CONSENT AND SETTLEMENT AGREEMENT
Exhibit 10.26.5
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
This
Consent and Settlement Agreement (“Agreement”) is effective
as of March 10, 2011 (the
“Effective Date”), and is entered into by and between Ashford Hospitality Finance, L.P. (together
with any and all of its affiliates and subsidiaries, collectively, “Ashford”) and Xxxxx Fargo Bank,
N.A., as successor by merger to Wachovia Bank, National Association (together with any and all of
its affiliates and subsidiaries, collectively, “Xxxxx”). Ashford and Xxxxx are each a “Party” and
collectively “the Parties.”
RECITALS
A. WHEREAS, on or about June 2, 2009, Ashford filed a complaint (the “Complaint”) commencing an
action in the District Court of Dallas County, Texas, 298th Judicial District, styled Ashford
Hospitality Finance, L.P. v. Wachovia Bank, N.A., No. 09-06958 (the “Action”); and
B. WHEREAS, by Answer dated June 8, 2009, Xxxxx denied the allegations of the Complaint and further
denies any and all liability for the claims asserted by Ashford in the Action; and
C. WHEREAS, Ashford desires to enter into a series of related transactions with
affiliates of Prudential Life Insurance Company, Guggenheim, Barclays Capital Real Estate Finance, Inc.
(“Barclays”), The Blackstone Group and Xxxxx, which, when and if consummated, will result in
Ashford owning an aggregate up to 75% interest in one or more entities which will own all of the
equity interests in a portfolio of hotels (and their related operating lessees and other
affiliates), which are defined as the “Individual Properties” and the “CIGNA Properties” under that
certain Amended and Restated Mortgage Loan Agreement, to be entered into by and among Xxxxx,
Barclays and the obligors parties thereto (the “Loan Agreement” and such transactions described
herein being, collectively, the “Transaction”); and
D. WHEREAS, the Transaction described in the foregoing Recital C requires consent from Xxxxx in
order to effectuate the purchase by Ashford contemplated thereby; and
E. WHEREAS, the Parties wish to enter into this Agreement to: (i) avoid further expense,
inconvenience, and the distraction of litigation and to put to rest all claims asserted in or
related to the Action, and (ii) consent to the Transaction.
NOW, THEREFORE, in consideration of the promises, terms and provisions hereof, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
AGREEMENT
1. HIGHLAND HOSPITALITY RESTRUCTURING.
(a) In connection with the Transaction, Xxxxx agrees to permit Ashford (or its Affiliates (as
defined in the Loan Agreement)) to acquire up to a 75% indirect ownership interest in the Borrower
Principal (as defined in the Loan Agreement) and to be the managing or administering member of the
venture which holds the ownerships interests in the Borrower Principal. It is understood and agreed
however that Xxxxx, in its capacity as lender under the Loan Agreement, shall have the right to
review and approve all organizational documents relating to or affecting the ownership structure of
the Borrower Principal (and its equity owners), all in accordance with the terms of the Loan
Agreement.
(b) On
the date that [***] receives any cash payment
[***] Xxxxx shall, within 30 days after the
receipt of such properly paid payment, pay to Ashford an equivalent amount,
up to a total of $30,000,000 in the aggregate (said total sum of $30,000,000 is referred to herein as the
“Total Settlement Payment”). No interest shall accrue on the Total Settlement Amount, or on any
amounts paid or payable to Ashford [***] hereunder. If all or any portion of the Total Settlement
Payment has not been paid by Xxxxx to Xxxxxxx on the earlier to occur of (i) the maturity date of [***],
(ii) the date [***] has been terminated or otherwise eliminated [***], or (iii) the [***] is sold in its entirety, then,
within 15 days following such date, Xxxxx shall pay to Ashford the balance of the Total Settlement
Payment that remains unpaid as of such date. Once the Total Settlement Payment has been paid to
Ashford, all further obligations of Xxxxx under this Settlement Agreement shall cease.
(c) The payments by Xxxxx to Ashford pursuant to the foregoing paragraph shall be made by direct
wire transfer to an account in the United States designated by Ashford. Ashford shall send Xxxxx
acknowledgement of receipt of payment within one (1) business day after Ashford’s receipt of such
payment.
