<PAGE>
G:\SEC\MISC\8K695B.DOC 6/13/95 DRAFT 20 CONTROL
As filed with the Securities and Exchange Commission on June 16, 1995.
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: JUNE 15, 1995
DATE OF EARLIEST EVENT REPORTED: JUNE 15, 1995
LA QUINTA INNS, INC.
----------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 1-7790 74-1724417
- ------------------------ ------------------------ --------------------
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) IRS EMPLOYER
IDENTIFICATION NO.
WESTON CENTRE
112 E. PECAN STREET
P.O. BOX 2636
SAN ANTONIO, TEXAS 78299-2636
------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(210) 302-6000
------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
<PAGE>
Item 5. OTHER EVENTS.
The Company formed a limited partnership, La Quinta
Development Partners, L.P. ("LQDP"), with AEW Partners, L.P. ("AEW")
pursuant to the La Quinta Development Partners, L.P. Amended and Restated
Agreement of Limited Partnership dated March 21, 1990 (the "LQDP Partnership
Agreement"). LQDP was established for the purpose of acquiring competitors'
inns and converting them to the La Quinta -Registered Trademark- brand.
La Quinta manages the inns owned by LQDP. Prior to the transaction described
below, La Quinta, the general partner of LQDP, owned a 40% interest and AEW,
the limited partner, owned a 60% interest in LQDP. La Quinta contributed
property with a fair value of approximately $44 million and $4 million in
cash to the Partnership and AEW contributed cash of $3 million and an
additional $69 million in the form of a promissory note which was
subsequently funded. At May 31, 1995, LQDP owned 47 inns and 16 adjacent
restaurant buildings.
Under the terms of the LQDP Partnership Agreement, AEW paid $3,000,000
for an option, subject to certain vesting and other conditions, to convert
two-thirds of its ownership interest in LQDP into a specified number of
shares (adjusted for stock splits, cash dividends and distributions from LQDP
to AEW) of the Company's Common Stock. On June 15, 1995, AEW notified the
Company that it would exercise, subject to certain conditions, its option to
convert two-thirds of its ownership interest in LQDP into 5,299,821 shares of
the Company's Common Stock and also agreed to sell its remaining ownership
interest in LQDP to the Company for a negotiated price of $48.2 million in
cash (collectively, the "AEW Transaction"). The Company will finance the cash
portion of the AEW Transaction through borrowings under its and LQDP's bank
credit facilities. On June 13, 1995, Joseph F. Azrack, President and Director
of AEW, Inc., the general partner of AEW, resigned as a director of the
Company.
Following the AEW Transaction, La Quinta will own the entire interest in
the 47 inns and 16 adjacent restaurant buildings currently owned by LQDP. The
acquisition is anticipated to close approximately July 3, 1995, subject to
certain conditions. Since 1993, the Company has been purchasing 100% interests
in many of its properties through the acquisition of partners' ownership
interests. The AEW Transaction effectively completes the Company's strategy to
own, as well as operate, its inns. The acquisition of these partnership
interests, as well as individual inns, has resulted in an 81 percent increase
in the La Quinta equivalent rooms since December 31, 1992. The following table
summarizes the ownership of inns at December 31, 1992 and, on a pro forma basis
to reflect the AEW Transaction, at May 31, 1995:
<TABLE>
<CAPTION>
Pro Forma
May 31, 1995 December 31, 1992
---------------------------------------- ---------------------------------------
La Quinta La Quinta
Total Equivalent Total Equivalent
Inns Rooms Rooms Inns Rooms Rooms
---- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Owned 100% 228 29,352 29,352 89 11,456 11,456
Owned 40-80% 7 836 467 80 10,218 4,919
---- ------ ------ --- ------ ------
Total Company
owned and operated 235 30,188 29,819 169 21,674 16,375
Managed inns --- --- --- 40 4,978 75
Licensed inns 1 120 --- 3 366 ---
---- ------ ------ --- ------ ------
236 30,308 29,819 212 27,018 16,450
---- ------ ------ --- ------ ------
---- ------ ------ --- ------ ------
</TABLE>
Upon conversion of two-thirds of AEW's partnership interest into La
Quinta Common Stock, the Company will issue 5,299,821 shares of Common Stock
having a fair market value of $141.8 million based on the June 9, 1995 New
York Stock Exchange closing price. As a result of the conversion, the Company
will record net assets acquired at their fair market value of $96.4 million
and a non-cash, non-recurring item of $45.4 million as a deduction presented
below net earnings in the Statement of Operations (Conversion of Partner's
Interest into Common Stock) in arriving at net earnings available to common
shareholders.
The sale to La Quinta of the remaining one-third of AEW's interest in
LQDP will be accounted for as an acquisition of a minority interest and
purchase accounting will be applied.
As permitted under the Partnership Agreement, AEW has requested that the
Common Stock be registered with the Securities and Exchange Commission for
sale in an underwritten secondary public offering.
2
<PAGE>
1. Period Ended March 31, 1995
The unaudited pro forma combined condensed statement of operations
presented below includes the statement of operations as reported in the
Company's Quarterly Report on Form 10-Q for the three months ended March 31,
1995, and as adjusted to reflect the AEW Transaction as if the transaction had
occurred on January 1, 1995.
<TABLE>
<CAPTION>
As Reported Pro Forma
Quarter Ended Pro Forma Adjustments Quarter Ended
March 31, ----------------------- March 31,
STATEMENT OF OPERATIONS: 1995 Debit Credit 1995(F)
---------- ----- ------ -----------
<S> <C> <C> <C> <C>
(amounts in thousands, except per share data)
Total revenues $96,735 $96,735
-------- -------
Operating costs and expenses:
Direct 49,352 49,352
Corporate 4,510 4,510
Depreciation, amortization, and fixed asset retirements 10,181 A) 294 10,475
-------- -------
Total operating costs 64,043 64,337
-------- -------
Operating income 32,692 32,398
-------- -------
Other (income) expenses:
Net interest 10,264 B) 829 11,093
Partner's equity in earnings 4,428 C) 3,808 620
-------- -------
Earnings before income taxes 18,000 20,685
Income tax expense 6,930 D) 879 7,809
-------- ------ ------ -------
Net earnings $ 11,070 2,002 3,808 $12,876
-------- ------ ------ -------
-------- ------ ------ -------
Earnings per common and common equivalent share:
Net earnings $ 0.23 $ 0.24
-------- -------
-------- -------
Weighted average number of common and common
equivalent shares outstanding 49,086 E) 5,295 54,381
-------- ----- -------
-------- ----- -------
Notes to pro forma financial information for the period ended March 31, 1995:
<FN>
(A) Records additional depreciation expense on the addition of $40.0 million of
depreciable assets. The depreciation expense was calculated using the
straight line method based on a 34 year remaining life.
(B) Represents the interest expense on additional debt of $48.2 million
relating to the acquisition of one-third of AEW's interest in LQDP at the
effective weighted average interest rate under the Company's and LQDP's
credit facilities of 6.88% per annum.
(C) Represents the elimination of AEW's equity in earnings.
(D) Reflects income tax effect of pro forma adjustments including an
adjustment to the effective income tax rate from 38.5% to 37.75% due to
a difference between aggregate recorded cost and tax basis of the
acquired assets.
(E) Reflects the increase in weighted average shares outstanding.
(F) In the period the conversion transaction is consummated, the Company
will record $45.4 million (adjusted for the market price of the Common
Stock at closing) associated with the exercise of AEW's conversion
option as a deduction presented below net earnings in the Statement of
Operations (Conversion of Partner's Interest into Common Stock) in
arriving at net earnings available to common shareholders. This
non-recurring, non-cash item is directly attributable to the AEW
Transaction and is not reflected in the pro forma condensed statement of
operations above.
</TABLE>
3
<PAGE>
The unaudited pro forma combined condensed balance sheet of the Company
presented below includes the balance sheet as reported in the Company's
Quarterly Report on Form 10-Q for the three months ended March 31, 1995, and as
adjusted to reflect the AEW Transaction as if the transaction had occurred on
March 31, 1995.
