, 1997 (the "Private Placement Agreement"), between
the same signatories hereto (the "Combined Funding"), be funded in increments of
less than $15 million, subsequent to an initial $10 million Combined Funding,
which will occur upon ten (10) days' prior written notice from the Company, but
in any event, on or before October 16, 1997 (the "First Funding Date"). The
first Closing shall occur no later than October 16, 1997. The entire commitment
for the Combined Funding must be drawn prior to January 31, 1998, subject to an
extension to March 31, 1998, at the Investor's discretion. Each Closing
described in this Agreement and each Closing described in the Private Placement
Agreement shall occur simultaneously on a pro rata basis determined with respect
to the aggregate funding commitments under the Private Placement Agreement and
this Agreement. In such event, or in the event that the Investor is terminated
as investment manager under the Private Placement Agreement, the Combined
Funding amount of each subsequent Closing shall be adjusted accordingly. In the
event the Investor is terminated as investment manager by a Pecuniary Owner and
neither the Investor nor any of its affiliates is reengaged as investment
manager by the Pecuniary Owner for at least one (1) year, there shall not be any
obligation to fund that Pecuniary Owner's pro rata amount.
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The Closing will be handled through Depository Trust Company ("DTC") in the
same manner it generally would be handled for the trading of registered
securities, with the names and denominations representing the shares of Common
Stock to be sold to the Investor hereunder to be set forth on Exhibit A. The
date for Closing (each, a "Closing Date") shall be within ten (10) days
following written notice from the Company that all of the conditions set forth
in Section 4 of this Agreement have been fulfilled, but in no event later than
January 31, 1998, subject to an extension to March 31, 1998, at Investor's
discretion.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the representations and warranties set forth below
to the Investor and the Pecuniary Owners.
2.1. REGISTRATION OF COMMON STOCK.
(a) A registration statement on Form S-3 (File No. 333-33007) with respect
to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed with
the Commission under the Securities Act. The Company has complied with the
conditions for the use of Form S-3. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses contained therein
and the exhibits, financial statements and schedules, as finally amended and
revised, have heretofore been delivered by the Company to you. Such registration
statement, herein referred to as the "Registration Statement," has been declared
effective by the Commission under the Securities Act and no post-effective
amendment to the Registration Statement has been filed as of the date of this
Agreement. The prospectus constituting a part of the Registration Statement and
the prospectus supplement relating to the offering of the Common Stock (the
"Prospectus Supplement"), including all documents incorporated by reference
therein, as from time to time amended or supplemented pursuant to the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise, are collectively referred to herein as the "Prospectus." Any
reference herein to the Registration Statement, any Prospectus or the Prospectus
Supplement shall be deemed to refer to and include the documents incorporated by
reference therein, as of the date of such Registration Statement, Prospectus or
Prospectus Supplement, as the case may be, and, in the case of any reference
herein to any Prospectus or Prospectus Supplement, also shall be deemed to
include any documents incorporated by reference therein, and any supplements or
amendments relating to the Common Stock being issued and sold pursuant hereto,
filed with the Commission after the date of filing of the Prospectus under Rule
424(b), and prior to the Closing Date.
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(b) The Commission has not issued an order preventing or suspending the use
of any Prospectus relating to the proposed offering of the Common Stock nor
instituted proceedings for that purpose. The Registration Statement and the
Prospectus and any amendments or supplements thereto comply, or will comply, in
all respects with the requirements of the Securities Act and the Rules and
Regulations. The documents incorporated by reference in the Prospectus, at the
time they were filed or will be filed with the Commission, complied or will
comply at the time of filing, in all material respects to the requirements of
the Exchange Act or the Securities Act, as applicable, and the Rules and
Regulations of the Commission thereunder. Neither the Registration Statement
nor any amendment thereto, and neither the Prospectus nor any supplement
thereto, including any documents incorporated by reference therein, contains or
will contain, as the case may be, any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended or supplemented, there has not been
any material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or the funds from operations, business affairs, management or business
prospects of the Company, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into by the
Company other than transactions in the ordinary course of business and changes
and transactions contemplated by the Registration Statement, as it may be
amended or supplemented. The Company has no material contingent obligations
which are not disclosed in the Registration Statement, as it may be amended or
supplemented.
2.2. ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with full
corporate power and authority to own its properties and conduct its business as
now being conducted, and has been duly qualified as a foreign corporation for
the conduct of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business so
as to require such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the operations, assets, business, affairs, properties
or financial or other condition of the Company and its Subsidiaries (as defined
below) taken as a whole.
(b) Each "significant subsidiary" (as such term is defined in Rule 1-02 of
Regulation S-X) of the Company (each a "Subsidiary," and collectively, the
"Subsidiaries") is listed on Schedule 2.2 hereto. Each Subsidiary is a
corporation, limited partnership, limited liability company or trust, as the
case may be, duly
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organized or formed and validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation. Each Subsidiary has the power
and authority (corporate and other) to conduct its businesses as now being
conducted, and each Subsidiary has been duly qualified as a foreign corporation
for the conduct of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. All of the outstanding capital stock,
partnership interests, limited liability company membership interests or trust
beneficial interests, as the case may be, issued by the Subsidiaries or created
by agreements to which the Subsidiaries are parties (i) have been duly and
validly issued or created (and in the case of capital stock are fully paid and
nonassessable) and (ii) are owned or held, directly or indirectly by the Company
in the percentage amounts set forth on Schedule 2.2 hereto free and clear of any
security interest, lien, adverse claim, equity or other encumbrance (each of the
foregoing, a "Lien") except for Liens disclosed in the SEC Documents (as defined
below) or incurred in the ordinary course of business since the date of the
Company's last Quarterly Report on Form 10-Q prior to the date hereof.
(c) References to the Company in the representations and warranties shall
be deemed to include each Subsidiary unless the context otherwise requires.
2.3. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock (the
"Capital Stock") of the Company consists of 100,000,000 shares currently
classified as Common Stock, par value $0.01 (the "Common Stock"), of which
14,770,110 shares are issued and outstanding. All of such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date of this Agreement, no shares of Capital Stock are
entitled to preemptive rights. Except as disclosed in the SEC Documents (as
defined below) or as set forth in Schedule 2.3(b), there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of Capital Stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Capital Stock of
the Company or any Subsidiary. The Company has furnished to the Investor true
and correct copies of the Company's Amended and Restated Articles of
Incorporation, as amended as of the date hereof (the "Charter") and the
Company's Bylaws, as in effect on the date hereof (the "Bylaws").
(c) As of the date of this Agreement, the Company has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof, other than as required by the Real Estate
Investment Trust provisions of the Internal Revenue Code.
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(d) The Company has no knowledge of any voting agreements, voting trusts,
stockholders' agreements, proxies or other agreements or understandings that are
currently in effect or that are currently contemplated with respect to the
voting of any capital stock of the Company.
(e) All of the outstanding securities of the Company were issued in
compliance with all applicable federal and state securities laws.
2.4. AUTHORIZATION; ENFORCEMENT.
(a) The Company has the requisite corporate power and authority to enter
into and perform this Agreement and to issue the Common Stock in accordance with
the terms hereof. Except for the Ownership Limit and the Look-Through Ownership
Limit (as such terms are defined in the Charter), the Charter does not in any
way prevent or restrict the transactions contemplated hereby or preclude the
Investor, acting as agent on behalf of the Pecuniary Owners, or the Pecuniary
Owners from owning or holding the amount, value or class of Capital Stock to be
purchased hereby.
(b) The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required.
(c) This Agreement has been duly executed and delivered by the Company.
(d) This Agreement constitutes the legal, valid and binding obligation of
the Company enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.5. VALID ISSUANCE OF SHARES.
The Shares which are being purchased by the Investor hereunder, when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws and stock exchange requirements.
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2.6. COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby do
not (i) result in a violation of the Charter or Bylaws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Company, any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect or materially impair the Company's ability to perform its
obligations under this Agreement). Other than in connection with the listing of
the Common Stock with the New York Stock Exchange (the "NYSE") and filings
required in connection with the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), if applicable, no governmental license, permit
or authorization, and no registration, declaration or filing with any
governmental authority or regulatory agency by the Company or any of its
affiliates is required in connection with the execution, delivery and
performance of this Agreement and the performance of the transactions
contemplated by this Agreement by the Company or any of its affiliates.
2.7. SEC DOCUMENTS; FINANCIAL STATEMENTS; OTHER INFORMATION.
(a) Since the completion of the Company's initial public offering on July
31, 1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Commission pursuant to
the reporting requirements of Section 13 of the Exchange Act (all of the
foregoing filed prior to the date hereof being hereinafter referred to as the
"SEC Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents (when read together with all exhibits
included therein and financial statement schedules thereto and documents (other
than exhibits) incorporated by reference) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. The financial statements
of the Company included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or
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summary statements) and fairly present in all material respects the consolidated
financial position of the Company and the Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(b) Since June 30, 1997, (i) the business of the Company has been
conducted in the ordinary course and (ii) there has been no Material Adverse
Effect on the Company and its Subsidiaries taken as a whole that has not been
described in the SEC Documents. As of the Closing Date and as of the date
hereof, there are no material liabilities of the Company which would be required
to be provided for in a consolidated balance sheet of the Company as of either
such date prepared in accordance with generally accepted accounting principles
consistently applied, other than liabilities incurred in connection with the
acquisition of real estate assets or hotels or related improvements to such
hotels or real estate assets in the ordinary course of business.
(c) As of the date hereof, the Company is not aware of any material
liabilities, contingent or otherwise, of the Company that have not been
disclosed in the financial statements (including the notes thereto) referred to
above or otherwise disclosed in the SEC Documents or other items provided to the
Investor.
2.8. LITIGATION.
Except as set forth on Schedule 2.8 or in the SEC Documents, there is no
action, suit, proceeding, investigation or claim pending against the Company or,
to the knowledge of the Company, threatened against the Company in law, equity
or otherwise before any federal, state, municipal or local court, administrative
agency, commission, board, bureau, instrumentality or arbitrator which either
(a) questions the validity of this Agreement or the Common Stock or any action
taken or to be taken pursuant hereto or thereto, or (b) may adversely affect the
right, title or interest of the Investor to the Common Stock or (c), if decided
adversely to the Company, may individually or in the aggregate have a Material
Adverse Effect. The Company is not aware of facts or circumstances that could
give rise to a legal action that, if determined adversely, would have a Material
Adverse Effect. There is no action or suit by the Company pending or threatened
against others except litigation in the ordinary course of business, none of
which individually or in the aggregate will result in a Material Adverse Effect.
2.9. TITLE TO PROPERTIES; LEASEHOLD INTERESTS.
Except as disclosed in the SEC Documents, the Company and its Subsidiaries
have good and marketable title to each of the properties and assets owned by
them. Certain real property used by the Company and its Subsidiaries in the
conduct of their business is held under lease, and the Company is not aware of
any pending or threatened claim or action by any lessor of any such property to
terminate any such lease. None of the properties owned or leased by the Company
and its subsidiaries is
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subject to any liens, other than in the ordinary course of business or, which,
taken as a whole, could reasonably be expected to have a Material Adverse
Effect. "Lien," in this Section 2.9 only, means a mortgage, lien (statutory or
otherwise), charge, pledge, hypothecation, adverse claim, or other security
interest or encumbrance on any interest or title of the Company or its
subsidiaries with respect to any property or asset of such person. Each lease or
agreement to which the Company is a party under which it is the lessee of any
property, real or personal, is a valid and subsisting agreement without any
material default of the Company thereunder and, to the best of the Company's
knowledge, without any material default thereunder of any other party thereto.
No event has occurred and is continuing which, with due notice or lapse of time
or both, would constitute a default or event of default by the Company under any
such lease or agreement or, to the best of the Company's knowledge, by any party
thereto, except for such defaults that would not individually or in the
aggregate have a Material Adverse Effect. The Company's possession of such
property has not been disturbed and, to the best of the Company's knowledge, no
claim has been asserted against it adverse to its rights in such leasehold
interests that would have a Material Adverse Effect.