(d) From and after the Effective Date but prior to the date that the Total Settlement Payment is
paid in full, Xxxxx shall deliver to Ashford within fifteen (15) days after the last day of each
calendar quarter (commencing on the calendar quarter ending March 31, 2011), a written certification setting forth all payments received by Xxxxx from or in respect of
[***] during such calendar quarter.
[***] = Indicates confidential information has been redacted.
2
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
(e) Well
represents, and Ashford understands and acknowledges that (i) the [***] owned by Xxxxx is a
passive interest, (ii) Xxxxx has no control whatsoever over the timing for when it may receive
any [***] and (iii) Xxxxx will have no obligation to take any legal or other action or exercise
any legal or other remedy to attempt to receive such [***], nor shall Xxxxx have any obligation to
officially market and attempt to sell its [***] in order to
generate any [***].
2. RELEASE.
(a) In consideration of the promises and agreements set forth in this Agreement, as of the closing
date of the transaction (“Closing Date”), Ashford, on behalf of itself and its present, former or
future officers, directors, agents (alleged or otherwise), employees, representatives, consultants,
accountants, attorneys, parents, subsidiaries, affiliated entities, predecessors, successors, and
assigns (collectively, the “Ashford Releasors”), does hereby completely and irrevocably release and
forever discharge Xxxxx, and each of its respective current and former parents, subsidiaries, and
affiliated entities, and their respective current and former officers, directors, shareholders,
agents, employees, representatives, consultants, accountants, attorneys, insurers, reinsurers,
predecessors, successors, and assigns (collectively, the “Xxxxx Releasees”), from any and all
claims and rights (including, without limitation, rights of set-off and recoupment, demands,
charges, complaints, actions, obligations, causes of action, or liabilities of any and every kind,
nature and character, known and unknown) that the Ashford Releasors possess or possessed, assert,
asserted, or could or may have asserted, from the beginning of the world to the date of this
Agreement (including, without limitation, rights of set-off and recoupment, demands, charges,
complaints, actions, obligations, causes of action, or liabilities of any and every kind, nature
and character, known and unknown), arising out of or related to or in connection with the Ashford
Releasors’ interest, whenever acquired, in Extended Stay, Inc. and certain of its affiliates and
the financings that were originated in connection with the
acquisition thereof in 2007 and/or
arising out of or related to or in connection with the subject matter
of the Action; provided that
nothing herein shall prevent Ashford from bringing suit to enforce the terms of this Agreement.
(b) In consideration of the promises and agreements set forth in this Agreement, as of the Closing
Date, Xxxxx, on behalf of itself and its present, former or future officers, directors, agents
(alleged or otherwise), employees, representatives, consultants, accountants, attorneys, parents,
subsidiaries, affiliated entities, predecessors, successors, and assigns (collectively, the “Xxxxx
Releasors”), does hereby completely and irrevocably release and forever discharge Ashford, and each
of its respective current and former parents, subsidiaries, and affiliated entities, and their
respective current and former officers, directors, shareholders, agents, employees,
representatives, consultants, accountants, attorneys, insurers, reinsurers, predecessors,
successors, and assigns (collectively, the “Ashford Releasees”), from any and all claims and rights
(including, without limitation, rights of set-off and recoupment, demands, charges, complaints,
actions, obligations, causes of action, or liabilities of any and every kind, nature and character,
known and unknown) that the Xxxxx Releasors possess or
[***] =
Indicates confidential information has been redacted.
3
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
possessed, assert, asserted, or could or may have asserted, from the beginning of the world to the
date of this Agreement (including, without limitation, rights of set-off and recoupment, demands,
charges, complaints, actions, obligations, causes of action, or liabilities of any and every kind,
nature and character, known and unknown), arising out of or related to the subject matter of the
Action; provided that nothing herein shall prevent Xxxxx from bringing suit to enforce the terms of
this Agreement.
(c) The Parties hereby acknowledge that the releases provided in this Agreement shall apply to all
claims and rights released hereby, whether known or unknown, anticipated or unanticipated, or
suspected or unsuspected, notwithstanding the fact that a Party may later discover facts in
addition to or different from those which that Party now believes to be true.
