<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Hotel Investors Trust
Hotel Investors Corporation
(Name of Issuer)
Shares of Beneficial Interest, $.01 Par Value
Shares of Common Stock, $.01 Par Value
(Title of Class of Securities)
855905 10 5
(CUSIP Number)
Madison F. Grose
Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
(203) 861-2100
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)
January 31, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits,
filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
(Continued on the following pages)
(Page 1 of 44 Pages)
<PAGE> 2
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 2 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Berl Holdings L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 3
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 3 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood-Apollo Hotel Partners VIII, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 4
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 4 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood-Apollo Hotel Partners IX, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,049,163
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,049,163
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.96%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 5
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 5 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood-Nomura Hotel Investors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 6
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 6 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood/Wichita Investors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 7
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 7 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood-Huntington Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 598,023
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
598,023
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.70%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 8
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 8 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Woodstar Partners I, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 9
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 9 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Firebird Consolidated Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 10
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 10 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood Opportunity Fund II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
299,600
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 299,600
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
299,600
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.47%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 11
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 11 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Barry S. Sternlicht
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
299,600
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,055,039
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,055,039
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.00%
14 TYPE OF REPORTING PERSON
IN
</TABLE>
<PAGE> 12
SCHEDULE 13D
CUSIP No. 855905 10 5 Page 12 of 44 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Starwood Capital Group, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
</TABLE>
<TABLE>
<S> <C>
7 SOLE VOTING POWER
-0-
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH -0-
10 SHARED DISPOSITIVE POWER
-0-
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON
PN
</TABLE>
<PAGE> 13
Page 13 of 44 Pages
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D (this "Schedule") relates to shares of Beneficial
Interest, par value $.01 per share ("Trust Shares"), of Starwood Lodging Trust
(formerly Hotel Investors Trust) (the "Trust") and shares of Common Stock, par
value $.01 per share ("Corporation Shares"), of Starwood Lodging Corporation
(formerly Hotel Investors Corporation) (the "Corporation" and, together with
the Trust, the "Companies"). Pursuant to a Pairing Agreement between the Trust
and the Corporation, the Trust Shares and the Corporation Shares are "paired"
and may only be held and transferred in units consisting of one Trust Share and
one Corporation Share (collectively, a "Paired Share"). Accordingly, this
Schedule is filed with respect to Paired Shares and relates to both the Trust
and the Corporation.
The principal executive offices of the Trust are located at 11845 West
Olympic Boulevard, Suite 550, Los Angeles, California 90064 and the principal
executive offices of the Corporation are located at 11845 West Olympic
Boulevard, Suite 560, Los Angeles, California 90064.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule is filed by Berl Holdings L.P. ("Berl Holdings"),
Starwood-Apollo Hotel Partners VIII, L.P. ("Starwood Apollo VIII"),
Starwood-Apollo Hotel Partners IX, L.P. ("Starwood Apollo IX"), Starwood-Nomura
Hotel Investors, L.P. ("Starwood Nomura"), Starwood/Wichita Investors, L.P.
("Starwood Wichita"), Starwood-Huntington Partners, L.P. ("Starwood
Huntington"), Woodstar Partners I, L.P. ("Woodstar"), Firebird Consolidated
Partners, L.P. ("Firebird"), Starwood Opportunity Fund II, L.P. ("SOFI II"),
Mr. Barry S. Sternlicht ("Sternlicht") and Starwood Capital Group, L.P.
("Starwood Capital"). Berl Holdings, Starwood Apollo VIII, Starwood Apollo IX,
Starwood Nomura, Starwood Wichita, Starwood Huntington, Woodstar, Firebird,
SOFI II, Mr. Sternlicht and Starwood Capital are collectively referred to
herein as the "Filing Persons".
Berl Holdings. Berl Holdings is a Delaware limited partnership. Berl
Holdings was organized to acquire certain of the hotel properties and related
assets which were contributed to the Partnerships in the Reorganization
described in Item 3.
The general partner of Berl Holdings is Berl Holdings I, Inc. ("Berl GP"), a
Delaware corporation which is controlled by and wholly-owned by Mr. Sternlicht.
The principal business of Berl GP is to act as general partner of Berl
Holdings. The executive officers and directors of Berl GP are Mr. Sternlicht
(President and director), Mr. Madison F. Grose (Executive Vice President)
("Grose"), Mr. Jerome Silvey (Senior Vice President,
<PAGE> 14
Page 14 of 44 Pages
Secretary and Treasurer) ("Silvey"), Mr. Steven R. Goldman (Vice President)
("Goldman"), Mr. Michael Meuller (Vice President) ("Meuller"), Mr. J. Peter
Paganelli (Vice President) ("Paganelli") and Mr. David Yin (Vice President).
Messrs. Sternlicht and Grose are also Trustees of the Trust and Messrs.
Sternlicht and Goldman have also been elected as directors of the Corporation,
to take office upon receipt of necessary gaming regulatory approvals. Each
officer and director of Berl GP is a United States citizen.
Starwood Apollo VIII. Starwood Apollo VIII is a Delaware limited
partnership. The principal business of Starwood Apollo VIII is investing in
debt and equity securities of companies that own or manage real estate and/or
hotels.
The general partners of Starwood Apollo VIII are SAHI, Inc. ("SAHI"), a
Delaware corporation, and AP-GP Midstar Hotels VIII, Inc. ("AP- VIII"), a
Delaware corporation. The principal business of SAHI is investing in debt and
equity securities of companies that own or manage real estate and/or hotels.
SAHI does not have any directors and is a close corporation whose business is
managed by its stockholders. Mr. Sternlicht controls SAHI and owns a majority
of the shares of SAHI. The executive officers of SAHI are Mr. Sternlicht
(President), Mr. Grose (Executive Vice President), Mr. Jonathan Eilian (Vice
President, Treasurer and Secretary, ("Eilian"), Mr. Silvey (Senior Vice
President) and Mr. Paganelli (Vice President). Mr. Eilian is also a Trustee
of the Trust. Each officer and director of SAHI is a United States citizen.
AP-VIII was formed to act as a general partner of Starwood Apollo VIII.
AP-VIII is wholly-owned and controlled by Apollo Real Estate Investment Fund,
L.P. The executive officers and directors of AP-VIII are Mr. John J. Hannan
(President, Secretary and director), Mr. Michael D. Weiner (Vice President and
director), Mr. Edward Scheetz (Vice President), Mr. Gary Sherman (Vice
President), Mr. Lee Neibart (Vice President), Mr. Ronald Kravit (Vice
President) and Mr. Fred Shapiro (Vice President and Controller). Each
executive officer and director of AP-VIII is a United States citizen.
Starwood Apollo IX. Starwood Apollo IX is a Delaware limited partnership.
The principal business of Starwood Apollo IX is investing in debt and equity
securities of companies that own or manage real estate and/or hotels.
The general partners of Starwood Apollo IX are SAHI and AP-GP Midstar Hotels
IX, Inc. ("AP-IX"), a Delaware corporation. AP-IX was formed to act as a
general partner of Starwood Apollo IX. AP-IX is wholly-owned and controlled by
Apollo Real Estate Investment Fund, L.P. The executive officers and directors
of AP-IX are the same as the executive officers and directors of AP-VIII.
<PAGE> 15
Page 15 of 44 Pages
Starwood Nomura. Starwood Nomura is a Delaware limited partnership.
Starwood Nomura was organized to acquire first mortgage notes and other assets
which notes, assets or interests therein were contributed to the Partnerships
in the Reorganization described in Item 3.
The general partner of Starwood Nomura is SNHI, Inc. ("SNHI"), a Delaware
corporation. The principal business of SNHI is to act as general partner of
Starwood Nomura. SNHI is controlled by and wholly owned by Mr. Sternlicht.
The executive officers and directors of SNHI are Mr. Sternlicht (President and
director), Mr. Grose (Executive Vice President and Secretary), Mr. Eilian (Vice
President) and Mr. Silvey (Vice President).
Starwood Wichita. Starwood Wichita is a Delaware limited partnership.
Starwood Wichita was organized to acquire hotel properties and related assets
which were contributed to the Partnerships in the Reorganization described in
Item 3.
The general partner of Starwood Wichita is SOFI II. The general partner of
SOFI II is Starwood Capital. Starwood Capital is a privately held real estate
investment organization which acquires equity and debt interests in hotel
properties, multifamily residential properties and single family developable
land throughout the United States, among other categories of assets. The
general partner of Starwood Capital is BSS Capital Partners, L.P. ("BSS"), a
Delaware limited partnership. BSS is the entity through which senior
executives of Starwood Capital receive equity interests in the investments
sponsored by Starwood Capital. Mr. Sternlicht indirectly controls BSS and owns
a majority of the interests in BSS. The sole general partner of BSS is
Sternlicht Holdings, II, Inc., ("Sternlicht Holdings"), a Delaware corporation
which is controlled by and wholly-owned by Mr. Sternlicht. The executive
officers and directors of Sternlicht Holdings are Mr. Sternlicht (President,
CEO and director), Mr. Grose (Executive Vice President), Mr. Silvey (Senior
Vice President, CFO and Secretary), Mr. Jay Sugarman (Executive Vice
President), Mr. Jamie Gates (Executive Vice President) ("Gates"), Mr. Eugene
Gorab (Executive Vice President) ("Gorab"), Mr. Eilian (Vice President), Mr.
Goldman (Vice President), Mr. Merrick Kleeman (Vice President) ("Kleeman"), Mr.
Meuller (Vice President), Mr. James Babb III (Vice President) and Mr. Paganelli
(Vice President). Each executive officer and director of Sternlicht Holdings
is a United States citizen.
Starwood Huntington. Starwood Huntington is a Delaware limited partnership.
Starwood Huntington was organized to acquire hotel properties and related
assets which were contributed to the Partnerships in the Reorganization
described in Item 3.
<PAGE> 16
Page 16 of 44 Pages
The general partner of Starwood Huntington is SRL Holdings, Inc. ("SRL"), a
Delaware corporation. The principal business of SRL is to act as general
partner of Starwood Huntington. SRL is owned and controlled by Mr. Sternlicht.
The executive officers and directors of SRL are Mr. Sternlicht (President and
director), Mr. Grose (Executive Vice President), Mr. Gorab (Senior Vice
President), Mr. Goldman (Senior Vice President), Mr. Kleeman (Vice President),
Mr. Eilian (Vice President), Mr. Meuller (Vice President), and Mr. Silvey
(Vice President, Treasurer and Secretary). Each executive officer and director
of SRL is a United States citizen.
Woodstar. Woodstar is a Delaware limited partnership. Woodstar was
organized to make the capital contributions to the Partnerships in the
Reorganization described in Item 3 and to hold the Units of the Partnerships
held by it as described in Item 3.
The general partner of Woodstar is Starwood Capital. The general partner of
Starwood Capital is BSS and the general partner of BSS is Sternlicht Holdings.
Firebird. Firebird is a Delaware limited partnership. Firebird was
organized to enter into a swap arrangement with Merrill Lynch Mortgage Capital
Inc. ("MLMC"), the current holder of senior debt of the Realty Partnership (the
"Senior Debt"), pursuant to which Firebird has the right to acquire Senior Debt
in exchange for the payment to MLMC of a notional principal amount under such
swap.
The general partner of Firebird is SOFI II. The general partner of SOFI II
is Starwood Capital, the general partner of Starwood Capital is BSS and the
general partner of BSS is Sternlicht Holdings.
SOFI II. SOFI II is a Delaware limited partnership. SOFI II is a
blind-pool fully discretionary investment fund sponsored by Starwood Capital.
The general partner of SOFI II is Starwood Capital, the general partner of
Starwood Capital is BSS and the general partner of BSS is Sternlicht Holdings.
Mr. Sternlicht. Mr. Sternlicht is the President and CEO of Starwood
Capital. He is also a Trustee of and the Chairman and CEO of, the Trust. Mr.
Sternlicht is a United States citizen.
Starwood Capital. Starwood Capital is a Delaware limited partnership. The
general partner of Starwood Capital is BSS and the general partner of BSS is
Sternlicht Holdings.
<PAGE> 17
Page 17 of 44 Pages
The address of the principal business and the principal office for each of
the Filing Persons and their respective general partners and the directors and
executive officers named in this Item 2 is Three Pickwick Plaza, Suite 250,
Greenwich, Connecticut 06830, except that the address of the principal business
and the principal office for AP-VIII and AP-IX and their directors and
executive officers are Two Manhattanville Road, Purchase, New York, 10577.
During the last five years none of the persons or entities named in this
Item 2 (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, as a
result of which such person or entity was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The acquisition of beneficial ownership of Paired Shares which resulted in
the filing of this Schedule occurred in connection with the Reorganization
described below.
Reorganization. On January 31, 1995 (the "Closing Date"), the Trust and the
Corporation consummated a reorganization (the "Reorganization") with the Filing
Parties pursuant to a Formation Agreement among the Trust, the Corporation and
certain of the Filing Parties (the "Formation Agreement") and other agreements
entered into pursuant to the Formation Agreement. A copy of the Formation
Agreement and certain of those agreements are filed as exhibits to this
Schedule. The descriptions hereto are qualified in their entirety by reference
to the provisions of the Formation Agreement and such other agreements. The
Reorganization was approved by the shareholders of the Trust and the
stockholders of the Corporation at meetings held on December 15, 1994 (the
"Special Meetings").
The Reorganization involved a number of related transactions that occurred
simultaneously on the Closing Date pursuant to the terms of the Formation
Agreement. Such transactions included (i) the contribution by the Trust to SLT
Realty Limited Partnership (the "Realty Partnership") of all of the properties
and assets of the Trust, subject to substantially all of the liabilities of the
Trust (including the Senior Debt of the Trust), in exchange for an approximate
28.3% interest as a general partner in the Realty Partnership, (ii) the
contribution
<PAGE> 18
Page 18 of 44 Pages
by the Filing Parties to the Realty Partnership of approximately $12,600,000 in
cash and certain hotel properties and first mortgage notes, in exchange for
limited partnership units of the Realty Partnership ("Realty Units")
representing the remaining approximate 71.7% interest in the Realty
Partnership, (iii) the contribution by the Corporation and its subsidiaries to
SLC Operating Limited Partnership (the "Operating Partnership") of all of their
properties and operating assets (except for their gaming assets, which are to
be contributed upon receipt of requisite approvals by Nevada gaming authorities
("Gaming Approval")), subject to substantially all of their liabilities, in
exchange for an approximate 28.3% interest as a general partner in the
Operating Partnership and (iv) the contribution by the Filing Parties to the
Operating Partnership of approximately $1,400,000 in cash, furnishings and
equipment of the hotel properties, in exchange for limited partnership units of
the Operating Partnership ("Operating Units") representing the remaining
approximate 71.7% interest in the Operating Partnership. The Realty Units and
the Operating Units are collectively referred to as the "Units".
Pursuant to the Reorganization, each of the Filing Parties received the
number of Units set forth opposite its name below:
<TABLE>
<CAPTION>
Filing Person Number of Units
------------- ---------------
<S> <C>
Berl Holdings 13,770,379
Starwood Apollo VIII 1,311,454
Starwood Apollo IX 1,049,163
Starwood Nomura 5,255,258
Starwood Wichita 2,132,184
Starwood Huntington 598,023
Woodstar 6,661,713
Firebird -0-
SOFI II -0-
Sternlicht -0-
Starwood Capital -0-
----------
Total Units Issued
to Filing Persons 30,778,174
</TABLE>
Each Unit held by the Filing Parties is (subject to the Ownership Limit
Provisions of the Trust and the Corporation described in Item 5 which are
designed to preserve the status of the Trust as a REIT for tax purposes)
exchangeable by the Filing Parties, for, at the option of the Trust and the
Corporation, either cash, one Paired Share, or a combination of cash and such
Paired Shares, as described under "Exchange Rights".
<PAGE> 19
Page 19 of 44 Pages
In addition if, prior to June 15, 1995, Firebird acquires Senior Debt, it
has agreed that it will exchange up to $12,000,000 of such Senior Debt for up
to an additional 4,884,691 Units, which would represent up to an additional
approximate 3.0% of the outstanding Units (assuming exchange of all Units
issued to the Filing Persons). As described in Item 2, Firebird has the right
to acquire approximately $74.0 million of Senior Debt. Any such Units issued
pursuant to such exchange would be exchangeable for Paired Shares on the same
basis as other Units issued to the Filing Parties in connection with the
Reorganization.
Exchange Rights. Pursuant to an Exchange Rights Agreement (the "Exchange
Rights Agreement"), subject to the limitations described below, holders of
Units have the right to tender to the Trust and the Corporation all or a
portion of the Units held by such holder. Each tender of a Realty Unit must be
accompanied by a tender of an Operating Unit and each tender of an Operating
Unit must be accompanied by a tender of a Realty Unit. The Trust and the
Corporation will have the option to pay for such tendered Units either (i) by
delivering Paired Shares to such tendering holders as described below (the
"Paired Share Option"), (ii) with available cash or borrowed funds (the "Cash
Option") or (iii) by delivering a combination of Paired Shares and cash (the
"Combined Option").
The election by the Trust and the Corporation between those options must be
made by a majority of each of their respective Disinterested Members (as
defined in Item 5). If the Trust and the Corporation are unable to agree on
the option to be elected within 15 days after the tender of Units, they shall
be deemed to have elected the Cash Option. If the Trust and the Corporation
elect the Paired Share Option or the Combined Option and if, as a result of the
Ownership Limit Provisions, the tendering holder cannot receive the full number
of Paired Shares otherwise issuable pursuant to such Option, such tender shall
be automatically reduced so that after such tender the tendering holder
receives the maximum number of Paired Shares that such holder can receive
without violating the Ownership Limit Provisions. In such circumstance, a
tendering holder may, subject to certain limitations, cause the Trust and the
Corporation to effect a registered public offering of a number of Paired Shares
equal to the number of Paired Shares which could not be so issued as a result
of the Ownership Limit Provisions. The proceeds of such offering would be used
to purchase such tendered Units, as described under "-- Registration Rights."
Prior to the receipt of Gaming Approval, holders of Units must, as a
condition to tender of Units, give not less than 90 days' notice to the Trust
and the Corporation of their intent to tender Units which would result in the
Filing Parties beneficially owning in excess of 4.9% of the outstanding Paired
<PAGE> 20
Page 20 of 44 Pages
Shares. After receipt of Gaming Approval, no such 90 day notice will be
required.
If the Trust and the Corporation elect the Paired Share Option or the
Combined Option, they will deliver to the tendering holder within 15 days after
the related tender (the "Exchange Date"), for each Unit tendered for which
Paired Shares are to be delivered, one Paired Share, subject to adjustment. If
the Trust and the Corporation elect the Cash Option or the Combined Option,
they will deliver to the tendering holder within 20 days after the related
tender, an amount of cash in respect of each Paired Share for which cash is to
be paid equal to the average closing price per share of the Paired Shares on
the New York Stock Exchange for the ten trading day period ending on the day
before the date of the related tender.
The Exchange Rights Agreement provides that no Units shall be accepted for
exchange (i) if as a result of such tender the Trust would not satisfy the REIT
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), in
any respect or (ii) prior to the expiration or termination of any applicable
waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976,
as amended.
Registration Rights. Pursuant to a Registration Rights Agreement (the
"Registration Rights Agreement") the Trust and the Corporation have granted
registration rights with respect to Paired Shares which may be acquired upon
exchange of Units. Pursuant to such registration rights, Starwood Capital, on
behalf of holders of Units exchangeable for not less than 100,000 Paired Shares
may, subject to certain limitations, require the Trust and the Corporation to
effect up to four registrations of Paired Shares under the Securities Act,
including shelf registrations of Paired Shares under the Securities Act (any
such shelf registrations to be maintained until no Paired Shares are required
to be registered under the Registration Rights Agreement).
In addition, if the Trust and the Corporation do not issue Paired Shares
upon a tender of Units because of the Ownership Limit Provisions, the tendering
holder may, each such time, subject to certain limitations, require the Trust
and the Corporation to effect a registered public offering under the Securities
Act of an equivalent number of Paired Shares. The net proceeds of such
offering (after underwriting discounts and selling commissions) would be used
to purchase such tendered Units.
Starwood Capital also has rights, subject to certain exemptions and
limitations, to request that the Trust and the Corporation include such Paired
Shares in other registrations of
<PAGE> 21
Page 21 of 44 Pages
Paired Shares by the Trust and the Corporation under the Securities Act
("Incidental Registrations").
All expenses incident to such registrations (other than underwriting
discounts and selling commissions and fees and expenses of counsel to the
selling holders) are to be borne by the Trust and the Corporation.
The Registration Rights Agreement specifies certain times during which a
registration of Paired Shares cannot be initiated, including the 90-day period
after the Trust and the Corporation effect a registration of Paired Shares and
the 90-day period after a holder of Units delivers a demand for registration
that is not withdrawn.
The Trust and the Corporation have the right to delay any public offering of
Paired Shares pursuant to the Registration Rights Agreement for a period of up
to 90 days, if either the Trust or the Corporation determines that an earlier
sale would be materially adverse to the Trust and its shareholders or the
Corporation and its stockholders. Furthermore, if the underwriters used in
connection with a public offering in an Incidental Registration advise the
Trust and the Corporation that marketing factors require a limitation on the
number of Paired Shares to be sold at a given time, the size of such offering
will be reduced by decreasing the number of Paired Shares to be sold by the
holders of Units.
Except for Woodstar, in the Reorganization each of the Filing Persons which
received Units in the Reorganization contributed to the Partnerships hotel
properties and first mortgage notes, hotel furnishings and equipment in
exchange for the Units issued to it. Woodstar contributed cash to the
Partnerships for the Units issued to it. Such cash came from capital
contributions from Woodstar's partners.
Prior to the Reorganization, SOFI II purchased in open market transactions
299,600 Paired Shares.
ITEM 4. PURPOSE OF TRANSACTION.
The Filing Persons acquired beneficial ownership of the Paired Shares
reported in this Schedule as part of the Reorganization described in Item 3.
Each of the Filing Persons is holding the Paired Shares which it beneficially
owns for investment.
Board Matters. Pursuant to the Formation Agreement, Starwood Capital
designated three of the five nominees elected as Trustees of the Trust at the
Special Meetings. Such designees
<PAGE> 22
Page 22 of 44 Pages
were Messrs. Sternlicht, Grose and Eilian. In addition, pursuant to the
Formation Agreement, Starwood Capital designated two of the three nominees
elected as Directors of the Corporation at the Special Meetings, such Directors
to take office upon receipt of Gaming Approval. Such designees were Messrs.
Sternlicht and Goldman. If the Offering described below is consummated then
(i) the Board of Trustees intends to increase the size of the Board by at least
two and to fill the vacancies created thereby with independent Trustees not
affiliated with the Companies, the Partnerships or the Filing Parties and (ii)
the Board of Directors intends to increase the size of the Board by at least
two and to fill the vacancies created thereby with independent Directors not
affiliated with the Companies, the Partnerships or the Filing Parties.
Noncompetition Agreement. The Formation Agreement provides that so long as
any officer, director or general partner of, or any other person employed by,
any Filing Party remains on either the Board of Trustees of the Trust or the
Board of Directors of the Corporation, each of the Filing Parties will not
compete, directly or indirectly, with the Partnerships and that it will present
to the Partnerships all acquisitions of (i) fee interests in hotels in the
United States and (ii) debt interests in hotels in the United States where it
is anticipated that the equity will be acquired by the debt holder within one
year from the acquisition of such debt interest. During the term of such
non-competition agreement none of the Filing Parties will acquire any such fee
interest or debt interests. The Filing Parties are currently negotiating the
acquisition of several hotels, hotel portfolios and other related assets, some
of which are of significant size. Such acquisitions are subject to further
negotiation and numerous conditions and there can be no assurance that any such
acquisitions will be completed. The Filing Parties expect to continue to
explore and negotiate such acquisitions in the future.
The Trust and the Corporation have agreed that the Filing Parties may
consummate any acquisition which was subject to an executed letter of intent or
contract prior to the Reorganization, which acquisition relates to a group of
five or more properties with a total value in excess of $100 million (an
"Existing Acquisition"). On November 25, 1994, Starwood Capital announced that
Starwood Capital and Goldman, Sachs & Co. had agreed to purchase Westin Hotels
& Resorts ("Westin") for $561 million and the assumption of debt. Such
purchase is an Existing Acquisition. Starwood Capital has discussed with
Goldman, Sachs a potential strategic alliance or other combination between the
Partnerships and Westin, although no agreement has been reached as to any such
alliance and no assurance can be given that any such alliance will be formed or
discussed further.
<PAGE> 23
Page 23 of 44 Pages
Excluded Assets. There are certain fee interests, debt interests or other
investments held by the Filing Parties or their commonly controlled affiliates
in the hotel asset investment business (the "Excluded Assets") which were not
contributed to the Partnerships by the Filing Parties. With respect to each
Excluded Asset, subject to obtaining of all material required third party and
partner consents and approvals, the Partnerships will have the option, at any
time or times prior to the earlier of January 1, 2000 and the expiration of the
term of the noncompetition period described above, to acquire the interests of
the Filing Parties in one or more of the Excluded Assets for a cash purchase
price equal to the fair market value of such Excluded Asset, as determined by
agreement between the Partnerships and such Filing Party (or, if they are
unable to agree, by independent appraisers selected by the Trust, the
Corporation and Starwood Capital). The Trust and the Corporation have agreed
that such option to acquire Excluded Assets will not apply to any Existing
Acquisition.
Reverse Split. In connection with the Reorganization, the Board of Trustees
of the Trust and the Board of Directors of the Corporation have been authorized
by the shareholders of the Trust and the stockholders of the Corporation to
effect a reverse split of the Paired Shares, in which a number of Paired Shares
outstanding at the effective date of the reverse split (such number to be not
less than six nor more than ten, as determined by the Board of Trustees and the
Board of Directors) will be changed into one Paired Share. The Board of
Trustees and the Board of Directors are also authorized to determine the
effective date of such reverse split. The reverse split will be effected by
amendments to the Declaration of Trust of the Trust and the Articles of
Incorporation of the Corporation.
Disinterested Member Provisions. In connection with the Reorganization, the
Trust amended its Code of Regulations and the Corporation amended its By-Laws,
in each case to provide that, in addition to any affirmative vote required by
law, the partnership agreements of the Partnerships, the Trust Declaration of
the Trust or the Articles of Incorporation of the Corporation, any Transaction
(as described below) involving the Trust, the Corporation (or any of its
subsidiaries) or either of the Partnerships shall require the affirmative vote
of a majority of the members ("Disinterested Members") of the Board of Trustees
of the Trust (in the case of a Transaction involving the Trust or the Realty
Partnership) or the Board of Directors of the Corporation (in the case of a
Transaction involving the Corporation or the Operating Partnership) who are not
employees, officers, directors, Affiliates or Associates (as each is defined in
the Securities Exchange Act of 1934) of, the Interested Person who or which is
a party to the Transaction.
<PAGE> 24
Page 24 of 44 Pages
A "Transaction" is defined as any contract, sale, lease, exchange, mortgage,
transfer or disposition to or with, or any other transaction with, any
Interested Person (including, without limitation, any election with respect to
the method of payment for an exchange of Units for Paired Shares, or any action
to be taken by the Trust, the Corporation or either Partnership with respect to
the Senior Debt). An "Interested Person" is any person or entity who or which
is the beneficial owner, directly or indirectly, of 5% or more of the
outstanding Paired Shares or the outstanding Realty Units or Operating Units or
who or which is an Affiliate or Associate of the Trust, the Corporation or
either of the Partnerships.
The foregoing Disinterested Member provisions may be amended or repealed
only by a majority of the trustees or directors, as the case may be, who are
not employees, officers, directors, Affiliates or Associates of the Trust, the
Corporation, the Partnerships or any Interested Person.
The Offering. The Trust and the Corporation have disclosed that they intend
to file with the Securities and Exchange Commission a registration statement
relating to a proposed public offering of Paired Shares (the "Offering") after
the consummation of the Reorganization, but that there can be no assurance that
the Offering will be consummated. The proceeds of any Offering will be
contributed by the Trust and the Corporation to the Realty Partnership and the
Operating Partnership, respectively, in exchange for additional interests in
such Partnerships and those proceeds will be used primarily to repay
indebtedness (including the Senior Debt), for acquisitions of additional
properties, for certain capital improvements to hotel properties and for other
corporate purposes. The Filing Parties have agreed that they will not offer or
sell any Paired Shares in connection with the Offering and will agree not to
offer, sell, contract to sell or otherwise dispose of any Units or Paired
Shares acquired in exchange for Units for a period after the consummation of
the Offering without the consent of the managing underwriter, the Trust and the
Corporation.