2.10. ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed and described in all material respects in the SEC
Documents or on Schedule 2.10 hereto, there is no hazardous material about or in
any property, real or personal, in which the Company has any interest, in
violation of law in a manner which could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed and described in the SEC Documents or on Schedule
2.10 hereto, there is no (and has not been any) off-site disposal or on-site
disposal by the Company, or to the best knowledge of the Company by any prior
owner, operator, tenant, subtenant, or invitee at any locations currently or
formerly owned or occupied by the Company as a result of which disposal there
would exist a reasonably foreseeable risk that the Company would incur a
material liability or obligation under federal, state or local environmental or
other laws, regulations or ordinances which could reasonably be expected to have
a Material Adverse Effect.
(c) Except as disclosed and described in all material respects in the SEC
documents or on Schedule 2.10 hereto, neither the Company nor, to the knowledge
of the Company, any prior or present owner, operator, tenant, subtenant or
invitee of any of the real property (including improvements) currently or
formerly owned or occupied by the Company has (i) used, installed, stored,
spilled, released, transported, disposed of or discharged any hazardous material
upon, into, beneath, from or affecting such real property (including
improvements) in violation of law in a manner which could reasonably be expected
to have a Material Adverse Effect, or (ii) received any written notice,
citation, subpoena, summons, complaint or other correspondence or communication
from any person (as defined below) (not previously satisfactorily resolved) with
respect to the presence of hazardous material upon, into, beneath, or
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emanating from or affecting any of the real property (including improvements)
currently or formerly owned or occupied by the Company which could reasonably be
expected to have a Material Adverse Effect. Person, in this Section 2.10, means
an individual, partnership, corporation, limited liability company, trust or
unincorporated organization, or a government agency or political subdivision
thereof.
(d) Except as disclosed and described in all material respects on Schedule
2.10 hereto, there has been no intentional or unintentional, gradual or sudden,
release, disposal or discharge upon, into or beneath the real property
(including improvements) currently or formerly owned or occupied by the Company
or, to the best of the knowledge of the Company, by any prior owner, operator,
tenant, subtenant or invitee with respect thereto, that has caused or is causing
soil or ground water contamination which under applicable environmental laws,
regulations or ordinances could reasonably be expected to have a Material
Adverse Effect.
2.11. TAXES.
The Company has filed all Federal, state, local and other tax returns and
reports (except for foreign returns and reports the failure to file which will
not result in any material liability to the Company), and any other material
returns and reports with any governmental authorities (Federal, state or local),
required to be filed by it. The Company has paid or caused to be paid all taxes
(including interest and penalties) that are due and payable, except those which
are being contested by it in good faith by appropriate proceedings and in
respect of which adequate reserves are being maintained on its books in
accordance with generally accepted accounting principles consistently applied.
The Company does not have any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which adequate
reserves are being maintained by it in accordance with generally accepted
accounting principles consistently applied. As of the date hereof, no Federal
and state income tax returns for the Company have been audited by the Internal
Revenue Service or state authorities. No deficiency assessment with respect to
or proposed adjustment of the Company's Federal, state, local or other tax
returns is pending or, to the best of the Company's knowledge, threatened which
could reasonably be expected to have a Material Adverse Effect. There is no
material tax lien, whether imposed by any Federal, state, local or other tax
authority outstanding against the assets, properties or business of the Company
which could reasonably be expected to have a Material Adverse Effect. There are
no applicable taxes, fees or other governmental charges payable by the Company
in connection with the execution and delivery of this Agreement or the issuance
by the Company of the Common Stock, except for governmental fees paid in
connection with securities law filings.
With respect to all tax periods regarding which the Internal Revenue
Service is or will be entitled to assert any claim, the Company has met the
requirements for qualification as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code, as amended, and the Company's
present and contemplated operations, assets and income continue to meet such
requirements.
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2.12. EMPLOYEES; ERISA.
The Company has good relationships with its employees and has not had any
substantial labor problems. As of the date hereof, no key employee has left the
employ of the Company, and the Company does not have any knowledge of any
intentions of any key employee or any group of employees to leave the employ of
the Company. Other than as disclosed in the SEC Documents or on Schedule 2.12,
the Company has not established, sponsored, maintained, made any contributions
to or been obligated by law to establish, maintain, sponsor or make any
contributions to any "employee pension benefit plan" or "employee welfare
benefit plan" (as such terms are defined in ERISA), including, without
limitation, any "multi-employer plan." The Company has complied in all material
respects with all applicable laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and the payment of Social Security and other taxes, and with ERISA, other than
such non-compliance as would not have a Material Adverse Effect.
2.13. LEGAL COMPLIANCE.
(a) The Company has complied with all applicable laws, rules, regulations,
orders, licenses, judgments, writs, injunctions, decrees or demands, except to
the extent that failure to comply would not have a Material Adverse Effect. The
Company has all necessary permits, licenses and other authorizations required to
conduct its business as currently conducted, and as proposed to be conducted, in
all material respects, other than such authorizations the failure to obtain of
which would not have a Material Adverse Effect.
(b) There are no adverse orders, judgments, writs, injunctions, decrees or
demands of any court or administrative body, domestic or foreign, or of any
other governmental agency or instrumentality, domestic or foreign, outstanding
against the Company which may result in a Material Adverse Effect.
(c) There is no existing law, rule, regulation or order, and the Company is
not aware of any proposed law, rule, regulation or order, which would prohibit
or materially restrict the Company from, or otherwise materially adversely
affect the Company in, conducting its business as now being conducted and as
proposed to be conducted.
2.14. ACCOUNTANTS.
Coopers & Lybrand, L.L.P. who has certified the financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), is an independent public
accountant with respect to the Company as required by the Securities Act.
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2.15. INSURANCE.
The Company and the Subsidiaries self insure or maintain insurance with
insurers of recognized financial responsibility against losses and risks and in
such amounts as are generally deemed adequate for their respective businesses
and consistent with coverage maintained by similar companies in the businesses
in which they are engaged; and neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew the coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
2.16. OPERATING PARTNERSHIP.
As of the date hereof, the Company indirectly owns an aggregate of
approximately 88.5% of the partnership interests in American General Hospitality
Operating Partnership, L.P., a Delaware limited partnership (the "Operating
Partnership"), free and clear of all Liens. A wholly-owned subsidiary of the
Company is the sole general partner of the Operating Partnership.
2.17. APPROVAL RIGHTS.
(a) The Company has the right to approve (which approval will not be
unreasonably withheld) the engagement by AGH Leasing, L.P. (the "Lessee") of any
operator of a hotel other than American General Hospitality, Inc. ("AGHI") or an
affiliate of AGHI. The Company has the right to approve the payment of
management fees to AGHI under the management agreements in excess of 3.5% of the
gross revenues of a particular hotel.
(b) The stockholders of AGHI have agreed, for so long as more than fifty
percent (50.0%) of the management agreements with respect to the hotels as of
July 31, 1996 remain in place, to grant to the Lessee or its designee a right of
first refusal to acquire, under certain circumstances, any stock of AGHI that is
proposed to be sold in a Change of Control Transaction (as defined below). The
Lessee has assigned this right to the Company. The Company intends to assign
this right to a designee. This right is subordinate to a right of first refusal
in favor of AGHI and the existing stockholders of AGHI set forth in AGHI's
existing stockholders' agreement. For this purpose, a Change of Control
Transaction means a sale of stock in AGHI that will result in the ability of a
person (other than a current stockholder of AGHI) and his or its controlled
affiliates to elect at least a majority of the Board of AGHI. A Change of
Control Transaction does not include (i) an underwritten public offering of
common stock of AGHI, (ii) the transfer of stock to a spouse of an AGHI
stockholder, (iii) the transfer of stock to a trust for the benefit of the
spouse and/or children of an AGHI
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stockholder, or (iv) the transfer of stock to any corporation or other entity of
which a stockholder controls at least fifty percent (50.0%) of the voting
interests. The stockholders of AGHI have also agreed to grant to the Lessee or
its designee, for so long as more than fifty percent (50.0%) of the management
agreements in effect at July 31, 1996, remain in place, a right of first offer
to acquire such stockholders' interests in AGHI prior to any proposed merger or
business combination transaction involving AGHI that would result in the
stockholders of AGHI or their affiliates holding less than twenty-five percent
(25.0%) of the interests in the surviving entity. The Lessee has assigned this
right to the Company, and the Company intends to assign this right to a
designee.
2.18. INVESTMENT COMPANY.
The Company and the Subsidiaries are not now, and after the sale of the
Common Stock to be sold hereunder and application of the net proceeds from such
sale as described in the Prospectus Supplement under the caption "Use of
Proceeds," none of them will be, an "investment company" or an entity controlled
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
2.19. CUBA.
The Company has complied with all provisions of Florida statutes Section
517.075 relating to issuers doing business with Cuba.
2.20. AFFILIATE STATUS.
Assuming that no relationship exists between the Investor and the Pecuniary
Owners on the one hand and the Company and its officers and directors on the
other, based solely upon the purchase of shares of Common Stock hereunder,
neither the Investor nor the Pecuniary Owners will be "affiliates" of the
Company as that term is defined in Securities Act Rule 144(a)(1) in accordance
with SEC rules and regulations as in effect on the date hereof.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor, as agent for and on behalf of the Pecuniary Owners, hereby
represents and warrants that:
3.1. AUTHORIZATION.
(a) The Investor has the requisite power and authority to enter into and
perform this Agreement on behalf of the Pecuniary Owners and to purchase the
Shares in accordance with the terms hereof.
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(b) The execution and delivery of this Agreement by the Investor as agent
for the Pecuniary Owners and the consummation by it of the transactions
contemplated hereby have been duly authorized, and no further consent or
authorization of the Investor or any Pecuniary Owner is required.
(c) This Agreement has been duly executed and delivered by the Investor.
3.2. ENFORCEMENT.
This Agreement constitutes the legal, valid and binding obligation of the
Investor and each Pecuniary Owner enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
3.3. APPROVAL; CONSENTS.
Except for the requirements of the HSR Act, if applicable, no consent,
authorization or waiver by or filing with any governmental agency or any other
person or entity not a party to this Agreement is required to be obtained or
made by Investor in connection with the execution or performance of this
Agreement or the taking of any action contemplated hereby.
3.4. CURRENT HOLDINGS.
As of the date hereof, Investor, on behalf of clients, "beneficially owns,"
as that term is defined in Rule 13d-3 under the Exchange Act, 323,800 shares of
Common Stock of the Company.
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING.
The Investor's obligations at each Closing under Section 1 of this
Agreement are subject to the fulfillment on or before each Closing of each of
the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section 2
shall be true on and as of each Closing Date with the same effect as though such
representations and warranties had been made on and as of such Closing Date.
4.2. PERFORMANCE.
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The Company shall have performed and complied in all material respects with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing Date.
4.3. COMPLIANCE CERTIFICATE.
The Chief Executive Officer of the Company shall have delivered to the
Investor at each Closing a certificate certifying that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled.
4.4. OPINIONS OF COMPANY COUNSEL.
The Investor shall have received from Battle Fowler LLP or Ballard Spahr
Andrews & Ingersoll, counsel for the Company, an opinion dated as of each
Closing Date, substantially in the form attached hereto as Schedule 4.4 and the
Opinion of Counsel described in Section 6.1 hereto. In rendering any such
opinion, such counsel may rely, as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company and
public officials. Such opinion may also include customary and reasonable
assumptions and qualifications that are acceptable to the Investor and its
counsel.
4.5. NYSE LISTING.
The shares of Common Stock being purchased hereunder shall have been
approved for listing on the NYSE upon official notice of issuance. If required
by the NYSE, at the Company's option, the Company may seek stockholder approval
in connection with the listing of the Common Stock with the NYSE, but in no
event shall the Company have any obligation to seek such stockholder approval.
The parties hereto agree that the Company shall not be in breach of this
Agreement if it decides not to obtain stockholder approval in order to list the
Common Stock with the NYSE.
4.6. NO MATERIAL CHANGE.
No event or change of circumstances shall have occurred and be continuing
at the time of disbursement of funds by the Investor which is likely to have a
Material Adverse Effect.