<TABLE>
<CAPTION>
As Reported Pro Forma Adjustments Pro Forma
March 31, ----------------------- March 31,
ASSETS: 1995 Debit Credit 1995
---------- ----- ------ -----------
<S> <C> <C> <C> <C>
(amounts in thousands)
Current assets $ 32,794 $ 32,794
Other non-current assets 24,492 24,492
Net property and equipment 791,424 A) 18,283 846,274
B) 36,567
------------ ------ ------ -----------
$ 848,710 54,850 - $ 903,560
------------ ------ ------- -----------
------------ ------ ------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities $ 71,829 A) 30,000 $ 101,829
Long term debt, excluding current installments 455,503 A) 18,200 473,703
Deferred income taxes and other 20,592 20,592
Partners' capital 96,220 A) 29,917 6,470
B) 59,833
Shareholders' equity (net of treasury stock) 204,566 B) 96,400 300,966
------------ ------ ------- -----------
$ 848,710 89,750 144,600 $ 903,560
------------ ------ ------- -----------
------------ ------ ------- -----------
Notes to pro forma financial information as of March 31, 1995:
<FN>
(A) Records the purchase of one-third of AEW's interest in LQDP using proceeds
from the Company's and LQDP's credit facilities and the related elimination
of one-third of AEW's partner's capital. Approximately $30 million of the
$48.2 million purchase price will be drawn on LQDP's 364-day unsecured line
of credit (which the Company intends to renew annually subject to the
consent of the lenders) and therefore is included in current liabilities.
The remainder of the purchase price will be borrowed under the Company's
and LQDP's other bank credit facilities.
(B) Reflects the purchase of the assets and the related elimination of
two-thirds of AEW's partner's capital. Also, reflects the net of the
$141.8 million of Common Stock issued in the AEW Transaction and the
$45.4 million (adjusted for the market price of the Common Stock at
closing) which represents the non-recurring, non-cash item which will be
recorded as a deduction presented below net earnings in the Statement of
Operations (Conversion of Partner's Interest into Common Stock) in arriving
at net earnings available to common shareholders in the period the
transaction is consummated.
</TABLE>
4
<PAGE>
2. Year Ended December 31, 1994
The unaudited pro forma combined condensed statement of operations
presented below includes the statement of operations as reported in the
Company's Form 10-K for the year ended December 31, 1994, and as adjusted to
reflect the AEW Transaction as if the transaction had occurred on January 1,
1994.
<TABLE>
<CAPTION>
As Reported Pro Forma
Year Ended Pro Forma Adjustments Year Ended
December 31, ----------------------- December 31,
STATEMENT OF OPERATIONS: 1994 Debit Credit 1994(F)
---------- ----- ------ -----------
(amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Total revenues $362,242 $362,242
-------- -------
Operating costs and expenses:
Direct 194,894 194,894
Corporate 18,614 18,614
Depreciation, amortization, and fixed asset retirements 37,977 A) 1,176 39,153
-------- -------
Total operating costs 251,485 252,661
-------- -------
Operating income 110,757 109,581
-------- -------
Other (income) expenses:
Net interest expense 37,439 B) 3,316 40,755
Partners' equity 11,406 C) 9,278 2,128
Net gain on property transactions (79) (79)
-------- -------
Earnings before income taxes 61,991 66,777
Income tax expense 24,176 D) 1,366 25,542
-------- ------ ------ -------
Net earnings $ 37,815 5,858 9,278 $41,235
-------- ------ ------ -------
-------- ------ ------ -------
Earnings per common and common equivalent share:
Net earnings $ 0.78 $ 0.76
-------- -------
-------- -------
Weighted average number of common and common
equivalent shares outstanding 48,624 E) 5,290 53,914
-------- ----- -------
-------- ----- -------
Notes to pro forma financial information for the year ended December 31, 1994:
<FN>
(A) Records additional depreciation expense on the addition of $40.0 million of
depreciable assets. The depreciation expense was calculated using the
straight line method based on a 34 year remaining life.
(B) Represents the interest expense on additional debt of $48.2 million
relating to the acquisition of one-third of AEW's interest in LQDP at the
effective weighted average interest rate under the Company's and LQDP's
credit facilities of 6.88% per annum.
(C) Represents the elimination of AEW's equity in earnings.
(D) Reflects income tax effect of pro forma adjustments including an adjustment
to the effective income tax rate from 39% to 38.25% due to a difference
between aggregate recorded cost and tax basis of the acquired assets.
(E) Reflects the increase in weighted average shares outstanding.
(F) In the period the conversion transaction is consummated, the Company
will record $45.4 million (adjusted for the market price of the Common
Stock at closing) associated with the exercise of AEW's conversion
option as a deduction presented below net earnings in the Statement of
Operations (Conversion of Partner's Interest into Common Stock) in
arriving at net earnings available to common shareholders. This
non-recurring, non-cash item is directly attributable to the AEW
Transaction and is not reflected in the pro forma condensed statement of
operations above.
</TABLE>
5
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBIT
(c) EXHIBITS. The following exhibit is filed herewith and incorporated
by reference herein.
2.1 Agreement to Sell and Purchase, dated as of June 15, 1995, among
La Quinta, AEW, and LQI Acquisition Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
LA QUINTA INNS, INC.
(Registrant)
Date: June 15, 1995 By /s/ William C. Hammett, Jr.
----------------------------------
William C. Hammett, Jr.
Senior Vice President
Accounting and Administration
6
<PAGE>
AGREEMENT TO SELL AND PURCHASE
THIS AGREEMENT TO SELL AND PURCHASE ("Agreement") dated
as of the 15th day of June, 1995 is made by and between LA
QUINTA INNS, INC., a Texas corporation ("La Quinta"), LQI
ACQUISITION CORPORATION, a wholly-owned subsidiary of La
Quinta, ("Purchaser") and AEW Partners, L.P., a Delaware
limited partnership ("AEW").
WHEREAS, La Quinta and AEW entered into an Amended and
Restated Agreement of Limited Partnership of La Quinta
Development Partners, L.P. on March 21, 1990 (the
"Partnership Agreement") to form a partnership known as La
Quinta Development Partners, L.P.("LQDP").
WHEREAS, under the Partnership Agreement, AEW has the
right to convert two thirds (2/3rds) of its interest in LQDP
(40 Partnership Units) (the "Convertible Interest") into
shares of the Common Stock of La Quinta, the number of such
shares being determinable by a conversion rate specifically
set forth in said Partnership Agreement.
WHEREAS, AEW has been granted registration rights by La
Quinta for its Registrable Securities as defined in the
Partnership Agreement whereby La Quinta must file a
registration statement upon a demand for registration by AEW
following a conversion of the portion of its interests in
LQDP which may be converted into the Common Stock of La
Quinta, all as stated in the Partnership Agreement.
WHEREAS, under the Partnership Agreement, AEW has the
right to institute a buy-sell process on AEW's remaining
interest in LQDP subsequent to any conversion referenced
above, said process requiring certain procedures and notice
periods, all as set forth in the Partnership Agreement.
WHEREAS, AEW desires to convert the Convertible
Interest into Common Stock of La Quinta, and to obtain
registration of these securities. Moreover, AEW wishes to
sell its remaining interest in LQDP, and Purchaser wishes to
purchase same.
WHEREAS, AEW and La Quinta, in the interests of time
and a more manageable transaction, have deemed it in their
mutual best interests to modify certain procedures set forth
in the Partnership Agreement (including the Registration
Rights provisions set forth as Exhibit K thereto (the
"Registration Rights Agreement")) pertaining to these
transactions.
<PAGE>
Capitalized terms used herein without definition shall
have the meanings set forth in the Partnership Agreement or
the Registration Rights Agreement, as applicable.