The Partnerships have agreed that if the Trust and the Corporation
consummate a public offering of Paired Shares within 18 months following
consummation of the Reorganization which results in the receipt by the Trust
and the Corporation of gross proceeds of not less than $150 million, then the
Trust and the Corporation will pay to Starwood Capital an amount equal to
three-fourths of one percent (.75%) of the sum of the total market value of
all Paired Shares (assuming exchange of all outstanding Units) upon
consummation of the Offering and the principal amount of indebtedness of the
Partnerships at such time.
<PAGE> 25
Page 25 of 44 Pages
Operation of the Partnerships. After the Reorganization, the Trust will be
the sole general partner of, and will conduct all of its business and
operations through, the Realty Partnership. After the receipt of Gaming
Approval, the Corporation will be the managing general partner of, and will
conduct all of its business and operations through, the Operating Partnership.
Except with respect to Major Decisions described below, the Trust and the
Corporation will have full and complete power, authority and discretion to take
all action necessary or appropriate to carry out the business of the Realty
Partnership and the Operating Partnership, respectively.
The Trust and the Corporation will not undertake on behalf of the Realty
Partnership and the Operating Partnership, respectively, any of the following
"Major Decisions" without the prior consent of the Filing Parties: (i) make a
general assignment for the benefit of creditors or appoint or acquiesce in the
appointment of a custodian, receiver or trustee for all or any part of the
assets of such Partnership, (ii) institute any proceedings for bankruptcy on
behalf of such Partnership, (iii) except in connection with the dissolution and
winding up of such Partnership, agree to or consummate a merger or
consolidation of such Partnership or the voluntary sale or other transfer of
all or substantially all of such Partnership's assets in a single transaction
or related series of transactions (without limiting the transactions which will
not be deemed to be a voluntary sale or transfer, the foreclosure of a mortgage
lien on any real estate or the grant by such Partnership of a deed in lieu of
foreclosure for such real estate shall not be deemed to be such a voluntary
sale or other transfer); (iv) sell, in one transaction or a series of related
transactions, an asset or assets of such Partnership having a book value of 25%
or more of the total book value of the assets of such Partnership or (v)
dissolve such Partnership. Such consent will be required at any time that the
limited partners own or control at least 15% of all partnership interests in
the Realty Partnership or the Operating Partnership, respectively.
In the event of a dissolution of either of the Partnerships, the assets of
such Partnership will be liquidated and (after payment of creditors and
establishment of any reserves to provide for contingent liabilities)
distributed to holders of Units in accordance with the positive balances in
their capital accounts. In the event of the dissolution, liquidation or
winding up of either Partnership after the consummation of the Reorganization
and prior to the occurrence of (i) the consummation of the first public
offering of securities subsequent to the consummation of the Reorganization of
such Partnership, the Trust or the Corporation or (ii) the consummation of a
private placement of securities that reduces the outstanding balance of the
Senior Debt by at least one-half,
<PAGE> 26
Page 26 of 44 Pages
then the distributions to holders of Units will be made (a) to limited partners
who are Filing Partners until such limited partners have received 55% of their
capital contributions to such Partnership and (b) then, to holders of Units in
proportion to their capital contributions less the distributions described in
clause (a), and (c) thereafter, in accordance with the remaining positive
balances in holders' capital accounts.
Certain Covenants After the Closing Date. The Formation Agreement provides
for certain agreements after the consummation of the Reorganization. The
Formation Agreement provides that none of the Trust, the Corporation, the
Realty Partnership or the Operating Partnership will assert any claim of
equitable subordination or other lender liability claims or defenses against
holders of the Senior Debt based on the transactions contemplated by the
Formation Agreement, the presence on the Board of Trustees or the Board of
Directors of nominees of Starwood Capital or any action taken by such trustees
or directors as such or the employment by the Trust or the Corporation of
employees who are affiliates of Starwood Capital or any actions taken by such
employees as such.
Pursuant to the Formation Agreement the Filing Parties have agreed that so
long as Starwood Capital or any affiliate of Starwood Capital shall have any
interest in the Senior Debt (other than solely as a result of the interests of
the Filing Parties in the Partnerships), any affiliate or associate of the
Filing Parties on the Board of Trustees or the Board of Directors shall, and
Starwood Capital shall use its best efforts to secure their agreement to
abstain from voting upon and excuse and absent themselves from any
deliberations relating to any pending or threatened defaults or any action to
be taken by the Trust, the Corporation or the Partnerships in respect of any
pending or threatened defaults under or in respect of the Senior Debt.
Other. The Trust intends to refinance the Senior Debt with MLMC pursuant to
a commitment letter to effect such refinancing. In addition, to the extent
funds are available, the Filing Parties intend to take action to have the Trust
make regular quarterly distributions to shareholders (including if the Offering
is effected), including distributions to enable the Trust to qualify as a REIT
under the Code.
In addition to the transactions described in this Schedule, the Filing
Persons (and officers and directors of general partners of the Filing Persons)
may from time to time acquire additional Paired Shares or Units, exchange Units
for Paired Shares as described in this Schedule or dispose of Units or Paired
Shares received upon any such exchange.
<PAGE> 27
Page 27 of 44 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) At the date hereof, each of the Filing Persons beneficially owned the
number of Paired Shares set forth opposite its name below:
<TABLE>
<CAPTION>
Number of Percentage of Paired
Filing Person Paired Shares Shares Outstanding
------------- ------------- --------------------
<S> <C> <C>
Berl Holdings 1,055,039 8.00%
Starwood Apollo VIII 1,055,039 8.00%
Starwood Apollo IX 1,049,163 7.96%
Starwood Nomura 1,055,039 8.00%
Starwood Wichita 1,055,039 8.00%
Starwood Huntington 598,023 4.70%
Woodstar 1,055,039 8.00%
Firebird 1,055,039 8.00%
SOFI II 299,600 2.47%
Starwood Capital 0 0%
Sternlicht 1,055,039 8.00%
</TABLE>
Except for the 299,600 Paired Shares beneficially owned by SOFI II, the
Paired Shares listed above are owned by virtue of the ownership of Units which
are exchangeable into Paired Shares as described in Item 3.
In connection with the consummation of the Reorganization, the Trust amended
its Declaration of Trust and the Corporation amended and restated its Articles
of Incorporation to, among other things, add provisions (the "Ownership Limit
Provisions") which updated and replaced provisions which are designed to allow
the Trust to qualify as a real estate investment trust for federal income tax
purposes. The Ownership Limit Provisions provide that, subject to certain
exceptions specified in the Trust Declaration and the Restated Articles, no
shareholder (including the Filing Parties) may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 8.0%, whether
measured by vote, value or number (the "Ownership Limit"), of Paired Shares,
shares of Preferred Stock of the Corporation or preferred shares of the Trust
which may be issued, or any combination thereof. As a result of the Ownership
Limit Provisions, the Filing Parties cannot receive Paired Shares upon an
exchange of Units if such Paired Shares would cause the Filing Parties to
beneficially own more than 8.0% of the outstanding Paired Shares. Accordingly,
no Filing Party individually and the Filing Parties in the aggregate do not
beneficially own more than 8.0% of the outstanding Paired Shares.
<PAGE> 28
Page 28 of 44 Pages
Berl Holdings. Berl Holdings owns 13,770,379 Units which are, subject to
the Ownership Limit, exchangeable for 13,770,379 Paired Shares (representing
approximately 53.16% of the outstanding Paired Shares, assuming exchange of all
of the Units owned by Berl Holdings (and no exchange of Units by any other
Filing Party), irrespective of the Ownership Limit). Because of the Ownership
Limit, Berl Holdings cannot exchange Units for, or otherwise hold, more than
8.0% of the outstanding Paired Shares; accordingly, this Schedule reports the
beneficial ownership by Berl Holdings of 1,055,039 Paired Shares (the maximum
number of Paired Shares that Berl Holdings may acquire within the Ownership
Limit, assuming that no other Filing Party beneficially owns Paired Shares at
the time of such exchange). Berl GP, by virtue of being the general partner of
Berl Holdings, may be deemed to beneficially own the Paired Shares beneficially
owned by Berl Holdings.
Starwood Apollo VIII. Starwood Apollo VIII owns 1,311,454 Units which are,
subject to the Ownership Limit, exchangeable for 1,311,454 Paired Shares
(representing approximately 9.75% of the outstanding Paired Shares, assuming
exchange of all of the Units owned by Starwood Apollo VIII (and no exchange of
Units by any other Filing Party) irrespective of the Ownership Limit).
Because of the Ownership Limit, Starwood Apollo VIII cannot exchange Units for,
or otherwise hold, more than 8.0% of the outstanding Paired Shares;
accordingly, this Schedule reports the beneficial ownership by Starwood Apollo
VIII of 1,055,039 Paired Shares (the maximum number of Paired Shares that
Starwood Apollo VIII may acquire within the Ownership Limit, assuming that no
other Filing Party beneficially owns Paired Shares at the time of such
exchange). Each of SAHI and AP-VIII, by virtue of being a general partner of
Starwood Apollo VIII, may be deemed to beneficially own the Paired Shares
beneficially owned by Starwood Apollo VIII.
Starwood Apollo IX. Starwood Apollo IX beneficially owns the 1,049,163
Paired Shares issuable upon exhcange of the 1,049,163 Units held by Starwood
Apollo IX, assuming that such issuance does not violate the Ownership Limit at
the time of such exchange (such Paired Shares represent approximately 7.96% of
the outstanding Paired Shares, assuming exchange of all of the Units owned by
Starwood Apollo IX (and no exchange of Units by any other Filing Party)).
Each of SAHI and AP-IX, by virtue of being a general partner of Starwood
Apollo IX, may be deemed to beneficially own the Paired Shares beneficially
owned by Starwood Apollo IX.
Starwood Nomura. Starwood Nomura owns 5,255,258 Units which are, subject to
the Ownership Limit, exchangeable for 5,255,258 Paired Shares (approximately
30.22% of the outstanding Paired Shares, assuming exchange of all of the Units
owned by Starwood Nomura (and no exchange of Units by any other Filing
<PAGE> 29
Page 29 of 44 Pages
Party), irrespective of the Ownership Limit). Because of the Ownership Limit,
Starwood Nomura cannot exchange Units for, or otherwise hold, more than 8.0% of
the outstanding Paired Shares; accordingly, this Schedule reports the
beneficial ownership by Starwood Nomura of 1,055,039 Paired Shares (the maximum
number of Paired Shares that Starwood Nomura may acquire within the Ownership
Limit, assuming that no other Filing Party beneficially owns Paired Shares at
the time of such exchange). SNHI, by virtue of being the general partner of
Starwood Nomura, may be deemed to beneficially own the Paired Shares
beneficially owned by Starwood Nomura.
Starwood Wichita. Starwood Wichita owns 2,132,184 Units which are, subject
to the Ownership Limit, exchangeable for 2,132,184 Paired Shares (approximately
14.95% of the outstanding Paired Shares, assuming exchange of all of the Units
owned by Starwood Wichita (and no exchange of Units by any other Filing Party),
irrespective of the Ownership Limit). Because of the Ownership Limit, Starwood
Wichita cannot exchange Units for, or otherwise hold, more than 8.0% of the
outstanding Paired Shares; accordingly, this Schedule reports the beneficial
ownership by Starwood Wichita of 1,055,039 Paired Shares (the maximum number of
Paired Shares that Starwood Wichita may acquire within the Ownership Limit,
assuming that no other Filing Party beneficially owns Paired Shares at the time
of such exchange). Each of SOFI II (by virtue of being a general partner of
Starwood Wichita), Starwood Capital (by virtue of being a general partner of
SOFI II), BSS (by virtue of being a general partner of Starwood Capital) and
Sternlicht Holdings (by virtue of being the general partner of BSS) may be
deemed to beneficially own the Paired Shares beneficially owned by Starwood
Wichita.
Starwood Huntington. Starwood Huntington beneficially owns the 598,023
Paired Shares issuable upon exchange of the 598,023 Units held by Starwood
Huntington, assuming that such issuance does not violate the Ownership Limit at
the time of such exchange (such Paired Shares represent approximately 4.70% of
the outstanding Paired Shares, assuming exchange of all of the Units owned by
Starwood Huntington (and no exchange of Units by any other Filing Party)).
SRL, by virtue of being a general partner of Starwood Huntington, may be deemed
to beneficially own the Paired Shares beneficially owned by Starwood
Huntington.
Woodstar. Woodstar owns 6,661,713 Units which are, subject to the Ownership
Limit, exchangeable for 6,661,713 Paired Shares (representing approximately
35.44% of the outstanding Paired Shares, assuming exchange of all of the Units
owned by Woodstar, irrespective of the Ownership Limit (and no exchange of
Units by any other Filing Party)). Because of the Ownership Limit, Woodstar
cannot exchange Units for, or otherwise hold, more than 8.0% of the outstanding
Paired Shares; accordingly,
<PAGE> 30
Page 30 of 44 Pages
this Schedule reports the beneficial ownership by Woodstar of 1,055,039 Paired
Shares (the maximum number of Paired Shares that Woodstar may acquire within
the Ownership Limit, assuming that no other Filing Party beneficially owns
Paired Shares at the time of such exchange). Each of Starwood Capital (by
virtue of being a general partner of Woodstar), BSS (by virtue of being a
general partner of Starwood Capital) and Sternlicht Holdings (by virtue of
being the general partner of BSS) may be deemed to beneficially own the Paired
Shares beneficially owned by Woodstar.
Firebird. Firebird may acquire 4,884,691 Units pursuant to an exchange of
up to $12,000,000 of the Senior Debt which may be acquired by Firebird, as
described in Items 1 and 3. Such Units would be, subject to the Ownership
Limit, exchangeable for 4,884,691 Paired Shares (approximately 28.70% of the
outstanding Paired Shares, assuming exchange of all of the Units owned by
Firebird (and no exchange of Units by any other Filing Party), irrespective of
the Ownership Limit). Because of the Ownership Limit, Firebird cannot exchange
Units for, or otherwise hold, more than 8.0% of the outstanding Paired Shares;
accordingly, this Schedule reports the beneficial ownership by Firebird of
1,055,039 Paired Shares (the maximum number of Paired Shares that Firebird may
acquire within the Ownership Limit, assuming that no other Filing Party
beneficially owns Paired Shares at the time of such exchange). Each of SOFI II
(by virtue of being a general partner of Firebird), Starwood Capital (by virtue
of being the general partner of SOFI II), BSS (by virtue of being a general
partner of Starwood Capital) and Sternlicht Holdings (by virtue of being the
general partner of BSS) may be deemed to beneficially own the Paired Shares
beneficially owned by Firebird.
SOFI II. SOFI II beneficially owns 299,600 Paired Shares (approximately
2.47% of the outstanding Paired Shares (and no exchange of Units by any other
Filing Party)). Each of Starwood Capital (by virtue of being the general
partner of SOFI II), BSS (by virtue of being a general partner of Starwood
Capital) and Sternlicht Holdings (by virtue of being the general partner of
BSS) may be deemed to beneficially own the Paired Shares beneficially owned by
SOFI II.
Sternlicht. Mr. Sternlicht owns directly no Units or Paired Shares. By
virtue of his control of Berl GP (a general partner of Berl Holdings), SAHI (a
general partner of Starwood Apollo VIII and Starwood Apollo IX), SNHI (a
general partner of Starwood Nomura), Sternlicht Holdings (a general partner of
BSS, which is a general partner of SOFI II (the general partner of Starwood
Wichita and Firebird) and Starwood Capital (a general partner of SOFI II and
Woodstar)), SRL (a general partner of Starwood Huntington), Mr. Sternlicht may
be deemed to
<PAGE> 31
Page 31 of 44 Pages
beneficially own the Paired Shares beneficially owned by Berl Holdings,
Starwood Apollo VIII, Starwood Apollo IX, Starwood Nomura, Starwood Wichita,
Starwood Huntington, Woodstar, Firebird and SOFI II (i.e., all of the Paired
Shares reported in this Schedule). Because of the Ownership Limit, Mr.
Sternlicht cannot own more than 1,055,039 Paired Shares (such amount
representing 8.0% of the outstanding Paired Shares, the maximum number of
Paired Shares that Mr. Sternlicht may acquire within the Ownership Limit).
The Filing Persons may act as a group with respect to the Paired Shares
reported in this Schedule. As a result of the Ownership Limit, the Filing
Parties as a group cannot own more than 1,055,039 Paired Shares (such amount
representing 8.0% of the outstanding Paired Shares, the maximum number of
Paired Shares that the Filing Parties as a group may acquire within the
Ownership Limit).
(b) SOFI II has sole power to vote or direct the vote of, the 299,600
Paired Shares reported herein as beneficially owned by it. Because Mr.
Sternlicht controls Sternlicht Holdings (the general partner of BSS, which is
the general partner of Starwood Capital, which is the general partner of SOFI
II), Mr. Sternlicht also has the power to vote or direct the vote of such
299,600 Paired Shares. Other than such 299,600 Paired Shares, none of the
Filing Parties has any power to vote or direct the vote of any Paired Shares
reported in this Schedule because none of the Paired Shares reported in this
Schedule (other than such 299,600 Paired Shares) is outstanding or entitled to
vote. Each of the Filing Parties has sole dispositive power with respect to
the Paired Shares reported in this Schedule as beneficially owned by it.
(c) Other than the acquisition of Units described in Item 3, none of the
Filing Persons has effected any transaction in Paired Shares or Units during
the past 60 days. The information set forth in Item 3 is incorporated herein.
On December 12, 1994 Mr. Gates, an Executive Vice President of Sternlicht
Holdings, purchased, for his own account, 2,000 Paired Shares (for a purchase
price of $3.125 per Paired Share) and on December 14, 1994 Mr. Gates purchased,
for his own account, 1,000 Paired Shares (for a purchase price of $3.00 per
Paired Share). Such Paired Shares purchased by Mr. Gates are not reported
herein as beneficially owned by any of the Filing Parties.
(d) Certain persons, including the direct and indirect partners of the
Filing Parties and the direct and indirect partners of such partners, have an
economic interest (which may include the right to receive dividends on or the
proceeds from sale of Paired Shares) in the Paired Shares held by the Filing
Parties.
<PAGE> 32
Page 32 of 44 Pages
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The information set forth in Items 3 and 5 is incorporated herein. In
addition, pursuant to an Assignment Agreement (the "Assignment Agreement"),
Starwood Capital received an assignment of certain claims (the "Assigned
Claims") of Leonard M. Ross and his affiliates ("Ross"), who currently hold
approximately 9.8% of the outstanding Paired Shares. Pursuant to the
Assignment Agreement, Ross also granted to a party designated by Starwood
Capital (which party is not an affiliate of Starwood Capital) a proxy to vote
Ross' Paired Shares. Starwood Capital has agreed to purchase those Paired
Shares, at Ross' election, in a 60-day period beginning on December 15, 1995,
at a price of $5.625 per Paired Share. Starwood Capital may also elect to
purchase such Paired Shares at the same time and on the same terms. At the
date hereof, such Paired Shares are not beneficially owned by Starwood Capital
or any other Filing Party. Ross has agreed not to purchase or sell any Paired
Shares during such period and not more than 4.9% thereafter.
The Trust and the Corporation have agreed in the Formation
Agreement that (i) the Trust and the Corporation will indemnify and hold
harmless the Filing Parties (and their subsidiaries, affiliates and successors)
against liabilities, losses or damages and reasonable out-of-pocket expenses
incurred in connection with any action, suit or proceeding brought by a holder
of Paired Shares (other than Ross in connection with the Assignment Agreement)
against Starwood relating to the Reorganization and (ii) if prior to December
15, 1995 the Trust and the Corporation receive a full release of the Assigned
Claims, they will also indemnify and hold harmless the Filing Parties and their
affiliates against liabilities, losses or damages and reasonable out-of-pocket
expenses under or in respect of the Assignment Agreement; provided that such
indemnification described in this clause (ii) is limited to $1,800,000. In
addition, if Starwood Capital agrees that any recovery with respect to the
Assigned Claims shall not exceed $1,800,000, the Trust and the Corporation will
toll the expiration of the limitations period in respect of the Assigned Claims
until January 31, 1996.
The Filing Parties which received Units in the Reorganization
have agreed to share the costs and benefits of any purchase of Paired Shares
from Ross pursuant to the Assignment Agreement, in accordance with their
respective percentage interests in such Units. On December 29, 1994 Ross sold
to an individual unaffiliated with the Filing Parties 199,000 Paired
<PAGE> 33
Page 33 of 44 Pages
Shares which were subject to the Assignment Agreement. Such Paired Shares
remain subject to the provisions of the Assignment Agreement.
In addition, Starwood Nomura VIII and Starwood Nomura IX
(along with certain other related entities) have pledged all of their assets
(including the Units held by them) as collateral for approximately $2.8 million
of indebtedness to Nomura Asset Capital Corporation ("NACC"). In addition,
Starwood Capital has agreed (i) to allow NACC to require that Starwood Capital
exercise one of the demand registration rights under the Registration Rights
Agreement for the benefit of NACC and (ii) to allow Starwood Apollo VIII and
Starwood Apollo IX to require that Starwood Capital exercise one of the demand
registration rights under the Registration Rights Agreement for the benefit of
Starwood Apollo VIII and Starwood Apollo IX.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The exhibits accompanying this statement are listed in the
accompanying Exhibit Index located after the signature page.
<PAGE> 34
Page 34 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
BERL HOLDINGS L.P.
By: BERL HOLDINGS I, INC.,
general partner
By: /s/ Barry S. Sternlicht
--------------------------
<PAGE> 35
Page 35 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD-APOLLO HOTEL PARTNERS
VIII, L.P.
By: SAHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------------
<PAGE> 36
Page 36 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD-APOLLO HOTEL PARTNERS IX, L.P.
By: SAHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
----------------------------
<PAGE> 37
Page 37 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD-NOMURA HOTEL INVESTORS, L.P.
By: SNHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------------
<PAGE> 38
Page 38 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD/WICHITA INVESTORS, L.P.
By: STARWOOD OPPORTUNITY FUND, II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
<PAGE> 39
Page 39 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD-HUNTINGTON PARTNERS, L.P.
By: SRL HOLDINGS, INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------------
<PAGE> 40
Page 40 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
WOODSTAR PARTNERS I, L.P.
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II,
INC., general partner
By: /s/ Barry S. Sternlicht
-------------------------------
<PAGE> 41
Page 41 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
FIREBIRD CONSOLIDATED PARTNERS, L.P.
By: STARWOOD OPPORTUNITY FUND II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II,
INC., general partner
By: /s/ Barry S. Sternlicht
------------------------------
<PAGE> 42
Page 42 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD OPPORTUNITY FUND, II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
--------------------------------
<PAGE> 43
Page 43 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
--------------------------------
<PAGE> 44
Page 44 of 44 Pages
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
February 10, 1995
/s/ Barry S. Sternlicht
----------------------------------
Barry S. Sternlicht
<PAGE> 45
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
Exhibit 1 Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii).
Exhibit 2 Formation Agreement dated as of November 11, 1994 among the
Trust, the Corporation, and certain of the Filing Parties.
Exhibit 3 Exchange Rights Agreement dated as of January 1, 1995 among the
Trust, the Corporation, the Realty Partnership, the Operating
Partnership and certain of the Filing Parties.
Exhibit 4 Registration Rights Agreement dated as of January 1, 1995 among
the Trust, the Corporation and Starwood Capital.
<PAGE> 1
EXHIBIT 1
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1(f)(1)(iii) of the Regulation 13D-G of the General
Rules and Regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, the undersigned agree that the
statement on Schedule 13D to which this Exhibit is attached is being, and any
and all amendments thereto may be, filed on behalf of each of the undersigned.
Dated: February 10, 1995
BERL HOLDINGS, L.P.
By: BERL HOLDINGS I INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------
STARWOOD APOLLO HOTEL PARTNERS
VIII, L.P.
By: SAHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------
STARWOOD APOLLO HOTEL PARTNERS IX, L.P.
By: SAHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
-----------------------
<PAGE> 2
STARWOOD NOMURA HOTEL INVESTORS, L.P.
By: SNHI, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
STARWOOD/WICHITA INVESTORS, L.P.
By: STARWOOD OPPORTUNITY FUND, II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
STARWOOD-HUNTINGTON PARTNERS, L.P.
By: SRL HOLDINGS, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
WOODSTAR PARTNERS I, L.P.
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
<PAGE> 3
FIREBIRD CONSOLIDATED PARTNERS, L.P.
By: STARWOOD OPPORTUNITY FUND II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
STARWOOD OPPORTUNITY FUND, II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
STARWOOD CAPITAL GROUP, L.P.
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By: /s/ Barry S. Sternlicht
---------------------------
/s/ Barry S. Sternlicht
-----------------------
Barry S. Sternlicht
<PAGE> 1
EXHIBIT 2
FORMATION AGREEMENT
AMONG
HOTEL INVESTORS TRUST
HOTEL INVESTORS CORPORATION
STARWOOD CAPITAL GROUP, L.P.
BERL HOLDINGS, L.P.
STARWOOD-APOLLO HOTEL PARTNERS VIII, L.P.
STARWOOD-APOLLO HOTEL PARTNERS IX, L.P.
STARWOOD-NOMURA HOTEL INVESTORS, L.P.
STARWOOD\WICHITA INVESTORS, L.P.
STARWOOD-HUNTINGTON PARTNERS, L.P.
AND
WOODSTAR PARTNERS I, L.P.
____________________________________
DATED AS OF NOVEMBER 11, 1994
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - FORMATION AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Closing Date Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF HIT . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1. Organization of HIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2. HIT Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6. Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7. SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF HIC . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1. Organization of HIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.6. Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.7. SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.8. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.9. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE
STARWOOD PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.1. Organization of Starwood Parties . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3. Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5. Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.8. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V - ACTIONS PRIOR TO THE CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.1. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.2. Action by HIT, HIC, Shareholders of HIT
and Stockholders of HIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.3. Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.4. Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.5. Lawsuits, Proceedings, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.6. Conduct of Business by HIT, HIC and Starwood Pending the Closing . . . . . . . . 18
Section 5.7. Mutual Cooperation; Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
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----
<S> <C>
Section 5.8. No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.9. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.10. Gaming Law Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.11. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI - ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.1. Abstentions of Starwood Nominees . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2. Waiver of Certain Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.3. Further Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4. Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.5. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.6. Exclusivity; Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII - CONDITIONS PRECEDENT TO OBLIGATIONS OF
HIT AND HIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1. No Misrepresentation or Breach of
Covenants and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.2. No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.3. Opinion of Counsel for Starwood . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.4. No Injunctions or Restraints. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.5. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.6. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.7. Transaction Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.8. Shareholder and Stockholder Action . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.9. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII - CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE STARWOOD PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1. No Misrepresentation or Breach
of Covenants and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.2. No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.3. Opinion of Counsel for HIT and HIC. . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.4. No Injunctions or Restraints. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.5. Necessary Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6. Necessary Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.7. Transaction Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.8. Shareholder and Stockholder Action . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.9. Partnership Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX - INDEMNIFICATION; SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1. Indemnification by HIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.2. Indemnification by HIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.3. Indemnification by the Starwood Parties . . . . . . . . . . . . . . . . . . . . . 36
Section 9.4. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.5. Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.6. Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.7. Satisfaction of Indemnification
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.8. Special Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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<TABLE>
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<S> <C>
ARTICLE X - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XI - OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.1. Confidential Nature of Information . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.4. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.5. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.7. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.8. Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.9. Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.10. Entire Agreement; Amendments and Waivers; Assignment . . . . . . . . . . . . . . 46
Section 11.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.12. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.13. The Trust; Starwood General Partners . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.14. Designation of Starwood as Representative. . . . . . . . . . . . . . . . . . . . 47
Section 11.15. Several Nature of Representations and Agreements . . . . . . . . . . . . . . . . 47
Section 11.16. Determinations and Interpretations by HIT and HIC. . . . . . . . . . . . . . . . 48
Section 11.17. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.18. Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.19. HIT and HIC Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.20. Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SCHEDULES TO FORMATION AGREEMENT
--------------------------------
Schedule A Starwood Realty Properties and Liabilities
Schedule B Starwood Operating Properties and Liabilities
EXHIBITS TO FORMATION AGREEMENT
-------------------------------
Exhibit A Form of Realty Partnership Agreement
Exhibit B Form of Operating Partnership Agreement
Exhibit C Form of Exchange Rights Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Trust Amendment of HIT
Exhibit F Form of Charter Amendment of HIC
Exhibit G Form of Fairness Opinion
</TABLE>
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<PAGE> 5
FORMATION AGREEMENT
FORMATION AGREEMENT, dated as of November 11, 1994 (this
"Agreement"), among Hotel Investors Trust, a real estate investment trust
organized under the laws of the State of Maryland ("HIT"), Hotel Investors
Corporation, a corporation organized under the laws of the State of Maryland
("HIC"), Starwood Capital Group, L.P., a limited partnership organized under
the laws of the State of Delaware ("Starwood"), and the entities listed on the
signature pages hereto as Starwood Partners (the "Starwood Partners")(each of
the Starwood Partners and Starwood are collectively referred to as the
"Starwood Parties"). Unless otherwise indicated, certain terms used herein are
used as defined in Section 11.4 hereof.