4.7. NO STOP ORDER.
No stop order suspending the effectiveness of the Registration Statement,
as amended from time to time, shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission.
4.8. AGREEMENT WITH STEVEN JORNS AND BRUCE WILES.
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The Company shall have delivered to the Investor an agreement of Steven
Jorns and Bruce Wiles to not sell their positions in AGHI and Lessee for a
period of three (3) years or for the period during which the Investor manages at
least 250,000 shares of Common Stock purchased under this Agreement and the
Private Placement Agreement, whichever is shorter, except (i) if the sale is in
conjunction with a sale of the Company and has been approved by the Board of
Directors and, if required by law, by the stockholders of the Company or (ii) in
the case of the death or transfer to a family member of Steven Jorns or Bruce
Wiles, as long as the transferees agree to be bound by the same restrictions.
4.9. KEY EMPLOYEES.
The Company shall have delivered to the Investor at the Closing a
certificate certifying that Steven Jorns, Bruce Wiles or Kenneth Barr have not
left the employ of the Company and that the Company has no knowledge that they
have the intent to leave the employ of the Company.
4.1. HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If applicable, the waiting period under the HSR Act shall have expired or
Investor and the Company shall have received notice from the FTC or the
Antitrust Division of the early termination thereof.
V. CONDITIONS OF COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment on or before the Closing Date of each of the
following conditions:
5.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investor, as agent for and on
behalf of the Pecuniary Owners, contained in Section 3 shall be true on and as
of each Closing Date with the same effect as though such representations and
warranties had been made on and as of each Closing Date.
5.2. PERFORMANCE.
The Investor shall have performed and complied in all material respects
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it or before the Closing Date.
5.3. COMPLIANCE CERTIFICATE.
The Investor shall deliver to the Company at the Closing a certificate
certifying that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled.
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5.4. HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If applicable, the waiting period under the HSR Act shall have expired or
Investor and the Company shall have received notice from the FTC or Antitrust
Division of the early termination thereof.
5.5. NYSE LISTING.
The shares of Common Stock being purchased hereunder shall have been
approved for listing on the NYSE upon official notice of issuance. If required
by the NYSE, at the Company's option, the Company may seek stockholder approval
in connection with the listing of the Common Stock with the NYSE, but in no
event shall the Company have any obligation to seek such stockholder approval.
The parties hereto agree that the Company shall not be in breach of this
Agreement if it decides not to obtain stockholder approval in order to list the
Common Stock with the NYSE.
VI. COVENANTS.
6.1. OPINION OF COMPANY COUNSEL FOR REIT STATUS.
(a) At or before the Closing, the Investor and the Pecuniary Owners shall
have received from Battle Fowler LLP, counsel for the Company (or such other
counsel as shall be reasonably acceptable to the Investor and the Pecuniary
Owners), an opinion that the Company should be classified as a "real estate
investment trust" under Section 856 of the Internal Revenue Code of 1986, as
amended (after giving effect to the investment contemplated by this Agreement).
Such opinion may include customary reasonable assumptions and qualifications and
counsel may rely upon certificates of responsible officers of the Company.
(b) The Company will use its commercially reasonable efforts to operate in
a manner which will not cause it to be classified other than as a real estate
investment trust in accordance with Section 6.1(a) above.
6.2. STOP ORDERS.
The Company will promptly advise the Company in writing of (i) any request
by the Commission for amendment of or a supplement to the Registration Statement
or the Prospectus, and (ii) any issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose. If at any time the Commission
shall issue a stop order suspending the effectiveness of the Registration
Statement, the Company will use its commercially reasonable best efforts to
obtain the withdrawal of such order as soon as possible.
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6.3. USE OF PROCEEDS.
The Company will contribute the net proceeds from the sale of the Common
Stock to American General Hospitality Operating Partnership, L.P. (the
"Operating Partnership"). The Company shall cause the Operating partnership to
contribute the net proceeds from the sale of the Common Stock to pay down a
credit line used for the acquisition, development or renovation of hotels and
related real estate of the character, quality and estimated investment returns
reasonably similar to those previously purchased by the Company.
6.4. CONFIDENTIALITY.
The parties to this Agreement will not disclose to any other party any
information about this Agreement, the transactions contemplated hereby, and the
parties hereto except as required by law or the rules of the New York Stock
Exchange, or with the prior written consent of the other party, which consent
will not be unreasonably withheld. Any public announcement of the commitment of
the Investor or the Pecuniary Owners hereunder must be approved by the Company
and the Investor (except as required by the NYSE or applicable law or
regulation). Such approval shall not be unreasonably withheld.
6.5. FUTURE OFFERINGS.
The Company will give prior written notice to the Investor of potential
offerings of the Capital Stock or any other equity security of the Company (an
"Offering"). Notwithstanding the foregoing, the Company shall not be obligated
to provide such notice prior to any public announcement of the Offering.
Exclusive of private equity offerings of securities and non-syndicated
underwritten registered equity offerings of capital stock of the Company such as
"spot offerings" or "ROCS offerings," until December 21, 2000, the Company shall
use commercially reasonable efforts to allow the Investor to participate in
syndicated underwritten registered equity offerings of the Company on the same
terms and conditions contemplated by that underwritten offering (except there
shall be no right to participate with respect to the exercise of the
underwriter's over-allotment option thereto) as necessary in order to allow the
Investors to maintain its percentage equity interest in the Company. The
foregoing shall be limited by the share ownership limitations of Company's
Charter and by necessary authorizations that may be imposed upon such issuance
to the Investors under the rules and regulations of the NYSE and in no event
shall the Company be required to obtain stockholder consent in order to list
such shares with the NYSE. In the event the Investor desires to substitute a
client who is not a Pecuniary Owner for one (1) or more of the Pecuniary Owners
in respect of any future offerings, the Investor shall be free to do so, subject
to any authorizations or consents that such substitution may require; provided,
however, that the Company shall not be required to obtain stockholder approval
or violate its Charter provisions in connection with the substitution.
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6.6. REGISTRATION RIGHTS.
Upon request of Investor, the Company agrees to include in that certain
shelf registration statement, defined and described in Section 6.4 of the
Private Placement Agreement, the Common Stock hereby purchased, subject to the
same terms, conditions and procedures described in Section 6.4 of such
agreement.
6.7. HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If required, the Company and Investor shall, as soon as practicable, file a
Notification and Report Form under the HSR Act with the FTC and the Antitrust
Division and shall use their best efforts to respond as promptly as practicable
to all inquiries received from the FTC or the Antitrust Division for additional
information or documentation.
6.8. PREEMPTIVE RIGHTS.
The Company agrees not to grant any preemptive rights without Investor's
consent prior to the time period in which the full commitment for the Combined
Funding has been drawn, which shall be prior to January 31, 1998, subject to an
extension to March 31, 1998, at the Investor's discretion, unless this Agreement
is otherwise terminated prior thereto.
VII. INDEMNIFICATION.
7.1. INDEMNIFICATION BY INVESTOR AND THE COMPANY.
(a) Subject to Sections 7.3 and 8.1, from and after any Closing Date,
Investor shall indemnify and hold harmless the Company, its successors and
assigns, from and against any and all damages, claims, losses, expenses, costs,
obligations, and liabilities, including liabilities for all reasonable
attorneys' fees and expenses (including attorney and expert fees and expenses
incurred to enforce the terms of this Agreement) (collectively, "Loss and
Expenses") suffered, directly or indirectly, by the Company by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by Investor in or pursuant to
this Agreement, or any certificates delivered pursuant to this Agreement, or
(ii) any failure by Investor or the Pecuniary Owners to perform or fulfill any
of its or their covenants or agreements set forth herein. Notwithstanding any
other provisions of this Agreement to the contrary, in no event shall Loss and
Expenses include a party's incidental or consequential damages.
(b) Subject to Sections 7.3 and 8.1, from and after any Closing Date, the
Company shall indemnify and hold harmless Investor, its successors and assigns,
from and against any and all Loss and Expenses, suffered directly or indirectly
by Investor by reason of, or arising out of, (i) any breach as of the date made
or deemed made or
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required to be true of any representation or warranty made by the Company in or
pursuant to this Agreement and any statements made in any certificate delivered
pursuant to this Agreement, or (ii) any failure by the Company to perform or
fulfill any of its covenants or agreements set forth herein. Notwithstanding any
other provision of this Agreement to the contrary, in no event shall Loss and
Expenses include a party's incidental or consequential damages. The damages for
breach by the Company of any of the representations and warranties, or any of
the covenants or agreements, shall be measured with respect to all of Investor's
purchases of Common Stock hereunder, but such measurement shall not in any event
include any shares of Company Stock that Investor may have purchased other than
from the Company.
(c) Notwithstanding the foregoing, the cumulative aggregate indemnity
obligation of each of Investor and the Pecuniary Owners, on the one hand, and
the Company on the other hand, under this Section 7.1 shall in no event exceed
the actual aggregate amount paid by Investor for the shares of Common Stock
purchased by it from the Company pursuant to this Agreement. Except with
respect to third-party claims being defended in good faith or claims for
indemnification with respect to which there exists a good faith dispute, the
indemnifying party shall satisfy its obligations hereunder within thirty (30)
days of receipt of a notice of claim under this Article 7.
7.2. THIRD-PARTY CLAIMS.
If a claim by a third party is made against an indemnified party and if
such indemnified party intends to seek indemnity with respect thereto under this
Section, such indemnified party shall promptly notify the indemnifying party in
writing of such claims setting forth such claims in reasonable detail; provided,
however, the foregoing notwithstanding, the failure of any indemnified party to
give any notice required to be given hereunder shall not affect such indemnified
party's right to indemnification hereunder except to the extent the indemnifying
party from whom such indemnity is sought shall have been prejudiced in its
ability to defend the claim or action for which such indemnification is sought
by reason of such failure. The indemnifying party shall have twenty (20) days
after receipt of such notice to undertake, through counsel of its own choosing
and at its own expense, the settlement or defense thereof, and the indemnified
party shall cooperate with it in connection therewith; provided, however, that
the indemnified party may participate in such settlement or defense through
counsel chosen by such indemnified party, provided that the fees and expenses of
such counsel shall be borne by such indemnified party. The indemnified party
shall not pay or settle any claim which the indemnifying party is contesting.
Notwithstanding the foregoing, the indemnified party shall have the right to pay
or settle any such claim, provided that in such event it shall waive any right
to indemnity therefor by the indemnifying party. If the indemnifying party does
not notify the indemnified party within twenty (20) days after the receipt of
the indemnified party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the indemnified party shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
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7.3. SURVIVAL.
The indemnity set forth in this Section 7 shall survive each Closing or any
termination of this Agreement and shall remain in effect for a period of (a)
with respect to a breach of a representation or warranty, for the period through
which such representation or warranty shall continue pursuant to Section 8.1
(including such period of time through which such representation or warranty
shall be extended until resolution of a claim with respect thereto) and (b) with
respect to a breach of a covenant or agreement referred to in Sections 2.3 and
2.4, forever.
VIII. MISCELLANEOUS.
8.1. SURVIVAL OF WARRANTIES.
The warranties, representations and covenants of the Company and the
Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement for a period of three (3) years
following the last Closing Date hereunder.
8.2. SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto, including the Pecuniary Owners.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto and the Pecuniary Owners or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
8.3. GOVERNING LAW.
This Agreement shall be governed by and construed under the internal laws
of the State of Maryland.
8.4. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
8.5. TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
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8.6. NOTICES.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given (a)
upon personal delivery to the party to be notified, (b) on the fifth business
day after deposit with the United States Post Office, by registered or certified
mail, postage prepaid, (c) on the next business day after dispatch via
nationally recognized overnight courier or (d) upon confirmation of transmission
by facsimile. Notices should be provided in accordance with this Section at the
following addresses or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties:
If to the Investor, to: With a copy to:
ABKB/LaSalle Securities Limited Partnership Piper & Marbury L.L.P.
100 East Pratt Street 36 South Charles Street
Baltimore, Maryland 21202 Baltimore, Maryland 21201
Attn: Stanley J. Kraska, Jr. Attn: Elizabeth Grieb, Esq.