NOW THEREFORE, for the consideration and the mutual
covenants and agreements set forth, subject to the terms and
conditions hereof, the parties hereto hereby agree as
follows:
1. AEW hereby gives its Initial Conversion Notice as
referenced in the Partnership Agreement to La Quinta,
indicating its intention to exercise its right to convert
two-thirds (2/3rds) of its interest in LQDP (40 Partnership
Units) into 5,299,821 shares of the Common Stock, par value
$.10 share (the "Common Stock") of La Quinta (as such number
may be adjusted pursuant to the terms of the Partnership
Agreement), (as adjusted, the "Conversion Shares") by
transfer of said Partnership Units to La Quinta. AEW agrees
to convert the Convertible Interest into the Conversion
Shares at the Closing (as defined herein) (the
"Conversion"). AEW hereby requests that a filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR")
be made by La Quinta, if required, and AEW hereby agrees
that it shall cooperate with La Quinta in making such
filing. Further, AEW states that its present expectations
are that the Conversion Shares will be sold in an
underwritten public offering pursuant to a registration
statement on Form S-3, covering the Conversion Shares plus
20,250 additional shares of Common Stock (the "Registration
Statement") to be filed by La Quinta with the Securities and
Exchange Commission (the "SEC"); provided, however, that AEW
and La Quinta recognize that AEW's non-binding present
expectation with respect to the sale of Conversion Shares
pursuant to the Registration Statement may change at any
time.
La Quinta agrees to issue and deliver to AEW at the
Closing (as defined herein) one or more certificates
representing the Conversion Shares. Such certificate(s)
shall contain only the legend set forth in Section 7(a)(ix)
hereof and shall contain no further legends or restrictions
set forth thereon. AEW and La Quinta each waive any and
all notices and timelines set forth in Section 12.01 of the
Partnership Agreement, it being the intention of the parties
hereto to conform to the requirements set forth in this
Agreement where any conflict exists between this Agreement
and such notice and timeline provisions. La Quinta further
waives any rights it may have under Section 12.02(b) of the
Partnership Agreement with respect to the Conversion
contemplated hereby.
2. AEW hereby makes a Registration Request, as
defined in the Registration Rights Agreement, to La Quinta,
requesting the filing of a registration statement under the
Demand Registration provisions of the Registration Rights
Agreement for registration with the SEC under and in
accordance with the provisions of the Securities Act of
1933, as amended (the "Securities Act") of the Conversion
Shares. AEW and La Quinta each waive any
2
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and all notices and timelines set forth in the Registration
Rights Agreement with respect to the proposed offering of
the Conversion Shares pursuant to the Registration
Statement, it being the intention of the parties hereto to
conform to the requirements set forth in this Agreement
where any conflict exists between this Agreement and such
notice and timeline provisions.
3. AEW hereby requests that La Quinta conduct, and La
Quinta agrees to conduct, a road show with respect to the
offering. In consideration therefore, AEW hereby agrees to
pay, if but only if the Closing occurs, all the expenses of
all parties hereto associated with the registration process
and the road show, notwithstanding the fact that Sections
1(b) and 5 of the Registration Rights Agreement require such
expenses to be borne or reimbursed by LQDP. The aforesaid
expenses to be paid by AEW shall include, but are not
limited to:
(a) all those items detailed in Section 5 of the
Registration Rights Agreement.
(b) $150,000 payable directly to La Quinta to
account for the overhead and salaries of La
Quinta's officers and employees performing
services associated with the transactions
contemplated by this Agreement.
(c) all costs, and expenses associated with the
road show and travel related thereto.
(d) all costs, underwriting fees, discounts,
commissions and expenses payable to or incurred
with the engagement of underwriters.
If the Closing occurs, the aforesaid costs and expenses
shall be paid by AEW regardless of the consummation of the
offering of the Conversion Shares contemplated hereby. In
order to satisfy the anticipated expenses which are AEW's
responsibility as set forth above, La Quinta will withhold
from the Purchase Price set forth in Section 6 hereinbelow
the sum of $665,000 (the "Holdback"), from which amount the
expenses will be paid or reimbursed to La Quinta, with AEW
responsible for any excess expense over the amount withheld
if the Closing occurs. Any portion of the Holdback
remaining after all expenses are satisfied will be paid over
to AEW. In the event that the Closing does not occur,
expenses incurred in connection with this Agreement shall be
paid by LQDP in accordance with the Partnership Agreement.
4. AEW hereby appoints Smith Barney Shearson, Inc.,
Montgomery Securities and Alex. Brown & Sons, Incorporated
as underwriters to administer the public offering of the
Conversion Shares, with Smith Barney Shearson as the
managing underwriter, and La Quinta hereby approves such
selections. The
3
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offering of Conversion Shares shall be made pursuant to an
underwriting agreement in the form of the draft thereof
dated the date hereof, with such changes thereto as shall be
consented to by each of La Quinta, AEW and the managing
underwriter.
5. La Quinta will use its best efforts to cause the
Registration Statement to become effective as soon as
practicable, the provisions of Section 4 of the Registration
Rights Agreement notwithstanding. Notwithstanding the
provisions of Sections 7 and 4(a)(ii) of the Registration
Rights Agreement, La Quinta shall have no obligation to
cause the Registration Statement to remain effective
following the closing of the offering of the Conversion
Shares unless otherwise required by the Underwriters with
respect to the proposed offering of the Conversion Shares.
La Quinta and AEW hereby agree (i) that AEW shall have
the right in its sole discretion to request that La Quinta
withdraw the Registration Statement filed with the SEC in
connection with the registration request made herein at any
time prior to or after the effectiveness of the Registration
Statement, (ii) that La Quinta shall promptly comply with
any such withdrawal request, and (iii) if withdrawn by AEW
in accordance with this Paragraph, such Registration
Statement shall constitute an effective Demand Registration
for purposes of calculating the number of Demand
Registrations made under the Partnership Agreement.
Unless specifically waived, altered or amended by the
terms of this Agreement, all other provisions of the
Partnership Agreement with respect to the issuance,
registration and sale of the Conversion Shares, as the same
may be amended from time to time by the parties thereto,
including the exhibits incorporated by reference therein,
shall remain in full force and effect.
6. AEW agrees to sell, and Purchaser agrees to
purchase, AEW's remaining twenty percent (20%) interest (20
Partnership Units) ("Remainder Interest") at the time of
Closing, and La Quinta agrees to pay to AEW an amount (the
"Purchase Price") equal to (i) $48,200,000, plus (ii)
interest from July 1, 1995 to and including the date the
Closing occurs, calculated at the rate of 6.75% per annum
(based on a 360 day year).
(a) The Closing is agreed to be effective as of
July 1, 1995.
(b) The parties hereto agree that there shall be
no contributions made to or distributions from
LQDP subsequent to April 30, 1995 and prior to the
Closing Date.
(c) Together with the Conversion, the
simultaneous closing on the Remainder Interest
will convey all of AEW's interests, right,
4
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and title of every nature and kind whatsoever in
and to LQDP, subject to the conditions and
agreements set forth herein. The Convertible
Interest and the Remainder Interest are
collectively referred to herein as "AEW's
Interest."
With respect to the transactions contemplated
by this Section 6, La Quinta and AEW hereby waive
the requirements set forth in Article XI
(Liquidation of Limited Partner's Interest; Buy-
Sell Provisions) of the Partnership Agreement.
The provisions set forth in this Agreement with
respect to the purchase and sale of the Remainder
Interest shall be in lieu of and in complete
substitution of such Article XI unless the
purchase and sale of the Remainder Interest is not
consummated on or before August 1, 1995.
7. (a) AEW hereby represents and warrants to La
Quinta and Purchaser as of the date of execution of this
Agreement that:
(i) AEW has all requisite power and
authority to execute and deliver this Agreement
and the related agreements contemplated hereby and
to perform its obligations hereunder and
thereunder. This Agreement has been duly executed
and delivered by AEW and constitutes a valid and
binding obligation of AEW enforceable in
accordance with its terms.
(ii) AEW is a limited partnership, validly
existing and in good standing under the laws of
the State of Delaware.