W I T N E S S E T H :
WHEREAS, HIT is a Maryland real estate investment trust, the
beneficial interest in which on the date hereof is divided into Shares of
Beneficial Interest, $1.00 par value (the "Trust Shares"), which are limited to
30,000,000 Trust Shares;
WHEREAS, HIC is a Maryland corporation having an authorized
capital on the date hereof of 30,000,000 shares of Common Stock, par value $.10
per share (the "Corporation Shares" and, together with the Trust Shares,
"Paired Shares"), and 10,000,000 shares of Preferred Stock, par value $1.00 per
share;
WHEREAS, HIT, and the Starwood Parties desire to, among other
things, provide for the formation, capitalization and operation of a limited
partnership (the "Realty Partnership") under the Delaware Revised Uniform
Limited Partnership Act (the "Delaware RULPA") (through which all future real
estate acquisitions of HIT shall be made) on the terms and conditions set forth
herein and HIC and the Starwood Parties desire to, among other things, provide
for the formation, capitalization and operation of a limited partnership (the
"Operating Partnership" and, together with the Realty Partnership, the
"Partnerships") under the Delaware RULPA on the terms and conditions set forth
herein;
WHEREAS, the respective general partners of the Starwood
Parties have approved the transactions provided for in this Agreement (except
as set forth in Section 11.20) and the Board of Trustees of HIT and the Board
of Directors of HIC have approved the transactions provided for in this
Agreement and have directed that the reorganization contemplated by this
Agreement be submitted for adoption to the shareholders of HIT and the
stockholders of HIC, respectively; and
<PAGE> 6
WHEREAS, HIT, HIC, and the Starwood Parties desire to make
certain representations, warranties and agreements in connection with the
transactions contemplated by this Agreement and also to prescribe various
conditions to the consummation of such transactions.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
FORMATION AND CLOSING
Section 1.1. Formation. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 1.2) (a) HIT and the Starwood Partners shall form the Realty
Partnership by executing and delivering the Agreement of Limited Partnership
for the Realty Partnership in substantially the form attached to this Agreement
as Exhibit A (the "Realty Partnership Agreement") and by executing and filing
in the Office of the Secretary of State of the State of Delaware a certificate
of limited partnership of the Realty Partnership, (b) HIC, certain subsidiaries
of HIC and the Starwood Partners shall form the Operating Partnership by
executing and delivering the Agreement of Limited Partnership for the Operating
Partnership in substantially the form attached to this Agreement as Exhibit B
(the "Operating Partnership Agreement" and, together with the Realty
Partnership Agreement, the "Partnership Agreements") and by executing and
filing in the Office of the Secretary of State of the State of Delaware a
certificate of limited partnership of the Operating Partnership, (c) each of
the Starwood Partners hereby agrees to acquire the Units of each of the
Partnerships to be acquired by it pursuant to the Partnership Agreements and
(d) HIT, HIC, and the Starwood Parties shall take or cause to be taken all
other actions contemplated herein to be taken on the Closing Date.
Section 1.2. Closing Date. Upon the terms and subject to the
conditions set forth in this Agreement, the transactions contemplated by this
Agreement shall be consummated (the "Closing") at 10:00 a.m., local time, on
the third business day after the meetings of the shareholders of HIT and the
stockholders of HIC provided in Section 5.2, or such other date as may be
agreed upon by HIT, HIC and Starwood, at the offices of Sidley & Austin, 875
Third Avenue, New York, New York 10022, or at such other place or at such other
time as shall be agreed upon by HIT, HIC and Starwood (such date and time being
herein called the "Closing Date").
Section 1.3. Closing Date Deliveries. On the Closing Date,
HIT, HIC, and the Starwood Parties, as appropriate, shall
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<PAGE> 7
execute and deliver or cause the Realty Partnership or the Operating
Partnership to execute and deliver the following documents: (a) the Partnership
Agreements, (b) a Contribution Agreement between HIT and the Realty Partnership
in a form to be agreed upon between HIT and Starwood and containing terms and
conditions consistent with the terms of this Agreement (the "HIT Contribution
Agreement"), pursuant to which, among other things, HIT will convey to the
Realty Partnership on the Closing Date all of the assets and properties (the
"HIT Properties") of HIT, including, without limitation, the notes receivables
(the "Notes Receivable") of HIT, and the Realty Partnership will assume all of
the liabilities and obligations of HIT (other than the liabilities and
obligations of HIT pursuant to this Agreement and the Transaction Agreements
(as defined below)), (c) a Contribution Agreement between HIC and the Operating
Partnership in a form to be agreed upon between HIC and Starwood and containing
terms and conditions consistent with the terms of this Agreement (the "HIC
Contribution Agreement"), pursuant to which, among other things, HIC will
convey or cause to be conveyed to the Operating Partnership on the Closing Date
all of the assets and properties of HIC and of its subsidiaries, other than the
capital stock of such subsidiaries (such assets and properties of HIC and its
subsidiaries, other than such capital stock, being referred to as the "HIC
Properties") (except that the assets and properties of Hotel Investors
Corporation of Nevada ("HICN") (such assets and properties of HICN being
referred to as the ("HICN Properties") will be conveyed as provided in Section
6.3) and the Operating Partnership will assume all of the liabilities and
obligations of HIC and of its subsidiaries (except that the liabilities and
obligations of HICN will be assumed as provided in Section 6.3), other than the
liabilities and obligations of HIC pursuant to this Agreement and the
Transaction Agreements, (d) a Contribution Agreement among Starwood, the
Starwood Partners and the Realty Partnership in a form to be agreed upon
between HIT and Starwood and containing terms and conditions consistent with
the terms of this Agreement (the "Starwood Realty Contribution Agreement"),
pursuant to which, among other things, the Starwood Parties will convey to the
Realty Partnership on the Closing Date the assets and properties generally
described in Schedule A hereto (the "Starwood Realty Properties"), and the
Realty Partnership will assume the liabilities and obligations of the Starwood
Parties generally described in Schedule A hereto, including the liabilities and
obligations encumbering, binding upon or related to the Starwood Realty Assets
which are described in the Starwood Realty Contribution Agreement (other than
the liabilities and obligations of the Starwood Parties pursuant to this
Agreement and the Transaction Agreements), (e) a Contribution Agreement among
Starwood, the Starwood Partners and the Operating Partnership in a form to be
agreed upon between HIC and Starwood and containing terms and conditions
consistent with the terms of this Agreement (the "Starwood Operating
Contribution Agreement"), pursuant to which, among other things, the Starwood
Parties will convey to the Operating Partnership on the Closing
-3-
<PAGE> 8
Date the assets and properties generally described on Schedule B hereto (the
"Starwood Operating Properties" and, together with the Starwood Realty
Properties, the "Starwood Properties"), and the Operating Partnership will
assume the liabilities and obligations of the Starwood Parties generally
described on Schedule B hereto, including the liabilities and obligations
encumbering, binding upon or related to the Starwood Operating Assets which are
described in the Starwood Operating Contribution Agreement (other than the
liabilities and obligations of the Starwood Parties pursuant to this Agreement
and the Transaction Agreements), (f) the Exchange Rights Agreement among the
Realty Partnership, the Operating Partnership, HIT, HIC and the Starwood
Parties in substantially the form attached to this Agreement as Exhibit C (the
"Exchange Agreement"), (g) the Registration Rights Agreement among HIT, HIC and
Starwood in substantially the form attached to this Agreement as Exhibit D
(such agreements referred to in subsections 1.3(a) through 1.3(g) (inclusive)
being collectively referred to as the "Transaction Agreements") and (h) all of
the documents, instruments and opinions required to be delivered pursuant to
Articles VII and VIII or required to be delivered on the Closing Date pursuant
to the terms of the Transaction Agreements.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF HIT
As an inducement to the Starwood Parties to enter into this
Agreement and to consummate the transactions contemplated hereby, HIT
represents and warrants to each of the Starwood Parties and each of the
Partnerships and agrees as follows:
Section 2.1. Organization of HIT. HIT is a real estate
investment trust duly organized, validly existing and in good standing under
the laws of the State of Maryland. HIT is duly qualified to transact business
and is in good standing in each of the jurisdictions in which the ownership or
leasing of the properties used in its business or the conduct of its business
requires such qualification (each of which is listed in the HIT Disclosure
Schedule), other than in such jurisdictions where the failure to be so
qualified and in good standing would not have a Material Adverse Effect on HIT
and its subsidiaries (taken as a whole) or, in addition, after the Closing, on
the Realty Partnership and its subsidiaries (taken as a whole). HIT has all
requisite trust power and authority to own or lease and operate its properties
and to carry on its business as now conducted. HIT has delivered to Starwood
complete and correct copies of the Amended and Restated Declaration of Trust
(the "Trust Declaration") and Trustees' Regulations (the "Trustees'
Regulations") of HIT in each case as amended and in effect on the date hereof.
-4-
<PAGE> 9
Section 2.2. HIT Subsidiaries. The HIT Disclosure Schedule
accurately and completely sets forth as to the only subsidiary of HIT such
subsidiary's name, the jurisdiction of its organization or formation and a
detailed description of its capital structure which indicates the direct or
indirect interest of HIT in such subsidiary. Such subsidiary is a limited
partnership duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite partnership
power and authority to own or lease and operate its properties, and to carry on
its business as now conducted. All of the issued and outstanding equity
interests in such subsidiary described in the HIT Disclosure Schedule as being
owned by HIT are validly issued, fully paid and nonassessable and owned
beneficially by HIT, free and clear of any liens or other encumbrances, other
than pursuant to the Credit Agreement or as otherwise set forth in the HIT
Disclosure Schedule, and there are no options, warrants or other rights to
acquire, or agreements or commitments pursuant to which any such subsidiary is
obligated to issue sell, purchase or redeem shares of capital stock or other
equity interests in such subsidiary.
Section 2.3. Capitalization. On the date hereof, the
authorized capital of HIT consists of 30,000,000 Trust Shares, of which
12,132,948 shares are validly issued and outstanding and are fully paid and
nonassessable and of which none is reserved for any purpose, except for
2,858,005 shares issuable upon exercise of the Trust Warrants, the Trust Lender
Warrants and the Trust Options (each as hereinafter defined). HIT has issued
warrants (the "Trust Warrants") to purchase up to an aggregate of 1,659,743
Trust Shares pursuant to a warrant agreement dated as of September 16, 1986 and
warrants (the "Trust Lender Warrants") to purchase up to an aggregate of
888,762 Trust Shares pursuant to a warrant agreement dated as of January 28,
1993. HIT has delivered to Starwood complete and correct copies of each of
such warrant agreements. HIT has granted options to purchase an aggregate of
309,500 Trust Shares ("Trust Options") pursuant to option plans of HIT and HIC.
Except for the Trust Warrants, the Trust Lender Warrants and the Trust Options,
and except as contemplated by this Agreement, there are no options, warrants or
other rights to acquire, or agreements or commitments pursuant to which HIT is
obligated to issue, sell, purchase or redeem, shares of capital stock of HIT.
Section 2.4. Authority. (a) HIT has full trust power and
authority to enter into this Agreement and the other agreements and instruments
contemplated by this Agreement to be entered into by HIT and, subject to the
approval by the shareholders of HIT of the HIT Shareholder Matters (as defined
in Section 5.2), to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance of this Agreement
by HIT and the consummation by HIT of the transactions
-5-
<PAGE> 10
contemplated hereby have been duly authorized by all necessary trust action on
the part of HIT, subject to the approval by the shareholders of HIT of the HIT
Shareholder Matters. This Agreement is, and each other agreement or instrument
of HIT contemplated hereby when executed and delivered will be, the legal,
valid and binding agreement of HIT, enforceable against HIT in accordance with
its respective terms.
(c) Neither the execution or delivery of this Agreement by
HIT, nor consummation of the transactions contemplated hereby or compliance
with or fulfillment of the terms and provisions hereof by HIT, will (i)
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in the
creation or imposition of any encumbrance upon any of the assets of HIT, under
the Trust Declaration, the Trustees' Regulations, the Pairing Agreement dated
June 25, 1980 (the "Pairing Agreement") between HIT and HIC, or any other
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which HIT is a party or any of its properties is subject or by which it is
bound or any statute, other law or regulatory provision affecting it, (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of HIT, or (iii) adversely affect the ability of HIT to elect and
qualify to be taxed as a "real estate investment trust", as defined in Section
856 of the Code ("REIT"), for the taxable year ending December 31, 1995 or
adversely affect the ability of HIT to retain its status as grandfathered
pursuant to Section 132(c) of the Deficit Reduction Act of 1984, except for (A)
the applicable requirements of the gaming authorities of the State of Nevada
and of the Clark County, Nevada Liquor and Gaming Licensing Board (the "Nevada
Gaming Approvals"), (B) the filing of appropriate documents with the Securities
and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (C) the consent of the holders of the
indebtedness of HIT (the "Senior Debt") issued pursuant to the Credit Agreement
dated as of January 28, 1993, as amended, and related agreements and documents
(the "Credit Agreement"), (D) approval by the shareholders of HIT of the HIT
Shareholder Matters, (E) those matters set forth in the HIT Disclosure Schedule
and (F) such conflicts, breaches, defaults, events, creations, impositions,
approvals, consents, declarations, filings or authorizations which would not
reasonably be expected to either (x) have a Material Adverse Effect on HIT and
its subsidiaries (taken as a whole) or, in addition, after the Closing, on the
Realty Partnership and its subsidiaries (taken as a whole) or (y) prevent or
hinder the consummation of the
-6-
<PAGE> 11
transactions contemplated hereby. HIT is grandfathered pursuant to Section
132(c)(3) of the Deficit Reduction Act of 1984.
Section 2.5. Litigation. To the knowledge of HIT, except as
disclosed in the HIT Disclosure Schedule or in the SEC Documents (as defined in
Section 2.7), there are no actions, suits or proceedings or court orders or
decrees pending or threatened to which HIT is a party or any of its properties
is subject or by which it is bound before or by any court or governmental
agency, which if determined adversely to the interests of HIT, would reasonably
be expected to either (x) have a Material Adverse Effect on HIT and its
subsidiaries (taken as a whole) or, in addition, after the Closing, on the
Realty Partnership and its subsidiaries (taken as a whole) or (y) prevent or
hinder the consummation of the transactions contemplated hereby.
Section 2.6. Certain Matters. (a) To the knowledge of HIT,
except as disclosed in the HIT Disclosure Schedule, the SEC Documents, or in
reports of consultants or title companies delivered to Starwood prior to the
date of this Agreement, there are no structural, mechanical, HVAC,
environmental, zoning or title conditions relating to the HIT Properties which
would reasonably be expected to have a Material Adverse Effect on HIT and its
subsidiaries (taken as a whole) or, in addition, after the Closing, on the
Realty Partnership and its subsidiaries (taken as a whole).
(b) HIT will be eligible to qualify to elect to be taxed as a
REIT for the taxable year ending December 31, 1995.
Section 2.7. SEC Documents. HIT has previously delivered or
made available to Starwood complete and correct copies of all reports and
statements jointly filed by HIT and HIC with the SEC since May 1, 1991 (the
"SEC Documents"). As of their respective dates, none of the SEC Documents
contained any 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.
Section 2.8. Financial Information. The combined financial
statements included in the SEC Documents are correct in all material respects,
are in accordance with the books and records of HIT and HIC and present fairly
the combined financial position of HIT and HIC as of the respective dates of
such financial statements and the combined results of their operations and cash
flows for the respective periods covered thereby, in accordance with generally
accepted accounting principles.
Section 2.9. No Finder. Neither HIT nor any party acting on
the behalf of HIT has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement,
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<PAGE> 12
other than to Salomon Brothers Inc and Smith Barney Inc., whose fees and
expenses, to the extent payable, shall be paid by HIT prior to Closing and
other than to Merrill Lynch & Co., whose fees and expenses, to the extent
payable, shall be paid by HIT and HIC after the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF HIC
As an inducement to the Starwood Parties to enter into this
Agreement and to consummate the transactions contemplated hereby, HIC
represents and warrants to each of the Starwood Parties and each of the
Partnerships and agrees as follows:
Section 3.1. Organization of HIC. HIC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland. HIC and its subsidiaries are each duly qualified to transact
business and are each in good standing in each of the jurisdictions in which
the ownership or leasing of the properties used in its business or the conduct
of its business requires such qualification (each of which is listed in the HIC
Disclosure Schedule), other than in such jurisdictions where the failure to be
so qualified and in good standing would not have a Material Adverse Effect on
HIC and its subsidiaries (taken as a whole) or, in addition, after the Closing,
on the Operating Partnership and its subsidiaries (taken as a whole). HIC has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted. HIC has delivered to
Starwood complete and correct copies of the Articles of Incorporation (the "HIC
Articles") and by-laws (the "HIC By-laws") of HIC, in each case as amended and
in effect on the date hereof.
Section 3.2. Subsidiaries. The HIC Disclosure Schedule
accurately and completely sets forth as to (a) each subsidiary of HIC which is
a corporation, its name, the jurisdiction of its incorporation, the number of
shares of its capital stock of each class outstanding and the number of such
outstanding shares owned by HIC and its other subsidiaries and (b) as to each
subsidiary of HIC which is not a corporation, its name, the jurisdiction of its
organization or formation and a detailed description of its capital structure
which indicates the direct or indirect interest of HIC in such subsidiary.
Each subsidiary of HIC is a trust, corporation or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, organization or formation, as the case may be, and has all
requisite trust, corporate or partnership power and authority to own or lease
and operate its properties, and to carry on its business as now conducted. All
of the issued and outstanding shares of capital
-8-
<PAGE> 13
stock or other equity interests in each subsidiary of HIC are validly issued,
fully paid and nonassessable and owned beneficially by HIC, free and clear of
any liens or other encumbrances, other than pursuant to the Credit Agreement or
as otherwise set forth in the HIC Disclosure Schedule, and there are no
options, warrants or other rights to acquire, or agreements or commitments
pursuant to which any such subsidiary is obligated to issue sell, purchase or
redeem shares of capital stock or other equity interests in such subsidiary.
Section 3.3. Capitalization. On the date hereof, the
authorized capital of HIC consists of (a) 30,000,000 Corporation Shares of
which 12,132,948 shares are validly issued and outstanding and are fully paid
and nonassessable and of which none is reserved for any purpose, except for
2,858,005 shares issuable upon exercise of the Corporation Warrants, the
Corporation Lender Warrants and the Corporation Options (each as hereinafter
defined), and (b) 10,000,000 shares of preferred stock, par value $1.00 per
share, none of which are issued or outstanding or reserved for any purpose.
HIC has issued warrants (the "Corporation Warrants") to purchase up to an
aggregate of 1,659,743 Corporation Shares pursuant to a warrant agreement dated
as of September 16, 1986 and warrants (the "Corporation Lender Warrants") to
purchase up to an aggregate of 888,762 Corporation Shares pursuant to a warrant
agreement dated as of January 28, 1993. HIC has delivered to Starwood complete
and correct copies of each of such warrant agreements. HIC has granted options
to purchase an aggregate of 309,500 (the "Corporation Options") pursuant to
option plans of HIT and HIC. Except for the Corporation Warrants, the
Corporation Lender Warrants and the Corporation Options, and except as
contemplated by this Agreement, there are no options, warrants or other rights
to acquire, or agreements or commitments pursuant to which HIC is obligated to
issue, sell, purchase or redeem shares of capital stock of HIC.
Section 3.4. Authority. (a) HIC has full corporate power and
authority to enter into this Agreement and the other agreements and instruments
contemplated by this Agreement to be entered into by HIC and, subject to the
approval by the stockholders of HIC of the HIC Stockholder Matters (as defined
in Section 5.2), to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance of this Agreement
by HIC and the consummation by HIC of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of HIC,
subject to the approval by the stockholders of HIC of the HIC Stockholder
Matters. This Agreement is, and each other agreement or instrument of HIC
contemplated hereby when executed and delivered will be, the legal, valid and
binding agreement of HIC, enforceable against HIC in accordance with its
respective terms.
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(c) Neither the execution or delivery of this Agreement by
HIC, nor consummation of the transactions contemplated hereby or compliance
with or fulfillment of the terms and provisions hereof by HIC, will (i)
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in the
creation or imposition of any encumbrance upon any of the assets of HIC or any
of its subsidiaries, under the HIC Articles, the HIC By-laws, the
organizational documents of any subsidiary of HIC, the Pairing Agreement or any
other instrument, agreement, mortgage, indenture, deed of trust, permit,
concession, grant, franchise, license, judgment, order, award, decree or other
restriction to which HIC or any of its subsidiaries is a party or any of their
respective properties is subject or by which any of them is bound or any
statute, other law or regulatory provision affecting any of them, or (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of HIC or any of its subsidiaries, except for (A) the Nevada Gaming
Approvals, (B) the filing of appropriate documents with the SEC under the
Exchange Act, (C) the consent of the holders of the Senior Debt, (D) approval
by the stockholders of HIC of the HIC Stockholder Matters, (E) those matters
set forth in the HIC Disclosure Schedule and (F) such conflicts, breaches,
defaults, events, creations, impositions, approvals, consents, declarations,
filings or authorizations, which would not reasonably be expected to either (x)
have a Material Adverse Effect on HIC and its subsidiaries (taken as a whole)
or, in addition, after the Closing, on the Operating Partnership and its
subsidiaries (taken as a whole) or (y) prevent or hinder the consummation of
the transactions contemplated hereby.
Section 3.5. Litigation. To the knowledge of HIC, except as
disclosed in the HIC Disclosure Schedule or in the SEC Documents, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which HIC is a party or any of its properties is subject or by which it is
bound before or by any court or governmental agency, which if determined
adversely to the interests of HIC, would reasonably be expected to either (x)
have a Material Adverse Effect on HIC and its subsidiaries (taken as a whole)
or, in addition, after the Closing, on the Operating Partnership and its
subsidiaries (taken as a whole) or (y) prevent or hinder the consummation of
the transactions contemplated hereby.
Section 3.6. Certain Matters. To the knowledge of HIC,
except as disclosed in the SEC Documents, the HIC Disclosure Schedule or in
reports of consultants or title companies delivered to Starwood prior to the
date of this Agreement, there are no structural, mechanical, HVAC,
environmental, zoning or
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title conditions relating to the HIC Properties which would reasonably be
expected to have a Material Adverse Effect on HIC and its subsidiaries (taken
as a whole) or, in addition, after the Closing, on the Operating Partnership
and its subsidiaries (taken as a whole).
Section 3.7. SEC Documents. HIC has previously delivered or
made available to Starwood complete and correct copies of the SEC Documents.
As of their respective dates, none of the SEC Documents contained any 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.
Section 3.8. Financial Information. The combined financial
statements included in the SEC Documents are correct in all material respects,
are in accordance with the books and records of HIT and HIC and present fairly
the combined financial position of HIT and HIC as of the respective dates of
such financial statements and the combined results of their operations and cash
flows for the respective periods covered thereby, in accordance with generally
accepted accounting principles.
Section 3.9. No Finder. Neither HIC nor any party acting on
the behalf of HIC has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement, other than to Salomon Brothers Inc and Smith
Barney Inc., whose fees and expenses, to the extent payable, shall be paid by
HIC prior to the Closing and other than to Merrill Lynch & Co., whose fees and
expenses, to the extent payable, shall be paid by HIT and HIC after the
Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE STARWOOD PARTIES
As an inducement to each of HIT and HIC to enter into this
Agreement and to consummate the transactions contemplated hereby, each of the
Starwood Parties severally and not jointly represents and warrants to each of
HIT and HIC and each of the Partnerships and agrees as follows:
Section 4.1. Organization of Starwood Parties. Such Starwood
Party is a limited partnership duly formed, validly existing and in good
standing as a limited partnership under the Delaware RULPA. Such Starwood
Party is duly qualified to transact business and is in good standing in each of
the jurisdictions in which the ownership or leasing of the properties used in
its business or the conduct of its business requires such qualification (each
of which is listed in the Starwood Disclosure
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Schedule), other than in such jurisdictions where the failure to be so
qualified and in good standing would not have a Material Adverse Effect on the
Starwood Properties (taken as a whole) or, in addition, after the Closing, on
the Realty Partnership and its subsidiaries (taken as a whole) or the Operating
Partnership and its subsidiaries (taken as a whole). Such Starwood Party has
all requisite partnership power and authority to own or lease and operate its
properties and to carry on its business as now conducted.
Section 4.2. Authority. (a) Such Starwood Party has full
partnership power and authority to enter into this Agreement and the other
agreements and instruments contemplated by this Agreement to be entered into by
it and to consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement
by such Starwood Party and the consummation by such Starwood Party of the
transactions contemplated hereby have been duly authorized by all necessary
partnership action on the part of such Starwood Party and its partners. This
Agreement is, and each other agreement or instrument of such Starwood Party
contemplated hereby when executed and delivered will be, the legal, valid and
binding agreement of such Starwood Party, enforceable against such Starwood
Party in accordance with its respective terms.
(c) Neither the execution and delivery of this Agreement by
such Starwood Party nor consummation of the transactions contemplated hereby or
compliance with or fulfillment of the terms and provisions hereof by such
Starwood Party will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the Starwood Properties under the agreement of limited partnership or other
organizational document of such Starwood Party (or, if such Starwood Party has
any subsidiaries, the organizational documents of such subsidiaries), any
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which such Starwood Party or any of its subsidiaries is a party or any of
their respective properties is subject or by which any of them is bound or any
statute, other law or regulatory provision affecting any of them, or (ii)
require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body, by or
on behalf of such Starwood Party or any of its subsidiaries, except for (A) the
Nevada Gaming Approvals, (B) those matters set forth in the Starwood Disclosure
Schedule and (C) such conflicts, breaches, defaults, events, creations,
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impositions, approvals, consents, declarations, filings or authorizations which
would not reasonably be expected to either (x) have a Material Adverse Effect
on the Starwood Properties (taken as a whole) or, in addition, after the
Closing, on the Realty Partnership and its subsidiaries (taken as a whole) or
the Operating Partnership and its subsidiaries (taken as a whole) or (y)
prevent or hinder the consummation of the transactions contemplated hereby.
Section 4.3. Investment Representations. Such Starwood Party
is an "accredited investor" within the meaning of Rule 501 under the Securities
Act of 1933, as amended (the "Securities Act"), and (except for Woodstar
Partners I, L.P.) was not organized for the purpose of acquiring limited
partnership interests in the Realty Partnership or the Operating Partnership.
Such Starwood Party has sufficient knowledge and experience in financial and
business matters and in investing in entities similar to the Realty Partnership
and the Operating Partnership so as to be able to evaluate the risks and merits
of its investment in the Realty Partnership and the Operating Partnership and
it is able financially to bear the risks thereof. Such Starwood Party has had
an opportunity to discuss the business, management and financial affairs of
HIT, HIC and the Realty Partnership and the Operating Partnership with the
management of HIT and HIC. The limited partnership interests in the Realty
Partnership and the Operating Partnership are being acquired by such Starwood
Party for its own account for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof. Such Starwood Party
understands that (i) the limited partnership interests in the Realty
Partnership and the Operating Partnership have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof or Rule 505 or 506 promulgated under the Securities Act, and (ii) such
interests and, upon any issuance of Trust Shares and Corporation Shares
pursuant to the Exchange Agreement, such Trust Shares and Corporation Shares
must be held indefinitely unless such Shares are registered upon receipt
thereof, or unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt from such
registration.
Section 4.4. Litigation. To the knowledge of such Starwood
Party, except as disclosed in the Starwood Disclosure Schedule, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which such Starwood Party is a party or any of its properties is subject or
by which it is bound before or by any court or governmental agency, which if
determined adversely to the interests of such Starwood Party, would reasonably
be expected to either (x) have a Material Adverse Effect on the Starwood
Properties (taken as a whole) or, in addition, after the Closing, on the Realty
Partnership and its
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subsidiaries (taken as a whole) or the Operating Partnership and its
subsidiaries (taken as a whole), or (y) prevent or hinder the consummation of
the transactions contemplated hereby.