Managing Director
If to the Company, to: With a copy to:
American General Hospitality Corporation Battle Fowler LLP
5605 MacArthur Boulevard 75 East 55th Street
Suite 1200 New York, New York 10022
Irving, Texas 75038 Attn: Peter M. Fass, Esq.
Attn: Steven D. Jorns
Chairman of the Board of Directors
Chief Executive Officer and President
8.7. NO FINDER'S FEES.
Each party represents that it neither is nor will be obligated for any
finders' fee or commission in connection with this transaction. The Investor
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless the Investor
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
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8.8. EXPENSES.
The Company shall pay all costs and expenses incident to the performance by
the Company of its obligations hereunder and pay the Investor's reasonable fees
and expenses, including but not limited to the fees and expenses of Piper &
Marbury L.L.P., incurred in connection with the transactions contemplated by
this Agreement, up to a maximum of $25,000 in the aggregate for transactions
contemplated by this Agreement and the Private Placement Agreement, except as
otherwise provided under Section 6.4 of the Private Placement Agreement. Any
expenses of the NYSE listing provided for under the Private Placement Agreement
shall be borne by the Company. If it is required by law for Investor to make a
filing under the HSR Act, with respect to this Agreement and the Private
Placement Agreement, the Company shall advance to Investor the amount of the fee
required with respect to Investor's filing, and the purchase price for the
Shares purchased hereunder and the Private Placement Agreement shall be
increased in the same amount. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
8.9. AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended, and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, including securities into which
such securities are convertible, each future holder of all such securities, and
the Company.
8.10. SEVERABILITY.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and
the balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.11. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein.
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<PAGE>
8.12. KNOWLEDGE.
As used herein, the "knowledge" of the Company, or any derivative thereof,
shall mean the actual knowledge, without independent investigation, of Steven D.
Jorns, Bruce G. Wiles, Kenneth E. Barr or Russ C. Valentine.
8.13. SCHEDULES.
With respect to each Closing, each Schedule previously delivered hereto
shall be updated to reflect the facts and circumstances which exist as of the
date of such subsequent Closing.
8.14. CROSS-DEFAULT.
A default of the terms and conditions under this Agreement, including
without limitation, representations, warranties and covenants, shall constitute
a default of the Private Placement Agreement.
[Remainder of Page Intentionally Left Blank]
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ABKB/LASALLE SECURITIES
LIMITED PARTNERSHIP
By: /s/ Keith R. Pauley
---------------------------------------
Keith R. Pauley
Managing Director
Address:
100 East Pratt Street, 20th Floor
Baltimore, Maryland 21202
Fax: (410) 347-0612
AMERICAN GENERAL HOSPITALITY
CORPORATION
By: /s/ Steven D. Jorns
---------------------------------------
Steven D. Jorns
Chairman of the Board of Directors,
Chief Executive Officer and President
Address:
5605 MacArthur Boulevard
Suite 1200
Irving, Texas 75038
Fax: (972) 550-6895
24
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EXHIBIT 2.2
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this
9th day of September, 1997, by and between American General Hospitality
Corporation, a Maryland corporation (the "Company"), ABKB/LaSalle Securities
Limited Partnership, a registered investment adviser, as to certain of its
clients, and LaSalle Advisors Limited Partnership, a registered investment
adviser, as to certain of its clients (collectively, the "Investor"), as agent
for and for the benefit of certain clients (each a "Pecuniary Owner," and
collectively, the "Pecuniary Owners") listed on Exhibit A attached hereto.
THE PARTIES HEREBY AGREE AS FOLLOWS:
I. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK.
Subject to the terms and conditions of this Agreement, the Investor agrees
to purchase on the Closing Date (as defined below), and the Company agrees to
sell and issue to the Investor on behalf of the Pecuniary Owners on the Closing
Date (as defined below), 1,982,868 shares of the Company's Common Stock, $0.01
par value per share (the "Common Stock"), at a per share price equal to $25.216
(the "Price"), for an aggregate price of $49,999,999.49.
1.2 CLOSING.
The transactions contemplated by this Agreement shall be funded from time
to time (each, a "Closing"), but in no event shall the combined funding for each
Closing contemplated by this Agreement and that certain Common Stock Purchase
Agreement, dated September 9, 1997 (the "Public Offering Agreement"), between
the signatories hereto (the "Combined Funding"), be funded in increments of less
than $15 million, subsequent to an initial $10 million Combined Funding, which
will occur upon ten (10) days' prior written notice from the Company, but in any
event, on or before October 16, 1997 (the "First Funding Date"). The first
Closing shall occur no later than October 16, 1997. The entire commitment for
the Combined Funding must be drawn prior to January 31, 1998, subject to an
extension to March 31, 1998 at the Investor's discretion. Each Closing
described in this Agreement and each Closing described in the Public Offering
Agreement shall occur simultaneously on a pro rata basis determined with respect
to aggregate funding commitments under the Public Offering Agreement and this
Agreement. In the event that the Investor is terminated as investment manager
by a Pecuniary Owner and neither the Investor nor any of its affiliates is
reengaged as investment manager by the Pecuniary Owner for at least one (1)
year, there shall not be any obligation to fund that Pecuniary Owner's pro rata
amount. In such event, or in the event that Investor is terminated as
investment manager under the Public Offering Agreement, the Combined Funding
amount of each subsequent Closing shall be adjusted accordingly.
<PAGE>
At the Closing, the Investor shall deliver to the Company a wire transfer
payable to the Company's order for the aggregate purchase price of the Common
Stock against delivery by the Company to the Investor of one (1) or more
certificates in the names and denominations set forth on Exhibit A, representing
the shares of Common Stock to be sold to the Investor hereunder. The date for
Closing (each, a "Closing Date") shall be within ten (10) days following written
notice from the Company that all of the conditions in Section 4 of this
Agreement have been fulfilled, but in no event later than January 31, 1998,
subject to an extension to March 31, 1998, at Investor's discretion.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the representations and warranties set forth below
to the Investor and the Pecuniary Owners.
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland with full
corporate power and authority to own its properties and conduct its business as
now being conducted, and has been duly qualified as a foreign corporation for
the conduct of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the operations, assets, business, affairs, properties
or financial or other condition of the Company and its subsidiaries taken as a
whole.
(b) As of the date hereof, the Company indirectly owns an aggregate of
87.22% of the units of limited partnership interests of American General
Hospitality Operating Partnership, L.P. (the "Operating Partnership"). Schedule
2.1(b) lists all of the Company's significant subsidiaries (as such term is
defined in Rule 1-02 of Regulation S-X) of the Company (each a "Subsidiary," and
collectively, the "Subsidiaries"). Each Subsidiary is a corporation, limited
partnership, limited liability company or trust, as the case may be, duly
organized or formed and validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation. Each Subsidiary has the power
and authority (corporate and other) to conduct its businesses as now being
conducted, and each Subsidiary has been duly qualified as a foreign corporation
for the conduct of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. All of the outstanding capital stock,
partnership interests, limited liability company membership interests or trust
beneficial interests, as the case may be, issued by the Subsidiaries or created
by agreements to which the Subsidiaries are parties (i) have been duly and
validly issued or created (and in the case of capital stock are fully paid and
nonassessable) and (ii) are owned or held, directly or indirectly by the Company
free and clear of any security interest, lien, adverse claim, equity or other
encumbrance (each of the foregoing, a "Lien") except for such Liens disclosed in
the SEC Documents (as defined below), or incurred in the ordinary course of
business since the date of the Company's last Quarterly Report on Form 10-Q
prior to the date hereof.
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2.2 CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock (the
"Capital Stock") of the Company consists of 100,000,000 million shares of Common
Stock, $0.01 par value per share, of which 14,770,110 shares are issued and
outstanding. All of such outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) As of the date of this Agreement, no shares of Capital Stock are
entitled to preemptive rights. Except as disclosed in the SEC Documents (as
defined below), as set forth in Schedule 2.2(b) or as issued in connection with
the acquisition of, and as consideration for, real estate assets acquired by the
Company, there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company or any of
its subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries.
The Company has furnished to the Investor true and correct copies of the
Company's Amended and Restated Articles of Incorporation, as amended as of the
date hereof (the "Articles"), and the Company's Bylaws, as in effect on the date
hereof (the "Bylaws").
(c) As of the date of this Agreement, the Company has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof, other than as required by the Real Estate
Investment Trust provisions of the Internal Revenue Code.
(d) The Company has no knowledge of any voting agreements, voting trusts,
stockholders' agreements, proxies or other agreements or understandings that are
currently in effect or that are currently contemplated with respect to the
voting of any capital stock of the Company.
(e) All of the outstanding securities of the Company were issued in
compliance in all material respects with all applicable federal and state
securities laws.
2.3 AUTHORIZATION; ENFORCEMENT.
(a) The Company has the requisite corporate power and authority to enter
into and perform this Agreement and to issue the Common Stock in accordance with
the terms hereof. Except for the Ownership Limit and the Look-Through Ownership
Limit (as such terms are defined in the Articles), the Articles do not in any
way prevent or restrict the transactions contemplated hereby or preclude the
Investor, acting as agent on behalf of the Pecuniary Owners, or the Pecuniary
Owners from owning or holding the amount, value or class of capital stock to be
purchased hereby.
(b) The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors, and no further consent or
authorization of the Company or its Board of Directors is required.
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<PAGE>
(c) This Agreement has been duly executed and delivered by the Company.
(d) This Agreement constitutes the legal, valid and binding obligation of
the Company enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.4 VALID ISSUANCE OF SHARES.
The Common Stock which is being purchased by the Investor hereunder, when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and, based upon the representations of the Investor in this
Agreement, will be issued in compliance with all applicable federal and state
securities laws.
2.5 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby do
not (i) result in a violation of the Articles or Bylaws or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Company, any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect or materially impair the Company's ability to perform its
obligations under this Agreement). Other than in connection with the listing of
the Common Stock with the NYSE and filings required in connection with the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if
applicable, no governmental license, permit or authorization, and no
registration, declaration or filing with any governmental authority or
regulatory agency by the Company or any of its affiliates is required in
connection with the execution, delivery and performance of this Agreement and
the performance of the transactions contemplated by this Agreement by the
Company or any of its affiliates.
2.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; OTHER INFORMATION.
(a) Since the completion of the Company's initial public offering on July
31, 1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of Section 13 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (all of the foregoing filed with the SEC being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none
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<PAGE>
of the SEC Documents (when read together with all exhibits included therein and
financial statement schedules thereto and documents (other than exhibits)
incorporated by reference) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year end
audit adjustments).
(b) Since June 30, 1997, (i) the business of the Company has been conducted
in the ordinary course and (ii) there has been no Material Adverse Effect on the
Company and its Subsidiaries taken as a whole that has not been described in the
SEC Documents or other items provided to the Investor. As of the Closing Date
and as of the date hereof, there are no material liabilities of the Company
which would be required to be provided for in a consolidated balance sheet of
the Company as of either such date prepared in accordance with generally
accepted accounting principles consistently applied, other than liabilities
incurred in connection with the acquisition of real estate assets or hotels or
related improvements to such hotels or real estate assets in the ordinary course
of business.
(c) As of the date hereof, the Company is not aware of any material
liabilities, contingent or otherwise, of the Company that have not been
disclosed in the financial statements (including the notes thereto) referred to
above or otherwise disclosed in the SEC Documents or other items provided to the
Investor.
2.7 LITIGATION.
Except as disclosed on Schedule 2.7 or in the SEC Documents, there is no
action, suit, proceeding, investigation or claim pending against the Company or,
to the knowledge of the Company, threatened against the Company in law, equity
or otherwise before any federal, state, municipal or local court, administrative
agency, commission, board, bureau, instrumentality or arbitrator which either
(a) questions the validity of this Agreement or the Common Stock or any action
taken or to be taken pursuant hereto or in relation thereto, or (b) may
adversely affect the right, title or interest of the Investor to the Common
Stock or (c) if decided adversely to the Company, may individually or in the
aggregate have a Material Adverse Effect. The Company is not aware of facts or
circumstances that could give rise to a legal action against the Company that,
if determined adversely, would have a Material Adverse Effect. There is no
action or suit by the Company pending or threatened against others except
litigation in the ordinary course of business, none of which individually or in
the aggregate will result in a Material Adverse Effect.