(iii) AEW has all right, title and
interest in AEW's Interest free and clear of any
adverse claim, pledge, lien, mortgage, commitment
or option (other than as set forth in the
Partnership Agreement). There is no action, suit,
proceeding or claim pending against, or, to AEW's
knowledge, threatened against, AEW with respect
to, or in any manner affecting, AEW's ownership of
any of AEW's Interest or wherein an unfavorable
decision, ruling or finding against AEW could
render unlawful or otherwise have a material
adverse effect on the consummation by AEW of the
transactions contemplated by this Agreement.
(iv) Neither the execution or delivery of
this Agreement by AEW nor the fulfillment of or
compliance with the terms or provisions hereof by
AEW nor the completing of the transactions
contemplated hereby will result in a breach by AEW
of the terms, conditions or provisions of, or
constitute a default by AEW under, or result in a
violation by AEW of any debt, obligation,
agreement, instrument, order, judgment or decree
to which AEW is bound, or violate any provision of
any applicable law or regulation or any
5
<PAGE>
order, decree, writ or injunction of any court or
governmental body, violate the partnership
agreement or other governing document of AEW, or
result in the creation or imposition of any lien,
charge, restriction, security interest or
encumbrance of any nature whatsoever on any of
AEW's Interest.
(v) No consent from, approval of, or filing
with any governmental entity or any other person
is necessary in connection with the execution,
delivery or performance of this Agreement, and all
other agreements or documents contemplated herein,
by AEW, with the exception of any filing to be
made under HSR or any state securities laws, or
with the SEC.
(vi) AEW understands that the Common Stock to
be issued and delivered to it in the Conversion
has not been registered pursuant to the
registration requirements of the Securities Act by
reason of the reliance on an exemption from the
registration requirements of the Securities Act
pursuant to Section 4(2) thereof.
(vii) AEW (i) has the capacity to protect
its own interests in connection with the
transactions contemplated hereby, (ii) is able to
bear the economic risk thereof, (iii) is
knowledgeable, sophisticated and experienced in
business and financial matters and (iv) is an
"accredited investor" (as such term is defined in
Rule 501(a) of Regulation D under the Securities
Act) with such knowledge and experience in
financial matters that it is capable of evaluating
the merits and risks of an investment in the
Common Stock. The Company has delivered or made
available to AEW such documents, materials and
information pertaining to the Company as it may
have requested and has afforded it an opportunity
to ask questions of and receive answers from the
Company and its executive officers and
representatives; provided, however, that this
representation shall have no effect whatsoever on
the representations and warranties contained in
Section 7(b) of this Agreement and AEW's rights
and remedies with respect thereto.
(viii) AEW is acquiring the Common Stock
on Conversion for its own account and not with a
view to any distribution thereof or with any
present intention of offering or selling any of
the Common Stock in a transaction that would
violate the Securities Act or the securities laws
of any state of the United States or any other
applicable jurisdiction. AEW understands that the
Common Stock to be issued in the Conversion may
not be sold, transferred
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or otherwise disposed of without registration
under the Securities Act or an exemption
therefrom, and that in the absence of an effective
registration statement covering the same or an
available exemption from registration under the
Securities Act, such Common Stock must be held
indefinitely. In the absence of an effective
registration statement under the Securities Act
or an exemption therefrom, AEW will not sell any
Common Stock received in the Conversion, except
in a manner consistent with its representations
set forth in this Section.
(ix) AEW understands and acknowledges that
each certificate representing the Common Stock
issued to it in the Conversion will bear a legend
to the following effect:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR
REGISTRATION OR QUALIFICATION UNDER ANY
APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT,
IN THE CIRCUMSTANCES, REQUIRED."
(x) AEW represents that it has carefully
read Subsections 7(a)(vi) through (x) of this
Agreement and discussed their requirements and
other applicable limitations upon its ability to
sell the Common Stock received in the Conversion
to the extent that it felt necessary with its
counsel.
(b) La Quinta and Purchaser hereby represent and
warrant to AEW, as of the date of this Agreement, that:
(i) Both of La Quinta and Purchaser have all
requisite power and authority to execute and
deliver this Agreement and the related agreements
contemplated hereby and to perform its respective
obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by
each of La Quinta and Purchaser and constitutes a
valid and binding obligation of La Quinta and
Purchaser enforceable in accordance with its
terms. There is no action, suit, proceeding or
claim pending or, to the
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<PAGE>
knowledge of La Quinta, threatened against La
Quinta, the Partnership, or the Purchaser with
respect to, or which could, in any manner, have a
material adverse effect on, the consummation of
the transactions contemplated by this Agreement.
(ii) La Quinta and Purchaser are corporations
duly organized, validly existing and in good
standing under the laws of the State of Texas and
Delaware, respectively.
(iii) Neither the execution nor delivery
of this Agreement by La Quinta or Purchaser nor
the fulfillment of or compliance with the terms or
provisions hereof nor the completion of the
transactions contemplated hereby will result in a
breach of the terms, conditions or provisions of,
or constitute a default under, or result in a
violation of any debt, obligation, agreement or
instrument to which La Quinta, the Partnership, or
Purchaser is bound (which, individually or in the
aggregate, would have a material adverse effect on
La Quinta and its subsidiaries, taken as a whole),
or violate any provision of any applicable law
or regulation or any order, judgment, decree, writ
or injunction of any court or governmental body
or violate the charter, by-laws, or other
governing documents, as the case may be, of La
Quinta, the Partnership or Purchaser.
(iv) No consent from, approval of, or filing
with any governmental entity or any other person,
whether by vote, agreement or otherwise, is
necessary in connection with the execution,
delivery or performance of this Agreement,
including the issuance of the Conversion Shares,
and any other agreements or documents contemplated
herein, by La Quinta, the Partnership or
Purchaser, with the exception of any filings to be
made under HSR or any state securities law or with
the SEC.
(v) The Conversion Shares when issued will
be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any
preemptive or similar right. The issuance of the
Conversion Shares and the resale thereof by AEW
will not violate or be limited by the charter,
bylaws, or other governing documents of La Quinta
and will not violate or be limited by any
provision of the corporate or antitakeover laws
of the State of Texas. Except for options
for a total of 393,750 shares of Common Stock
granted after December 31, 1994, and except for
stock option grants that may be made to newly
hired officers and newly appointed directors in
the ordinary course of business, La Quinta does
not have outstanding any options to purchase, or
any rights or warrants to subscribe for or any
securities or obligations convertible into, or any
contracts or commitments to issue or sell, any
shares of Common Stock, any shares of capital
stock of any subsidiary or any such warrants,
convertible securities or obligations that are not
8
<PAGE>
disclosed in La Quinta's Annual Report on Form
10-K for the year ended December 31, 1994.
(vi) Except for certain rights of La Quinta's
President and Chief Executive Officer set forth in
a Registration Rights Agreement between La Quinta
and such officer dated March 3, 1992, no holder of
securities of La Quinta has or will have rights to
the registration of any securities of La Quinta as
a result of La Quinta seeking to register the
Conversion Shares. All registration rights (if
any) of any holder of securities of La Quinta with
respect to the Registration Statement will be
waived prior to the filing of the Registration
Statement.
(vii) La Quinta and Purchaser, as the
case may be, will have immediately prior to and at
the Closing the financial resources and liquidity
necessary to pay the Purchase Price to AEW at the
Closing.
(viii) La Quinta currently satisfies, and
will use its best efforts to continue to satisfy,
all of the conditions that must be satisfied in
order to utilize Form S-3 to register the
Conversion Shares under the Securities Act. La
Quinta will use its best efforts to qualify the
Conversion Shares for listing on the New York
Stock Exchange (the "NYSE").