(d) Each Party agrees to indemnify, defend and hold the other Party harmless from and against any
and all liabilities, claims, demands, losses, damages, costs and expenses (including, without
limitation, legal fees and disbursements, and litigation expenses), actions and causes of action,
arising out of or relating to a breach by the other Party of any provision of this Agreement
(including, without limitation, this Paragraph 2), or the incorrectness or inaccuracy of any
representation and warranty of such Party contained in this Agreement or in any document or
agreement delivered in connection with this Agreement.
3. CONFIDENTIALITY. Ashford and Xxxxx represent and warrant that they have not and none of their
officers, directors, principals, owners, employees, agents, attorneys, or other representatives
have disclosed to or discussed with anyone other than the other Party’s counsel any term,
condition, or other aspect of this Agreement. Ashford and Xxxxx acknowledge and agree, on behalf of
themselves and each of their officers, directors, principals, owners, employees, agents, attorneys,
and other representatives, that the financial terms of this Agreement (but not the existence of
this Agreement) are and shall remain confidential except to the extent such financial information
is required to be disclosed by a Party in compliance with the rules or regulations of any
governmental entity having jurisdiction over such Party.
4. FAILURE OF TRANSACTION TO CLOSE. If the Transaction does not close on or before June 30, 2011,
(i) the terms of this Agreement will become null and void, and the parties will have no further
obligations hereunder, except that the provisions contained in Paragraphs 8,9 and 10 shall survive
termination of this Agreement.
5. ADDITIONAL DOCUMENTS AND AMENDMENT.
(a) The Parties acknowledge that they may execute additional agreements relating to the terms of
their settlement of the Action. If the Parties elect to prepare such documents, the Parties agree
to cooperate in good faith in the drafting and execution thereof. However, the Parties acknowledge
and agree that the terms and conditions of this Agreement constitute a valid and binding agreement
and that they intend to be bound by its terms regardless of whether additional settlement documents
are ultimately executed between the Parties. That the Parties might execute additional settlement
documents does not in any way affect the binding nature and affect of this agreement.
4
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
(b) This Agreement may be amended only by an instrument in writing signed by the Parties that
expressly refers to this Agreement and specifically states that it is intended to amend this
Agreement.
6. NO ADMISSION OF LIABILITY. The Parties agree that the consideration and other terms of this
Agreement do not constitute an admission of liability on any of the Parties’ part, that liability
is expressly denied, and that this Agreement is a settlement of a disputed claim.
7. INTEGRATED AGREEMENT. This Agreement contains the understanding and agreement of the Parties
with respect to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations, and discussions of the Parties, whether oral or written, relating to
the content hereof. The Parties agree that the terms of this Agreement are contractual and not mere
recitals. The Parties acknowledge that the consideration recited in this Agreement is the sole and
only consideration for it and that no representations, promises or inducements have been made other
than those that appear in this Agreement, and that in executing this Agreement, the Parties are not
relying on any statement, representation or promise made to them except as set forth herein. In
interpreting the provisions of this Agreement, no presumption shall apply against any Party that
otherwise would operate against such Party by reason of such document having been drafted by such
Party or at the direction of such Party.
8. AUTHORITY. The Parties represent and warrant to one another that each has the full and complete
power and authority to enter into this Agreement and is entering into this Agreement voluntarily.
The Parties further represent and warrant that the signatories below have full and complete power
and authority, and have taken all necessary action, to enter into this Agreement on behalf of their
respective entities. The Parties warrant and represent that each has not sold, subrogated, assigned
or otherwise transferred or agreed to sell, assign, subrogate or otherwise transfer to any other
person or entity any claims, demand, actions, causes of action an/or suits that are the subject of
this Agreement.