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2.8 TITLE TO PROPERTIES; LEASEHOLD INTERESTS.
(a) Except as disclosed in the SEC Documents, the Company or its
Subsidiaries have good and marketable title to each of the properties and assets
owned by them. Certain real property used by the Company or its Subsidiaries in
the conduct of its business is held under lease, and the Company is not aware of
any pending or threatened claim or action by any lessor of any such property to
terminate any such lease. None of the properties owned or leased by the Company
is subject to any Liens other than in the ordinary course of business which,
taken as a whole, could reasonably be expected to have a Material Adverse
Effect. "Lien," in this Section 2.8 only, means any mortgage, lien (statutory
or otherwise), charge, pledge, hypothecation, adverse claim, or other security
interest or encumbrance on any interest or title of the Company or its
Subsidiaries with respect to any property or asset of such person.
(b) Each lease or agreement to which the Company is a party under which it
is the lessee of any property, real or personal, is a valid and subsisting
agreement without any material default of the Company thereunder and, to the
best of the Company's knowledge, without any material default thereunder of any
other party thereto. No event has occurred and is continuing which, with due
notice or lapse of time or both, would constitute a default or event of default
by the Company under any such lease or agreement or, to the best of the
Company's knowledge, by any party thereto, except for such defaults that would
not individually or in the aggregate have a Material Adverse Effect. The
Company's possession of such property has not been disturbed and, to the best of
the Company's knowledge, no claim has been asserted against it adverse to its
rights in such leasehold interests that would have a Material Adverse Effect.
2.9 ENVIRONMENTAL COMPLIANCE.
(a) Except as disclosed and described in all material respects in the SEC
Documents or on Schedule 2.9(a) hereto, there is no hazardous material about or
in any property, real or personal, in which the Company has any interest, in
violation of law in a manner which could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed and described in all material respects in the SEC
Documents or on Schedule 2.9(b) hereto, there is no (and has not been any) off-
site disposal or on-site disposal by the Company, or to the best knowledge of
the Company by any prior owner operator, tenant, subtenant, or invitee at any
locations currently or formerly owned or occupied by the Company as a result of
which disposal there would exist a reasonably foreseeable risk that the Company
would incur a material liability or obligation under federal, state or local
environmental or other laws, regulations or ordinances which could reasonably be
expected to have a Material Adverse Effect.
(c) Except as disclosed and described in all material respects in the SEC
Documents or on Schedule 2.9(c) hereto, neither the Company nor, to the best of
the knowledge of the Company, any prior or present owner, operator, tenant,
subtenant or invitee of any of the real property (including improvements)
currently or formerly owned or occupied by the Company has (i) used, installed,
stored, spilled, released, transported, disposed of or discharged any hazardous
material upon, into, beneath, from or affecting such real property (including
improvements) in violation of
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<PAGE>
law in a manner which could reasonably be expected to have a Material Adverse
Effect, or (ii) received any written notice, citation, subpoena, summons,
complaint or other correspondence or communication from any Person, as defined
in Section 6.4.1 (not previously satisfactorily resolved) with respect to the
presence of hazardous material upon, into, beneath, or emanating from or
affecting any of the real property (including improvements) currently or
formerly owned or occupied by the Company, which could reasonably be expected to
have a Material Adverse Effect.
(d) Except as disclosed and described in all material respects in the SEC
Documents or on Schedule 2.9(d) hereto, there has been no intentional or
unintentional, gradual or sudden, release, disposal or discharge upon, into or
beneath the real property (including improvements) currently or formerly owned
or occupied by the Company or, to the best of the knowledge of the Company, by
any prior owner, operator, tenant, subtenant or invitee with respect thereto,
that has caused or is causing soil or ground water contamination which under
applicable environmental laws, regulations or ordinances could reasonably be
expected to have a Material Adverse Effect.
2.10 TAXES.
The Company has filed all Federal, state, local and other tax returns and
reports (except for foreign returns and reports the failure to file which will
not result in any material liability to the Company), and any other material
returns and reports with any governmental authorities (Federal, state or local),
required to be filed by it. The Company has paid or caused to be paid all taxes
(including interest and penalties) that are due and payable, except those which
are being contested by it in good faith by appropriate proceedings and in
respect of which adequate reserves are being maintained on its books in
accordance with generally accepted accounting principles consistently applied.
The Company does not have any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which adequate
reserves are being maintained by it in accordance with generally accepted
accounting principles consistently applied. As of the date hereof, no Federal
and state income tax returns for the Company have been audited by the Internal
Revenue Service or state authorities. No deficiency assessment with respect to
or proposed adjustment of the Company's Federal, state, local or other tax
returns is pending or, to the best of the Company's knowledge, threatened which
could reasonably be expected to have a Material Adverse Effect. There is no
material tax lien, whether imposed by any Federal, state, local or other tax
authority outstanding against the assets, properties or business of the Company
which could reasonably be expected to have a Material Adverse Effect. There are
no applicable taxes, fees or other governmental charges payable by the Company
in connection with the execution and delivery of this Agreement or the issuance
by the Company of the Common Stock, except for governmental fees paid in
connection with securities law filings.
2.11 EMPLOYEES; ERISA.
The Company has good relationships with its employees and has not had any
substantial labor problems. As of the date hereof, the Company does not have
any knowledge as to any key employee having left the employ of the Company or
any intentions of any key employee or any group of employees to leave the employ
of the Company. Other than as disclosed in the SEC Documents or, Schedule 2.11,
the Company has not established, sponsored, maintained, made any
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contributions to or been obligated by law to establish, maintain, sponsor or
make any contributions to any "employee pension benefit plan" or "employee
welfare benefit plan" (as such terms are defined in ERISA), including, without
limitation, any "multi-employer plan." The Company has complied in all material
respects with all applicable laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and the payment of Social Security and other taxes, and with ERISA, other than
such non-compliance as would not have a Material Adverse Effect.
2.12 LEGAL COMPLIANCE.
(a) The Company has complied with all applicable laws, rules, regulations,
orders, licenses, judgments, writs, injunctions, decrees or demands, except to
the extent that failure to comply would not have a Material Adverse Effect. The
Company has all necessary permits, licenses and other authorizations required to
conduct its business as currently conducted, and as proposed to be conducted, in
all material respects, other than such authorizations of which the failure to
obtain would not have a Material Adverse Effect.
(b) There are no adverse orders, judgments, writs, injunctions, decrees or
demands of any court or administrative body, domestic or foreign, or of any
other governmental agency or instrumentality, domestic or foreign, outstanding
against the Company which may result in a Material Adverse Effect.
(c) There is no existing law, rule, regulation or order, and the Company is
not aware of any proposed law, rule, regulation or order, which would prohibit
or materially restrict the Company from, or otherwise materially adversely
affect the Company in, conducting its business as now being conducted and as
proposed to be conducted.
2.13 APPROVAL RIGHTS.
(a) The Company has the right to approve (which approval will not be
unreasonably withheld) the engagement by AGH Leasing, L.P. (the "Lessee") of any
operator of a hotel other than American General Hospitality, Inc. ("AGHI") or an
affiliate of AGHI. The Company has the right to approve the payment of
management fees to AGHI under the management agreements in excess of 3.5% of the
gross revenues of a particular hotel.
(b) The stockholders of AGHI have agreed, for so long as more than fifty
percent (50.0%) of the management agreements with respect to the hotels as of
July 31, 1996 remain in place, to grant to the Lessee or its designee a right of
first refusal to acquire, under certain circumstances, any stock of AGHI that is
proposed to be sold in a Change of Control Transaction (as defined below). The
Lessee has assigned this right to the Company, and the Company intends to assign
this right to a designee. This right is subordinate to a right of first refusal
in favor of AGHI and the existing stockholders of AGHI set forth in AGHI's
existing stockholders' agreement. For this purpose, a Change of Control
Transaction means a sale of stock in AGHI that will result in the ability of a
person (other than a current stockholder of AGHI) and his or its controlled
affiliates to elect at least a majority of the Board of AGHI. A Change of
Control Transaction does not include (i) an
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underwritten public offering of common stock of AGHI, (ii) the transfer of stock
to a spouse of an AGHI stockholder, (iii) the transfer of stock to a trust for
the benefit of the spouse and/or children of an AGHI stockholder, or (iv) the
transfer of stock to any corporation or other entity of which a stockholder
controls at least fifty percent (50.0%) of the voting interests. The
stockholders of AGHI have also agreed to grant to the Lessee or its designee,
for so long as more than fifty percent (50.0%) of the management agreements in
effect at July 31, 1996, remain in place, a right of first offer to acquire such
stockholders' interests in AGHI prior to any proposed merger or business
combination transaction involving AGHI that would result in the stockholders of
AGHI or their affiliates holding less than twenty-five percent (25.0%) of the
interests in the surviving entity. The Lessee has assigned this right to the
Company, and the Company intends to assign this right to a designee.
2.14 CUBA.
The Company has complied with all provisions of Florida statutes Section
17.075 relating to issuers doing business with Cuba.
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III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor, as agent for and on behalf of the Pecuniary Owners, hereby
represents and warrants that:
3.1 AUTHORIZATION.
(a) The Investor has the requisite power and authority to enter into and
perform this Agreement on behalf of the Pecuniary Owners and to purchase the
Common Stock in accordance with the terms hereof.
(b) The execution and delivery of this Agreement by the Investor as agent
for the Pecuniary Owners and the consummation by it of the transactions
contemplated hereby have been duly authorized and no further consent or
authorization of the Investor or any Pecuniary Owner is required.
(c) This Agreement has been duly executed and delivered by the Investor.
3.2 ENFORCEMENT.
This Agreement constitutes the legal, valid and binding obligation of the
Investor and each Pecuniary Owner enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT; CURRENT HOLDINGS.
This Agreement is made with the Investor in reliance upon such Investor's
representation to the Company, which by such Investor's execution of this
Agreement such Investor hereby confirms, that the Common Stock will be acquired
for investment by the Investor as agent for and on behalf of the Pecuniary
Owners, for the Pecuniary Owners' own accounts, not as a nominee or agent for
any other party, and not with a view to the resale or distribution of any part
thereof, and that neither the Investor nor the Pecuniary Owners have any present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Investor further represents that
neither the Investor nor the Pecuniary Owners have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Common Stock. The Investor has been furnished access to such information and
documents as it has requested and it has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company concerning
the terms and conditions of this Agreement and the purchase of the Common Stock
contemplated hereby and the business and financial condition of the Company. As
of the date hereof, Investor on behalf of clients "beneficially owns", as that
term is defined in Rule 13d-3 under the Exchange Act, 323,800 shares of Common
Stock of the Company.
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3.4 INVESTMENT EXPERIENCE.
The Investor acknowledges that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Common Stock and that each Pecuniary Owner can
bear the economic risk of its investment.
3.5 ACCREDITED INVESTOR.
The Investor and each Pecuniary Owner is an "accredited investor" within the
meaning of SEC Rule 501 of Regulation D and a "qualified institutional buyer"
with the meaning of SEC Rule 144A, as presently in effect, and the Investor
represents that the purchase of the shares by each of them is made in the
ordinary course of business and is made solely for the purpose of investment.
3.6 RESTRICTED SECURITIES.
The Investor and each Pecuniary Owner understand that the Common Stock is
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, the Investor represents
that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act and is aware that SEC Rule
144 is not presently available for use by the Investor for resale of the Common
Stock.
3.7 FURTHER LIMITATIONS ON DISPOSITION.
Without in any way limiting the representations set forth above, the
Investor further agrees not to make any disposition of all or any portion of the
Securities unless:
(a) There is then in effect a Registration Statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) The Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition, including
the name of the proposed transferee(s) and a description thereof sufficient to
enable the Company to verify whether the transfer will comply with Sections 3.5
and 3.6 and with the transfer restrictions and ownership limitations in the
Articles, and (ii) the Investor shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company, that such disposition will
not require registration of such shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for transactions which are
shown to the Company's reasonable satisfaction as being made pursuant to and in
compliance with Rule 144; however, the Company's transfer agent may require such
opinions.