(ix) The Form 10-K of La Quinta and its
subsidiaries (as used in this Agreement in
Sections 7(b)(ix) and (x), "subsidiaries" shall
mean its subsidiaries and unincorporated
partnerships and joint ventures) for the year
ended December 31, 1994 and the Form 10-Q of La
Quinta for the quarter ended March 31, 1995
(collectively, the "Exchange Act Filings"), when
they were filed, conformed in all material
respects with the requirements of the Securities
Exchange Act of 1934; no such document when it was
filed contained an untrue statement of a material
fact or omitted to state a material fact required
to be stated therein or necessary to make the
statements therein not misleading. La Quinta and
its subsidiaries are not in default under any
contract or obligation by which any of them is
bound and there is no litigation against any of
them, except for such as is disclosed in the
Exchange Act Filings or which could not have a
material adverse effect on La Quinta and its
subsidiaries taken as a whole.
(x) Subsequent to the respective dates as of
which information is given in the Exchange Act
Filings, (i) neither La Quinta nor any of its
subsidiaries has incurred any liabilities or
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<PAGE>
obligations, direct or contingent, that are
material to La Quinta and its subsidiaries, taken
as a whole, nor entered into any transaction not
in the ordinary course of business that is
material to La Quinta and its subsidiaries taken
as a whole, and (ii) there has been no material
adverse change in the financial condition,
business, net worth or results of operations of La
Quinta and its subsidiaries, taken as a whole.
8. (a) The obligation of AEW to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, prior to or at the Closing, of each of the
following conditions precedent, any one or more of which may
be waived by AEW, which waiver, to be effective, must be
evidenced in a writing signed by AEW on or before the
Closing:
(i) The representations and warranties of La
Quinta and Purchaser under Section 7(b) shall be
true and correct in all material respects as of
the date of this Agreement and as of the Closing
Date with the same effect as though such
representations and warranties had been made at
and as of the Closing Date and each of La Quinta
and Purchaser shall have delivered to AEW a
certificate to such effect;
(ii) All obligations of La Quinta and
Purchaser to be performed prior to or at the
Closing pursuant to the provisions of this
Agreement shall have been performed in all
material respects.
(iii) All filings required to be made
under HSR with respect to the transfer of the
Remainder Interest and the conversion of the
Convertible Interest shall have been made, and any
applicable waiting period thereunder shall have
terminated or expired.
(iv) The simultaneous consummation of the
Conversion and the purchase of the Remainder
Interest.
(v) Listing of the Conversion Shares on the
NYSE shall be effective.
(vi) La Quinta shall have received, and
delivered to AEW written evidence of, any consent
or waiver required with respect to the
transactions contemplated hereby (the failure of
which to obtain would have a material adverse
effect on La Quinta and its subsidiaries, taken as
a whole) under any agreement to which La Quinta or
any of its subsidiaries or affiliates is a party,
including any bank credit agreement.
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<PAGE>
(vii) The Registration Statement shall
have been filed.
(viii) The Certificate required by
Section 12.04(a) of the Partnership Agreement
shall have been delivered to AEW and such
certificate shall set forth that the Convertible
Interest is convertible into 5,299,821 shares of
Common Stock on the date hereof.
(b) The obligations of La Quinta and Purchaser to
consummate the transactions contemplated hereunder
shall be subject to the fulfillment, prior to or at the
Closing, of each of the following conditions precedent,
any one or more of which may be waived by La Quinta,
which waiver shall be evidenced in writing on or before
the Closing:
(i) The representations and warranties of
AEW under Section 7(a) above shall be true and
correct in all material respects as of the date of
this Agreement and as of the Closing Date with the
same effect as though such representations and
warranties had been made at and as of the Closing
Date and AEW shall have delivered to La Quinta and
Purchaser a certificate executed on behalf of AEW
to such effect.
(ii) All filings required to be made under
HSR with respect to the transfer of the Remainder
Interest and the conversion of the Convertible
Interest shall have been made, and any applicable
waiting period thereunder shall have terminated or
expired.
(iii) Simultaneous consummation of the
Conversion and the purchase of the Remainder
Interest.
(iv) All obligations of AEW to be performed
prior to or at the Closing pursuant to the
provisions of this Agreement shall have been
performed in all material respects.
9. (a) TIME AND PLACE. Consummation of the
Conversion of the Convertible Interest into the Conversion
Shares and the purchase and sale of the Remainder Interest
(the "Closing") shall take place at 10:00 a.m. at the
offices of La Quinta or at such other place as the parties
hereto shall mutually agree in writing on the date (the
"Closing Date") that is the later of (i) July 3, 1995,
(ii) a date mutually agreed to by La Quinta and AEW or
(iii) the second business day which follows the date on
which all conditions to the Closing specified in Section 8
hereof have been satisfied, fulfilled or waived. In the
event that the Closing shall not have occurred by August 1,
1995, this Agreement shall terminate.
11
<PAGE>
(b) ITEMS TO BE DELIVERED BY AEW. At the Closing, AEW
shall deliver to La Quinta and Purchaser, as
applicable, each of the following items:
(i) A Release, substantially in the form
attached hereto as Exhibit "A", executed and
acknowledged by AEW.
(ii) An Assignment of AEW's Interest
substantially in the form attached hereto as
Exhibit "B."
(iii) A First Amendment To La Quinta
Development Partners, L.P. Amended and Restated
Agreement of Limited Partnership in the form
attached hereto as Exhibit "C", executed and
acknowledged by AEW.
(iv) The certificate required by Section
8(b)(i) hereof.
(v) A Receipt For Funds and the Conversion
Shares substantially in the form attached as
Exhibit "D."
(vi) All additional documents and instruments
required hereby, or which La Quinta's and AEW's
counsel mutually determine are necessary to the
consummation of the transactions contemplated in
this Agreement.
(c) ITEMS TO BE DELIVERED BY LA QUINTA AND THE
PURCHASER. At the Closing, La Quinta and the Purchaser
shall deliver to AEW the following:
(i) One (1) or more, if requested by AEW,
certificates for the Common Stock issuable on
conversion, with the legends required by the
Partnership Agreement, registered in the name of
AEW or AEW's designee.
(ii) The Purchase Price in immediately
available funds by wire transfer to an account
designated by AEW.
(iii) A Release, substantially in the
form attached hereto as Exhibit "A" , executed and
acknowledged by La Quinta.
(iv) La Quinta and the Purchaser shall
deliver to AEW an opinion of John F. Schmutz,
General Counsel of La Quinta and the Purchaser, or
Latham & Watkins, special counsel to La Quinta and
the Purchaser, reasonably acceptable to AEW to the
effect that (A) La Quinta, Purchaser and the
Partnership are duly organized and validly
existing in their jurisdictions of organization,
(B) La Quinta and Purchaser have the corporate
12
<PAGE>
power and authority to execute and deliver the
documents and instruments required to consummate
the Closing, (C) all necessary corporate action,
as the case may be, required to be taken by or on
behalf of each of La Quinta and Purchaser to
authorize it to execute, deliver and perform the
terms of the documents and instruments required to
consummate the Closing have been taken, (D) such
documents and instruments are binding on La Quinta
and Purchaser, as applicable, and enforceable in
accordance with their terms, except (i) as limited
by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws
now or hereafter in effect relating to or
affecting the rights and remedies of creditors;
(ii) as limited by the effect of general
principles of equity, whether enforcement is
considered in a proceeding in equity or at law,
and the discretion of the court before which any
proceeding therefor may be brought; and (iii) as
limited by the unenforceability under certain
circumstances under law or court decisions of
provisions providing for the indemnification of or
contribution to a party with respect to a
liability where such indemnification or
contribution is contrary to public policy; and (E)
the Conversion Shares have been duly authorized
and validly issued and are fully paid and non-
assessable. Such opinions may be limited to the
laws of the states of Texas or California, as
appropriate, and the corporate and partnership
law of the State of Delaware.
(v) The certificates and other items
required by Section 8(a)(i) and (viii).
(vi) All additional documents and instruments
required hereby, or which La Quinta's and AEW's
counsel mutually determine are necessary to the
proper consummation of the transactions
contemplated in this Agreement.