Section 4.5. Certain Matters. To the knowledge of such
Starwood Party, except as disclosed in the Starwood Disclosure Schedule, or in
reports of consultants or title companies delivered to HIT or HIC prior to the
date of this Agreement, there are no structural, mechanical, HVAC,
environmental, zoning or title conditions relating to (a) the Starwood Realty
Properties to be contributed by such Starwood Party, which would reasonably be
expected to have a Material Adverse Effect on the Starwood Realty Properties
(taken as a whole) or, in addition, after the Closing, on the Realty
Partnership and its subsidiaries (taken as a whole) or (b) the Starwood
Operating Properties to be contributed by such Starwood Party, which would
reasonably be expected to have a Material Adverse Effect on the Starwood
Operating Properties (taken as a whole) or, in addition, after the Closing, on
the Operating Partnership and its subsidiaries (taken as a whole).
Section 4.6. Proxy Statement. Except for the financial
statements described in Section 4.7, none of the information supplied or to be
supplied by such Starwood Party or any of its representatives for inclusion in
the Proxy Statement (as defined in Section 5.1) will, at the time of the
mailing of the Proxy Statement to the shareholders of HIT and the stockholders
of HIC and at the time of the meetings of such shareholders and stockholders
referred to in Section 5.2, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading. Prior to the mailing of the Proxy Statement, HIT, HIC
and the Starwood Parties shall enter into a letter agreement specifying those
portions of the Proxy Statement which were supplied by the Starwood Parties
(the "Proxy Statement Letter").
Section 4.7. Financial Statements. The income statements,
statements of cash flows and other financial statements supplied by such
Starwood Party to be included in the Proxy Statement or used in preparing
financial statements to be included in the Proxy Statement are (to the
knowledge of such Starwood Party) correct in all material respects, are in
accordance with the books and records of such Starwood Party and present fairly
the financial position and results of operations and cash flows of the
respective properties covered thereby as of their respective dates and for the
respective periods covered thereby, in accordance with generally accepted
accounting principles.
Section 4.8. Employee Benefit Plans. Such Starwood Party is
not (1) an "employee benefit plan" as defined in and subject to the Employment
Retirement Income Security Act of 1974,
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as amended ("ERISA"), (2) a "plan" as defined in and subject to Section 4975 of
the Code or (3) an entity any portion or all of the assets of which are deemed
pursuant to United States Department of Labor Regulation Section 2510.3-101 or
otherwise pursuant to ERISA to be, for any purpose of ERISA or Section 4975 of
the Code, assets of any "employee benefit plan" or "plan" described in clause
(1) or (2) above which invests in such entity by virtue of such investment.
Section 4.9. No Finder. Neither such Starwood Party nor any
party acting on its behalf has paid or become obligated to pay any fee or any
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement, other than to Merrill Lynch & Co.,
whose fees and expenses, to the extent payable, shall be paid by HIT and HIC
after the Closing.
ARTICLE V
ACTIONS PRIOR TO THE CLOSING DATE
HIT, HIC, and the Starwood Parties (severally and not jointly)
covenant and agree to take the following respective actions between the date
hereof and the Closing Date:
Section 5.1. Proxy Statement. HIT and HIC have prepared and
filed with the SEC a joint proxy statement to solicit proxies in connection
with the meetings of the shareholders of HIT and the stockholders of HIC
referred to in Section 5.2 (the form of such joint proxy statement, together
with any amendments thereof or supplements thereto, mailed to the shareholders
of HIT and the stockholders of HIC in connection with such meetings is herein
referred to as the "Proxy Statement"). HIT and HIC will cause the Proxy
Statement to comply as to form in all material respects with the applicable
requirements of the Exchange Act and the respective rules and regulations
thereunder and will cause the Proxy Statement, at the time of its mailing or
delivery to the shareholders of HIT and the stockholders of HIC and at the time
of the meetings referred to above, to not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by HIT or HIC
in reliance upon and in conformity with information concerning any Starwood
Party and their respective affiliates or representatives furnished to HIT or
HIC by a Starwood Party or its affiliates or representatives for inclusion in
the Proxy Statement, as set forth in the Proxy Statement Letter. Each Starwood
Party shall, and shall cause its affiliates and representatives to, furnish HIT
and HIC all information concerning itself and the Starwood Properties to be
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contributed by it and required for use in the Proxy Statement, including,
without limitation, audited and unaudited financial statements with respect to
the Starwood Realty Properties contributed by it and required to be included in
the Proxy Statement or which are necessary to prepare pro forma financial
statements and information to be included in the Proxy Statement. If, at any
time prior to the Closing Date, any event should occur which is required to be
described in an amendment of, or a supplement to, the Proxy Statement, HIT and
HIC will cause such event to be so described, and such amendment shall be
promptly filed with the SEC and, as required by law, disseminated to any
shareholders of HIT or any stockholders of HIC. Each of the Starwood Parties
will cooperate fully in connection with such amendment or supplement, including
supplying any and all information with respect to such Starwood Party (or its
affiliates and representatives) and the Starwood Properties to be contributed
by it which is necessary to prepare any such amendment or supplement.
Section 5.2. Action by HIT, HIC, Shareholders of HIT and
Stockholders of HIC. HIT shall, as soon as practicable after the Proxy
Statement shall be cleared by the SEC, duly call, give notice of, convene and
hold a meeting of the shareholders of HIT for the purpose of electing trustees
to the Board of Trustees (including the three nominees designated by Starwood
pursuant to Section 5.3) of HIT and approving (i) HIT becoming the general
partner of the Realty Partnership and the contribution to the Realty
Partnership of the HIT Properties, (ii) the issuance of Trust Shares pursuant
to the Exchange Agreement, (iii) the authorization of a reverse stock split of
Trust Shares, (iv) the amendment to the Trust Declaration substantially in the
form attached to this Agreement as Exhibit E, and (v) any other matter required
to be approved by such shareholders pursuant to this Agreement and the
transactions contemplated hereby (collectively, together with the election to
the Board of Trustees of the three nominees designated by Starwood pursuant to
Section 5.3, the "HIT Shareholder Matters"). HIC shall, as soon as practicable
after such clearance, duly call, give notice of, convene and hold a meeting of
the stockholders of HIC for the purpose of electing directors to the Board of
Directors of HIC (including the two nominees designated by Starwood pursuant to
Section 5.3) and approving (i) HIC becoming the general partner of the
Operating Partnership and the contribution to the Operating Partnership of the
HIC Properties, (ii) the issuance of Corporation Shares pursuant to the
Exchange Agreement, (iii) the authorization of a reverse stock split of
Corporation Shares, (iv) the amendment to the HIC Articles in the form attached
to this Agreement as Exhibit F, and (v) any other matter required to be
approved by such stockholders pursuant to this Agreement and the transactions
contemplated hereby (collectively, together with the election to the Board of
Directors of the two nominees designated by Starwood pursuant to Section 5.3,
the "HIC Stockholder Matters"). Subject to the fiduciary duties of the Board
of Trustees of HIT under
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applicable law and to the last sentence of this Section 5.2, the Board of
Trustees of HIT will recommend to its shareholders approval of the HIT
Shareholder Matters. Subject to the fiduciary duties of the Board of Directors
of HIC under applicable law and to the last sentence of this Section 5.2, the
Board of Directors of HIC will recommend to its stockholders approval of the
HIC Shareholder Matters. Each of the Board of Trustees of HIT or the Board of
Directors of HIC may at any time prior to the Closing Date withdraw, modify or
change any recommendation regarding the HIT Shareholder Matters, the HIC
Stockholder Matters, this Agreement or the transactions contemplated hereby or
recommend and declare advisable any other offer, proposal or transaction if in
any such case it determines upon advice of legal counsel that the failure to so
withdraw, modify or change such recommendation could reasonably be expected to
involve it in a breach of fiduciary duties under applicable law.
Section 5.3. Board Representation. HIT shall cause the Board
of Trustees of HIT to consist of five trustees and Starwood will be entitled to
designate three individuals to be nominated in the Proxy Statement by the Board
of Trustees of HIT (the "Starwood HIT Nominees"), such nominees to take office
effective upon their election at the meeting of shareholders of HIT referred to
in Section 5.2. HIC shall, effective upon the receipt of necessary Nevada
Gaming Approvals or such time as such Nevada Gaming Approvals are no longer
required, cause the Board of Directors of HIC to consist of three directors and
Starwood will be entitled to designate two individuals to be nominated in the
Proxy Statement by the Board of Directors of HIC (the "Starwood HIC Nominees"),
such nominees to take office as directors upon receipt of such Nevada Gaming
Approvals or such time as such Nevada Gaming Approvals are no longer required.
One of the Starwood HIT Nominees shall be nominated to each of the classes of
trustees whose terms expire at the annual shareholder meetings of HIT to be
held in 1995, 1996 and 1997. One of the Starwood HIC Nominees shall be
nominated to each of the classes of directors whose terms expire at the annual
stockholders meetings of HIC to be held in 1996 and 1997.
Section 5.4. Investigation. Each of the parties hereto shall
afford to the officers, employees and authorized representatives of each other
party hereto (including, without limitation, independent public accountants,
attorneys, environmental consultants and financial advisors thereof),
reasonable access during normal business hours to its offices, properties,
employees and business and financial records to the extent such party shall
deem necessary or desirable, and shall furnish to each such other party or such
other party's authorized representatives such additional information concerning
the operations, properties and businesses as may be reasonably requested in
writing, to enable such party or such party's authorized representatives to
verify the accuracy of the
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representations and warranties contained in this Agreement, and to determine
whether the conditions set forth in Articles VII and VIII have been satisfied.
Each of the parties hereto agrees that such investigations shall be conducted
in such manner as not to interfere unreasonably with the operation of the
business of any other party. No investigation made by any party or such
party's authorized representatives hereunder shall affect the representations
and warranties of the parties hereunder.
Section 5.5. Lawsuits, Proceedings, Etc. Each party hereto
shall notify each of the other parties hereto promptly upon becoming aware of
any lawsuit, proceeding, claim or investigation that may be threatened,
brought, asserted or commenced against it (a) involving in any way the
transactions contemplated by this Agreement or (b) that would have been listed
or specified as an exception to Sections 2.5, 3.5 or 4.4, as the case may be,
if such lawsuit, proceeding, claim or investigation had arisen prior to the
date hereof.
Section 5.6. Conduct of Business by HIT, HIC and Starwood
Pending the Closing. (a) During the period from the date of this Agreement
through the Closing Date, except as expressly contemplated by this Agreement,
(i) HIT shall carry on its business with respect to the HIT Properties in, and
not enter into any material transaction with respect to the HIT Properties
other than in accordance with, the ordinary course, (ii) HIC shall carry on its
business with respect to the HIC Properties in, and not enter into any material
transaction with respect to the HIC Properties other than in accordance with,
the ordinary course, and (iii) each of the Starwood Parties shall carry on its
business with respect to the Starwood Properties to be contributed by it in,
and not enter into any material transaction with respect to such Starwood
Properties other than in accordance with, the ordinary course (except, in each
case, with respect to HIT or HIC, with the prior written consent of Starwood
and except, in each case with respect to the Starwood Parties, with the prior
written consent of HIT and HIC).
(b) Without limiting the generality of the foregoing, and
except as expressly contemplated by this Agreement, during the period from the
date of this Agreement through the Closing Date, neither HIT nor HIC shall,
without the prior written consent of Starwood (not to be unreasonably
withheld):
(i) take any action that would cause HIT to fail to be
eligible to elect and qualify to be taxed as a REIT, for its taxable
year ending December 31, 1995, or omit to take any action necessary to
cause HIT to be eligible to elect and qualify to be taxed as a REIT
for such taxable year;
(ii) voluntarily sell, transfer or dispose of any real property
or any other material portion of the HIT Properties or of the Notes
Receivable or of the HIC Properties, except
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pursuant to the provisions of Section 11.2(c) and except for sales of
the following assets at any time prior to Closing on the following
terms, which terms are hereby deemed to be approved by Starwood: (A)
sale of the Jacksonville Holiday Inn for a sales price of $3,600,000
(prior to deductions for commissions and other closing costs), payable
$800,000 cash at closing and the balance in the form of a secured Note
Receivable on the Applicable Terms (for purposes of this Section 5.6,
"Applicable Terms" shall mean a 9% per annum interest rate, a 30-year
amortization schedule and a seven year term); (B) sale of the Newport
Richey Sheraton and the Brunswick Holiday Inn for an aggregate sales
price of $4,300,000 (prior to deductions for commissions and other
closing costs), payable $1,230,000 cash at closing and the balance in
the form of a secured Note Receivable on the Applicable Terms; and (C)
sale of the Fayetteville Ramada for a sales price of $1,000,000 (prior
to deductions for commissions and other closing costs), payable
$250,000 cash at closing and the balance in the form of a secured Note
Receivable on the Applicable Terms;
(iii) refinance any of the HIT Properties, the Notes Receivable or
the HIC Properties (other than in the ordinary course of business)
except for refinancings necessary to meet "balloon" payments on
maturing debt with respect to assets being refinanced; provided that
prior to effecting any such proposed refinancing HIT and HIC will
offer to Starwood the opportunity to provide such refinancing on terms
no less favorable to HIT and HIC than the terms of such proposed
refinancing, and if Starwood does not agree to provide such
refinancing on such terms within five business days of such offer, HIT
and HIC shall be free to effect such proposed refinancing on such
terms;
(iv) incur any costs or expenses that are not in accordance with
capital or operating budgets for the periods in question that have
been approved in writing by Starwood; provided, however, that such
approval shall not be required for non-budgeted costs or expenses (A)
that are non-discretionary in nature, (B) that are in the nature of
emergency expenditures necessary for the preservation of property or
protection of public safety or which are in the nature of enforcement
costs or protective advances with respect to the Notes Receivable, (C)
that are discretionary and that do not exceed, in the aggregate, 10%
of the total of the applicable budget for the period from the date
hereof through Closing or (D) that constitute reasonable out-of-pocket
costs and expenses paid to third parties in connection with the
transactions contemplated by this Agreement;
(v) incur any unsecured debt or lease obligations or purchase
money financing obligations, other than, in each
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case, in the ordinary course of business (for example, trade payables)
or pursuant to a foreclosure under Notes Receivable;
(vi) acquire any additional real estate or other assets (other
than receipt of cash or investments of cash in cash-equivalents and
other than receipt of Notes Receivable in connection with permitted
sales of assets and other than pursuant to a foreclosure under Notes
Receivable);
(vii) enter into any contracts or agreements or terminate any
existing contracts or agreements other than in the ordinary course of
business (other than pursuant to a foreclosure under Notes
Receivable);
(viii) issue or enter into any executory agreement to issue any new
debt securities other than modifications and amendments to the Senior
Debt and debt securities issued (A) under terms which would not
prevent HIT and HIC from performing any of their respective duties or
obligations under this Agreement and (B) the proceeds of which are
used by HIT or HIC to meet scheduled amortization payments on their
respective debt obligations, including, without limitation, "balloon"
payments, or to fund expenditures incurred in the ordinary course of
business; provided, however, that prior to any such proposed issuance
HIT and HIC will offer to Starwood (or its designee) the opportunity
to purchase all or any portion of such issuance (subject to their or
their designees' compliance with the REIT Requirements and any
necessary Nevada Gaming Approvals) on terms no less favorable to HIT
and HIC than the terms of such proposed issuance, and if Starwood does
not agree to purchase such issuance on such terms within five business
days of such offer, HIT and HIC shall be free to effect such proposed
issuance on such terms;
(ix) issue or enter into any executory agreement to issue any new
equity securities other than (A)(1) common shares issued in
replacement of lost, stolen or transferred outstanding shares, (2)
common shares to be issued upon exercise of options or warrants
outstanding prior to June 1, 1994 and referenced in public filings
prior to such date or (3) common shares to be issued upon exercise of
options to purchase up to 100,000 paired shares which may be issued to
directors and key employees of HIC or trustees or key employees of HIT
at exercise prices no less than then current market prices at the time
such options are issued or (B) common shares of equal priority with
shares to be issued pursuant to the Exchange Agreement, issued under
terms which would not prevent HIT and HIC from performing any of their
respective duties or obligations under this Agreement and the proceeds
of which issuance are utilized for purposes described in clause (B) of
the immediately preceding
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paragraph (viii); provided, however, that prior to any such issuance
HIT and HIC will offer to Starwood (or its designee) the opportunity
to purchase all or any portion of such issuance (subject to their or
their designees' compliance with the REIT Requirements and any
necessary Nevada Gaming Approvals) on terms no less favorable to HIT
and HIC than the terms of such proposed issuance, and if Starwood does
not agree to purchase such issuance on such terms within five business
days of such offer, HIT and HIC shall be free to effect such issuances
on such terms; or
(x) declare and pay any dividends or make other distributions
to holders of Paired Shares or repay indebtedness except pursuant to
the terms of such indebtedness.
(c) Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement, during the period
from the date of this Agreement through the Closing Date, none of the Starwood
Parties shall, without the prior written consent of HIT and HIC (not to be
unreasonably withheld):
(i) voluntarily sell, transfer or dispose of any portion to
the Starwood Realty Properties or the Starwood Operating Properties;
(ii) refinance any of the Harvey Debt (as defined in the Starwood
Realty Contribution Agreement) unless such refinancing is on terms
which would be no less favorable to the Realty Partnership following
contribution of the Harvey Hotels Notes (as defined in the Starwood
Realty Contribution Agreement) and the Realty Partnership's assumption
of such debt than the terms of the existing Harvey Debt;
(iii) incur any costs or expenses with respect to the Starwood
Realty Properties or the Starwood Operating Properties that are not in
accordance with capital or operating budgets for the periods in
question that have been approved in writing by HIT and HIC; provided,
however, that such approval shall not be required for non-budgeted
costs or expenses (A) that are non-discretionary in nature, (B) that
are in the nature of emergency expenditures necessary for the
preservation of property or protection of public safety or which are
in the nature of enforcement costs or protective advances with respect
to that portion of the Starwood Realty Properties or the Starwood
Operating Properties constituting notes, (C) that are discretionary
and that do not exceed, in the aggregate, 10% of the total of the
applicable budget for the period from the date hereof through Closing
or (D) that constitute out-of-pocket costs and expenses paid to third
parties in connection with the transactions contemplated by this
Agreement);
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(iv) incur any lease obligations or purchase money financing
obligations with respect to the Starwood Realty Properties or the
Starwood Operating Properties, other than, in each case, in the
ordinary course of business (for example, trade payables or pursuant
to a foreclosure under existing obligations); or
(v) enter into any contracts or agreements or terminate any
existing contracts or agreements binding upon or inuring to the
benefit of the Starwood Realty Properties or the Starwood Operating
Properties other than in the ordinary course of business (other than
pursuant to a foreclosure under existing obligations).
Section 5.7. Mutual Cooperation; Best Efforts. Subject to
the fiduciary duties of the Board of Trustees of HIT and the Board of Directors
of HIC under applicable law, and the fiduciary duties of general partners of
Starwood Parties under applicable law, the parties hereto shall cooperate with
each other, and shall use their respective best efforts to cause the
fulfillment of the conditions to the parties' obligations hereunder and to
obtain as promptly as possible all consents, authorizations, orders or
approvals from each and every third party, whether private or governmental,
required in connection with the transactions contemplated by this Agreement;
provided, however, that the foregoing shall not require Starwood, the Starwood
Partners, HIT, HIC, the Realty Partnership or the Operating Partnership to make
any divestiture or consent to any divestiture in order to obtain any waiver,
consent or approval.
Section 5.8. No Public Announcement. None of the parties
hereto shall, without the approval of the other parties hereto (which may not
be unreasonably withheld), make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to
the extent that such party shall be so obligated by law, in which case each of
such other parties hereto shall be advised and the parties hereto shall use
their reasonable best efforts to cause a mutually agreeable release or
announcement to be issued.
Section 5.9. No Solicitation. From and after the date
hereof, except as otherwise permitted by this Agreement (including Sections 5.2
and 5.6 of this Agreement) HIT and HIC will not, and will instruct their
respective officers and directors not to, solicit or otherwise engage in any
discussions or negotiations with any person other than the Starwood Parties
relating to any Proposal (as hereinafter defined); provided, however, that HIT
or HIC or their respective officers and directors may engage in discussions or
negotiations with any person (provided that neither HIT nor HIC solicited such
discussions or negotiations on or after June 2, 1994) if the Board of Trustees
of HIT and the Board of Directors of HIC determine in good faith upon advice of
legal counsel that a
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failure to engage in such discussions or negotiations could reasonably be
expected to involve the Board of Trustees of HIT or the Board of Directors of
HIC in a breach of fiduciary duties under applicable law; and provided further,
that nothing herein shall prevent the Board of Trustees of HIT or the Board of
Directors of HIC from taking, and disclosing to the shareholders of HIT and the
stockholders of HIC, a position in respect of a Proposal as contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act. In the event that
HIT or HIC reach an agreement with respect to a Proposal with any person other
than the Starwood Parties and such agreement is not consistent with the
obligations of HIT or HIC set forth in this Agreement or with the transactions
contemplated by this Agreement, then, prior to entering into such agreement
they will deliver the notice provided in Section 10.1(g) and pay the fee
provided in Section 11.2. For purposes of this Agreement "Proposal" shall mean
(i) a recapitalization or restructuring of HIT or HIC, (ii) the creation of any
UPREIT, (iii) a sale, disposition or refinancing of all or portions of the HIT
Properties, the Notes Receivable or the HIC Properties, (iv) the issuance of
any additional debt or equity securities of HIT or HIC, (v) the transfer in one
transaction or a series of related transactions of more than 10% of the
existing debt or equity securities of HIT or HIC or (vi) the appointment to the
Board of Trustees of HIT or the Board of Directors of HIC of trustees or
directors designated by a single person and its affiliates, other than Starwood
and its affiliates pursuant to the terms of this Agreement; provided that any
transaction (other than a transaction pursuant to Section 11.2(c)) consented to
by Starwood or permitted by Section 5.6 shall not be a "Proposal."
Section 5.10. Gaming Law Compliance. HIT, HIC and the
Starwood Parties shall make all filings under applicable gaming laws of the
State of Nevada and of the Clark County, Nevada Liquor and Gaming Licensing
Board required to effect the transactions contemplated hereby. The parties
hereto acknowledge that as of the date hereof they have received the Nevada
Gaming Approvals required to be obtained in order to consummate the Closing,
pursuant to the terms of the letter dated September 28, 1994 from the Nevada
Gaming Control Board, a copy of which letter has been made available to all
parties hereto. Each of HIT and HIC and each of the Starwood Parties,
severally and not jointly, warrants that all such filings by it shall be,
accurate as of the date filed and in accordance with the requirements of all
rules and regulations and such gaming laws. Each of HIT, HIC and each of the
Starwood Parties agree to make available, or cause to be made available, to the
other parties such information as may reasonably be requested relative to its
businesses, assets and property as may be required to file any additional
information requested by such agencies under such rules and regulations and
such gaming laws. HIT and HIC will use their best efforts to obtain temporary
approval under Nevada gaming laws for the new directors of HIC to be elected
pursuant to Section 5.3 so as to
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allow each such director to take office as a director as soon as practicable.
Section 5.11. Adjustments. Notwithstanding the provisions of
the Partnership Agreements, the Starwood Realty Contribution Agreement, the
Starwood Operating Contribution Agreement, the HIT Contribution Agreement and
the HIC Contribution Agreement, the respective Partnership Interests (as
defined in the Partnership Agreements) of the partners of the Partnership shall
be increased or decreased on or prior to the date (the "Adjustment Date") which
is ten business days prior to the date on which the Proxy Statement is to be
mailed, and on the Closing Date, in accordance with the following provisions
(without duplication among any such adjustments):
(a) In the case of the Partnership Interest of the Starwood
Parties in each of the Partnerships:
(i) such Partnership Interests shall be decreased if the
principal amount of the Midlantic Notes or the Harvey
Hotel Notes (as each is defined in the Starwood
Realty Contribution Agreement) is reduced after the
date hereof and prior to the Adjustment Date;
(ii) such Partnership Interests shall be increased if the
principal amount of the Harvey Debt (as defined in
the Starwood Realty Contribution Agreement) or of the
debt encumbering the Midlantic Notes is reduced after
the date hereof and prior to the assumption thereof
by the Realty Partnership on the Closing Date; and
(iii) such Partnership Interests shall be increased in the
event that on or prior to the Adjustment Date
Starwood shall irrevocably commit to contribute to
the Realty Partnership on the Closing Date all or
portions of the equity securing the Harvey Hotel
Notes or the equity interest in the Ramada Suites in
Secaucus, New Jersey (in addition to the notes
secured by such equities) (any such contributions to
be valued using a valuation method which is the same
as the method used for valuing the HIT Properties
(exclusive, however, of extraordinary or
non-recurring expenditures) relative to the Starwood
Realty Properties).
(b) If the principal amount of the Midlantic Notes or the
Harvey Hotel Notes is reduced on or after the Adjustment Date and prior to the
assumption thereof by the Realty Partnership on the Closing Date, then the
Starwood Parties shall contribute an additional amount of cash to the Realty
Partnership equal to the amount of such reduction, and the Partnership
Interests of such
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Starwood Partners, as the case may be, shall not be decreased or increased by
reason of such reduction or such additional cash contribution.
(c) In the case of the Partnership Interests of any partner in
the Partnerships, such Partnership Interests shall be decreased if any assets
which are to be contributed to the Partnerships by such partner are not so
contributed; provided, that if any such decrease would cause the aggregate
Partnership Interests of the Starwood Parties to be less than 51%, then the
Starwood Parties shall contribute additional assets to the Partnerships in
order to cause such aggregate Partnership Interests to be equal to 51%, with
any such additional assets to be subject to the approval of HIT and HIC (which
approval shall not be unreasonably withheld or delayed) and shall be valued
using the same valuation principles used in valuing similar assets of the
Starwood Parties contributed to the Partnerships.
(d) In the event and to the extent that the adjustments
provided for in this Section 5.11 would cause the aggregate Partnership
Interests of the Starwood Parties in the Partnerships to be less than 71.725%
(such percentage being the aggregate Partnership Interests of the Starwood
Parties prior to adjustment thereof pursuant to this Section 5.11 (the
"Unadjusted Partnership Interests")), then the Starwood Parties shall have the
right, on or prior to the Adjustment Date, to irrevocably commit to contribute
to the Partnerships on the Closing Date additional cash or other assets in
order to cause the aggregate Partnership Interests of the Starwood Parties, as
adjusted pursuant to this Section 5.11, to equal the aggregate Unadjusted
Partnership Interests of the Starwood Parties. Any such additional
contribution of cash which is to be contributed in lieu of all or a portion of
a note shall be valued based on the discounted value used for purposes of
valuing such note, and any such additional contribution of other assets
(including, without limitation, notes) shall be subject to the approval of HIT
and HIC (which approval shall not be unreasonably withheld or delayed) and
shall be valued using the same valuation principles used in valuing similar
assets of the Starwood Parties contributed to the Partnerships.
(e) On or prior to the Adjustment Date, the Starwood Parties
shall have the right to irrevocably commit to contribute to the Partnerships on
the Closing Date additional assets so as to cause the aggregate Partnership
Interests of the Starwood Parties in the Partnerships to be greater than the
aggregate Unadjusted Partnership Interests of the Starwood Parties. Any such
additional contributions shall be subject to the approval of HIT and HIC (which
approval shall not be unreasonably withheld) and such contributions shall be
valued at such Starwood Party's cost for such assets, plus the excess, if any,
of (x) an amount equal to simple interest at a rate of 10% per annum on the
amount of equity invested by such Starwood Party in such assets during
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the period in which such Starwood Party owned such assets over (y) any net cash
flow (after debt service) received by such Starwood Party during such period.
(f) Notwithstanding the provisions of the Partnership
Agreements, the Starwood Realty Contribution Agreement and the Starwood
Operating Contribution Agreement, at Starwood's election, in lieu of making
contributions to the Partnerships on the Closing Date of certain Starwood
Properties (to be designated by Starwood) in exchange for Units of the
Partnerships, the Starwood Partners shall make such contributions to HIT and
HIC on the Closing Date in exchange for a number of Paired Shares equal to the
number of such Units that such Starwood Partners would have received if such
contributions had been made to the Partnerships; provided that after giving
effect to the issuance of such Paired Shares to such Starwood Partners and
their respective affiliates, the Starwood Parties shall not beneficially own,
in the aggregate, Paired Shares representing more than 4.9% of the then issued
and outstanding Paired Shares (such percentage to be increased to 8.0% after
such time as necessary Nevada Gaming Approvals are obtained or such time as
such Nevada Gaming Approvals are no longer required).