9. NOTICES. All notices, consents and requests required or permitted hereunder, shall be given in
writing and shall be effective for all purposes if (i) hand delivered with proof of attempted
delivery, (ii) sent by prepaid overnight delivery service with proof of attempted delivery, or
(iii) by facsimile (with a copy sent contemporaneously by expedited overnight delivery service with
proof of attempted delivery), addressed as follows:
5
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
If to Ashford:
Xxxxx Xxxxxxxx
CFO
Xxxxxxx Hospitality Trust
00000 Xxxxxx Xxxxxxx, Xxx. 0000
CFO
Xxxxxxx Hospitality Trust
00000 Xxxxxx Xxxxxxx, Xxx. 0000
Xxxxxx, XX 00000
and
Xxxxx X. Xxxxxx
Chief Operating Officer/General Counsel
Ashford Hospitality Trust, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax: 000-000-0000
Chief Operating Officer/General Counsel
Ashford Hospitality Trust, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax: 000-000-0000
If to Xxxxx:
Xxxxxxx X. Xxxxxxx
Managing Director
Xxxxx Fargo Bank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Managing Director
Xxxxx Fargo Bank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
and
Xxxx X. Brighton
Managing Counsel
Xxxxx Fargo Bank, N.A
MAC: D1053-300
000 Xxxxx Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Managing Counsel
Xxxxx Fargo Bank, N.A
MAC: D1053-300
000 Xxxxx Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
and
Xxxxxxxx X. Xxxxxx
Xxxx, Xxxxxx & Xxxxxxx, LLP
One Houston Center
0000 XxXxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Xxxx, Xxxxxx & Xxxxxxx, LLP
One Houston Center
0000 XxXxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
6
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
Such notice shall be deemed given on the day delivery was attempted (as set forth in the proof of
attempted delivery).
10. COSTS. Each Party agrees that, notwithstanding any other provision herein, it bears full
responsibility and will pay its own costs and expenses, including, without limitation, its
attorneys’ fees in connection with the Action and this Agreement (and any documents entered into in
connection with this Agreement). However, in the event of any dispute arising out of or in
connection with any terms of this Agreement the non-prevailing Party in any such dispute shall be
responsible for paying the attorneys’ fees of the prevailing Party.
11. GOVERNING LAW AND WAIVER OF JURY TRIAL. This Agreement shall be construed and enforced pursuant
to the laws of the State of New York, without regard to the choice of law provisions thereof. The
Parties further agree that the language of each and all paragraphs, terms, and provisions of this
Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or
against any Party hereto and without regard whatsoever to the identity or status of any person or
persons who drafted all or any portion of this Agreement. The Parties hereby waive their respective
rights to a jury trial of any claim or cause of action based upon or arising out of this Agreement.
12. JURISDICTION. The Parties agree that any suit instituted to enforce the terms of this
Agreement, or to prevent any threatened violation of this Agreement, shall be instituted in the
federal or state courts within the City and State of New York, and that no suit instituted to
enforce the terms of this Agreement shall be instituted in any court or arbitral forum other than
the federal or state courts within the City and State of New York. The Parties consent to the
exercise of personal jurisdiction over each of them by the federal and state courts within the
State of New York for the purposes of any suit instituted to enforce the terms of this Agreement,
or to prevent any threatened violation of this Agreement.
13. SEVERABILITY. Should any provision or paragraph of this Agreement be held invalid or illegal,
such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the
Agreement shall be construed as if it did not contain the illegal or invalid part, and the rights
and obligations of the Parties shall be construed and be enforced accordingly.
14. COOPERATION. Each Party agrees to execute and deliver any and all additional instruments and
documents, do any and all acts and things as may be necessary or expedient to effectuate more fully
the terms of this Agreement or any provision hereof.
15. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to the benefit of the
parties and their respective successors, heirs, assigns, administrators, executors and legal
representatives. This Agreement may not be assigned by Ashford without prior written consent of
Xxxxx.
16. COUNTERPARTS/EXECUTION. This Agreement may be executed in counterparts, including by facsimile,
with the same effect as if all Parties have signed the same document. All counterparts shall be
construed together and shall constitute a single Agreement.
7
CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
FOR SETTLEMENT PURPOSES ONLY
IT IS SO AGREED.
| DATED: February 24, 2011 |
ASHFORD HOSPITALITY FINANCE L.P. |
|||
| By: | ASHFORD HOSPITALITY FINANCE GENERAL PARTNER LLC, GEN. PTR | |||
| By: | /s/ XXXXX X. XXXXXX | |||
| XXXXX X. XXXXXX VICE PRESIDENT |
||||
STATE
OF TEXAS COUNTY OF DALLAS |
) ) ) |
|||
| Sworn to before me this 24 day of February, 2011 | ||||
| DATED: March 10, 2011 | XXXXX FARGO BANK, N.A. |
|||
| By: | /s/ Xxx XxXxxxxxxx | |||
8