11. (a) La Quinta covenants and agrees to comply with
all applicable anti-manipulation rules of the SEC contained
in Rules 10b-6 and 10b-7 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")(namely, not to buy,
or make bids to purchase, common stock or any other
securities of La Quinta of the same class as the Common
Stock, or solicit purchases thereof by others except to the
extent not prohibited by such rules) until the offering of
the Conversion Shares is completed.
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<PAGE>
(b) AEW hereby covenants and agrees (i) to comply
with all applicable anti-manipulation rules of the SEC
contained in Rules 10b-6 and 10b-7 under the Exchange
Act (namely, not to buy, or make bids to purchase,
Common Stock or any other securities of La Quinta of
the same class as the Common Stock, or solicit
purchases thereof by others, except to the extent not
prohibited by such rules) until the offering of the
Conversion Shares is completed, (ii) to inform La
Quinta when the distribution of the Conversion Shares
pursuant to the Registration Statement is completed,
and (iii) until the offering of the Conversion Shares
pursuant to the Registration Statement is completed or
the Registration Statement is withdrawn, to inform La
Quinta prior to making any purchases, or bids to
purchase, Common Stock or any other securities of La
Quinta of the same class as the Common Stock, or prior
to soliciting purchases thereof by others, which are
not prohibited by Rules 10b-6 and 10b-7 of the SEC
under the Exchange Act, and in connection therewith to
furnish La Quinta with a written opinion of counsel,
which counsel shall be reasonably acceptable to La
Quinta, to the effect that such purchases, bids to
purchase or solicitations of purchases by others will
not violate said rules, which such counsel's opinion
shall be in such form and with such limitations,
qualifications and exceptions as are reasonably
acceptable to La Quinta. In connection with any "at
the market" non-underwritten public offering, AEW
further covenants and agrees to advise any selling
securities broker, dealer or other person participating
in the distribution of the Conversion Shares pursuant
to such a public offering about the necessity to
comply, if applicable, with Rules 10b-6 and 10b-7 in
connection therewith.
12. (a) La Quinta and Purchaser, jointly and
severally, hereby agree to defend, indemnify and hold the
AEW Indemnified Parties harmless from and against any and
all claims, demands, liabilities, judgments, liens, costs,
expenses, penalties, damages and losses (including, but not
limited to, attorneys' fees and costs) of every kind and
nature whether known or unknown, now existing or which may
arise in the future from the beginning of time through and
after the Closing Date which pertain in any manner to or
arise out of, are based upon, or relate to:
(i) Any breach of the warranties,
representations, covenants and agreements of La
Quinta and Purchaser contained in this Agreement;
(ii) Ownership of LQDP or any of its
Properties as to the actions or failure to act of
LQDP or its successors or its assigns, after the
Closing Date; and
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<PAGE>
(iii) La Quinta's negligence or
misfeasance as a Partner in LQDP.
La Quinta will also indemnify the AEW Indemnified Parties as
required under the Management Agreement (as defined in the
Partnership Agreement), and such obligation shall continue
after the Closing.
(b) AEW hereby agrees to defend, indemnify and
hold the La Quinta Indemnified Parties harmless from
and against any and all claims, demands, liabilities,
judgments, liens, costs, expenses, penalties, damages
and losses (including, but not limited to, attorneys'
fees and costs) of every kind and nature whether known
or unknown, now existing or which may arise in the
future from the beginning of time through and after the
Closing Date which pertain in any manner to or arise
out of or relate to any breach of the warranties,
representations, covenants and agreements of AEW
contained in this Agreement;
(c) For the purposes of this Agreement, the "AEW
Indemnified Parties" shall be defined as AEW and any
and all parent, subsidiary or affiliated corporations,
partnerships, or business enterprises and their
respective successors, assignees, partners,
shareholders, representatives, agents, attorneys,
employees, heirs, executors, officers and directors and
the "La Quinta Indemnified Parties" shall be defined as
La Quinta, the Purchaser and any and all subsidiary or
affiliated corporations, partnerships, or business
enterprises and their respective successors, assignees,
partners, shareholders, representatives, agents,
attorneys, employees, heirs, executors, officers and
directors. The AEW Indemnified Parties and the La
Quinta Indemnified Parties are sometimes respectively
referred to as the "Indemnified Parties" as the context
requires.
Promptly after receipt by an Indemnified Party of
notice of any claim, loss, damage, liability, cost,
expense or the commencement of any action involving the
subject matter of the foregoing indemnity provisions,
such Indemnified Party will, if a claim thereof is to
be made against the Indemnifying Parties pursuant to
the provisions of these indemnity provisions, notify
the Indemnifying Party thereof within 30 days of the
Indemnified Party's receipt of such notice; but the
omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any
Indemnified Party unless such Indemnifying Party is
materially prejudiced insofar as its liabilities
hereunder to the Indemnified Party are concerned by
such omission.
In case an action is brought against any
Indemnified Party and it notifies the Indemnifying
Party of the commencement thereof, the
15
<PAGE>
Indemnified Party shall have the right to select counsel
to assume and control the defense thereof with counsel
chosen by the Indemnified Party. The Indemnifying
Parties agree to promptly pay the fees and expenses of
such counsel and the defense upon receipt of invoices
with respect thereto. Neither party will compromise or
settle any such suit, proceeding, claim or demand with-
out prior written consent of the other, provided that
in the event that the Indemnifying Party proposes a
monetary settlement, the acceptance of which would
release the Indemnified Party from all claims
asserted in such action, suit proceeding or demand
and if the Indemnified Party withholds its consent
to such settlement, then the liability of the
Indemnifying Party shall be limited to the total sum
representing the amount of the proposed compromise or
settlement and the amount of attorney's fees
incurred by the Indemnified Party up to the time
such approval is withheld.
13. This Agreement and all questions relating to the
interpretation, construction and enforceability of this
Agreement, shall be governed in all respects by the
substantive laws of the State of Delaware, without regard
to choice of law principles. It is the specific intention
of the parties hereto that any court which is called upon
to construe or apply this Agreement or any document in
connection herewith should apply the substantive laws of
the State of Delaware, without regard to choice of law
principles. Each party hereto for itself its or successors
and assigns consents to the personal jurisdiction of any
state or federal court located within the State of Delaware
and hereby waives the requirements of personal service of
any and all process upon it pursuant to Delaware or federal
rules of civil procedure and consents that in lieu thereof
all such service so made to said person shall be deemed to
be completed five (5) business days after the same shall
have been posted to the address set forth below in Section
18. In addition, each party hereto for itself, its
successors and assigns agrees that Delaware shall be the
exclusive venue (to the extent that subject matter
jurisdiction exists) for all causes of action arising out of
this Agreement and any and all related documents and
agreements. This consent to jurisdiction and venue shall
not be deemed a waiver of any right of any party to remove
any litigation to a federal court located in Delaware.
14. Except for underwriting commissions, discounts and
fees in connection with the public offering of Conversion
Shares owned by AEW, La Quinta (including for purposes of
this Section, Purchaser) and AEW each represent one to
another that no real estate commissions or other broker's,
finder's, or other similar fees will be due in respect of
the sale of AEW's interest or any other transaction
contemplated by this Agreement. AEW agrees to indemnify and
hold the La Quinta Indemnified Parties harmless from any
loss, liability, damage, cost or expense (including, without
limitation, reasonable attorneys' fees) paid or incurred by
any such La Quinta Indemnified Party by reason of any claim
to any broker's, finder's or other similar fee(s) in
connection with this transaction by any party claiming by,
through or under AEW. La Quinta
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<PAGE>
and Purchaser jointly and severally agree to indemnify and
hold the AEW Indemnified Parties harmless from any loss,
liability, damage, cost or expense (including, without
limitation, reasonable attorneys' fees) paid or incurred
by any such AEW Indemnified Party reason of any claim
to any broker's, finder's or other similar fees in
connection with this transaction by any party claiming by,
through or under La Quinta or Purchaser.
15. All references to "Exhibits" contained herein are
references to Exhibits annexed hereto, all of which are made
a part hereof, and incorporated herein, for all purposes.