(g) Notwithstanding anything to the contrary set forth in
this Section 5.11, no adjustments shall be made to the Partnership Interests in
the Realty Partnership and the Operating Partnership to the extent that, as a
result thereof, the Partnership Interest of HIT and HIC, respectively, would be
reduced to below 25%, unless HIT and HIC, respectively, in its sole and
absolute discretion, approves in writing such adjustments, which approval may
be unreasonably withheld.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1. Abstentions of Starwood Nominees. So long as
Starwood or any affiliate of Starwood shall have any interest in the Senior
Debt (other than solely as a result of the interests of the Starwood Parties in
the Partnerships), the Starwood HIT Nominees and the Starwood HIC Nominees and
any other member of the Board of Trustees of HIT, the Board of Directors of HIC
or the governing Board of the Operating Partnership who is nominated by
Starwood or is otherwise an affiliate or associate of the Starwood Parties
shall, and Starwood shall use their respective best efforts to cause them to,
abstain from voting upon and excuse and absent themselves from any
deliberations relating to any pending or threatened defaults or any action to
be taken by HIT, HIC or the Partnerships in respect of any pending or
threatened defaults under or in respect of the Senior Debt (whether such
pending or threatened defaults are by HIT, HIC or the holders of the Senior
Debt).
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Section 6.2. Waiver of Certain Claims. None of HIT, HIC, the
Realty Partnership or the Operating Partnership shall ever assert any claim of
equitable subordination or other lender liability claims or defenses against
holders of the Senior Debt based upon any one or more of the following: (a) the
presence on the Board of Trustees of HIT, the Board of Directors of HIC or the
governing board of the Operating Partnership of trustees, directors or members
who were nominated by or at the direction of Starwood, or any actions taken by
such trustees, directors or members as such, (b) the employment by HIT or HIC
of any employees who are affiliates of Starwood or any actions taken by such
employees as such or (c) the transactions contemplated by this Agreement. None
of HIT, HIC, the Realty Partnership or the Operating Partnership shall be
entitled to offset against payments due by them pursuant to the Senior Debt any
payments due to them by reason of a breach or default by any Starwood Party of
its obligations pursuant to or in connection with this Agreement.
Section 6.3. Further Contributions. Pursuant to the
provisions to be contained in the HIC Contribution Agreement and the Operating
Partnership Agreement, upon the receipt of necessary Nevada Gaming Approvals
with respect to the conveyance of the HICN Properties or such earlier time as
such Nevada Gaming Approvals are no longer required ("HICN Approval"), HICN
shall convey to the Operating Partnership or a subsidiary of the Operating
Partnership all of the HICN Properties and all other assets of HICN, and the
Operating Partnership or such subsidiary will assume all of the liabilities and
obligations of HICN on such date. If all or a portion of the HICN Properties
are disposed of prior to the receipt of the HICN Approval, then HIC or HICN
shall contribute to the Operating partnership the net proceeds of such
disposition, promptly upon receipt thereof. If the HICN Approval is not
received on or prior to December 31, 1995, then on such date HIC or HICN will
contribute to the Operating Partnership, with respect to any HICN Properties or
other assets not previously disposed of, cash equal to the fair value of such
HICN Properties and such other assets on December 31, 1995. Such fair value
shall be conclusively determined by an independent appraiser selected by the
Board of Directors of HIC. No additional interests in the Operating
Partnership will be issued upon the transfer of any of the HICN Properties,
such other assets, such net proceeds or such cash. HIC shall contribute to the
Operating Partnership any dividends or other distributions declared or paid by
HICN to HIC prior to the receipt of the HICN Approval, such contributions to be
made upon receipt by HIC of such dividends or other distributions. Neither HIC
nor HICN shall be entitled to any additional Units or Partnership Interests by
reason of any such contribution.
Section 6.4. Senior Debt. If Starwood or any affiliate of
Starwood acquires Senior Debt on or prior to six months after the date on which
the HIT Shareholder Matters shall have been approved by the requisite vote of
the holders of Trust
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Shares and the HIC Stockholder Matters shall have been approved by the
requisite vote of the holders of Corporation Shares, then Starwood or the
Starwood affiliate which so acquires Senior Debt shall contribute all of such
Senior Debt to the Partnerships (up to a maximum of $12 million aggregate
principal amount of Senior Debt) in exchange for a number of additional Units
of the Partnerships equal to 406.94 Units (such number of Units to be adjusted
as provided in Section 4.1(f) of the Realty Partnership Agreement and Section
4.1(g) of the Operating Partnership Agreement) for each $1,000 aggregate
principal amount of Senior Debt so contributed. Any such contribution of
Senior Debt shall be considered a Capital Contribution for purposes of Section
8.2 of each of the Partnership Agreements.
Section 6.5. [Intentionally Omitted]
Section 6.6. Exclusivity; Excluded Assets. (a) So long as
any officer, director or general partner of, or any other person employed by,
any Starwood Party remains on either the Board of Trustees of HIT or the Board
of Directors of HIC (such period during which any such officer, director,
general partner or other person remains on either such Board being referred to
as the "Noncompete Period"), each of the Starwood Parties agrees that it will
not compete within the United States, directly or indirectly, with the Realty
Partnership, the Operating Partnership, HIT or HIC and that such Starwood Party
will present to the Realty Partnership and the Operating Partnership all
opportunities for acquisitions of (i) fee interests in hotels in the United
States and (ii) debt interests in hotels in the United States where it is
anticipated that the equity will be acquired by the debt holder within one year
from the acquisition of such debt interest. During the Noncompete Period none
of the Starwood Parties or their affiliates may acquire any such fee interests
or debt interests described in clauses (i) and (ii) above. The provisions of
this Section 6.6(a) shall not apply to Excluded Assets (as defined in Section
6.6(b)).
(b) Each Starwood Party hereby grants to the Partnerships the
option, from and after the Closing Date and at any time or times prior to the
earlier of (i) five years from the Closing Date and (ii) the expiration of the
Noncompete Period, to acquire the interest of such Starwood Party in one or
more Excluded Assets (as defined below), subject to receipt of all required
material third party and partner consents and approvals. Upon exercise of such
option from time to time, such Starwood Party shall use its best efforts to
obtain such consents and approvals. Such acquisition by the Partnerships shall
be made for a cash purchase price equal to the fair market value of the
Excluded Assets being acquired, as determined by agreement between the
Partnerships and such Starwood Party or, if they are unable to so agree within
30 days after the exercise of such option, such fair market value shall be
equal to the average of the two closest of three appraisals of such fair market
value,
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such appraisals to be performed by an independent appraiser selected by a
majority of the Disinterested Members of HIT and HIC, an independent appraiser
selected by Starwood and a third independent appraiser selected by agreement of
such first two appraisers. HIT and HIC shall pay all costs and expenses of the
appraiser selected by them and one-half of the costs and expenses of such third
appraiser and Starwood shall pay all costs and expenses of the appraiser
selected by it and one-half of the costs and expenses of such third appraiser.
As used herein, "Excluded Assets" means those fee interests, debt interests or
other investments in the hotel asset investment business of any Starwood Party
or their commonly controlled affiliates existing on the Closing Date.
Section 6.7. Wichita Hotel. (a) The Starwood Party that
contributes to the Realty Partnership and the Operating Partnership the Harvey
Wichita Hotel (the "Wichita Hotel") shall pay to the Operating Partnership in
respect of each of the years ending December 31, 1995, 1996 and 1997, the
amount, if any (the "Shortfall Amount"), by which the Base Amount (as defined
below) for such year exceeds the Cash Flow (as defined below) for such year.
Within 90 days after the end of each such year, the Operating Partnership shall
deliver to such Starwood Party a computation of the Cash Flow and the Shortfall
Amount for such year and within 20 days after such delivery such Starwood Party
shall pay to the Operating Partnership, in immediately available funds, such
Shortfall Amount.
As used herein, (i) "Cash Flow" means with respect to any year
the cash received by the Operating Partnership from the Wichita Hotel during
such year, less all management fees paid with respect to the Wichita Hotel
(including pursuant to the Management Agreement (as defined below)) for such
year, and less the amount of all actual capital expenditures with respect to
the Wichita Hotel for such year; (ii) "Base Amount" means (x) for the year
ending December 31, 1995, $700,000, (y) for the year ending December 31, 1996,
an amount equal to $800,000 less any Credit Amount (as defined below) for such
year and (z) for the year ending December 31, 1997, an amount equal to $900,000
less any Credit Amount (as defined below) for such year; and (iii) "Credit
Amount" means (x) for the year ending December 31, 1996, the excess, if any, of
the Cash Flow for 1995 over the Base Amount for 1995 and (y) for the year
ending December 31, 1997, the excess, if any, of the Cash Flow for 1996 over
the Base Amount for 1996.
(b) The Operating Partnership shall assume the obligations of
Starwood/Wichita Investors, L.P. ("SWI") under that certain Management
Agreement dated April 11, 1994 between SWI and Harvey Hotel Management
Corporation ("HHM"), as such agreement is to be amended pursuant to that
certain letter agreement dated November 7, 1994 between SWI and HHM (such
Management Agreement, as it may be so amended, the "Management
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Agreement") with respect to the Wichita Hotel and, so long as all required
Shortfall Amounts have been contributed as provided in Section 6.7(a), neither
the Trust nor the Corporation shall take any action to cause the termination of
the Management Agreement prior to December 31, 1997, without the prior written
consent of Starwood.
Section 6.8. Indemnification of Directors and Officers. From
and after the Closing Date, each of HIT and HIC shall, and Starwood shall use
its best efforts to cause HIT and HIC to, indemnify, defend and hold harmless
the respective present officers, directors and employees of HIT and HIC and any
of their respective subsidiaries against all losses, expenses, claims, damages
or liabilities arising out of actions or omissions occurring on or prior to the
Closing Date (including, without limitation, the transactions contemplated by
this Agreement) to the full extent permitted or required under applicable law
(and shall also advance expenses as incurred to the fullest extent permitted
under applicable law, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification). Each of HIT and HIC
agree that all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action or suit, existing in
favor of the present directors, officers and employees of HIT and HIC or any of
their respective subsidiaries (collectively, the "Indemnified Parties") as
provided in the Declaration of Trust of the Trust and the Articles of
Incorporation or By-Laws of the Corporation or pursuant to other agreements, as
in effect as of the date hereof, shall survive the Closing and shall continue
in full force and effect. Each of HIT and HIC shall, and Starwood shall use
its best efforts to cause HIT and HIC to, maintain in effect for not less than
seven years the current policies of directors' and officers' liability
insurance maintained by HIT and HIC with respect to matters occurring prior to
the Closing Date. This Section 6.8 is intended to benefit the Indemnified
Parties.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF HIT AND HIC
The obligations of each of HIT and HIC under this Agreement to
consummate the transactions contemplated hereby to be consummated at the
Closing shall, at the option of each of HIT and HIC, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
Section 7.1. No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by any Starwood Party in
the performance of its covenants and
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agreements herein to be performed at or prior to the Closing Date; on the
Closing Date each of the representations and warranties of any Starwood Party
that is qualified as to materiality shall be true and correct as though made on
the Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
by HIT and HIC, permitted by Section 5.6 (including, without limitation,
transactions in the ordinary course of business) or entered into in connection
with the consummation of the transactions contemplated hereby; on the Closing
Date each of the representations and warranties of any Starwood Party that is
not so qualified as to materiality shall be true and correct in all material
respects as though made on the Closing Date, except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by HIT and HIC, permitted by Section 5.6
(including, without limitation, transactions in the ordinary course of
business) or entered into in connection with the consummation of the
transactions contemplated hereby; and there shall have been delivered to HIT
and HIC a certificate or certificates to the foregoing effect, dated the
Closing Date, signed on behalf of each of the Starwood Parties; provided that
the conditions set forth in this Section 7.1 may be appropriately modified
after giving effect to the operation of the covenants and agreements contained
in Sections 5.6 and 5.11.
Section 7.2. No Material Adverse Effect. Between the date
hereof and the Closing Date, there shall have been no Material Adverse Effect
on the Starwood Realty Properties (taken as a whole) or the Starwood Operating
Properties (taken as a whole); and there shall have been delivered to HIT and
HIC a certificate or certificates to such effect, dated the Closing Date,
signed on behalf of each of the Starwood Parties; provided that the condition
set forth in this Section 7.2 may be appropriately modified after giving effect
to the operation of the covenants and agreements contained in Sections 5.6 and
5.11.
Section 7.3. Opinion of Counsel for Starwood. HIT and HIC
shall have received from Rogers & Wells, counsel for the Starwood Parties, an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to HIT and HIC.
Section 7.4. No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect, provided, however, that each of the parties shall have used its best
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any injunction or other order that may be
entered.
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Section 7.5. Necessary Governmental Approvals. The parties
thereto shall have received all governmental and regulatory approvals and
actions reasonably necessary to consummate the transactions contemplated
hereby, which are either required to be obtained prior to the Closing Date by
applicable law or regulation or are necessary to prevent a Material Adverse
Effect on HIT and its subsidiaries (taken as a whole), or HIC and its
subsidiaries (taken as a whole) or, in addition, after the Closing, on the
Realty Partnership and its subsidiaries (taken as a whole) or the Operating
Partnership and its subsidiaries (taken as a whole).
Section 7.6. Necessary Consents. The parties hereto shall
have received consents, in form and substance reasonably satisfactory to HIT
and HIC, to the transactions contemplated hereby from the other parties to all
material contracts, leases, agreements and permits to which any Starwood Party
is a party or by which any of them is affected and which require such consent
prior to the Closing and are necessary to prevent a Material Adverse Effect on
the Starwood Properties (taken as a whole) or, in addition, after the Closing,
on the Realty Partnership and its subsidiaries (taken as a whole) or the
Operating Partnership and its subsidiaries (taken as a whole).
Section 7.7. Transaction Agreements. Each of the parties
(other than HIT, HIC or a subsidiary of HIC) to each of the Transaction
Agreements shall have entered into such Transaction Agreements substantially in
the forms attached hereto as exhibits or, if not so attached, as agreed to by
the parties.
Section 7.8. Shareholder and Stockholder Action. The HIT
Shareholder Matters shall have been approved by the requisite vote of the
holders of Trust Shares. The HIC Stockholder Matters shall have been approved
by the requisite vote of the holders of Corporation Shares.
Section 7.9. Fairness Opinion. HIT and HIC shall have
received a written fairness opinion from Salomon Brothers Inc (or another
financial advisor chosen by the Board of Trustees of HIT or the Board of
Directors of HIC), dated the date of mailing of the Proxy Statement, in form
and substance reasonably satisfactory to HIT and HIC, to the effect set forth
in Exhibit G hereto.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE STARWOOD PARTIES
The obligations of the Starwood Parties under this Agreement
to consummate the transactions contemplated hereby to be consummated at the
Closing shall, at the option of Starwood,
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be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
Section 8.1. No Misrepresentation or Breach of Covenants and
Warranties. There shall have been no material breach by HIT or HIC in the
performance of their respective covenants and agreements herein to be performed
at or prior to the Closing Date; on the Closing Date each of the
representations and warranties of HIT or HIC that is qualified as to
materiality shall be true and correct as though made on the Closing Date,
except for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Starwood,
permitted by Section 5.6 (including, without limitation, transactions in the
ordinary course of business) or entered into in connection with the
consummation of the transactions contemplated hereby; on the Closing Date each
of the representations and warranties of HIT and HIC that is not so qualified
as to materiality shall be true and correct in all material respects as though
made on the Closing Date, except for changes therein specifically permitted by
this Agreement or resulting from any transaction expressly consented to in
writing by Starwood, permitted by Section 5.6 (including, without limitation,
transactions in the ordinary course of business) or entered into in connection
with the consummation of the transactions contemplated hereby; and there shall
have been delivered to the Starwood Parties a certificate or certificates to
the foregoing effect, dated the Closing Date, signed on behalf of HIT and HIC;
provided that the conditions set forth in this Section 8.1 may be appropriately
modified after giving effect to the operation of the covenants and agreements
contained in Sections 5.6 and 5.11.
Section 8.2. No Material Adverse Effect. Between the date
hereof and the Closing Date, there shall have been no Material Adverse Effect
on HIT and its subsidiaries (taken as a whole) or HIC and its subsidiaries
(taken as a whole); and there shall have been delivered to Starwood a
certificate with respect to HIT and a certificate with respect to HIC, each to
such effect, dated the Closing Date, signed on behalf of HIT and HIC; provided
that the condition set forth in this Section 8.2 may be appropriately modified
after giving effect to the operation of the covenants and agreements contained
in Sections 5.6 and 5.11.
Section 8.3. Opinion of Counsel for HIT and HIC. The
Starwood Parties shall have received from Sidley & Austin, counsel for HIT and
HIC, an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to Starwood.
Section 8.4. No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect,
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provided, however, that each of the parties shall have used its best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
Section 8.5. Necessary Governmental Approvals. The parties
hereto shall have received all governmental and regulatory approvals and
actions reasonably necessary to consummate the transactions contemplated
hereby, which are either required to be obtained prior to the Closing Date by
applicable law or regulation or are necessary to prevent a Material Adverse
Effect on HIT and its subsidiaries (taken as a whole), or HIC and its
subsidiaries (taken as a whole), or, in addition, after the Closing, on the
Realty Partnership and its subsidiaries (taken as a whole), or the Operating
Partnership and its subsidiaries (taken as a whole).
Section 8.6. Necessary Consents. The parties hereto shall
have received consents, in form and substance reasonably satisfactory to
Starwood, to the transactions contemplated hereby from the other parties to all
material contracts, leases, agreements and permits to which HIT or HIC is a
party or by which any of them is affected and which require such consent prior
to the Closing and are necessary to prevent a Material Adverse Effect on HIT
and its subsidiaries (taken as a whole), or HIC and its subsidiaries (taken as
a whole) or, in addition, after the Closing, on the Realty Partnership and its
subsidiaries (taken as a whole) or the Operating Partnership and its
subsidiaries (taken as a whole).
Section 8.7. Transaction Agreements. Each of the parties
(other than the Starwood Parties) to each of the Transaction Agreements shall
have entered into such Transaction Agreements substantially in the forms
attached hereto as exhibits or, if not so attached, as agreed to by the
parties.
Section 8.8. Shareholder and Stockholder Action. The HIT
Shareholder Matters shall have been approved by the requisite vote of the
holders of Trust Shares. The HIC Stockholders Matters shall have been approved
by the requisite vote of the holders of Corporation Shares.
Section 8.9. Partnership Notes. Starwood shall have received
notes (the "Starwood Notes") issued by the Realty Partnership or the Operating
Partnership in a form reasonably satisfactory to Starwood, the Realty
Partnership and the Operating Partnership which notes shall provide that they
shall be payable only if HIT and HIC consummate a public offering of Paired
Shares within 18 months following the Closing Date, which public offering
results in the receipt by HIT and HIC of gross proceeds of not less than $150
million. The amount payable on all Starwood Notes shall be equal to three
fourths of one percent (.75%) of an amount equal to the sum of the total market
value of
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all Paired Shares (assuming the conversion of all outstanding Units if the
Partnerships) upon consummation of such offering and the principal amount of
indebtedness of the Partnerships at such time.
ARTICLE IX
INDEMNIFICATION; SURVIVAL
Section 9.1. Indemnification by HIT. HIT shall indemnify and
hold harmless the Starwood Parties, the Realty Partnership and their respective
subsidiaries, affiliates and successors from and against any and all (x)
liabilities, losses or damages ("Loss") and (y) reasonable out-of-pocket
expenses ("Expense") incurred by the Starwood Parties, the Realty Partnership
or their respective subsidiaries, affiliates and successors in connection with
or arising from (a) any breach or failure to perform by HIT of any of its
agreements, covenants or obligations in this Agreement or any Transaction
Agreement, (b) any breach of any warranty or the inaccuracy of any
representation of HIT contained in this Agreement, any Transaction Agreement or
in any certificate delivered by or on behalf of HIT pursuant hereto or thereto
or (c) HIT's termination of its REIT status for each of the taxable years ended
December 31, 1991, 1992, 1993 and 1994; provided, however, that HIT shall be
required to indemnify and hold harmless under this Section 9.1 only to the
extent that the sum of (i) the aggregate amount of Loss and Expense referred to
above in this Section 9.1 and (ii) the aggregate amount of Loss and Expense
referred to in Section 9.2 exceeds $100,000; and provided, further, that the
obligation of HIT to indemnify and hold harmless pursuant to this Section 9.1
shall be limited to the payment by HIT in the aggregate of an amount equal to
$5,000,000 less the aggregate amount of payments made by HIC pursuant to
Section 9.2.
Section 9.2. Indemnification by HIC. HIC shall indemnify and
hold harmless the Starwood Parties, the Operating Partnership and their
respective subsidiaries, affiliates and successors from and against any and all
Loss and Expense incurred by the Starwood Parties, the Operating Partnership or
their respective subsidiaries, affiliates and successors in connection with or
arising from (a) any breach or failure to perform by HIC of any of its
agreements, covenants or obligations in this Agreement or any Transaction
Agreement, and (b) any breach of any warranty or the inaccuracy of any
representation of HIC contained in this Agreement, any Transaction Agreement or
in any certificate delivered by or on behalf of HIC pursuant hereto or thereto;
provided, however, that HIC shall be required to indemnify and hold harmless
under this Section 9.2 only to the extent that the sum of (i) the aggregate
amount of Loss and Expense referred to above in this Section 9.2 and (ii) the
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aggregate amount of Loss and Expense referred to in Section 9.1 exceeds
$100,000; and provided, further, that the obligation of HIC to indemnify and
hold harmless pursuant to this Section 9.2 shall be limited to the payment by
HIC in the aggregate of an amount equal to $5,000,000 less the aggregate amount
of payments made by HIT pursuant to Section 9.1.
Section 9.3. Indemnification by the Starwood Parties. Each
of the Starwood Parties shall severally and not jointly indemnify and hold
harmless HIT, HIC, the Realty Partnership and the Operating Partnership and
their respective subsidiaries, affiliates and successors from and against any
and all Loss and Expense incurred by HIT, HIC, the Realty Partnership or the
Operating Partnership or their respective subsidiaries, affiliates and
successors in connection with or arising from (a) any breach or failure to
perform by such Starwood Party of any of its agreements, covenants or
obligations in this Agreement or any Transaction Agreement, (b) any breach of
any warranty or the inaccuracy of any representation of such Starwood Party
contained in this Agreement (provided that for purposes of this Section 9.3 the
representations and warranties in Section 4.7 shall not be qualified as to
knowledge and such representations and warranties shall be made as if the
parenthetical phrase contained in Section 4.7 was not contained in Section
4.7), any Transaction Agreement or in any certificate delivered by or on behalf
of such Starwood Party pursuant hereto or thereto and (c) the litigation
described in the Starwood Disclosure Schedule with respect to the Lexington,
Kentucky French Quarters Suites; provided, however, that the Starwood Parties
shall be required to indemnify and hold harmless under this Section 9.3 only to
the extent that the aggregate amount of Loss and Expense referred to above in
this Section 9.3 exceeds $100,000; and provided, further, that the obligation
of the Starwood Parties to indemnify and hold harmless pursuant to this Section
9.3 shall be limited to the payment by the Starwood Parties in the aggregate of
an amount equal to $5,000,000.
Section 9.4. Notice of Claims. If a party believes that any
of the persons entitled to indemnification under this Article IX has suffered
or incurred any Loss or incurred any Expense, whether or not the applicable
dollar limitation specified by Sections 9.1, 9.2 or 9.3 has been exceeded, such
party shall notify the indemnifying party promptly in writing describing such
Loss or Expense, the amount thereof, if known, and the method of computation of
such Loss or Expense, all with reasonable particularity and containing a
reference to the provisions of this Agreement, any Transaction Agreement or any
certificate delivered pursuant hereto in respect of which such Loss or Expense
shall have occurred; provided, however, that the omission by such indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its indemnification obligation under this Article IX except to the
extent that such indemnifying party is materially damaged as a
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result of such failure to give notice. If any action at law or suit in equity
is instituted by or against a third party with respect to which any of the
persons entitled to indemnification under this Article IX intends to claim any
liability or expense as Loss or Expense under this Article IX, any such person
shall promptly notify the indemnifying party of such action or suit as
specified in this Section 9.4 and Section 9.5. Any party entitled to
indemnification hereunder shall use reasonable efforts to minimize any Loss or
Expense for which indemnification is sought hereunder.
Section 9.5. Third Party Claims. In the event of any claim
for indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party, the indemnified persons shall give such
notice thereof to the indemnifying party not later than twenty business days
prior to the time any response to the asserted claim is required, if possible,
and in any event within fifteen days following the date such indemnified person
has actual knowledge thereof; provided, however, that the omission by such
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its indemnification obligation under this Article IX
except to the extent that such indemnifying party is materially damaged as a
result of such failure to give notice. In the event of any such claim for
indemnification resulting from or in connection with a claim or legal
proceeding by a third party, the indemnifying party may, at its sole cost and
expense, assume the defense thereof; provided, however, that counsel for the
indemnifying party, who shall conduct the defense of such claim or legal
proceeding, shall be reasonably satisfactory to the indemnified party; and
provided, further, that if the defendants in any such actions include both the
indemnified persons and the indemnifying party and the indemnified persons
shall have reasonably concluded that there may be legal defenses or rights
available to them which have not been waived and are in actual or potential
conflict with those available to the indemnifying party, the indemnified
persons shall have the right to select one law firm reasonably acceptable to
the indemnifying party to act as separate counsel, on behalf of such
indemnified persons, at the expense of the indemnifying party. Unless the
indemnified persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, if an indemnifying party assumes
the defense of any such claim or legal proceeding, such indemnifying party
shall not consent to entry of any judgment, or enter into any settlement, that
(a) is not subject to indemnification in accordance with the provisions in this
Article IX, (b) provides for injunctive or other non-monetary relief affecting
the indemnified persons or (c) does not include as an unconditional term
thereof the giving by each claimant or plaintiff to such indemnified persons of
a release from all liability with respect to such claim or legal proceeding,
without the prior written consent of the indemnified persons (which consent, in
the case of clauses (b) and (c), shall
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not be unreasonably withheld); and provided, further, that, unless the
indemnified persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, the indemnified persons may, at
their own expense, participate in any such proceeding with the counsel of their
choice without any right of control thereof. So long as the indemnifying party
is in good faith defending such claim or proceeding, the indemnified persons
shall not compromise or settle such claim or proceeding without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld. If the indemnifying party does not assume the defense
of any such claim or litigation in accordance with the terms hereof, the
indemnified persons may defend against such claim or litigation in such manner
as they may deem appropriate, including, without limitation, settling such
claim or litigation (after giving prior written notice of the same to the
indemnifying party and obtaining the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld) on such terms as the
indemnified persons may deem appropriate, and the indemnifying party will
promptly indemnify the indemnified persons in accordance with the provisions of
this Section 9.5.
Section 9.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive until
the first anniversary of the Closing Date (except for the representation of HIT
pursuant to Section 2.6(b), which shall survive until the second anniversary of
the Closing Date), at which time such representations and warranties will
terminate and be of no force and effect. Any claim under this Article IX for
Loss or Expense in respect of any representations and warranties must be
asserted in writing prior to the first anniversary of the Closing Date, except
for such a claim in respect of the representation of HIT pursuant to Section
2.6(b), which must be asserted in writing prior to the second anniversary of
the Closing Date. Notwithstanding the foregoing, if a claim of a breach of a
representation or warranty under this Article IX is asserted in writing prior
to the applicable time period set forth above in this Section 9.6, then such
representation or warranty, as it relates to such claim, shall survive until
the Loss or Expense in respect thereof, if any, is finally determined and paid
by the indemnifying party.
Section 9.7. Satisfaction of Indemnification Obligations.
From and after the Closing, any indemnifying party who is otherwise obligated
to make an indemnification payment pursuant to this Article IX may in lieu of
such payment transfer Units (as defined in the Realty Partnership Agreement and
the Operating Partnership Agreement) pursuant to and subject to the provisions
of Section 5.5 of each of the Realty Partnership Agreement and the Operating
Partnership Agreement.
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Section 9.8. Special Indemnities. (a) In the event that this
Agreement is terminated other than pursuant to Section 10.1(b) or 10.1(d),
then:
(i) HIT and HIC shall severally indemnify and hold harmless
the Starwood Parties and their respective subsidiaries, affiliates and
successors from and against any and all Loss and Expense incurred by
the Starwood Parties or their respective subsidiaries, affiliates and
successors in connection with or arising from any action, suit or
proceeding brought against such Starwood Party by any holder of Paired
Shares (other than any of the Ross Parties (as defined below) in
connection with the Assignment Agreement (as defined below)) relating
to the transactions contemplated by this Agreement, other than to the
extent such Loss or Expense arose from a breach by a Starwood Party of
its obligations under either this Agreement, any other agreement
entered into in connection with this Agreement or the Assignment
Agreement or a breach by a Starwood Party or its affiliates or
successors of any fiduciary duty to the plaintiff in any such action,
suit or proceeding; and
(ii) if, within 60 days after the effectiveness of such
termination, HIT and HIC receive from Starwood (and any other person
having any right to assert claims or causes of action ("Assigned
Claims") assigned to Starwood pursuant to that certain Assignment
Agreement dated November 7, 1994 (the "Assignment Agreement") by and
among Starwood and Leonard M. Ross and certain affiliated entities of
his (the "Ross Parties")) a full and complete general release (the
"Release") of the Assigned Claims, then HIT and HIC shall severally
indemnify and hold harmless Starwood and its affiliates and related
parties who have any liability or obligations under the Assignment
Agreement from and against any and all Loss and Expense under or in
respect of the Assignment Agreement, other than to the extent such
Loss or Expense arose from a breach by a Starwood Party of its
obligations under either this Agreement, any other agreement entered
into in connection with this Agreement or the Assignment Agreement or
a breach by Starwood or its affiliates or such related parties of any
duty to the Ross Parties;provided that the obligation of HIT and HIC
to indemnify and hold harmless for Loss and Expense pursuant to this
clause (ii) shall be limited to the payment by HIT and HIC in the
aggregate of an amount equal to $1,800,000.