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3.8 LEGENDS.
It is understood that the certificates evidencing the Securities may bear
one or more of the following legends:
(a) "These securities have not been registered under the Securities Act of
1933, as amended (the "Act"), and have been issued pursuant to exemptions under
the Act and under applicable state securities laws. They may not be sold,
offered for sale, pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such Act or an opinion
of counsel satisfactory to the Company that such registration is not required
under the Act or under applicable state securities laws or unless sold pursuant
to and in compliance with Rule 144 of such Act."
The foregoing legend shall be removed from any such certificate at the
request of the holder thereof at such time as the shares represented thereby are
registered under the Act or become eligible for resale pursuant to Rule 144(k).
(b) "The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the information required by Section 2-211(b) of the
Corporations and Associations Articles of the Annotated Code of Maryland with
respect to the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption of the
stock of each class which the Corporation has authority to issue and, if the
Corporation is authorized to issue any preferred or special class in series, (i)
the differences in the relative rights and preferences of subsequent series. The
foregoing summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the charter of the Corporation (the
"Charter"), a copy of which will be sent without charge to each stockholder who
so requests. Such request must be made to the Secretary of the Corporation at
its principal office or to the Transfer Agent."
(c) "The shares of Common Stock represented by this certificate are subject
to restrictions on transfer for the purpose of the Corporation's maintenance of
its status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may (i) Beneficially Own or
Constructively own shares of Equity Stock in excess of 9.8% of the number of
outstanding shares of any class of Equity Stock (or, in the case of a Look-
Through Entity, in excess of 15% of the number of outstanding shares of any
class of Equity Stock), (ii) beneficially own shares of Equity Stock that would
result in the shares of Equity Stock being beneficially owned by fewer than 100
Persons (determined without reference to any rules of attribution), (iii)
Beneficially Own shares of Equity Stock that would result in the Corporation
being "closely held" under Section 856(h) of the Code, or (iv) Constructively
Own shares of Equity Stock that would cause the Corporation to Constructively
Own more than 9.9% or more of the ownership interests in a tenant of the
Corporation's, the Operating Partnership's or a Subsidiary's real property,
within the meaning of Section 856(d)(2) of the Code. Any person who attempts to
Beneficially Own or Constructively Own shares of Equity Stock in excess of the
above limitations must immediately notify the Corporation in writing. If the
restrictions above are violated, the shares of Equity Stock
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represented hereby will be transferred automatically and by operation of law to
a Trust and shall be designated Shares-in-Trust. All capitalized terms in this
legend have the meanings defined in the Corporation's Charter, as the same may
be further amended from time to time, a copy of which, including the
restrictions on transfer, will be sent without charge to each Stockholder who so
requests. Such request must be made to the Secretary of the Corporation at its
principal office or to the Transfer Agent."
(d) Any legend required by applicable state securities laws.
3.9 APPROVAL; CONSENTS.
Except for the requirements of the HSR Act, if applicable, no consent,
authorization or waiver by or filing with any governmental agency or any other
person or entity not a party to this Agreement is required to be obtained or
made by Investor in connection with the execution or performance of this
Agreement or the taking of any action contemplated hereby.
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING.
The Investor's obligations at the Closing under subsection 1 of this
Agreement are subject to the fulfillment on or before the Closing Date of each
of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section 2
shall be true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
4.2 PERFORMANCE.
The Company shall have performed and complied in all material respects with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing Date.
4.3 COMPLIANCE CERTIFICATE.
The Chief Executive Officer of the Company shall have delivered to the
Investor at the Closing a certificate certifying that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled.
4.4 OPINIONS OF COMPANY COUNSEL.
The Investor shall have received from Battle Fowler LLP or Ballard Spahr
Andrews & Ingersoll, counsel for the Company, an opinion dated as of the Closing
Date, substantially in the form attached hereto as Exhibit B, and the Opinion of
---------
Counsel described in Section 6.1 herein. In rendering any such opinion, such
counsel may rely, as to matters of fact, to the extent such counsel
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deems proper, on certificates of responsible officers of the Company and public
officials. Such opinion may also include customary and reasonable assumptions
and qualifications that are acceptable to the Investor and its counsel.
4.5 NYSE LISTING.
The shares of all Common Stock issued and sold hereunder shall have been
approved for listing on the NYSE upon official notice of issuance. If required
by the NYSE, at the Company's option, the Company may seek stockholder approval
in connection with the listing of the Common Stock with the NYSE, but in no
event shall the Company have any obligation to seek such stockholder approval.
The parties hereto agree that the Company shall not be in breach of this
Agreement if it decides not to obtain stockholder approval in order to list the
Common Stock with the NYSE.
4.6 NO MATERIAL CHANGE.
No event or change of circumstances shall have occurred and be continuing
at the time of disbursement of funds by the Investor which is likely to have a
Material Adverse Effect.
4.7 AGREEMENT WITH STEVEN JORNS AND BRUCE WILES.
The Company shall have delivered to the Investor an agreement of Steven
Jorns and Bruce Wiles to not sell their positions in AGHI and Lessee for a
period of three (3) years or for the period during which the Investor manages at
least 250,000 shares of Common Stock purchased under this Agreement and the
Public Offering Agreement, whichever is shorter, except (i) if the sale is in
conjunction with a sale of the Company and has been approved by the Board of
Directors and, if required by law, by the stockholders of the Company or (ii) in
the case of the death or a transfer to a family member of Steven Jorns or Bruce
Wiles, as long as the transferees agree to be bound by the same restrictions
described herein.
4.8 KEY EMPLOYEES.
The Company shall have delivered to the Investor at the Closing a
certificate certifying that Steven Jorns, Bruce Wiles or Kenneth Barr have not
left the employ of the Company and that the Company has no knowledge that they
have the intent to leave the employ of the Company.
4.9 HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If applicable, the waiting period under the HSR Act shall have expired or
the Investor and the Company shall have received notice from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") of the early termination thereof.
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V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment on or before the Closing Date of each of the
following conditions:
5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investor, as agent for and on
behalf of the Pecuniary Owners, contained in Section 3 shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
5.2 PERFORMANCE.
The Investor shall have performed and complied in all material respects
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing
Date.
5.3 COMPLIANCE CERTIFICATE.
The Investor shall deliver to the Company at the Closing a certificate
certifying that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled.
5.4 HART-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If applicable, the waiting period under the HSR Act shall have expired or
Investor and the Company shall have received notice from the FTC or Antitrust
Division of the early termination thereof.
5.5 NYSE LISTING.
The shares of all Common Stock issued and sold hereunder shall have been
approved for listing on the NYSE upon official notice of issuance. If required
by the NYSE, at the Company's option, the Company may seek stockholder approval
in connection with the listing of the Common Stock with the NYSE, but in no
event shall the Company have any obligation to seek such stockholder approval.
The parties hereto agree that the Company shall not be in breach of this
Agreement if it decides not to obtain stockholder approval in order to list the
Common Stock with the NYSE.
VI. COVENANTS.
6.1 OPINION OF COMPANY COUNSEL FOR REIT STATUS.
(a) On or before the Closing Date, the Investor and the Pecuniary Owners
shall have received from Battle Fowler LLP, counsel for the Company, an opinion
that the Company should be classified as a "real estate investment trust" under
Section 856 of the Internal Revenue Code of
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1986, as amended (after giving effect to the investment contemplated by this
Agreement). Such opinion may include customary reasonable assumptions and
qualifications, and counsel may rely upon certificates of responsible officers
of the Company.
(b) The Company will use its commercially reasonable efforts to operate in
a manner which will not cause it to be classified other than as a real estate
investment trust in accordance with Section 6.l(a) above.
6.2 CONFIDENTIALITY.
The parties to this Agreement will not disclose to any other party any
information about this Agreement, the transactions contemplated hereby or the
parties hereto, except as required by law or the rules of the New York Stock
Exchange, or with prior written consent of the other party, which consent will
not be unreasonably withheld. Any public announcement of the commitment of the
Investor or the Pecuniary Owners hereunder must be approved by the Company and
the Investor (except as required by the NYSE or applicable law or regulation).
Such approval shall not be unreasonably withheld.
6.3 FUTURE OFFERINGS.
The Company will give prior written notice to the Investor of potential
offerings of the Capital Stock or any other equity security of the Company (an
"Offering"). Notwithstanding the foregoing, the Company shall not be obligated
to provide such notice prior to any public announcement of the Offering.
Exclusive of private equity offerings of securities and non-syndicated
underwritten registered equity offerings of Capital Stock of the Company such as
"spot offerings" or "ROCS offerings," until December 21, 2000, the Company shall
use commercially reasonable efforts to allow the Investor to participate in
syndicated underwritten registered equity offerings of the Company on the same
terms and conditions contemplated by that underwritten offering (except there
shall be no right to participate with respect to the exercise of the
underwriter's over-allotment option thereto) as necessary in order to allow the
Investor to maintain its percentage equity interest in the Company based upon
the number of Shares purchased under this Agreement and the Public Offering
Agreement which Investor manages as of that date. The foregoing shall be
limited by the share ownership limitations of the Company's Articles and
necessary authorizations that may be imposed upon such issuance to the Investor
under the rules and regulations of the NYSE, and in no event shall the Company
be required to obtain stockholder consent in order to list such shares with the
NYSE. In the event the Investor desires to substitute a client who is not a
Pecuniary Owner for one or more Pecuniary Owners in respect of any future
offerings, the Investor shall be free to do so, subject to any authorization or
consents that such substitution may require; provided, however that the Company
shall not be required to obtain stockholder approval or violate its Articles
provisions in connection with the substitution.
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6.4 SHELF REGISTRATION.
6.4 DEFINITIONS.
For purposes of this Section 6.4, the following capitalized terms shall
have the following meanings:
Person: An individual, partnership, corporation, limited liability company,
------
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in any Registration Statement (as
----------
defined below), as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement (as defined below) and by all
other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
Registration Statement: The Registration Statement of the Company that
----------------------
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
Registrable Securities: Registrable Securities include (a) the Common
----------------------
Stock issued and sold to the Investor pursuant to this Agreement and (b) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or distribution with respect to, or in exchange for or in replacement of, such
Common Stock, excluding in all cases, however, any Registrable Securities that
have previously been sold or otherwise transferred.
6.4.2 TERMS OF SHELF REGISTRATION.
The Company shall use commercially reasonable efforts to file by December
31, 1997, unless the Investor then reviewing the documents as described in
Section 6.4.4(a), in which case the Shelf Registration shall be filed as soon as
practicable after completion of such review, a shelf registration statement on
any appropriate form (the "Shelf Registration") pursuant to Rule 415 under the
Securities Act or any successor rule covering the Registrable Securities then
outstanding. The Shelf Registration shall include those securities issued
pursuant to this Agreement and the Public Offering Agreement.
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6.4.3 UNDERWRITTEN OFFERING.
If the Investor so elects, the offering of Registrable Securities pursuant
to the Shelf Registration may be in the form of a registration in which
Registrable Securities of the Company are sold to an underwriter for reoffering
to the public in a manner requiring registration under the Securities Act (an
"Underwritten Registration" or "Underwritten Offering"), but in no event shall
there be more than two (2) Underwritten Offerings by the Investor.
Notwithstanding the foregoing sentence, at such time as the Investor manages
fewer than 500,000 shares purchased under this Agreement and the Public Offering
Agreement, the Company shall have no further obligations under this Section
6.4.3 Following completion of two (2) underwritten offerings by the Investor,
the Company shall have no further obligations under this Section 6.4 with
respect to any shares that are eligible for resale under Securities Act Rule 144
or any successor rule.