16. The captions, headings, and arrangements used in
this Agreement are for convenience only and do not in any
way affect limit, amplify or modify the terms and provisions
hereof.
17. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words
of any gender shall include each other gender where
appropriate.
18. All notices, demands, requests and other
communications required or permitted hereunder shall be in
writing, and shall be deemed to be delivered to a party
hereto on the earlier of the date (i) when received by the
party or (ii) if sent by mail, on the day on which delivered
to such party at the address set forth below or on the fifth
(5th) business day after deposit in a regularly maintained
receptacle for the United States mail, registered or
certified, return receipt requested, postage prepaid,
addressed as follows:
If to La Quinta or: La Quinta Inns, Inc.
Purchaser P.O. Box 2636
San Antonio, Texas 78299-2636
Attention: General Counsel
If to AEW: Aldrich, Eastman, Waltch
225 Franklin Street
Boston, MA 02110-2893
Attention: General Counsel
19. This Agreement and the provisions relating hereto
in the Partnership Agreement constitute the entire
agreement of the parties and the same may not be amended or
modified other than by a writing signed by the parties
hereto. All prior understandings and agreements between
the parties are merged into this Agreement and the
Partnership Agreement, which alone fully and completely
express their understandings; provided, however, that, as
17
<PAGE>
set forth in Section 6 hereof the provisions of this
Agreement are in lieu of and in complete substitution of
Article XI of the Partnership Agreement unless the
Conversion and purchase and sale of the Remainder Interest
is not consummated on or before the date set forth in said
Section 6 and, for purposes of the transactions
contemplated by this Agreement Section 3 of this Agreement
is in lieu of and in complete substitution of the
provisions in the Partnership Agreement related thereto.
20. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future
laws, such provision shall be fully severable; the
Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never
comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and
shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from the
Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid or
enforceable.
21. The representations and warranties set forth in
this Agreement shall be continuing, shall survive the
Closing and shall not be affected by any investigation or
inspection, actual knowledge, verification, or approval by
La Quinta, the Purchaser or AEW or by anyone acting on
behalf of La Quinta, the Purchaser or AEW, and La Quinta
and Purchaser affirmatively acknowledge and agree that the
representations and warranties contained in Section
7(a)(vii) of this Agreement shall have no effect whatsoever
on the representations and warranties contained in Section
7(b) of this Agreement or AEW's rights and remedies with
respect thereto.
22. This Agreement may be executed in a number of
identical counterparts. If so executed, each of such
counterparts is to be deemed an original for all purposes,
and all such counterparts shall, collectively, constitute
one Agreement, but, in making proof of this Agreement, it
shall not be necessary to produce or account for more than
one such counterpart.
23. This Agreement shall be binding upon and inure to
the benefit of AEW, La Quinta and Purchaser, and their
respective heirs, personal representatives, successors, and
assigns. La Quinta may assign all or part of its rights and
obligations under this Agreement to any subsidiary
corporation; provided, however, that no such assignment
shall relieve La Quinta of its liabilities and obligations
hereunder.
24. In addition to the acts and deeds recited herein
and contemplated to be performed, executed and/or delivered
by AEW, La Quinta, the Partnership and Purchaser, the
parties hereto agree to perform, execute and/or deliver or
18
<PAGE>
cause to be performed, executed and/or delivered at the
Closing or after the Closing any and all such further acts,
deeds and assurances as may be necessary to consummate the
transaction contemplated hereby. In addition to the
foregoing, La Quinta and Purchaser agree that from and
after the Closing Date, AEW shall have full access to the
books and records of LQDP and the Property, upon
reasonable prior notices for any legitimate purpose
associated with AEW's involvement in LQDP or arising out of
or related to this Agreement including its rights and
obligations hereunder. Further, the parties agree to
effect any filings required under HSR within three (3)
business days of the execution of this Agreement, and to
cooperate with each other regarding actions necessary to
obtain clearance under HSR.
25. It is expressly agreed by the parties hereto that
time is of the essence with respect to this Agreement.
26. AEW may terminate this Agreement at any time by
written notice to the other parties hereto if the closing
price of the Common Stock of La Quinta on the New York
Stock Exchange on June 30, 1995 is less than $23.00 per
share.
27. The parties hereto agree that from and after the
Closing Date (i) the provisions of Exhibit K to the
Partnership Agreement as in effect on the date hereof shall
be incorporated into this Agreement by reference, (ii) AEW
shall continue to enjoy all rights and benefits afforded by
such provisions, and (iii) such provisions may only be
amended when and if agreed to in writing by AEW and La
Quinta.
28. La Quinta, as general partner of LQDP, hereby
consents to the transactions contemplated by this
Agreement, including without limitation the Conversion and
the purchase and sale of the Remainder Interest.
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<PAGE>
NOW, WHEREFORE, the parties hereto have agreed that the
effective date of this Agreement shall be the date first
hereinabove set forth.
LA QUINTA INNS, INC.,
a Texas corporation
By: /s/ Michael A. Depatie
_________________________
Name: Michael A. Depatie
Its: Senior Vice President-Finance
AEW PARTNERS, L.P.
By: AEW /L.P., its general partner
By: AEW, Inc., its general partner
By: /s/ Thomas H. Nolan, Jr.
__________________________
Name: Thomas H. Nolan, Jr.
Its: Vice President
LQI ACQUISITION CORPORATION
By: /s/ Michael A. Depatie
__________________________
Name: Michael A. Depatie
Its: Authorized Representative
20
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________, 1995
EXHIBIT "A"
MUTUAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN,
KNOW THAT, AEW PARTNERS, L.P., a Delaware limited partnership,
("Party of the First Part") and LA QUINTA INNS, INC., a Texas
corporation, and LQI Acquisition Corporation ("Purchaser"), a
Delaware corporation, (collectively "Parties of the Second
Part"), in consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration each have
received this date from the other, which is hereby acknowledged,
agree as follows:
Party of the First Part and Parties of the Second Part each
release and discharge the other, their successors and assigns
from all actions, causes of actions, suits, debts, sums of money,
accounts, bonds, covenants, contracts, controversies, agreements,
promises, damages, judgments, executions, claims, and demands
whatsoever, known or unknown, in law or equity, which either
Party of the First Part or Parties of the Second Part, their
heirs, executors, administrators, successors and assigns ever
had, now have or hereafter can, shall or may, have for, upon, or
by reason any matter, cause or thing whatsoever (INCLUDING,
WITHOUT LIMITATION, ANY MATTER, CAUSE OR OTHER THING ARISING OUT
OF THE NEGLIGENCE OF THE RELEASED PARTY) as to the other from the
beginning of the world to the date of this Release, but only with
respect to matters which relate to a certain Agreement of Limited
Partnership of La Quinta Development Partners, L.P. dated March
8, 1990, as amended and restated, along with Management
Agreements and License Agreements related thereto, for the
limited partnership known as La Quinta Development Partners
("LQDP"); provided, however, anything to the contrary
notwithstanding in this Release shall not be effective as to (i)
fraud, and (ii) those rights and obligations of the Party of the
First Part and Parties of the Second Part as are provided in that
certain AGREEMENT TO SELL AND PURCHASE (the "Agreement"), dated
as of June __, 1995, between Party of the First Part and Parties
of the Second Part, a copy of which is annexed hereto as Exhibit
"I", together with any documents delivered in connection
therewith.
The parties hereto acknowledge that this Mutual Release
includes all released claims and hereby expressly waive any
rights they may have under any statutes or common law principles
with respect to such release. Without limiting the generality of
the foregoing, the Parties of the Second Part and the Party of
the First Part hereby expressly waive all rights which they have,
or may hereafter claim to have, that any claim, demand,
obligation and/or cause of action has, through ignorance,
oversight or
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error, been omitted from the terms of this Agreement, and
hereby expressly waive all rights they may have, or claim to
have, under the provisions of ___________________; or equivalent
law of any jurisdiction.