(b) Notwithstanding anything to the contrary contained in
this Agreement or in any Transaction Agreement, in the event the Closing is
consummated, then:
(i) none of HIT, HIC, the Realty Partnership or the Operating
Partnership shall assume any obligations or liabilities under the
Assignment Agreement;
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(ii) in consideration of Starwood's agreement that any
recovery with respect to the Assigned Claims shall not exceed
$1,800,000, HIT and HIC hereby agree to toll the expiration of the
limitations period in respect of the Assigned Claims to January 31,
1996;
(iii) the Partnership Interests of each of HIT and HIC in the
Realty Partnership and the Operating Partnership, respectively, shall
be increased as if they had made an additional cash contribution to
the Partnerships equal to 50% of any Applied Proceeds (as defined
below);
(iv) if on or prior to December 15, 1995 HIT and HIC are
provided with the Release, then HIT and HIC shall indemnify and hold
harmless to the extent provided in Section 9.8(a)(ii); and
(v) HIT and HIC shall indemnify and hold harmless to the
extent provided in Section 9.8(a)(i).
As used herein "Applied Proceeds" means any insurance or other
proceeds which are deposited into escrow to be applied to reduce the price to
be paid to the Ross Parties under the Assignment Agreement, whether or not such
proceeds are so applied.
(c) Starwood shall not transfer, assign or otherwise convey
the Assigned Claims to any person. The provisions of Sections 9.4 and 9.5
shall apply to the indemnification obligations pursuant to this Section 9.8.
ARTICLE X
TERMINATION
Section 10.1. Termination. Anything contained in this
Agreement to the contrary notwithstanding, this Agreement may be terminated at
any time prior to the Closing Date:
(a) by the mutual consent of HIT, HIC and Starwood;
(b) by HIT or HIC upon any material breach by a Starwood
Party of any of its representations, warranties or covenants contained
in this Agreement; provided that such Starwood Partner shall have been
given a reasonable opportunity to cure such breach;
(c) by Starwood upon any material breach by HIT or HIC of any
of its representations, warranties or covenants contained in this
Agreement; provided that HIT or HIC, as the case may be, shall have
been given a reasonable opportunity to cure such breach;
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(d) by HIT or HIC if any of the conditions specified in
Article VII has not been met or waived at such time as it is no longer
possible to satisfy such condition;
(e) by Starwood if any of the conditions specified in Article
VIII has not been met or waived at such time as it is no longer
possible to satisfy such condition;
(f) by HIT or HIC or Starwood if the Closing shall not have
been consummated on or before January 31, 1995 (provided that Starwood
may extend such date to March 31, 1995 in order to facilitate the
approval by the shareholders of HIT of the HIT Shareholder Matters or
the approval by the stockholders of HIC of the HIC Stockholder Matters
and provided further that if Starwood so extends such date, then,
notwithstanding anything to the contrary contained in this Agreement,
HIT and HIC may take appropriate action (including, without
limitation, the preparation and filing of proxy materials for the
approval of the merger of HIT and HIC) in order to allow them to
consummate the Third Closing (as defined in the Credit Agreement)
pursuant to, and within the time period provided by, the Credit
Agreement); provided that prior to March 31, 1995 no party may
terminate this Agreement pursuant to this Section 10.1(f) if such
party shall then be in material breach of any of its representations,
warranties or covenants contained herein; or
(g) by HIT or HIC, upon 15 days' prior written notice, by HIT
or HIC to Starwood, in the event that as set forth in Section 5.9 HIT
or HIC enters into an agreement with any person other than the
Starwood Parties which is not consistent with the obligations of HIT
or HIC set forth in this Agreement or with the consummation of the
transactions contemplated by this Agreement (such notice to include an
explanation of such inconsistencies); provided that in entering into
such agreement HIT and HIC materially complied with the provisions
of Section 5.9.
In the event that this Agreement shall be terminated pursuant to this Section
10.1, all further obligations of the parties under this Agreement (other than
Section 9.8, the other provisions of Article IX (but only to the extent that
such other provisions relate to a breach which forms the basis for such
termination) and Sections 11.1, 11.2 and 11.10), shall terminate without
further liability of any party to the others; provided, however, that nothing
herein shall relieve any party from liability for its nonperformance or breach
of any provision of this Agreement if performance of or compliance with such
provision was within its reasonable control.
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ARTICLE XI
OTHER PROVISIONS
Section 11.1. Confidential Nature of Information. Each party
agrees that it will treat in strict confidence all documents, materials and
other information which it obtains regarding the other parties during the
course of the negotiations leading to the consummation of the transactions
provided for herein and the preparation of this Agreement; and if for any
reason whatsoever the transactions contemplated by this Agreement shall not be
consummated, each party shall return to the other party all copies of
non-public documents and materials which have been furnished or acquired in
connection therewith and shall not use or disseminate such documents, materials
or other information for any purpose whatsoever.
Section 11.2. Fees and Expenses. (a) Except as otherwise
provided in this Section 11.2, each of the parties hereto shall bear its own
costs and expenses (including, without limitation, fees and disbursements of
its counsel, accountants and other financial, legal, accounting or other
advisors) incurred by it in connection with the preparation, negotiation,
execution and delivery of the memorandum of understandings dated June 13, 1994
among HIT, HIC and Starwood, this Agreement, each of the other documents and
instruments executed in connection with or contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby
(collectively "Acquisition Expenses").
(b) In the event that the Closing occurs, HIT and HIC will
cause the Partnerships to reimburse the Starwood Parties for their reasonable
out-of-pocket Acquisition Expenses, upon receipt by the Partnerships of
reasonable documentation therefor.
(c) In the event of a Qualifying Termination (as defined
below), (i) if the Qualifying Termination is pursuant to Section 10.1(g), then
the written notice effecting such Qualifying Termination shall be accompanied
by payment to Starwood in readily available federal funds of an aggregate fee
of $3,500,000, or if such Qualifying Termination is pursuant to Section
10.1(f), then HIT and HIC shall pay such $3,500,000 fee to Starwood within ten
business days after the giving by any party of the written notice effecting
such Qualifying Termination (it being understood that if Qualifying
Terminations are effected pursuant to both Section 10.1(f) and Section 10.1(g),
Starwood shall be entitled to receive only one such fee pursuant to this clause
(i)), (ii) within 10 business days after receipt by HIT and HIC from Starwood
of reasonable documentation therefor, HIT and HIC shall reimburse the Starwood
Parties for their respective reasonable out-of-pocket Acquisition Expenses, and
(iii) Starwood may elect, by written notice delivered to HIT on the date which
is no later than 10 business days subsequent to the date on which
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the $3,500,000 fee pursuant to clause (c)(i) above is paid, to cause HIT to
purchase the Assets (as defined in the Asset Purchase Agreement (the "Albany
Agreement") dated as of August 30, 1994 among HIT, HIC and Berl Holdings, L.P.
("Berl")) from Berl on substantially the same terms and conditions as Berl
purchased such Assets pursuant to the Albany Agreement, such purchase by HIT to
be consummated within 30 days after the giving of such notice; provided that
the purchase price for the Assets shall be equal to the purchase price for the
Assets paid by Berl pursuant to the Albany Agreement plus the excess, if any,
of (A) an amount equal to simple interest at a rate of 10% per annum on the
amount of equity invested by Berl during the period in which it owned such
Assets pursuant to such purchase over (B) any net cash flow (after debt
service) received by Berl during such period.
For purposes of this Section 11.2(c), a "Qualifying
Termination" shall mean (i) a termination of this Agreement pursuant to Section
10.1(g) or (ii) a termination of this Agreement by Starwood pursuant to Section
10.1(f) if as of the date of such termination either (A) the meetings of the
shareholders of HIT and the stockholders of HIC referred to in Section 5.2
shall not have been held, unless such meetings were not held because of
circumstances or occurrences beyond the reasonable control of HIT and HIC or
(B) HIT and HIC shall then be engaged in substantive negotiations or
discussions with persons other than the Starwood Parties with respect to a
Proposal (as defined in Section 5.9).
Section 11.3. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by overnight mail, or four days after being mailed (by
registered mail, return receipt requested) to a party at the following address
(or to such other address as such party may have specified by notice given to
the other parties pursuant to this provision):
If to HIT to:
Hotel Investors Trust
11845 West Olympic Boulevard, Suite 550
Los Angeles, California 90064
Attention: Jeffrey C. Lapin
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
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If to HIC to:
Hotel Investors Corporation
11845 West Olympic Boulevard, Suite 560
Los Angeles, California 90064
Attention: Kevin E. Mallory
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
If to a Starwood Party to:
Starwood Capital Group, L.P.
c/o Sternlicht Holdings II, Inc.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Barry S. Sternlicht
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Robert E. King, Jr.
Section 11.4. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person;
(b) an "associate" of any person means (i) a corporation or
organization of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10 percent or more of
a class of equity securities, (ii) any trust or other estate in which
such person has substantial beneficial interest or as to which such
person serves as trustee or in the similar capacity and (iii) any
relative or spouse of such person, or any relative of such spouse, who
has the same home as such person or who is a director or officer of
the person or any of its parents or subsidiaries.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
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(d) "Disinterested Members" when used with respect to the
Trust has the meaning set forth in the Code of Regulations of the
Trust and, when used with respect to the Corporation, has the meaning
set forth in the By-Laws of the Corporation, in each case as amended
from time to time.
(e) "HIC Disclosure Schedule" means the disclosure letter
dated the date hereof delivered by HIC to Starwood and relating to
this Agreement.
(f) "HIT Disclosure Schedule" means the disclosure letter
dated the date hereof delivered by HIT to Starwood and relating to
this Agreement.
(g) the "knowledge of HIC" means the actual knowledge of the
persons listed in the HIC Disclosure Schedule.
(h) the "knowledge of HIT" means the actual knowledge of the
persons listed in the HIT Disclosure Schedule.
(i) the "knowledge of such Starwood Party" means the actual
knowledge of the persons listed in the Starwood Disclosure Schedule.
(j) "Material Adverse Effect" means any change or effect
(or any development that, insofar as can reasonably be foreseen, would
result in any change or effect) that is materially adverse to the
business, properties, assets, condition (financial or otherwise) or
results of operations of the applicable person or persons; and
(k) "person" means an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization or other entity.
(l) "REIT Requirements" shall mean the requirements for HIT
to (i) qualify as a REIT, (ii) avoid any federal income or excise tax
liability, (iii) retain its status as grandfathered pursuant to
Section 132(c)(3) of the Deficit Reduction Act of 1984 and (iv) retain
the benefits of that certain private letter ruling issued by the
Internal Revenue Service to HIT dated as of January 4, 1980.
(m) "Starwood Disclosure Schedule" means the disclosure
letter dated the date hereof delivered by Starwood to HIT and HIC and
relating to this Agreement.
(n) "subsidiary" shall mean with respect to any person, any
other person of which more than 50% of the outstanding voting power is
owned, directly or indirectly, by such first person or by one or more
subsidiaries of such first person.
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<PAGE> 50
Section 11.5. Partial Invalidity. In case any one or more of
the provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 11.6. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors or assigns.
Section 11.7. Execution in Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when HIT, HIC, and
each of the Starwood Parties shall have each executed one counterpart.
Section 11.8. Titles and Headings. Titles and headings to
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
Section 11.9. Schedules and Exhibits. The schedules
(including, without limitation, the HIT Disclosure Schedule, the HIC Disclosure
Schedule and the Starwood Disclosure Schedule) and exhibits referred to in this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
Section 11.10. Entire Agreement; Amendments and Waivers;
Assignment. This Agreement contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this
Agreement. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach. Except as expressly
provided herein, the rights and obligations of the parties under this Agreement
may not be assigned or transferred by any party hereto without the prior
written consent of the other parties hereto.
Section 11.11. Governing Law. Except to the extent that
Maryland law is mandatorily applicable to the rights and obligations of the
shareholders of HIT and the stockholders of
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<PAGE> 51
HIC, this Agreement, and the application or interpretation thereof, shall be
exclusively governed by its terms and by the internal laws of the State of New
York, without regard to principles of conflicts of laws as applied in the State
of New York or any other jurisdiction which, if applied, would result in the
application of any laws other than the internal laws of the State of New York.
Section 11.12. No Third-Party Beneficiaries. Except for
Article IX, nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon any person other than the parties hereto and
successors and assigns permitted by Section 11.6 any right, remedy or claim
under or by reason of this Agreement.
Section 11.13. The Trust; Starwood General Partners. Each of
the parties hereto acknowledge and agree that (a) the name "Hotel Investors
Trust" is a designation of HIT and its Trustees (as Trustees but not
personally) under a Declaration of Trust dated August 25, 1969, as amended and
restated as of June 6, 1988, and all persons dealing with HIT shall look solely
to the HIT's assets for the enforcement of any claims against HIT, and the
Trustees, officers, agents and security holders of HIT assume no personal
liability for obligations entered into on behalf of HIT, and their respective
individual assets shall not be subject to the claims of any person relating to
such obligations and (b) all persons dealing with any Starwood Party shall look
solely to the assets of such Starwood Party for the enforcement of any claims
against such Starwood Party and the general partner of such Starwood Party, and
the officers, agents and security holders of such general partner assume no
personal liability for obligations entered into on behalf of such Starwood
Party, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations.
Section 11.14. Designation of Starwood as Representative.
Each of the Starwood Partners irrevocably designates Starwood as its
representative, attorney-in-fact and agent authorized to act on behalf of such
Starwood Partner in connection with all matters arising pursuant to this
Agreement, including, without limitation, all amendments, modifications and
supplements to this Agreement and all waivers, consents and approvals pursuant
to this Agreement. HIT, HIC, the Realty Partnership, the Operating Partnership
and their respective affiliates and representatives shall be entitled to rely
on any act of Starwood as such attorney-in-fact and agent as being the duly
authorized and binding act of each Starwood Partner.
Section 11.15. Several Nature of Representations and
Agreements. Notwithstanding anything to the contrary in this Agreement, the
representations, warranties, covenants and agreements of each party to this
Agreement shall be several and
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<PAGE> 52
not joint and no party shall have any responsibility or liability for any
breach of this Agreement by any other party hereto.
Section 11.16. Determinations and Interpretations by HIT and
HIC. All determinations of the Trust (or the Board of Trustees of the Trust)
and the Corporation (or the Board of Directors of the Corporation) provided for
in or pursuant to this Agreement shall be made by their respective
Disinterested Members. All interpretations of the terms of this Agreement
shall be resolved on behalf of the Trust and the Corporation by their
respective Disinterested Members.
Section 11.17. Submission to Jurisdiction. Each of the
parties hereto irrevocably submits and consents to the jurisdiction of the
United States District Court for the Southern District of New York and United
States District Court for the Central District of California in connection with
any action or proceeding arising out of or relating to this Agreement or any
Transaction Document and the transactions contemplated hereby and thereby, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
Section 11.18. Approvals and Consents. Unless otherwise
expressly set forth herein, any agreement, approval or consent required a party
hereto shall not be unreasonably withheld or delayed.
Section 11.19. HIT and HIC Contributions. Notwithstanding
anything to the contrary contained in this Agreement or in any Transaction
Agreement, in the event that either HIT or HIC does not receive a consent
described in Section 8.6, then at the option of HIT or HIC, as the case may be,
HIT or HIC, as the case may be, shall hold the related asset in trust for the
use and benefit of the Realty Partnership or the Operating Partnership, as the
case may be (the "Transferee"), and shall retain the related liability for the
account and at the expense of the Transferee and take such other reasonable
action in order to place the Transferee, insofar as reasonably possible, in the
same position as would have existed had such asset been transferred and such
liability been assumed by the Transferee (with such assets and liability to be
transferred to and assumed by the Transferee upon receipt of the related
consent). Failure to obtain such consent shall not be a condition to the
obligation of any party hereto to consummate the transactions contemplated
hereby.
Section 11.20. Execution. In the event that this Agreement
is not executed prior to the Closing Date by either or both of Starwood Apollo
Hotel Partners VIII, L.P. or Starwood Apollo Hotel Partners IX (a "Nonexecuting
Person"), then, notwithstanding anything to the contrary contained in this
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<PAGE> 53
Agreement, this Agreement shall continue in effect and shall be binding upon
all other parties hereto which execute this Agreement, it being understood that
in such event the Partnership Interests of the partners in the Partnerships
shall be adjusted in accordance with Section 5.11 to reflect the contributions
not being made by the Nonexecuting Person or Persons.
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<PAGE> 54
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto or by their duly authorized officers, all as of
the date first above written.
HOTEL INVESTORS TRUST
a Maryland real estate investment trust
By:________________________________
Name:
Title:
HOTEL INVESTORS CORPORATION
a Maryland corporation
By:________________________________
Name:
Title:
STARWOOD CAPITAL GROUP, L.P.,
By: BSS CAPITAL PARTNERS, L.P,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By:__________________________
Name:
Title:
STARWOOD PARTNERS:
BERL HOLDINGS, L.P.
By: BERL HOLDINGS I, INC.,
general partner
By:___________________________
Name:
Title:
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<PAGE> 55
STARWOOD-APOLLO HOTEL PARTNERS VIII, L.P.
By: SAHI, INC.,
general partner
By:___________________________
Name:
Title:
By: AP-GP MIDSTAR HOTELS VIII, INC.,
general partner
By:___________________________
Name:
Title:
STARWOOD-APOLLO HOTEL PARTNERS IX, L.P.
By: SAHI, INC.,
general partner
By:___________________________
Name:
Title:
By: AP-GP MIDSTAR HOTELS IX, INC.,
general partner
By:___________________________
Name:
Title:
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<PAGE> 56
STARWOOD-NOMURA HOTEL INVESTORS, L.P.
By: SNHI, INC.,
general partner
By:___________________________
Name:
Title:
STARWOOD/WICHITA INVESTORS, L.P.
By: STARWOOD OPPORTUNITY FUND, II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II,
INC., general partner
By:______________________
Name:
Title:
STARWOOD-HUNTINGTON PARTNERS, L.P.
By: SRL HOLDINGS, INC.,
general partner
By:___________________________
Name:
Title:
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<PAGE> 57
WOODSTAR PARTNERS I, L.P.
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II, INC.,
general partner
By:______________________
Name:
Title:
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<PAGE> 58
SCHEDULE A
TO
FORMATION AGREEMENT
Starwood Realty Properties and Liabilities
The Starwood Partners will contribute to the Realty
Partnership the following assets (together with associated liabilities):
- $4,200,000 in cash
- a mixed-use property located in Lexington, Kentucky and
including a 155-suite hotel known as the French Quarters
Suites (all of which will be leased by the Realty Partnership
to the Operating Partnership after the Reorganization and will
be managed by the Operating Partnership after the
Reorganization), as well as an approximate 12,000 rentable
square foot office building and approximately 38,000 gross
leasable square feet of retail space, subject to the
assumption by the Realty Partnership of related indebtedness
in the aggregate principal amount of $1,517,000, which
indebtedness is also secured by mortgages on the Albany
Holiday Inn and the Capitol Hill Suites, referred to below,
and is cross defaulted and cross collateralized with the
$6,800,000 mortgage indebtedness secured by the Doubletree
Club Rancho Bernardo, referred to below.
- a 152-suite property located in Washington, D.C., known as the
Capitol Hill Suites (which will be leased by the Realty
Partnership to the Operating Partnership after the
Reorganization and will be managed by the Operating
Partnership after the Reorganization).
- a 151-room hotel located in Albany, Georgia, known as the
Albany Holiday Inn purchased by Starwood as described in
Section 11.2(c) of the Formation Agreement (which hotel will
be leased by the Realty Partnership to the Operating
Partnership after the Reorganization and will be managed by
the Operating Partnership after the Reorganization).
- a 209-room hotel located in Rancho Bernardo, California, known
as the Doubletree Club Rancho Bernardo (which will be leased
by the Realty Partnership to the Operating Partnership after
the
A-1
<PAGE> 59
Reorganization and will be managed by the Operating
Partnership), subject to the assumption by the Realty
Partnership of related indebtedness in the aggregate
principal amount of $6,800,000, which indebtedness is cross
defaulted and cross collateralized with the 1,517,000
mortgage indebtedness secured by the French Quarters Suites
(and related mixed-use property), the Capitol Hill Suites and
the Albany Holiday Inn, all referenced above.
- a 259-room hotel located in Wichita, Kansas, known as the
Harvey Wichita Inn, subject to the assumption by the Realty
Partnership of related indebtedness in the aggregate principal
amount of $2,250,000. The Starwood Partner contributing the
hotel will guarantee the cash flow therefrom pursuant to
Section 6.7 of the Formation Agreement.
- first mortgage notes in the aggregate principal amount of
approximately $55,200,000 at June 30, 1994 (subject to the
assumption by the Realty Partnership of related indebtedness
in the aggregate principal amount of approximately
$30,700,000), which are secured by (i) a 506-room hotel in
Dallas, Texas known as the Harvey DFW Airport Hotel, (ii) a
429-room hotel in Addison, Texas known as the Harvey Addison
Hotel and (iii) a 295-room hotel in Dallas, Texas known as the
Harvey Bristol Suites. These notes are guaranteed personally
by an individual.
- a first mortgage note in the aggregate principal amount of
approximately $12,500,000 at June 30, 1994, which is secured
by a 151-room hotel in Secaucus, New Jersey known as the
Ramada Suites.
- first mortgage notes in the aggregate principal amount of
approximately $11,500,000 at June 30, 1994, which are secured
by a 203-room hotel in Atlantic City, New Jersey, known as the
Atlantic City Inn, as well as by an adjacent parking lot and
certain additional collateral, subject to the assumption by
the Realty Partnership of related indebtedness in the
aggregate principal amount of approximately $9,000,000, which
indebtedness is also secured by the Ramada Suites first
mortgage note and the Atlantic City Inn (and related
collateral) first mortgage note, all referenced above.
The contributions of the hotel properties by the Starwood
Partners to the Realty Partnership will not include certain operating assets or
furnishings, inventory or equipment, all of which will be contributed by the
Starwood Partners to the Operating Partnership.
A-2
<PAGE> 60
SCHEDULE B
TO
FORMATION AGREEMENT
Starwood Operating Properties and Liabilities
The Starwood Partners will contribute to the Realty
Partnership the following assets (together with associated liabilities):
$800,000 of cash, certain leases and operating assets (including furnishings,
inventory and equipment) of the French Quarters, Capitol Hill Suites, Albany
Holiday Inn and Doubletree Rancho Bernardo hotels contributed by the Starwood
Partners to the Realty Partnership. Those leases will be similar to the
current leases from the Trust to the Corporation.
<PAGE> 1
EXHIBIT 3
EXCHANGE RIGHTS AGREEMENT
This Exchange Rights Agreement (this "Agreement") is made as
of January 1, 1995 among Hotel Investors Trust, a real estate investment trust
organized under the laws of the State of Maryland (the "Trust"), Hotel
Investors Corporation, a Maryland corporation (the "Corporation"), SLT Realty
Limited Partnership, a Delaware limited partnership (the "Realty Partnership"),
SLC Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), each of the limited partners of the Realty
Partnership and the Operating Partnership listed on the signature pages hereto
(the "Starwood Partners") and Firebird Consolidated Partners, L.P., a Delaware
limited partnership ("Firebird"). Unless otherwise indicated, capitalized
terms used herein are used herein as defined in Section 11.
WHEREAS, pursuant to a Formation Agreement dated as of
November 11, 1994 (the "Formation Agreement") among the Trust, the Corporation,
Starwood Capital Group, L.P., a limited partnership organized under the laws of
the State of Delaware ("Starwood"), and the Starwood Partners (i) on the date
hereof the Trust and the Starwood Partners are making capital contributions to
the Realty Partnership in return for the issuance by the Realty Partnership to
the Trust and to the Starwood Partners of Units (as defined in the Limited
Partnership Agreement of the Realty Partnership (the "Realty Partnership
Agreement")) of the Realty Partnership (such Units issued by the Realty
Partnership to the Starwood Partners on the date hereof, together with any
Units of the Realty Partnership issued to the Starwood Partners or Firebird
after the date hereof (including, without limitation, Units issued to Firebird
in exchange for senior debt pursuant to Section 6.4 of the Formation
Agreement), being hereinafter called the "Realty Units") and (ii) on the date
hereof the Corporation and the Starwood Partners are making capital
contributions to the Operating Partnership in return for the issuance by the
Operating Partnership to the Corporation and to the Starwood Partners of Units
(as defined in the Limited Partnership Agreement of the Operating Partnership
(the "Operating Partnership Agreement")) of the Operating Partnership (such
Units issued by the Operating Partnership to the Starwood Partners on the date
hereof, together with any Units of the Operating Partnership issued to the
Starwood Partners or Firebird after the date hereof (including, without
limitation, Units issued to Firebird in exchange for senior debt pursuant to
Section 6.4 of the Formation Agreement), being hereinafter called the
"Operating Units");
WHEREAS, in the event that Firebird shall acquire Realty Units
and Operating Units on or after the date hereof,
1
<PAGE> 2
then from and after such acquisition Firebird shall be deemed to be a "Starwood
Partner" for all purposes of this Agreement; and
WHEREAS, pursuant to the Formation Agreement the parties
hereto are entering into this Agreement to provide for the rights of the
Starwood Partners to tender Realty Units and Operating Units in exchange for
either Paired Shares (as defined herein), cash or a combination of Paired
Shares and cash, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth herein, the parties hereto agree as follows:
SECTION 1. RIGHT TO TENDER STARWOOD UNITS. (a) Upon the
terms and subject to the conditions of this Agreement, each holder of Starwood
Units (as defined below) shall have the right to tender to the Trust
outstanding Realty Units and the right to tender to the Corporation outstanding
Operating Units. Notwithstanding anything to the contrary contained in this
Agreement (i) no Realty Unit may be tendered to the Trust unless simultaneously
therewith the tendering holder also tenders to the Corporation an Operating
Unit and no Operating Unit may be tendered to the Corporation unless
simultaneously therewith the tendering holder also tenders to the Trust a
Realty Unit (a Realty Unit tendered for exchange and the Operating Unit
simultaneously tendered for exchange being hereinafter collectively referred to
as a "Starwood Unit") and (ii) any attempted tender of a Realty Unit or an
Operating Unit which is not accompanied by a simultaneous tender of an
Operating Unit or Realty Unit, respectively, shall be void and of no effect; it
being understood that a simultaneous tender of unequal numbers of Realty Units
and Operating Units shall be valid under this sentence to the extent of the
lesser of the number of Realty Units or Operating Units, as the case may be,
included in such tender.
(b) Notwithstanding any other provision of this Agreement, no
Paired Shares or cash shall be issued or paid in respect of any tender of
Starwood Units (i) if, notwithstanding the provisions of Section 6 of this
Agreement, the right to tender Starwood Units and receive Paired Shares or cash
would result in the Trust not satisfying the REIT Requirements in any respect
or would result in any person or entity Beneficially Owning Trust Shares
exceeding the Ownership Limit, (ii) prior to the expiration or termination of
the waiting period applicable to such exchange and issuance, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as it may be amended from
time to time, or (iii) prior to the receipt of all governmental and regulatory
approvals which are required to be obtained prior to such tender and issuance
or payment, including, without limitation, any required approvals of the gaming
authorities of the State of Nevada and of Clark County, Nevada (the "Gaming
2
<PAGE> 3
Approvals"). Prior to the receipt of Gaming Approvals, such holder shall, as a
condition to any tender of Starwood Units which would (if the Paired Share
Option (as defined below) were to be elected in respect of such tender) cause
the Starwood Partners to beneficially own, in the aggregate, Paired Shares
representing more than 4.9% of the then issued and outstanding Paired Shares,
give not less than 90 days' written notice to the Trust and the Corporation (at
the offices provided pursuant to Section 10) of its intent to tender Starwood
Units. In the event that the ability to receive Paired Shares or cash would
result in the Trust not satisfying the REIT Requirements in any respect or
would result in any person or entity Beneficially Owning Trust Shares exceeding
the Ownership Limit, and as a result thereof no Paired Shares or cash may be
issued or paid in respect of any tender of Starwood Units pursuant to Section
1(b)(i) above, the parties hereto shall use their respective best efforts to
restructure the terms and provisions of this Agreement (and, if necessary, the
Partnership Agreements and the Registration Rights Agreement (as defined in
Section 6)), or to agree to terms and provisions in addition to such terms and
provisions, so as to provide to each such party the same substantive rights (or
substantive rights as close thereto as is reasonably practicable) as those
provided by this Agreement, the Partnership Agreements and the Registration
Rights Agreement.