6.4.4 REGISTRATION PROCEDURES.
In connection with the Company's registration obligations pursuant to
Section 6.4 hereof, the Company will use its commercially reasonable efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will use commercially reasonable efforts to as
expeditiously as possible:
(a) Prepare and file with the SEC in the period set forth in Section
6.4.2 a Shelf Registration Statement relating to the applicable registration on
any appropriate form under the Securities Act, which forms shall be available
for the sale of the Registrable Securities in accordance with the intended
method or methods of distribution thereof and shall include all financial
statements of the Company, provided that the Company shall not be required to
prepare audited financials out of the ordinary course of business, and use its
commercially reasonable efforts to cause such Registration Statement to become
effective; provided that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, other than documents incorporated by
reference after the initial filing of the Registration Statement, the Company
will furnish the Investor and the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review of
the Investor and the underwriters, if any, and the Company will not file any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (other than such documents incorporated by reference) to which the
Investor or the underwriters, if any, shall reasonably object; provided,
however, such delay in the filing of the Registration Statement shall not be
deemed a breach of the Company's obligation herein.
(b) Subject to the last two (2) sentences of this Section, (i) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement as may be necessary to keep the Registration Statement
effective for the applicable period, or such shorter period which will terminate
when all Registrable Securities included in such Registration Statement have
been sold, or pursuant to the last sentence of Section 6.4.3; (ii) cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
(iii) comply with the provisions of the Securities Act with respect to the
disposition of all securities included in such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in
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such Registration Statement or supplement to the Prospectus; the Company shall
not be deemed to have used commercially reasonable efforts to keep a
Registration Statement effective during the applicable period if it voluntarily
takes any action that would result in the Investor not being able to sell its
Registrable Securities during that period unless such action is required under
applicable law or the Company has filed a post-effective amendment to the
Registration Statement and the SEC has not declared it effective; provided that
the foregoing shall not apply to actions taken by the Company in good faith and
for valid business reasons, including without limitation the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 6.4.4(j) hereof, if applicable. In connection with
the filing of the Registration Statement, the Investor shall promptly provide to
the Company such information as the Company reasonably requests in order to
identify the "beneficial owner" (as defined in Rule 13d-3 of the Securities
Exchange Act of 1933, as amended) of the Registrable Securities and the method
of distribution in a post-effective amendment to the Registration Statement or a
supplement to the Prospectus. The Investor also shall notify the Company in
writing upon completion of any offer or sale or at such time as the Investor no
longer intends to make offers or sales under the Registration Statement;
(c) Notify the Investor and the managing underwriters, if any, promptly,
and (if requested by any such Person) confirm such advice in writing, (1) when
the Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the SEC for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (1) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event as a result of which such
Registration Statement or the related Prospectus contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the Prospectus), not
misleading;
(d) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) If reasonably requested by the managing underwriter or underwriters, if
any, or by the Investor holding in the aggregate in excess of fifty percent
(50.0%) of the Registrable Securities covered by the Registration Statement,
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and the Investor agree should
be included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being sold to such underwriters, if any, the purchase
price being paid therefor by such underwriters, if any, and with respect to any
other terms of the Underwritten (or best efforts underwritten) Offering, if any,
of the Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus
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supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
(f) Furnish to the Investor and each managing underwriter, if any, without
charge, at least one (1) conformed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
without documents incorporated therein by reference and all exhibits unless
requested;
(g) Deliver to the Investor and the underwriters, if any, without charge,
as many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Investor and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(h) Prior to any public offering of Registrable Securities, register or
qualify or cooperate with the Investor, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as the Investor or any underwriter, if any, reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement, provided, however, that the
Company will not be required to submit to general service of process, taxation
in any jurisdiction in which it is not so subject, qualify generally to do
business in any jurisdiction, or register as a broker or dealer in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 6.4.4(h);
(i) Cooperate with the Investor and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters, if any, may request at least two (2)
business days prior to any sale of Registrable Securities to such underwriters;
(j) Subject to Sections 6.4.4(b) and (p), upon the occurrence of any event
contemplated by Section 6.4.4(c)(6) above, prepare a supplement or post-
effective amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
in light of the circumstances under which they were made, not misleading;
(k) Use commercially reasonable efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities exchange
on which similar securities issued by the Company are then listed;
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(l) Enter into such agreements (including an underwriting agreement
customarily entered into by the Company, if any,) and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities and in connection therewith, whether
or not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (1) make such representations and
warranties to the underwriters, in form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten offerings; (2) use its
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Investor and the managing underwriters, if any,)
covering the matters customarily covered in opinions requested in Underwritten
Offerings and such other matters as may be reasonably requested by the Investor
and the underwriters, if any; (3) use its reasonable efforts to obtain "cold
comfort" letters and updates thereof from the Company's independent certified
public accountants addressed to the Investor and the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection with primary
Underwritten Offerings; (4) if an underwriting agreement is entered into, the
same shall set forth in full the indemnification provisions and procedures of
Section 6.4.6 hereof with respect to all parties to be indemnified pursuant to
said Section; and 6.5 deliver such documents and certificates as may be
reasonably requested by the managing underwriters, if any, to evidence
compliance with clause (1) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company. The
above shall be done at each closing under such underwriting or similar agreement
or as and to the extent required thereunder;
(m) Make available for inspection by a representative of any underwriter
participating in any disposition pursuant to such registration, and any attorney
or accountant retained by the Investor or any underwriter, all financial and
other records, pertinent corporate documents and properties of the Company and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any records,
information or documents that the Company designates in writing as confidential
shall be kept confidential by such Persons unless disclosure of such records,
information or documents is required by court or administrative order;
(n) Otherwise use its commercially reasonable efforts to make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve (12) months, beginning within three (3) months after
the effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(o) Cooperate with the Investor and each underwriter participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
(p) Notwithstanding anything herein to the contrary, (i) the Company shall
have the right from time to time to require Investor not to sell under the
Registration Statement or to suspend the effectiveness thereof during the period
starting with the date 30 days prior to the Company's good faith estimate, as
certified in writing by an executive officer of the Company to Investor, of the
proposed date of filing of a registration statement or a preliminary prospectus
supplement relating
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to an underwritten public offering of equity securities of the Company for the
account of the Company, and ending on the date sixty (60) days following the
effective date of such registration statement or the final prospectus
supplement, and (ii) the Company shall be entitled to require Investor not to
sell under the Registration Statement or to suspend the effectiveness thereof
(but not for a period exceeding sixty (60) days in any calendar year) if the
Company determines, in its good faith judgment, that such offering or continued
effectiveness would interfere with any material financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or any of its Subsidiaries or public disclosure thereof would be
required prior to the time such disclosure might otherwise be required, or when
the Company is in possession of material information that it deems advisable not
to disclose in a registration statement.
The Company may require the Investor and each Pecuniary Owner, as
applicable, to furnish to the Company such information regarding the
distribution of Registrable Securities as the Company may from time to time
reasonably request in writing.
Notwithstanding anything herein to the contrary, the Investor agrees
by acquisition of the Registrable Securities that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
6.4.4(j) hereof, the Investor will forthwith discontinue disposition of
Registrable Securities until the Investor's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6.4.4(j) hereof, or
until it is advised in writing (the "Advice") by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus, and,
if so directed by the Company, the Investor will deliver to the Company (at the
Company's expense), all copies, other than permanent file copies then in the
Investor's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods regarding the effectiveness of
Registration Statements set forth in Section 6.4.4(b) hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6.4.4(c)(6) hereof to the date when
the Investor shall receive copies of the supplemented or amended prospectus
contemplated by Section 6.4.4(j) hereof or the Advice.
6.4.5 REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance with
this Section 6.4, including without limitation: all registration and filing
fees; fees with respect to filings required to be made with the NASD; fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel for the underwriters or the Investor in
connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters and the Investor may designate);
printing expenses, messenger, telephone and delivery expenses; fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters requested
pursuant to Section 6.4.4(l) hereof); securities acts liability insurance, if
the Company so desires; all internal expenses of the Company (including, without
limitation, all
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salaries and expenses of its officers and employees performing legal or
accounting duties); the expense of any annual audit; the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed; and the fees and expenses of any Person, including special experts,
retained by the Company (all such expenses being herein called "Registration
Expenses") will be borne by the Company regardless of whether the Registration
Statement becomes effective. The Company shall also reimburse the Investor for
the fees and expenses of counsel in accordance with Section 8.8 of the Purchase
Agreement. The Company shall not have any obligation to pay any underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, or any legal fees, expenses of counsel and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by the Investor to
the Investor, except as expressly provided herein.
6.4.6 INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by Company. The Company agrees to indemnify and hold
--------------------------
harmless the Investor and each Pecuniary Owner and their respective partners,
officers, directors, employees and agents, and each Person who controls any such
Persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by the Investor or such
Pecuniary Owner or any other person who participates as an underwriter in the
offer and sale of securities, as the case may be, expressly for use therein, or
due to the Investor's or Pecuniary Owners' failure to deliver an amended or
supplemental Prospectus, after having been provided copies of any such amended
or supplemental Prospectus by the Company, if such loss, liability, claim,
damage or expense would not have arisen had such delivery occurred. The Company
will also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and trust managers and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Investor and each Pecuniary Owner, if requested.
(b) Indemnification By Holder of Registrable Securities. The Investor
---------------------------------------------------
and each Pecuniary Owner, severally and not jointly, agrees to indemnify and
hold harmless the Company and its directors, officers, employees and agents, and
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by the Investor, as agent for and on behalf
of each Pecuniary Owner, to the Company specifically for inclusion in such
Registration Statement or Prospectus and information provided by the
underwriters, if any. In no event shall the liability of the Investor or any
Pecuniary
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Owner hereunder be greater in amount than the dollar amount of the proceeds
received by such Person upon the sale of the Registrable Securities giving rise
to such indemnification obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person in each of which events
the reasonable fees and expenses of such counsel shall be at the expense of the
indemnifying party, provided that in no event shall the Company be responsible
for the fees and expenses of more than one counsel for all of the indemnified
persons. The indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld), but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the indemnifying
party shall indemnify and hold harmless the indemnified parties from and against
any loss or liability (to the extent stated above) by reason of such settlement
or judgment. No indemnified party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in
------------
the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided, that neither the
Investor nor any Pecuniary Owner shall be required to contribute an amount
greater than the dollar amount of the proceeds received by such Person with
respect to the sale of the Registrable Securities giving rise to such
indemnification obligation. The relative fault of the Company on the one hand
and of the Investor and each Pecuniary Owner, on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentations.
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6.4.7 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) The investment banker or investment bankers and manager or managers
that will administer an Underwritten Offering will be selected by the Investor;
provided that such investment bankers and managers must be reasonably
satisfactory to the Company.
(b) No Person may participate in any Underwritten Registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 6.4.7 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
6.4.8 MISCELLANEOUS.
(a) Remedies. Each party hereto, in addition to being entitled to
--------
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement to the extent available under applicable law. Each party hereto agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) Third Party Registration Rights. The Company will not on or after
-------------------------------
the date of this Agreement, without the written consent of the Investor, enter
into any agreement granting any Person holding securities of the Company the
right to participate in the Registration Statement of the Company which covers
the Investor's securities.
(c) Investor as Agent. (i) The Company acknowledges and agrees that
-----------------
each of the Pecuniary Owners has initially appointed the Investor to act as its
agent and on its behalf in connection with the matters contemplated by this
Agreement. Until such time as the Company shall have received a written notice
from any Pecuniary Owner or the Investor that the Investor is no longer acting
as such Pecuniary Owner's agent hereunder, the Company shall be entitled to rely
on any instructions and notices received from the Investor on behalf of
Pecuniary Owner as if received from such Pecuniary Owner directly. The parties
hereto further acknowledge and agree that Investor shall act solely as agent for
and on behalf of the Pecuniary Owners in connection with the matters set forth
in this Agreement, and that the Investor shall not, under any circumstances,
have any liability to the Company in its individual capacity arising out of or
in connection with this Agreement or the transactions contemplated hereby, other
than for gross negligence, fraud, or willful misconduct.