The Party of the First Part and the Parties of the Second
Part represent and warrant that they have not assigned or
otherwise transferred any interest in any claims which they may
have against the other, and agree to indemnify and hold the
other party harmless from any liability, claims, demands,
damages, costs, expenses and attorneys' fees incurred as a result
of any person asserting any such assignment or transfer or any
rights or claims under any such assignment or transfer.
For purposes herein, the Party of the First Part and the
Parties of the Second Part shall include successors,
representatives, employees, attorneys, heirs, executors,
shareholders, officers, directors and other persons or entities
who may claim through one or all of them.
Whenever the text hereof requires, the use of the singular
number shall include the appropriate plural number as the text of
the within instrument may require.
IN WITNESS WHEREOF, the Parties have hereunto set their
hands and seals as of the ___ day of July, 1995.
LA QUINTA INNS, INC.,
a Texas corporation
By:_________________________________
Michael Depatie
Senior Vice President - Finance
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its
general partner
By:_________________________
Name:_______________________
Its: _______________________
<PAGE>
LQI ACQUISITION CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE>
EXHIBIT "B"
ASSIGNMENT AND ASSUMPTION
OF
SELLER'S INTEREST
This Assignment made and entered into this ________________,
1995, by and between AEW Partners, L.P. , a Delaware limited
partnership, hereinafter ("Assignor") and La Quinta Inns, Inc., a
Texas corporation, hereinafter referred to as ("La Quinta") and
LQI Acquisition Corporation, a Delaware corporation, hereinafter
referred to as ("Purchaser").
In consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the Assignor
hereby conveys, transfers and assigns directly to (A) Purchaser
all of its right, title and interest in and to 20 units of that
certain limited partnership known as La Quinta Development
Partners ("LQDP") and (B) to La Quinta, all of its right, title
and interest in and to 40 units of LQDP, together being
Assignor's total right, title and interest in LQDP. Assignor, La
Quinta and Purchaser are parties to the Agreement to Sell and
Purchase dated as of June __, 1995 ("Agreement"), which
contemplates, among other things, the transfer of the Assignor's
Interest (as defined in the Agreement). Unless expressly defined
herein, all capitalized terms used herein shall have the meanings
ascribed to them in the Agreement.
La Quinta and Purchaser hereby accept said assignment and
hereby agree to assume, keep, perform and be bound by all of the
obligations, liabilities, damages, covenants, claims, expenses,
losses, whether known or unknown, existing as of this time or
which may hereinafter arise from the beginning of time through
and after the Closing Date, which either directly or indirectly
relate to or arise out of Assignor's ownership of its Interest,
the Agreement of Limited Partnership, LQDP, the Property or the
Management Agreement, including, without limitation, those based
on the negligence of Assignor, all as set forth in the Agreement.
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La Quinta and Purchaser hereby accept from the Assignor all
of the Assignor's interest in and to LQDP. La Quinta and
Purchaser hereby acknowledge that the indemnification contained
in Section 12 of the Agreement is in full force and effect and
extends to all of the obligations assumed by them hereunder.
ASSIGNOR:
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its
general partner
By: _____________________
Name:_____________________
Its: _____________________
LA QUINTA INNS, INC.,
a Texas corporation
By: _______________________________
John F. Schmutz
Vice President-Secretary
LQI ACQUISITION CORPORATION
By: _____________________________
Name: _____________________________
Title:_____________________________
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CONSENT TO ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
The undersigned, being the sole partner of LQDP (other than
Assignor), hereby consents to the foregoing assignment.
Dated as of July __, 1995.
LA QUINTA INNS, INC.,
a Texas corporation
By:_________________________________
Michael Depatie
Senior Vice President - Finance
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EXHIBIT "C"
FIRST AMENDMENT TO
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
LA QUINTA DEVELOPMENT PARTNERS, L.P.
a Delaware limited partnership
THIS FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF LA QUINTA DEVELOPMENT PARTNERS, L.P. (the
"Amendment") is entered into this ___ day of _____, 1995, by and
between AEW Partners, L.P. ("AEW"), La Quinta Inns, Inc., a Texas
corporation ("LQ"), La Quinta Development Partners, L.P., a
Delaware limited Partnership ("LQDP") and LQI ACQUISITION
CORPORATION, a Delaware corporation ("Purchaser"). The Amendment
is entered into with reference to the following:
A. All specially capitalized terms in this Amendment not
otherwise defined in this Amendment shall have the meanings
ascribed to those terms in the Amended and Restated Agreement of
Limited Partnership of La Quinta Development Partners, L.P.
dated March 24, 1990 (the "Partnership Agreement").
B. Concurrently with this Amendment, LQ and Purchaser are
entering into an Assignment and Assumption of Seller's Interest
with AEW under which AEW is assigning all of its interest in LQDP
to LQ and Purchaser.
C. Additionally, La Quinta Development Partners, L.P.
("LQDP") desires to admit "Purchaser" as a substituted limited
partner in LQDP.
D. The parties desire to amend the Partnership Agreement
to reflect the described purchases, the admission of Investments
as a substituted limited partner in LQDP, and the withdrawal of
AEW as a limited partner in LQDP.
In consideration of the mutual covenants contained in this
Amendment, the parties agree to amend the Partnership Agreement
as follows:
1. Effective on the date of this Amendment, AEW shall
cease to be a limited partner of LQDP, and it and its direct and
indirect partners shall have no further claims against LQDP, as
to capital or profits or rights to a distributive share of
income, gain, loss, deductions or credits, or any right to an
ownership interest in any asset of LQDP, or any claim to
participate in the management of LQDP.
2. Effective on the date of this Amendment, Purchaser
shall be admitted as a limited partner of LQDP.
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3. From and after the date of this Amendment, the
ownership interest of LQ shall be 80% and the ownership interest
of Purchaser shall be 20%.
4. LQDP shall not dissolve upon the withdrawal of AEW.
5. Upon the request of any continuing limited partner,
LQDP shall make the election described in Section 754 of the
Internal Revenue Code of 1986, as amended, and any comparable
provision of state or local law with respect to the LQDP's 1994
Federal and/or any state tax return.
6. From and after the date hereof, LQDP shall indemnify
and hold harmless AEW from and against all claims, liabilities,
expenses, costs, and damages asserted against AEW as a limited
partner of LQDP and any judgments entered against AEW as a
venturer of LQDP. In addition to and in no way limiting the
foregoing, Purchaser and LQDP hereby acknowledge that the
indemnification contained in Section 12 of the Agreement to Sell
and Purchase between AEW, Purchaser and LQ, dated as of
__________ __, 1995, is in full force and effect and extends to
the obligations of Purchaser and LQ to AEW pursuant hereto.
7. Except as otherwise provided in this Amendment, the
Partnership Agreement is confirmed and shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the day and year first above written.
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its
general partner
By: ____________________
Name:____________________
Its: ____________________
LA QUINTA INNS, INC.,
a Texas corporation
By:_______________________________
Michael A. Depatie
Senior Vice President-Finance
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LQI ACQUISITION CORPORATION
By:_______________________________
LA QUINTA DEVELOPMENT
PARTNERS, L.P., a Delaware
limited partnership
By: LA QUINTA INNS, INC.,
its general partner
_______________________________
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EXHIBIT "D"
RECEIPT FOR FUNDS AND CONVERSION SHARES
La Quinta Inns, Inc.
P.O. Box 2636
San Antonio, Texas 78299-2636
Re: La Quinta Development Partners, L.P. ("LQDP")
Gentlemen:
The undersigned hereby acknowledges receipt from La Quinta
Inns, Inc. ("La Quinta") on July ___, 1995, of the sum of
$________________, such sum representing the purchase price for
twenty (20) units of LQDP, less the Holdback referenced in the
Agreement to Sell and Purchase dated June ___, 1995. The
undersigned further acknowledges receipt from La Quinta of
certificate(s) representing _______________ shares of Common
Stock of La Quinta.
Very truly yours,
AEW PARTNERS, L.P.
By: AEW/L.P., its general partner
By: AEW, Inc., its
general partner
By: _____________________
Name:_____________________
Its: _____________________