(c) The rights to exchange Starwood Units pursuant to this
Agreement constitute a continuous offer and may not be withdrawn, amended or
modified by the Trust or the Corporation without the prior written consent of
each holder of outstanding Starwood Units adversely affected by such
withdrawal, amendment or modification; provided that any withdrawal, amendment
or modification that does not adversely affect any holder of outstanding
Starwood Units may be effected without the consent of such holder.
SECTION 2. ACCEPTANCE OF TENDER; ELECTION OF METHOD OF
PAYMENT FOR TENDERED STARWOOD UNITS. (a) Upon the terms and subject to the
conditions of this Agreement, the Trust and the Corporation shall accept
Starwood Units validly tendered in proper form and meeting all of the
requirements of this Agreement. In order for Starwood Units to be validly
tendered pursuant to this Agreement, the registered holder thereof shall
deliver to the Trust and the Corporation, at the address provided pursuant to
Section 10, (i) a completed and duly executed Letter of Transmittal in the form
attached hereto as Exhibit A (the "Letter of Transmittal") and any other
documents required by the Letter of Transmittal and (ii) a calculation, to the
best knowledge of such registered holder after due inquiry (together with such
supporting documentation as the Trust may reasonably request), of the maximum
number of Paired Shares that may be issued to such registered holder without
causing either (x) the Trust to not satisfy the REIT Requirements in any
respect or (y) any person or entity to Beneficially Own Trust Shares exceeding
3
<PAGE> 4
the Ownership Limit. The Trust and the Corporation shall make all
determinations as to the validity and form of any tender of Starwood Units in
accordance with the provisions of this Agreement and upon rejection of a tender
shall give the tendering holder written notice of such rejection, which shall
include the reasons therefor.
(b) Unless otherwise determined by agreement of the Trust and
the Corporation, tenders of Starwood Units pursuant to this Agreement shall be
irrevocable and shall not be subject to withdrawal or modification; provided
that if the Trust and the Corporation make the Paired Share Election with
respect to a tender, then within 3 days after such Election the tendering
holder may elect to revoke such tender so long as (i) no public disclosure of
such tender has been made prior to such revocation and (ii) such tendering
holder reimburses the Trust and the Corporation for all reasonable costs and
expenses incurred in connection with such tender.
(c) Within 15 days after the valid tender pursuant to this
Agreement of Starwood Units, the Trust and the Corporation shall make an
election to pay for such Starwood Units by delivering either (i) Paired Shares
(the "Paired Share Election"), (ii) cash (the "Cash Election") or (iii) a
combination of Paired Shares and cash (the "Combined Election"). Such election
shall be made pursuant to an agreement as to such election between the Trust
and the Corporation. If the Trust and the Corporation do not so agree within
such 15-day period, they shall be deemed to have made the Cash Election.
SECTION 3. PAIRED SHARE ELECTION. (a) If with respect to
any tender of Starwood Units pursuant to this Agreement, the Trust and the
Corporation make the Paired Share Election, then within 20 days after such
tender the Trust and the Corporation shall deliver to the tendering holder one
Paired Share for each Starwood Unit validly tendered pursuant to the provisions
of this Agreement.
(b) No fractional Paired Shares or scrip representing
fractional Paired Shares shall be issued upon exchange of Starwood Units
pursuant to this Agreement. If more than one Letter of Transmittal shall be
delivered at one time by the same holder, the number of full Paired Shares
which shall be issuable upon exchange of the Starwood Units tendered thereby
shall be computed on the basis of the aggregate number of Starwood Units so
tendered. Instead of any fractional Paired Shares which would otherwise be
issuable upon exchange of any Starwood Units, the Trust and the Corporation
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Paired Share Closing Price on the last business day
preceding the date of exchange.
4
<PAGE> 5
(c) If a holder exchanges Starwood Units pursuant to this
Agreement, the Trust and the Corporation shall pay any documentary, stamp or
similar issue or transfer tax due on any issue of Paired Shares upon such
exchange. Such holder, however, shall (i) pay to the Trust and the Corporation
the amount of any additional documentary, stamp or similar issue or transfer
tax which is due (or shall establish to the satisfaction of the Trust and the
Corporation the payment thereof) as a result of Paired Shares being issued in a
name other than the name of such holder and (ii) be responsible for all income
or other taxes as a result of such exchange.
SECTION 4. CASH ELECTION. (a) If with respect to any tender
of Starwood Units pursuant to this Agreement, the Trust and the Corporation
make or are deemed to have made the Cash Election, then within 20 days after
such tender the Trust and the Corporation shall pay to the tendering holder an
aggregate amount of cash (the "Aggregate Cash Payment") equal to the product of
(i) the number of Paired Shares which would have been delivered to such holder
if the Trust and the Corporation had made the Paired Share Election with
respect to such tender and (ii) the average Paired Share Closing Price for the
ten trading day period ending one day prior to the date of such tender.
(b) In connection with any Aggregate Cash Payment pursuant
to Section 4(a) or any cash payment pursuant to Section 5(a)(ii), the Trust
shall pay 95% of such Aggregate Cash Payment or such cash payment and the
Corporation shall pay 5% of such Aggregate Cash Payment or such cash payment
(such percentages being herein called the "Issuance Percentages"); provided
that the Trust and the Corporation may from time to time change the Issuance
Percentages based on their determination of the relative fair values of the
Trust Shares and the Corporation Shares.
SECTION 5. COMBINED ELECTION. (a) If with respect to any
tender of Units pursuant to this Agreement, the Trust and the Corporation shall
make the Combined Election, then within 20 days after such tender the Trust and
the Corporation shall (i) notify the tendering holder of the number of such
tendered Units which will be exchanged for cash (the "Cash Units") and the
number of such tendered Units which will be exchanged for Paired Shares (the
"Paired Share Units"), (ii) pay to the tendering holder, in respect of each
Cash Unit validly tendered pursuant to the provisions of this Agreement, an
amount of cash (with each of the Trust and the Corporation paying its then
respective Issuance Percentage of such amount of cash) equal to the average
Paired Share Closing Price for the ten trading day period ending one day prior
to the date of such tender and (iii) deliver to the tendering holder one Paired
Share for each Paired Share Unit validly tendered pursuant to the provisions of
this Agreement.
5
<PAGE> 6
(b) The provisions of Sections 3(b) and 3(c) of this
Agreement shall apply to the issuance of Paired Shares pursuant to Section
5(a).
SECTION 6. REGISTRATION RIGHTS. If at any time after one
year from the date of this Agreement, (a) a Starwood Partner validly tenders
Starwood Units pursuant to the provisions of this Agreement, (b) the Trust and
the Corporation make the Paired Share Election or the Combined Election with
respect to such tender, (c) as a result of the Ownership Limit such Starwood
Partner cannot receive the full number of Paired Shares otherwise issuable to
such Starwood Partner pursuant to such tender and such Election (without giving
effect to the Ownership Limit) (the event described in clauses (a), (b) and (c)
being referred to as a "Paired Share Tender Reduction"; the number of such
Paired Shares which such Starwood Partner cannot receive pursuant to such
tender as a result of the Ownership Limit being referred to as the "Unissued
Paired Shares"; and the Starwood Units tendered in respect of such Unissued
Paired Shares being referred to as the "Delayed Payment Units"), then (i)
subject to the other terms and conditions of this Agreement, such Starwood
Partner shall be entitled to receive the number of Paired Shares which it can
receive pursuant to such tender, such Election and the Ownership Limit and (ii)
if Starwood shall make a written request for registration of Paired Shares
pursuant to Section 2.3 of the Registration Rights Agreement of even date
herewith among the Trust, the Corporation and Starwood (the "Registration
Rights Agreement"), then, pursuant to the terms of the Registration Rights
Agreement, the Trust and the Corporation shall cause there to be filed with the
Securities and Exchange Commission a registration statement and the Trust and
the Corporation shall register and sell pursuant thereto a number of Paired
Shares equal to the number of such Unissued Paired Shares requested by Starwood
to be registered pursuant to Section 2.3 of the Registration Rights Agreement.
Within two business days after the receipt by the Trust and the Corporation of
the proceeds of any sale (after underwriting discounts and commissions) of such
Paired Shares pursuant to such registration, the Trust and the Corporation
shall pay such proceeds to the tendering holder of the Delayed Payment Units,
in full payment for the tender of such Delayed Payment Units.
SECTION 7. REPRESENTATIONS OF TENDERING HOLDER. Each tender
of Starwood Units shall constitute a representation and warranty by the
tendering holder of each of the representations and warranties set forth in the
form of Letter of Transmittal. Without limiting the generality of the
foregoing, unless, at the time of a tender for exchange of Starwood Units
pursuant to this Agreement, a registration statement relating to any Paired
Shares to be delivered upon such tender is effective under the Securities Act
of 1933, as amended (the "Securities Act"), such tender shall constitute a
representation and warranty by the tendering holder to the Trust and the
Corporation that such
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<PAGE> 7
tendering holder (i) is an "accredited investor" within the meaning of Rule 501
under the Securities Act, (ii) has sufficient knowledge and experience in
financial and business matters and in investing in entities similar to the
Partnerships, the Trust and the Corporation so as to be able to evaluate the
risks and merits of its investment in the Partnerships, the Trust and the
Corporation and it is able financially to bear the risks thereof, (iii) has had
an opportunity to discuss the business, management and financial affairs of the
Trust, the Corporation and the Partnerships with the management of the Trust,
the Corporation and the Partnerships, and (iv) understands that the Paired
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act and such Paired Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
and applicable state securities laws or is exempt from such registration.
SECTION 8. STATUS OF TENDERING HOLDER. Until the holder of
Starwood Units tendered pursuant to this Agreement becomes a holder of record
of the Paired Shares issued in exchange therefor (in the case of a Paired Share
Election or a Combined Election) or until such holder has received cash in
exchange therefor (in the case of a Cash Election or a Combined Election), such
holder shall continue to hold and own such Starwood Units for all purposes of
the Realty Partnership Agreement and the Operating Partnership Agreement. In
the case of a Paired Share Election or a Combined Election, no such holder
shall have any rights as a shareholder of the Trust or a stockholder of the
Corporation in respect of such Paired Shares until such holder becomes a holder
of record of such Paired Shares.
SECTION 9. RESERVATION OF SHARES; CLOSING OF TRANSFER BOOKS.
(a) The Trust shall reserve and shall at all times have reserved out of its
authorized but unissued Trust Shares, solely for the purpose of effecting the
exchange of Realty Units pursuant to this Agreement, enough Trust Shares to
permit the exchange of the then outstanding Realty Units. The Corporation
shall reserve and shall at all times have reserved out of its authorized but
unissued Corporation Shares, solely for the purpose of effecting the exchange
of Operating Units pursuant to this Agreement, enough Corporation Shares to
permit the exchange of the then outstanding Operating Units. All Paired Shares
which may be issued upon exchange of Starwood Units shall be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof other than income taxes resulting from such
exchange.
(b) The Trust shall not close its transfer books so as to
prevent the timely issuance of Trust Shares pursuant to this
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<PAGE> 8
Agreement. The Corporation shall not close its transfer books so as to prevent
the timely issuance of Corporation Shares pursuant to this Agreement.
SECTION 10. NOTICES. All notices, documents and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or by overnight mail or when sent by facsimile
transmission, or four days after being mailed (by registered mail, return
receipt requested) to a party at the following address (or to such other
address as such party may have specified by notice given to the other parties
pursuant to this provision):
If to the Trust or the Realty Partnership, to:
Starwood Lodging Trust
11845 West Olympic Boulevard
Suite 550
Los Angeles, California 90064
Attention: Jeffrey C. Lapin
Telecopy No.: (310) 575-9512
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
Telecopy No.: (213) 896-6600
If to the Corporation or the Operating Partnership, to:
Starwood Lodging Corporation
11845 West Olympic Boulevard
Suite 560
Los Angeles, California 90064
Attention: Kevin E. Mallory
Telecopy No.: (310) 575-5912
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
Telecopy No.: (213) 896-6600
8
<PAGE> 9
If to Starwood, to:
Starwood Capital Group, L.P.
c/o Sternlicht Holdings II, Inc.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Barry S. Sternlicht
Telecopy No.: (203) 861-2101
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Robert E. King, Jr.
Telecopy No.: (212) 878-8375
SECTION 11. DEFINITIONS. For purposes of this Agreement:
"Beneficially Owning" means owning Trust Shares directly,
indirectly or constructively by a person or entity through the
application of Section 318(a) of the Code, as modified by Section
856(d)(5) of the Code, or Section 544 of the Code, as modified by
Section 856(h) of the Code. The term "Beneficially Own" shall have a
correlative meaning.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Corporation Shares" means the shares of Common Stock, par
value $.01 per share, of the Corporation.
"Declaration of Trust" means the Declaration of Trust of the
Trust dated August 25, 1969, as amended and restated as of June 6,
1988, and as further amended on February 1, 1995 and as amended from
time to time after the date of this Agreement.
"Disinterested Members" when used with respect to the Trust
has the meaning set forth in the Code of Regulations of the Trust and,
when used with respect to the Corporation, has the meaning set forth
in the By-Laws of the Corporation, in each case as amended from time
to time.
"Ownership Limit" when used with respect to Trust Shares, has
the meaning set forth in the Declaration of Trust and, when used with
respect to the Corporation Shares, has the meaning set forth in the
Restated Articles, in each case as amended from time to time.
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<PAGE> 10
"Paired Share" means a Corporation Share and a Trust Share
which are paired pursuant to the Pairing Agreement.
"Paired Share Closing Price" shall mean, with respect to a
particular date, the last reported sales price regular way on such
date or, in case no such reported sale takes place on such date, the
average of the reported closing bid and asked prices regular way on
such date, in either case on the New York Stock Exchange, or if the
Paired Shares are not then listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the
Paired Shares are then listed or admitted to trading or, if not then
listed or admitted to trading on any national securities exchange, the
closing sale price on such date of the Paired Shares or, in case no
reported sale takes place on such date then, the average of the
closing bid and asked prices on such date, on NASDAQ or any comparable
system. If the Paired Shares are not then quoted on NASDAQ or any
comparable system, the Board of Trustees of the Trust and the Board of
Directors of the Corporation shall in good faith determine the Paired
Share Closing Price.
"Pairing Agreement" means the Pairing Agreement dated June 25,
1980 between the Trust and the Corporation, as it may be amended from
time to time.
"REIT Requirements" shall mean the requirements for the Trust
to (i) qualify as a REIT under the Code and the rules and regulations
promulgated thereunder, (ii) avoid any federal income or excise tax
liability, (iii) retain its status as grandfathered pursuant to
Section 132(c)(3) of the Deficit Reduction Act of 1984 and (iv) retain
the benefits of that certain private letter ruling issued by the
Internal Revenue Service to the Trust dated as of January 4, 1980.
"Restated Articles" means the Restated Articles of
Incorporation of the Corporation, as amended from time to time after
the date of this Agreement.
"Trust Shares" means the shares of Beneficial Interest, $.01
par value, of the Trust.
SECTION 12. DETERMINATIONS AND INTERPRETATION. All
agreements between the Trust and the Corporation provided for in this Agreement
shall be made on behalf of the Trust and the Corporation by their respective
Disinterested Members, including, without limitation, any agreement between the
Trust and the Corporation as to the election of the Paired Share Election, the
Cash Election or the Combined Election with respect to a tender of Starwood
Units pursuant to Section 2(c), any agreement to permit the revocation,
withdrawal or modification of a tender of Starwood Units pursuant to Section
1(c) and any adjustment of the Issuance Percentages pursuant to Section 4(b).
All
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<PAGE> 11
interpretations of the terms of this Agreement shall be resolved on behalf of
the Trust and the Corporation by their respective Disinterested Members.
SECTION 13. PARTIAL INVALIDITY. In case any one or more of
the provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors or assigns. Notwithstanding prohibitions on
assignment contained herein, in the event that a Starwood Partner transfers
record ownership of Starwood Units to any of its direct or indirect partners,
this Agreement shall be assigned to such partners; provided that each such
partner agrees to be bound by all of the terms and conditions of this
Agreement.
SECTION 15. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when the Trust, the
Corporation, the Realty Partnership, the Operating Partnership, each of the
Starwood Partners and Firebird shall have each executed a counterpart of this
Agreement.
SECTION 16. TITLES AND HEADINGS. Titles and headings to
Articles and Sections herein are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
SECTION 17. EXHIBITS. The Exhibits referred to in this
Agreement shall be construed with, and as an integral part of, this Agreement
to the same extent as if the same had been set forth verbatim herein.
SECTION 18. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This
Agreement, including the Exhibits, contains the entire understanding of the
parties hereto with regard to the subject matter contained herein. In addition
to amendments and modifications permitted by Section 1(e), the parties hereto,
by mutual agreement in writing, may amend, modify and supplement this
Agreement; provided that any such amendment, modification or supplement shall
be approved by a majority of the Disinterested Members of each of the Trust and
the Corporation. The failure of any party hereto to enforce at any time any
provision of this
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<PAGE> 12
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
such party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
SECTION 19. GOVERNING LAW. Except to the extent that
Maryland law is mandatorily applicable to the rights and obligations of the
shareholders of the Trust and the stockholders of the Corporation, this
Agreement, and the application or interpretation thereof, shall be governed
exclusively by its terms and by the internal laws of the State of New York,
without regard to principles of conflicts of laws as applied in the State of
New York or any other jurisdiction which, if applied, would result in the
application of any laws other than the internal laws of the State of New York.
SECTION 20. HOTEL INVESTORS TRUST. The parties hereto
understand and agree that the name "Hotel Investors Trust" is a designation of
the Trust and its Trustees (as Trustees but not personally) under the
Declaration of Trust, and all persons dealing with the Trust shall look solely
to the Trust's assets for the enforcement of any claims against the Trust, and
that the Trustees, officers, agents and security holders of the Trust assume no
personal liability for obligations entered into on behalf of the Trust, and
their respective individual assets shall not be subject to the claims of any
person relating to such obligations.
SECTION 21. SUBMISSION TO JURISDICTION. Each of the parties
hereto irrevocably submits and consents to the jurisdiction of the United
States District Court for the Southern District of New York and the United
States District Court for the Central District of California in connection with
any action or proceeding arising out of or relating to this Agreement, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
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<PAGE> 13
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto or by their duly authorized officers, all as of
the date first above written.
HOTEL INVESTORS TRUST
a Maryland real estate investment
trust
By:_________________________
Name:
Title:
HOTEL INVESTORS CORPORATION
a Maryland corporation
By:_________________________
Name:
Title:
SLT REALTY LIMITED PARTNERSHIP
By: HOTEL INVESTORS TRUST,
general partner
By:_________________________
Name:
Title:
SLC OPERATING LIMITED PARTNERSHIP
By: HOTEL INVESTORS CORPORATION,
general partner
By:_________________________
Name:
Title:
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<PAGE> 14
STARWOOD PARTNERS:
BERL HOLDINGS, L.P.
By: BERL HOLDINGS I, INC.,
general partner
By:_________________________
Name:
Title:
STARWOOD-APOLLO HOTEL PARTNERS
VIII, L.P.
By: SAHI, INC.,
general partner
By:_________________________
Name:
Title:
STARWOOD APOLLO HOTEL PARTNERS IX, L.P.
By: SAHI, INC.,
general partner
By:_________________________
Name:
Title:
STARWOOD NOMURA HOTEL INVESTORS, L.P.
By: SNHI, INC.,
general partner
By:_________________________
Name:
Title:
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<PAGE> 15
STARWOOD/WICHITA INVESTORS, L.P.
By: STARWOOD OPPORTUNITY FUND,
II, L.P., general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS,
L.P., general partner
By: STERNLICHT HOLDINGS
II, INC., general
partner
By:______________________
Name:
Title:
STARWOOD-HUNTINGTON PARTNERS, L.P.
By: SRL HOLDINGS, INC.,
general partner
By:_________________________
Name:
Title:
WOODSTAR PARTNERS I, L.P.
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II,
INC., general partner
By:_________________________
Name:
Title:
15
<PAGE> 16
FIREBIRD:
FIREBIRD CONSOLIDATED PARTNERS, L.P.
By: STARWOOD OPPORTUNITY FUND II, L.P.,
general partner
By: STARWOOD CAPITAL GROUP, L.P.,
general partner
By: BSS CAPITAL PARTNERS, L.P.,
general partner
By: STERNLICHT HOLDINGS II,
INC., general partner
By:_________________________
Name:
Title:
16
<PAGE> 1
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
as of January 1, 1995 among Hotel Investors Trust, a real estate investment
trust organized under the laws of the State of Maryland (the "Trust"), Hotel
Investors Corporation, a Maryland corporation (the "Corporation"), and Starwood
Capital Group, L.P., a limited partnership organized under the laws of the
State of Delaware ("Starwood"). Unless otherwise indicated, capitalized terms
used herein are used herein as defined in Section 1.1.
RECITALS
WHEREAS, pursuant to a Formation Agreement dated as of
November 11, 1994 (the "Formation Agreement") among the Trust, the Corporation,
Starwood and certain affiliates of Starwood listed on Schedule A hereto (the
"Holders") (i) on the date hereof the Trust and the Holders are making capital
contributions to SLT Realty Limited Partnership, a Delaware limited partnership
(the "Realty Partnership"), in return for the issuance by the Realty
Partnership to the Trust and to the Holders of Units (as defined in the Limited
Partnership Agreement of the Realty Partnership) of the Realty Partnership
(such Units issued by the Realty Partnership to the Holders on the date hereof
being hereinafter called the "Realty Units") and (ii) on the date hereof the
Corporation and the Holders are making capital contributions to SLC Operating
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), in return for the issuance by the Operating Partnership to the
Corporation and to the Holders of Units (as defined in the Limited Partnership
Agreement of the Operating Partnership) of the Operating Partnership (such
Units issued by the Operating Partnership to the Holders on the date hereof
being hereinafter called the "Operating Units");
WHEREAS, in the event that Firebird Consolidated Partners,
L.P., a Delaware limited partnership ("Firebird"), shall acquire Units of the
Partnerships on or after the date hereof pursuant to Section 6.4 of the
Formation Agreement, then from and after such acquisition Firebird shall be
deemed to be a "Holder" for all purposes of this Agreement and such Units shall
be deemed to be "Units" for all purposes of this Agreement; and
WHEREAS, pursuant to the Formation Agreement the parties
hereto desire to set forth the rights of Starwood and the obligations of the
Trust and the Corporation to cause the registration of the Registrable
Securities pursuant to the Securities Act;
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NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND USAGE.
1.1. DEFINITIONS. As used in this Agreement:
Beneficially Owning. "Beneficially Owning" means owning Trust
Shares directly, indirectly or constructively by a Person through the
application of Section 318(a) of the Code, as modified by Section 856(d)(5) of
the Code, or Section 544 of the Code, as modified by Section 856(h) of the
Code.
Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Commission. "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act.
Continuously Effective. "Continuously Effective", with
respect to a specified registration statement, shall mean that such
registration statement shall not cease to be effective and available for
Transfers of Registrable Securities thereunder for longer than either (i) any
ten (10) consecutive business days, or (ii) an aggregate of fifteen (15)
business days during the period specified in the relevant provision of this
Agreement.
Corporation Shares. "Corporation Shares" shall mean the
shares of Common Stock, par value $.01 per share, of the Corporation.
Demand Registration. "Demand Registration" shall have the
meaning set forth in Section 2.1.
Disinterested Members. "Disinterested Members", when used
with respect to the Trust, has the meaning set forth in the Code of Regulations
of the Trust and, when used with respect to the Corporation, has the meaning
set forth in the By-Laws of the Corporation, in each case as amended from time
to time.
Formation Agreement. "Formation Agreement" shall have the
meaning set forth in the recitals.
Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934 and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
<PAGE> 3
Exchange Rights Agreement. "Exchange Rights Agreement" shall
mean the Exchange Rights Agreement dated the date hereof among the Trust, the
Corporation, the Realty Partnership, the Operating Partnership, Starwood and
the Holders.
Issuance Percentages. "Issuance Percentage", when used with
respect to the Trust, shall mean 95% and, when used with respect to the
Corporation, shall mean 5%; provided that the Trust and the Corporation may
from time to time change the Issuance Percentages based on their joint
determination of the relative values of the Trust Shares and Corporation
Shares.
Majority Selling Holders. "Majority Selling Holders" means
those Selling Holders whose Registrable Securities included in such
registration represent a majority of the Registrable Securities of all Selling
Holders included therein.
Operating Partnership. "Operating Partnership" shall have the
meaning set forth in the recitals.
Operating Units. "Operating Units" shall have the meaning set
forth in the recitals.
Ownership Limit. "Ownership Limit" when used with respect to
Trust Shares, has the meaning set forth in the Declaration of Trust of the
Trust and, when used with respect to the Corporation Shares, has the meaning
set forth in the Restated Articles of Incorporation of the Corporation, in each
case as amended from time to time.
Paired Shares. "Paired Shares" shall mean the shares of Trust
Shares and shares of Corporation Stock which are "paired" pursuant to the
Pairing Agreement dated June 25, 1980 between the Trust and the Corporation, as
it may be amended from time to time.
Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Piggyback Registration. "Piggyback Registration" shall have
the meaning set forth in Section 3.
Realty Partnership. "Realty Partnership" shall have the
meaning set forth in the recitals.
Realty Units. "Realty Units" shall have the meaning set
forth in the recitals.
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<PAGE> 4
Register, Registered and Registration. "Register",
"registered", and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean:
(i) the Paired Shares issued upon exchange of Realty Units and Operating Units
pursuant to the Exchange Rights Agreement, (ii) the Paired Shares issued upon
exchange of Units of the Partnerships issued in exchange for senior debt
pursuant to Section 6.4 of the Formation Agreement; (iii) any Paired Shares or
other securities issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange by the Trust and the Corporation
generally for, or in replacement by the Trust and the Corporation generally of,
such Paired Shares; and (iv) any securities issued in exchange for Paired
Shares in any merger or reorganization of the Trust and the Corporation;
provided, however, that Registrable Securities shall not include any securities
which have theretofore been registered and sold pursuant to the Securities Act
or which have been sold to the public pursuant to Rule 144 or any similar rule
promulgated by the Commission pursuant to the Securities Act, and, provided
further, the Trust and the Corporation shall have no obligation under Sections
2 and 3 to register any Registrable Securities if the Trust and the Corporation
shall deliver to the Holders of such Registrable Securities an opinion of
counsel to the effect that the proposed sale or disposition of all of the
Registrable Securities for which registration was requested does not require
registration under the Securities Act for a sale or disposition in a single
public sale, and offers to remove any and all legends restricting transfer from
the certificates evidencing such Registrable Securities. Notwithstanding
anything to the contrary set forth herein, Registrable Securities shall not
include (x) any Realty Units or Operating Units or (y) any Paired Shares issued
upon exchange of Units issued after the date hereof to any Person (including,
without limitation, any Holder), other than Units described in clause (ii) of
this definition.
Registrable Securities then outstanding. "Registrable
Securities then outstanding" shall mean, with respect to a specified
determination date, the Registrable Securities owned by all Holders on such
date and the Registrable Securities which are issuable upon exchange of Realty
Units and Operating Units owned by all Holders on such date.
Registration Expenses. "Registration Expenses" shall have the
meaning set forth in Section 6.1.
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<PAGE> 5
REIT Requirements. "REIT Requirements shall mean the
requirements for the Trust to (i) qualify as a REIT under the Internal Revenue
Code of 1986, as amended from time to time, and the rules and regulations
promulgated thereunder, (ii) avoid any federal income or excise tax liability,
(iii) retain its status as grandfathered pursuant to Section 132(c)(3) of the
Deficit Reduction Act of 1984 and (iv) retain the benefits of that certain
private letter ruling issued by the Internal Revenue Service to the Trust dated
as of January 4, 1980.
Securities Act. "Securities Act" shall mean the Securities
Act of 1933 and the rules and regulations of the Commission thereunder, all as
the same may be in effect at the time.