(ii) In the event that any Pecuniary Owner shall at any time
subsequent to the date hereof appoint a successor agent to the Investor in
connection with the matters set forth in this Agreement, such successor shall be
entitled to, and to exercise on behalf of such Pecuniary Owner, all of the
rights and remedies provided for herein with respect to the Investor or such
Pecuniary
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Owner, as the case may be, and the rights and remedies of such Pecuniary Owner
hereunder shall not in any way be modified, limited, delayed or impaired as a
consequence of such appointment. The Company shall grant such successor agent
such registration rights as are necessary to preserve the rights of such
Pecuniary Owner under this Agreement, provided that such rights shall not
conflict with the rights of the Investor hereunder.
(iii) The provisions of Sections 6.4.4; 6.4.5 and of this Section
6.4.8(c) shall remain in full force and effect with respect to the Investor
notwithstanding any termination of the Investor's appointment as agent for and
on behalf of any or all of the Pecuniary Owners hereunder.
(iv) Reference herein to the Investor "holding" Registrable
Securities shall mean holding such securities as agent for and on behalf of the
Pecuniary Owners.
(d) Amendments and Waivers. The provisions of this Agreement, including
----------------------
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and the Investor; provided,
that the provisions of Sections 6.4.5; 6.4.6 and 6.4.8(c) may not, under any
circumstances and notwithstanding any termination of the Investor's appointment
as agent for and on behalf of any or all of the Pecuniary Owners hereunder, be
amended, modified, supplemented or waived without the written consent of the
Investor.
6.5 LOCK-UP PERIODS.
Investor agrees not to sell any shares purchased hereby for six (6) months
after the First Funding Date (the "Lock-Up Period"), except as otherwise
provided in the following sentence. Prior to the expiration of six (6) months
following the First Funding Date, the Investor has the right to sell its shares
immediately upon the occurrence of either: (a) a Change of Control of the
Company (as defined below); (b) for a period of at least ninety (90) consecutive
days, the Company's ratio of debt to Total Market Capitalization (as defined
below) exceeds fifty percent (50.0%), based on all outstanding equity (including
partnership units) valued at the market price, and debt; (c) the Company's
management does not include at least two (2) of the following individuals:
Steven Jorns, Bruce Wiles, Kenneth Barr or Russ Valentine; or (d) with respect
to a specific Pecuniary Owner, the Investor is terminated as an investment
manager by that Pecuniary Owner and such Pecuniary Owner wishes to sell its
shares. A Change of Control shall mean the acquisition (including by virtue of
a merger, statutory share exchange or other business combination) by one (1)
stockholder or a group of stockholders acting in concert of more than fifty
percent (50.0%) of the outstanding voting stock of the Company, other than
pursuant to this Agreement. "Total Market Capitalization" means the sum of the
Company's total equity market capitalization, including issued and outstanding
units of limited partnership interest of the Operating Partnership, plus its
consolidated indebtedness.
6.6 HARD-SCOTT-RODINO ANTITRUST IMPROVEMENT ACT OF 1976.
If required, the Company and Investor shall, as soon as practicable, file a
Notification and Report Form under the HSR Act with the FTC and the Antitrust
Division and shall use their best efforts to respond as promptly as practicable
to all inquiries received from the FTC or the Antitrust Division for additional
information or documentation.
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<PAGE>
6.7 PREEMPTIVE RIGHTS.
The Company agrees not to grant any preemptive rights without the Investor's
consent prior to the time period in which the full commitment for the Combined
Funding has been drawn, which shall be prior to January 31, 1998, subject to an
extension to March 31, 1998, at the Investor's discretion, unless this Agreement
is otherwise terminated.
6.8 USE OF PROCEEDS.
The Company will contribute the net proceeds from the sale of the Common
Stock to American General Hospitality Operating Partnership, L.P. (the
"Operating Partnership"). The Company shall cause the Operating Partnership to
use the net proceeds from the sale of the Common Stock to pay down a credit line
used for the acquisition, development or renovation of hotels and related real
estate of the character, quality and estimated investment returns reasonably
similar to those previously purchased by the Company.
VII INDEMNIFICATION.
7.1 INDEMNIFICATION BY INVESTOR AND THE COMPANY.
(a) Subject to Sections 7.3 and 8.1, from and after any Closing Date,
Investor shall indemnify and hold harmless the Company, its successors and
assigns, from and against any and all damages, claims, losses, expenses, costs,
obligations, and liabilities, including liabilities for all reasonable
attorneys' fees and expenses (including attorney and expert fees and expenses
incurred to enforce the terms of this Agreement) (collectively, "Loss and
Expenses") suffered, directly or indirectly, by the Company by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by Investor in or pursuant to
this Agreement, and any statements made in any certificates delivered pursuant
to this Agreement, or (ii) any failure by Investor or the Pecuniary Owners to
perform or fulfill any of its covenants or agreements set forth herein.
Notwithstanding any other provisions of this Agreement to the contrary, in no
event shall Loss and Expenses include a party's incidental or consequential
damages.
(b) Subject to Sections 7.3 and 8.1, from and after any Closing Date, the
Company shall indemnify and hold harmless Investor, its successors and assigns,
from and against any and all Loss and Expenses, suffered, directly or indirectly
by Investor by reason of, or arising out of, (i) any breach as of the date made
or deemed made or required to be true of any representation or warranty made by
the Company in or pursuant to this Agreement and any statements made in any
certificate delivered pursuant to this Agreement, or (ii) any failure by the
Company to perform or fulfill any of its covenants or agreements set forth
herein. Notwithstanding any other provision of this Agreement to the contrary,
in no event shall Loss and Expenses include a party's incidental or
consequential damages. The damages for breach by the Company of any of the
representations and warranties, or any of the covenants or agreements shall be
measured with respect to all of Investor's purchases of Common Stock hereunder,
but such measurement shall not in any event include any shares of Company Stock
that Investor may have purchased other than from the Company.
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(c) Notwithstanding the foregoing, the cumulative aggregate indemnity
obligation of each of Investor and the Pecuniary Owners, on the one (1) hand,
and the Company, on the other hand, under this Section 7.1 shall in no event
exceed the actual aggregate amount paid by Investor for the shares of Common
Stock purchased by it from the Company pursuant to this Agreement. Except with
respect to third-party claims being defended in good faith or claims for
indemnification with respect to which there exists a good faith dispute, the
indemnifying party shall satisfy its obligations hereunder within 30 days of
receipt of a notice of claim under this Article 7.
7.2 THIRD-PARTY CLAIMS.
If a claim by a third party is made against an indemnified party and if such
indemnified party intends to seek indemnity with respect thereto under this
Section, such indemnified party shall promptly notify the indemnifying party in
writing of such claims setting forth such claims in reasonable detail; provided,
however, the foregoing notwithstanding the failure of any indemnified party to
give any notice required to be given hereunder shall not affect such indemnified
party's right to indemnification hereunder except to the extent the indemnifying
party from whom such indemnity is sought shall have been prejudiced in its
ability to defend the claim or action for which such indemnification is sought
by reason of such failure. The indemnifying party shall have twenty (20) days
after receipt of such notice to undertake, through counsel of its own choosing
and at its own expense, the settlement or defense thereof, and the indemnified
party shall cooperate with it in connection therewith; provided, however, that
the indemnified party may participate in such settlement or defense through
counsel chosen by such indemnified party, provided that the fees and expenses of
such counsel shall be borne by such indemnified party. The indemnified party
shall not pay or settle any claim which the indemnifying party is contesting.
Notwithstanding the foregoing, the indemnified party shall have the right to pay
or settle any such claim, provided that in such event it shall waive any right
to indemnity therefor by the indemnifying party. If the indemnifying party does
not notify the indemnified party within twenty (20) days after the receipt of
the indemnified party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the indemnified party shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
7.3 SURVIVAL.
The indemnity set forth in this Section 7 shall survive each Closing or any
termination of this Agreement and shall remain in effect for a period of (a)
with respect to a breach of a representation or warranty, for the period through
which such representation or warranty shall continue pursuant to Section 8.1
(including such period of time through which such representation or warranty
shall be extended until resolution of a claim with respect thereto) and (b) with
respect to a breach of a covenant or agreement referred to in Sections 2.3 and
2.4, forever.
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VIII. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES.
The warranties, representations and covenants of the Company and Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement for a period of three (3) years following the last
Closing Date hereunder.
8.2 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto, including the Pecuniary Owners.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto and the Pecuniary Owners or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
8.3 GOVERNING LAW.
This Agreement shall be governed by and construed under the internal laws of
the State of Maryland.
8.4 COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.5 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
8.6 NOTICES.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given (a)
upon personal delivery to the party to be notified, (b) on the fifth business
day after deposit with the United States Post Office, by registered or certified
mail, postage prepaid, (c) on the next business day after dispatch via
nationally recognized overnight courier or (d) upon confirmation of transmission
by facsimile. Notices should be provided in accordance with this Section at the
following addresses or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties:
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If to the Investor to:
ABKB/LaSalle Securities Limited Partnership
100 East Pratt Street
Baltimore, Maryland 21202
Attn: Stanley J. Kraska, Jr.
Managing Director
with a copy to:
Elizabeth Grieb, Esquire
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
If to the Company, to:
American General Hospitality Corporation
5605 MacArthur Boulevard
Suite 1200
Irving, Texas 75038
Attn: Steven D. Jorns
Chairman of the Board of Directors,
Chief Executive Officer and President
with a copy to:
Peter M. Fass, Esquire
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
8.7 NO FINDER'S FEES.
Each party represents that, except as disclosed on Schedule 8.7, it neither
is nor will be obligated for any finder's fee or commission in connection with
this transaction. The Investor agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted-liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
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8.8 EXPENSES.
Each party shall pay all costs and expenses that it incurs with respect to
the negotiation, execution, delivery and performance of this Agreement, except
that if the closing shall occur, the Company shall pay all of the Investor's
reasonable out-of-pocket third party expenses, including but not limited to the
fees and expenses of Piper & Marbury L.L.P., incurred in connection with the
transactions contemplated by this Agreement, up to a maximum of $25,000 in the
aggregate for transactions contemplated by this Agreement and the Public
Offering Agreement. Any expenses of the NYSE listing or the resale registration
to the extent provided by Section 6.4 hereof shall be borne by the Company. If
it is required by law for Investor to make a filing under the HSR Act with
respect to this Agreement and the Public Offering Agreement, the Company shall
advance to Investor the amount of the fee required with respect to Investor's
filing, and the aggregate purchase price for the shares purchased hereunder and
under the Public Offering Agreement shall be increased in the same amount. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
8.9 AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended, and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding (including securities into which
such securities are convertible), each future holder of all such securities, and
the Company.
8.10 SEVERABILITY.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and
the balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.11 ENTIRE AGREEMENT.
This Agreement between the named parties hereto constitutes the entire
agreement among the parties, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein and therein.
8.12 KNOWLEDGE.
As used herein, the "knowledge" of the Company, or any derivative thereof,
shall mean the actual knowledge, without independent investigation, of Steven D.
Jorns, Bruce G. Wiles, Kenneth E. Barr or Russ C. Valentine.
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8.13 SCHEDULES.
With respect to each Closing, each Schedule previously delivered hereto
shall be updated to reflect the facts and circumstances which exist as of the
date of such subsequent Closing.
8.14 CROSS-DEFAULT.
A default of the terms and conditions under this Agreement, including,
without limitation, representations, warranties, and covenants, shall constitute
a default of the terms and conditions of the Public Offering Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ABKB/LASALLE SECURITIES LIMITED AMERICAN GENERAL HOSPITALITY
PARTNERSHIP CORPORATION
By: /s/ Stanley J. Kraska, Jr. By: /s/ Steven D. Jorns
-------------------------------- -----------------------------------------
Stanley J. Kraska, Jr. Steven D. Jorns
Managing Director Chairman of the Board of Directors,
Chief Executive Officer and
President
Address: Address:
100 East Pratt Street 5605 MacArthur Boulevard
Baltimore, Maryland 21202 Suite 1200
Fax: (410) 347-0612 Irving, Texas 75038
Fax: (972) 550-6895
LASALLE ADVISORS LIMITED
PARTNERSHIP
By: /s/ Stanley J. Kraska, Jr.
--------------------------------
Stanley J. Kraska, Jr.
Managing Director
Address:
100 East Pratt Street
Baltimore, Maryland 21202
Fax: (410) 347-0612
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