Selling Holders. "Selling Holders" shall mean, with respect
to a specified registration pursuant to this Agreement, Holders whose
Registrable Securities are included in such registration.
Shelf Registration. "Shelf Registration" shall have the
meaning set forth in Section 2.2.
Tender Registration. "Tender Registration" shall have the
meaning set forth in Section 2.3.
Transfer. "Transfer" shall mean and include the act of
selling, giving, transferring, creating a trust (voting or otherwise),
assigning or otherwise disposing of (other than pledging, hypothecating or
otherwise transferring as security) (and correlative words shall have
correlative meanings); provided however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer".
Trust Shares. "Trust Shares" shall mean the shares of
Beneficial Interest, $.01 par value, of the Trust.
Underwriters' Representative. "Underwriters' Representative"
shall mean the managing underwriter, or, in the case of a co- managed
underwriting, the managing underwriter designated as the Underwriters'
Representative by the co-managers.
Units. "Units" shall mean Realty Units and Operating Units.
Violation. "Violation" shall have the meaning set forth in
Section 7.1.
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<PAGE> 6
1.2. USAGE.
(i) References to a Person are also references to its assigns
and successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but
which are held of record in the name of a nominee, trustee, custodian, or other
agent, but shall exclude Paired Shares held by a Holder in a fiduciary capacity
for customers of such Person.
(iii) References to a document are to it as amended, waived
and otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits
are to sections hereof or schedules or exhibits hereto, unless the context
otherwise requires.
(v) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(vi) The term "including" and correlative terms shall be
deemed to be followed by "without limitation" whether or not followed by such
words or words of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as a whole.
(viii) The "date of" any notice or request given pursuant to
this Agreement shall be determined in accordance with Section 12.
SECTION 2. DEMAND, SHELF AND TENDER REGISTRATIONS.
2.1. If Starwood shall make a written request to the Trust
and the Corporation, then the Trust and the Corporation shall cause there to be
filed with the Commission a registration statement under the Securities Act (a
"Demand Registration") and (subject to Section 2.9) the Trust and the
Corporation shall include therein all or any portion of the Registrable
Securities as Starwood shall request in such written request; provided,
however, that no request may be made pursuant to this Section 2.1 if within 90
days prior to the date of such request a Demand Registration statement pursuant
to this Section 2.1 shall have
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been declared effective by the Commission. Any request made pursuant to this
Section 2.1 shall be addressed to the attention of the Secretary of each of the
Trust and the Corporation, and shall specify the number of Registrable
Securities to be registered, the intended methods of disposition thereof and
that the request is for a Demand Registration pursuant to this Section 2.1.
2.2. If Starwood shall make a written request to the Trust
and the Corporation, then the Trust and the Corporation shall cause there to be
filed with the Commission a registration statement in accordance with the
Securities Act for an offering on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act (a "Shelf Registration"), and the Trust and
the Corporation shall include therein the Registrable Securities requested by
Starwood. Any request made pursuant to this Section 2.2 shall be addressed to
the attention of the Secretary of each of the Trust and the Corporation, and
shall specify the number of Registrable Securities to be registered, the
possible intended methods of disposition thereof and that the request is for a
Shelf Registration pursuant to this Section 2.2.
2.3. If (i) there is a Paired Share Tender Reduction (as
defined in Section 6 of the Exchange Rights Agreement) and (ii) Starwood shall
make a written request to the Trust and the Corporation, then the Trust and the
Corporation shall cause there to be filed with the Commission a registration
statement under the Securities Act (a "Tender Registration"), and the Trust and
the Corporation shall register and sell pursuant thereto a number of Paired
Shares (such Paired Shares being considered to be "Registrable Securities" for
purposes of this Agreement) equal to the number of Unissued Paired Shares (as
defined in Section 6 of the Exchange Rights Agreement) that Starwood shall
request in such written request. The Trust and the Corporation shall pay the
net proceeds of such sale (after underwriting discounts and commissions) to the
tendering holder of the Delayed Payment Units (as defined in Section 6 of the
Exchange Rights Agreement) pursuant to the Exchange Rights Agreement. Any
request made pursuant to this Section 2.3 shall be addressed to the attention
of the Secretary of each of the Trust and the Corporation, and shall specify
the number of Reduced Paired Shares to be registered, the intended methods of
disposition thereof and that the request is for a Tender Registration pursuant
to this Section 2.3.
2.4. (i) The Trust and the Corporation shall be entitled to
postpone for up to 90 days the filing, effectiveness, supplementing or amending
of any registration statement otherwise required to be prepared and filed
pursuant to this Section 2, if the Board of Trustees of the Trust or the Board
of Directors of the Corporation determines that such registration and the
Transfer of Registrable Securities contemplated thereby would
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interfere with, or require premature disclosure of, any material financing,
acquisition, disposition, reorganization or other transaction involving the
Realty Partnership, the Operating Partnership, the Trust or the Corporation or
any of their respective subsidiaries and the Trust or the Corporation, as the
case may be, promptly gives Starwood notice of such determination. Starwood
and each Holder hereby acknowledges that any notice given by the Trust or the
Corporation pursuant to this Section 2.4(i) shall constitute material
non-public information and that the United States securities laws prohibit any
Person who has material non-public information about a company from purchasing
or selling securities of such company or from communicating such information to
any other Person under circumstances in which it is reasonably foreseeable that
such Person is likely to purchase or sell such securities.
(ii) The Trust and the Corporation shall not be obligated to
file any Demand Registration statement or any Tender Registration statement
pursuant to this Section 2 if, within 30 days after their receipt of the
written request of Starwood the Trust and the Corporation notify Starwood that,
prior to their receipt of such request, they had a plan or intention promptly
to register equity securities under the Securities Act. Holders of Registrable
Securities shall have rights to participate in any such registration on the
terms provided in Section 3 hereof.
(iii) Notwithstanding anything to the contrary contained in
this Agreement, without the consent of the Trust and the Corporation, no
Registrable Securities may be offered or sold pursuant to a registration
statement pursuant to Sections 2 or 3 prior to the earlier of (A) one year from
the date of this Agreement and (B) the consummation of the first underwritten
public offering of Paired Shares by the Trust and the Corporation after the
date of this Agreement. No Holder shall be entitled to participate in any
Piggyback Registration pursuant to which securities registered thereunder are
to be offered or sold prior to the earlier of the events described in clauses
(A) and (B).
2.5. Following receipt of a request for a Demand
Registration, a Shelf Registration or a Tender Registration, the Trust and the
Corporation shall:
(i) File the registration statement with the Commission as
promptly as practicable, and shall use their respective reasonable efforts to
have the registration declared effective under the Securities Act as soon as
reasonably practicable, in each instance giving due regard to the need to
prepare current financial statements, conduct due diligence and complete other
actions that are reasonably necessary to effect a registered public offering.
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(ii) Use their respective reasonable efforts to keep the
relevant registration statement Continuously Effective (x) if a Demand
Registration or a Tender Registration, for up to 30 days or until such earlier
date as of which all the Registrable Securities under the Demand Registration
statement or Tender Registration statement shall have been disposed of in the
manner described in the registration statement and (y) if a Shelf Registration,
until such date as of which all the Registrable Securities under the Shelf
Registration statement have been disposed of in a manner described in the
registration statement. Notwithstanding the foregoing, if for any reason the
effectiveness of a registration pursuant to this Section 2 is suspended or, in
the case of a Demand Registration or a Tender Registration, postponed as
permitted by Section 2.4(i), the relevant foregoing period shall be extended by
the aggregate number of days of such suspension or postponement.
2.6. Notwithstanding anything in this Agreement to the
contrary, (a) in no event will the Trust or the Corporation be obligated to
effect more than a total of four Demand Registrations and Shelf Registrations,
(b) in no event will the Trust or the Corporation be obligated to effect any
Demand Registration for less than 100,000 Paired Shares, (c) in no event will
the Trust or the Corporation be obligated to effect a Demand Registration or a
Tender Registration if the Registrable Securities proposed to be registered
therein shall be covered by a Shelf Registration statement, and (d) no
registration shall be effected under this Agreement and no Transfer of
Registrable Securities may be effected if as a result thereof the Trust would
not satisfy the REIT Requirements in any respect or if such registration or
Transfer would result in any Person Beneficially Owning Paired Shares in excess
of the Ownership Limit. For purposes of the preceding sentence, registration
shall not be deemed to have been effected (i) unless a registration statement
with respect thereto has become effective, or (ii) if after such registration
statement has become effective, the related offer, sale or distribution of
Registrable Securities thereunder is prohibited by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
court for any reason not attributable to Starwood or the Selling Holders and
such prohibition is not thereafter eliminated. If the Trust and the
Corporation shall have complied with their respective obligations under this
Agreement, a right to demand a registration pursuant to this Section 2 shall be
deemed to have been satisfied (A) if a Demand Registration or a Tender
Registration, upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement, and (y) the date as of which such Demand
Registration shall have been Continuously Effective for a period of 30 days,
and (B) if a Shelf Registration, upon the effective date of such Shelf
Registration, provided no stop order or similar order, or
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proceedings for such an order, is thereafter entered or initiated.
2.7. A registration pursuant to this Section 2 shall be on
such appropriate registration form of the Commission as shall be selected by
the Trust and the Corporation and shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request pursuant to Sections 2.1, 2.2 or 2.3,
respectively.
2.8. If any Demand Registration or Shelf Registration
pursuant to Section 2 involves an underwritten offering (whether on a "firm
commitment", "best efforts" or "all reasonable efforts" basis or otherwise),
Starwood shall select the underwriter or underwriters and manager or managers
to administer such underwritten offering; provided, however, that each Person
so selected shall be acceptable to the Trust and the Corporation.
2.9. Whenever the Trust and the Corporation shall effect a
registration pursuant to this Section 2 in connection with an underwritten
offering by one or more Selling Holders of Registrable Securities: (i) if such
Selling Holders have requested the inclusion therein of more than one class of
Registrable Securities and the Underwriters' Representative advises Starwood
that, in its opinion, the inclusion of more than one class of Registrable
Securities would adversely affect such offering, Starwood shall decide which
class of Registrable Securities shall be included therein in such offering and
the related registration and the other class shall be excluded and (ii) if the
Underwriters' Representative advises Starwood that, in its opinion, the amount
of securities requested to be included in such offering (whether by Selling
Holders or others, including the Trust and the Corporation) exceeds the amount
which can be sold in such offering within a price range acceptable to the
Majority Selling Holders, securities shall be included in such offering and the
related registration, to the extent of the amount which can be sold within such
price range in the following order of priority: first, the Registrable
Securities requested to be included in such registration pursuant to this
Section 2, pro rata based on the estimated gross proceeds from the sale
thereof; and second all other securities requested to be included in such
registration.
SECTION 3. PIGGYBACK REGISTRATION.
3.1. If at any time the Trust and the Corporation propose to
register securities under the Securities Act in connection with the public
offering solely for cash on Form S-1, S-2, S-3, or S-11 (or any replacement or
successor forms), the Trust and the Corporation shall promptly give Starwood
written notice of such registration. Upon the written request of each
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<PAGE> 11
Holder given as promptly as practicable but in any event within 20 days
following the date of such notice, the Trust and the Corporation shall cause to
be included in such registration statement and use their respective reasonable
efforts to be registered under the Securities Act all the Registrable
Securities that each such Holder shall have requested to be registered;
provided, however, that such right of inclusion shall not apply to any
registration statement covering an offering of debt securities or convertible
debt securities (any such registration in which Holders participate pursuant to
this Section 3.1 being referred to as a "Piggyback Registration"). The Trust
and the Corporation shall have the absolute right to delay, withdraw or cease
to prepare or file any registration statement for any offering referred to in
this Section 3 without any obligation or liability to Starwood or any Holder,
it being understood that any Registrable Securities previously included in any
such withdrawn Registration Statement shall not cease to be Registrable
Securities by reason of such inclusion or withdrawal.
3.2. If the Underwriters' Representative shall advise the
Trust and the Corporation that, in its opinion, the amount or type of
Registrable Securities requested to be included in such registration would
adversely affect such offering, or the timing thereof, then the Trust and the
Corporation will include in such registration, to the extent of the amount and
class which the Trust and the Corporation are so advised can be sold without
such adverse effect in such offering: first, all securities proposed to be
sold by the Trust and the Corporation for their own accounts; second, the
Registrable Securities requested to be included in such registration by Holders
pursuant to this Section 3, pro rata based on the estimated gross proceeds from
the sale thereof; and third all other securities requested to be included in
such registration.
SECTION 4. REGISTRATION PROCEDURES. Whenever required under
Section 2 or Section 3 to effect the registration of any Registrable
Securities, the Trust and the Corporation shall, as expeditiously as
practicable:
4.1. Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use their respective
reasonable efforts to cause such registration statement to become effective;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Trust and the Corporation shall
furnish to one firm of counsel for the Selling Holders, copies of all such
documents in the form substantially as proposed to be filed with the
Commission.
4.2. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as
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may be necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten offering,
the Trust and the Corporation shall amend the registration statement or
supplement the prospectus whenever required by the terms of the underwriting
agreement entered into pursuant to Section 5.2. If the registration statement
is for a Shelf Registration, the Trust and the Corporation shall amend the
registration statement or supplement the prospectus so that it will remain
current and in compliance with the requirements of the Securities Act for the
period specified in Section 2.5(ii), and if during such period any event or
development occurs as a result of which the registration statement or
prospectus contains a misstatement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, the Trust or the Corporation shall promptly notify each
Selling Holder, amend the registration statement or supplement the prospectus
so that each will thereafter comply with the Securities Act and furnish to each
Selling Holder of Registrable Securities such amended or supplemented
prospectus, which each such Holder shall thereafter use in the Transfer of
Registrable Securities covered by such registration statement. Pending any
such amendment or supplement described in this Section 4.2, each such Holder
shall cease making offers or Transfers of Registrable Shares pursuant to the
prior prospectus. In the event that any Registrable Securities included in a
registration statement subject to, or required by, this Agreement remain unsold
at the end of the period during which the Trust and the Corporation are
obligated to use their respective reasonable efforts to maintain the
effectiveness of such registration statement, the Trust and the Corporation may
file a post-effective amendment to the registration statement for the purpose
of removing such Registrable Securities from registered status.
4.3. Furnish to each Selling Holder of Registrable
Securities, without charge, such numbers of copies of the registration
statement, any pre-effective or post-effective amendment thereto, the
prospectus, including each preliminary prospectus and any amendments or
supplements thereto, in each case in conformity with the requirements of the
Securities Act and the rules thereunder, and such other related documents as
any such Selling Holder may reasonably request in order to facilitate the
disposition of Registrable Securities owned by such Selling Holder.
4.4. Use their respective reasonable efforts (i) to register
and qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such states where an exemption from
registration is not available and as shall be reasonably requested by the
Underwriters' Representative and (ii) to obtain the withdrawal of any order
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suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of the offer
and transfer of any of the Registrable Securities in any state, at the earliest
possible moment; provided, however, that neither the Trust nor the Corporation
shall be required in connection therewith or as a condition thereto to qualify
to do business or to consent to general service of process in any state.
4.5. In the event of any underwritten offering, use their
respective reasonable efforts to enter into and perform their respective
obligations under an underwriting agreement (including indemnification and
contribution obligations of underwriters), in usual and customary form, with
the managing underwriter or underwriters of such offering. The Trust and the
Corporation shall also cooperate with the Majority Selling Holders, and the
Underwriters' Representative for such offering in the marketing of the
Registerable Securities, including making available the officers, accountants,
counsel, premises, books and records of the Trust and the Corporation for such
purpose, but neither the Trust nor the Corporation shall be required to incur
any material out-of-pocket expense pursuant to this sentence.
4.6. Promptly notify each Selling Holder of any stop order
issued or threatened to be issued by the Commission in connection therewith and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered.
4.7. Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide any Selling Holder, any underwriter
participating in such offering and the representatives of such Selling Holder
and Underwriter the reasonable opportunity to discuss the business affairs of
the Trust and the Corporation with their principal executives and independent
public accountants who have certified the audited financial statements included
in such registration statement, in each case all as necessary to enable them to
exercise their due diligence responsibility under the Securities Act; provided,
however, that information that the Trust or the Corporation determine to be
confidential and which the Trust or the Corporation advise such Person in
writing, is confidential shall not be disclosed unless such Person signs a
confidentiality agreement reasonably satisfactory to the Trust and the
Corporation or the related Selling Holder of Registrable Securities agrees to
be responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Trust and the Corporation.
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4.8. Use their respective reasonable efforts to obtain a
so-called "comfort letter" from the independent public accountants of the Trust
and the Corporation, and legal opinions of counsel to the Trust and the
Corporation addressed to the Selling Holders, in customary form and covering
such matters of the type customarily covered by such letters, and in a form
that shall be reasonably satisfactory to Starwood. Delivery of any such opinion
or comfort letter shall be subject to the recipient furnishing such written
representations or acknowledgements as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
4.9. Use their respective reasonable efforts to cause the
Registrable Securities covered by such registration statement (i) if the Paired
Shares are then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or included for a
reasonable period of time after the offering, and (ii) to be registered with or
approved by such other United States or state governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Trust and the Corporation to enable the Selling Holders of Registrable
Securities to consummate the disposition of such Registrable Securities.
4.10. Take such other actions as are reasonably required in
order to expedite or facilitate the disposition of Registrable Securities
included in each such registration.
SECTION 5. HOLDERS' OBLIGATIONS. It shall be a condition
precedent to the obligations of the Trust and the Corporation to take any
action pursuant to this Agreement with respect to the Registrable Securities of
any Selling Holder of Registrable Securities that such Selling Holder shall:
5.1. Furnish to the Trust and the Corporation such
information regarding such Selling Holder, the number of the Registrable
Securities owned by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such Selling
Holder's Registrable Securities, and to cooperate fully with the Trust and the
Corporation in preparing such registration.
5.2. Agree to sell their Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Trust and the Corporation or the other Persons on whose
behalf the registration statement was being filed have agreed to sell their
securities, and to execute the underwriting agreement agreed to by the Majority
Selling Holders (in the case of a registration under Section 2) or the Trust
and the Corporation and the Majority Selling Holders (in the case of a
registration under Section 3).
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SECTION 6. EXPENSES OF REGISTRATION. Expenses in connection
with registrations pursuant to this Agreement shall be allocated and paid as
follows:
6.1. With respect to each Demand Registration, Shelf
Registration and Tender Registration each of the Trust and the Corporation
shall bear and pay all expenses incurred in connection with any registration,
filing, or qualification of Registrable Securities with respect to such
Registration for each Selling Holder, including all registration, filing and
National Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or blue sky laws, all printing expenses, messenger
and delivery expenses, the reasonable fees and disbursements of counsel for the
Trust and the Corporation, and of the independent public accountants for the
Trust and the Corporation, including the expenses of "cold comfort" letters
required by or incident to such performance and compliance (the "Registration
Expenses"), but excluding underwriting discounts and commissions relating to
Registrable Securities (which shall be paid on a pro rata basis by the Selling
Holders) and all fees and expenses of counsel for the Selling Holders;
provided, however, that the Trust and the Corporation shall not be required to
pay for any expenses of any registration proceeding begun pursuant to Section 2
if the registration is subsequently withdrawn (in which case all Selling
Holders shall bear such expenses), unless, in the case of a Demand Registration
or a Shelf Registration, Holders whose Registrable Securities constitute a
majority of the Registrable Securities then outstanding agree that such
withdrawn registration shall have constituted one of the four Demand and Shelf
Registrations available to them under Section 2 hereof. The Trust and the
Corporation each agree between themselves that they shall bear and pay
Registration Expenses in an amount equal to its respective Issuance Percentage
of such Registration Expenses and that they shall reimburse each other to the
extent necessary to cause each of them to so bear and pay such respective
amounts.
6.2. The Trust and the Corporation shall bear and pay all
Registration Expenses incurred in connection with any Piggyback Registrations
pursuant to Section 3 but excluding underwriting discounts and commissions
relating to Registrable Securities (which shall be paid on a pro rata basis by
the Selling Holders) and all fees and expenses of counsel for the Selling
Holders.
SECTION 7. INDEMNIFICATION; CONTRIBUTION. If any Registrable
Securities are included in a registration statement under this Agreement:
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7.1. To the extent permitted by applicable law, each of the
Trust and the Corporation, severally and not jointly, shall indemnify and hold
harmless each Selling Holder, each Person, if any, who controls such Selling
Holder within the meaning of the Securities Act, and each officer, director,
partner and employee of such Selling Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorneys' fees and disbursements and reasonable
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto; or
(ii) The omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading; provided, however, that the indemnification
required by this Section 7.1 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or expense if such settlement is
effected without the consent of the Trust or the Corporation (which consent
shall not be unreasonably withheld), nor shall the Trust or the Corporation be
liable in any such case for any such loss, claim, damage, liability or expense
to the extent that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with information furnished to the Trust or
the Corporation by the indemnified party expressly for use in connection with
such registration; and provided, further, that the indemnity agreement
contained in this Section 7 shall not apply to the extent that any such loss is
based on or arises out of an untrue statement or alleged untrue statement of a
material fact, or an omission or alleged omission to state a material fact,
contained in or omitted from any preliminary prospectus if the final prospectus
shall correct such untrue statement or alleged untrue statement, or such
omission or alleged omission, and a copy of the final prospectus has not been
sent or given to such person at or prior to the confirmation of sale to such
person if an underwriter was under an obligation to deliver such final
prospectus and failed to do so.
7.2. To the extent permitted by applicable law, each Selling
Holder shall indemnify and hold harmless the Trust, the Corporation, each of
the Trustees of the Trust, each of the directors of the Corporation, each of
the officers of the Trust
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or the Corporation who shall have signed the registration statement, each
Person, if any, who controls the Trust or the Corporation within the meaning of
the Securities Act, any other Selling Holder, any controlling Person of any
such other Selling Holder and each officer, director, partner, and employee of
such other Selling Holder and such controlling Person, against any and all
losses, claims, damages, liabilities and expenses (joint and several),
including reasonable attorneys' fees and disbursements and reasonable expenses
of investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing
Persons may otherwise become subject under the Securities Act, the Exchange Act
or other federal or state laws, but only insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any Violation,
in each case to the extent that such Violation arises out of or is based upon
information furnished by such Selling Holder expressly for use in connection
with such registration; provided, however, that (x) the indemnification
required by this Section 7.2 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or expense if such settlement is
effected without the consent of the relevant Selling Holder (which consent
shall not be unreasonably withheld) and (y) in no event shall the amount of any
indemnity under this Section 7.2 exceed the gross proceeds from the applicable
offering received by such Selling Holder.
7.3. Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified
party may make a claim under this Section 7, such indemnified party shall
deliver to the indemnifying party a written notice thereof and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and disbursements and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7 to the extent of such prejudice but shall not relieve the indemnifying party
of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 7. Any fees and expenses incurred by the indemnified
party (including any fees and expenses
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incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within thirty
(30) days of written notice thereof to the indemnifying party (regardless of
whether it is ultimately determined that an indemnified party is not entitled
to indemnification hereunder). Any such indemnified party shall have the right
to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any
time for all such indemnified parties, unless in the reasonable judgment of
such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such action, claim or proceeding, in which event the indemnifying party shall
be obligated to pay the fees and expenses of such additional counsel or
counsels).
7.4. If the indemnification required by this Section 7 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 7:
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
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which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7.1 and Section 7.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
7.5. If indemnification is available under this Section 7,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in this Section 7 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
7.6. The obligations of the Trust, the Corporation and the
Selling Holders of Registrable Securities under this Section 7 shall survive
the completion of any offering of Registrable Securities pursuant to a
registration statement under this Agreement, and otherwise.
SECTION 8. DETERMINATIONS AND INTERPRETATION. All
determinations of the Trust (or the Board of Trustees of the Trust) and the
Corporation (or the Board of Directors of the Corporation) provided for in or
pursuant to this Agreement shall be made by their respective Disinterested
Members, including, without limitation, any determination pursuant to Sections
2.4(i) and 2.7. All interpretations of the terms of this Agreement shall be
resolved on behalf of the Trust and the Corporation by their respective
Disinterested Members.
SECTION 9. HOLDBACK. (a) Each Holder, if so requested by the
Underwriters' Representative in connection with an offering of any securities
covered by a registration statement filed by Trust and the Corporation, whether
or not Holder's
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securities are included therein, shall not effect any public sale or
distribution of Paired Shares or any securities convertible into or
exchangeable or exercisable for Paired Shares, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 15-day period prior to, and during the 180-day period
beginning on, the date such registration statement is declared effective under
the Securities Act by the Commission. In order to enforce the foregoing
covenant, the Trust and the Corporation shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder until the end of such period. Holders of Registrable Securities shall
have the right to participate in any such registration on the terms provided in
Section 3 hereof.
(b) Each of the Trust and the Corporation agrees not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 15-day period prior to and during the 90-day period beginning on the
effective date of any underwritten Demand Registration (except pursuant to (i)
registrations on Form S-8 or any successor form, (ii) registrations on Form S-4
or any successor form and (iii) registrations of securities in connection with
a dividend reinvestment plan on form(s) applicable to such securities) unless
the underwriters managing the registered public offering otherwise agree.
SECTION 10. AMENDMENT, MODIFICATION AND WAIVERS; FURTHER
ASSURANCES.
(i) This Agreement may be amended with the consent of the
Trust and the Corporation and the Trust and the Corporation may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Trust and the Corporation shall have obtained the written
consent of Starwood to such amendment, action or omission to act and no consent
or agreement of any Holder shall be required for such amendment, action or
omission to act.
(ii) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
No written waiver hereunder, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the
provisions being waived and no such waiver in any instance shall constitute a
waiver in any other instance or for any other purpose or impair the right of
the party against whom such waiver
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is claimed in all other instances or for all other purposes to require full
compliance with such provision.
(iii) Each of the parties hereto shall execute all such
further instruments and documents and take all such further action as any other
party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
SECTION 11. ASSIGNMENT; BENEFIT. This Agreement and all of
the provisions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, assigns, executors,
administrators or successors; provided, however, that neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned or
delegated (i) by the Trust and the Corporation without the consent of Starwood
(which consent shall not be unreasonably withheld) or (ii) by a Holder unless
the transferee of the Registrable Securities is a direct or indirect partner of
such Holder.
SECTION 12. MISCELLANEOUS.
12.1. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
regard to the conflict of laws principles thereof.
12.2. NOTICES. All notices and requests given pursuant to
this Agreement shall be in writing and shall be made by hand- delivery,
first-class mail (registered or certified, return receipt requested), confirmed
facsimile or overnight air courier guaranteeing next business day delivery to
the relevant address specified in the Formation Agreement. Except as otherwise
provided in this Agreement, the date of each such notice and request shall be
deemed to be, and the date on which each such notice and request shall be
deemed given shall be: at the time delivered, if personally delivered or
mailed; when receipt is acknowledged, if sent by facsimile; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next business day delivery.
12.3. ENTIRE AGREEMENT; INTEGRATION. This Agreement
supersedes all prior agreements between or among any of the parties hereto with
respect to the subject matter contained herein and therein, and such agreements
embody the entire understanding among the parties relating to such subject
matter.
12.4. SECTION HEADINGS. Section headings are for convenience
of reference only and shall not affect the meaning of any provision of this
Agreement.
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12.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all of which
shall together constitute one and the same instrument. All signatures need not
be on the same counterpart.
12.6. SEVERABILITY. If any provision of this Agreement shall
be invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity and enforceability of the remaining provisions of this
Agreement, unless the result thereof would be unreasonable, in which case the
parties hereto shall negotiate in good faith as to appropriate amendments
hereto.
12.7. TERMINATION. This Agreement may be terminated at any
time by a written instrument signed by the Trust, the Corporation and Starwood.
Unless sooner terminated in accordance with the preceding sentence, this
Agreement (other than Section 7 hereof) shall terminate in its entirety on such
date as there shall be (a) no Registrable Securities outstanding, and (b) no
securities outstanding which are convertible or exchangeable into Registrable
Securities; provided that any Paired Shares previously subject to this
Agreement shall not be Registrable Securities following the sale of any such
shares in an offering registered pursuant to this Agreement.
12.8. HOTEL INVESTORS TRUST. The parties hereto understand
and agree that the name "Hotel Investors Trust" is a designation of the Trust
and its Trustees (as Trustees but not personally) under the Declaration of
Trust, and all persons dealing with the Trust shall look solely to the Trust's
assets for the enforcement of any claims against the Trust, and that the
Trustees, officers, agents and security holders of the Trust assume no personal
liability for obligations entered into on behalf of the Trust, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations.
12.9. OTHER REGISTRATION RIGHTS. The Trust and the
Corporation will not grant directly or indirectly to any Persons the right to
request the Trust and the Corporation to register any equity securities of the
Trust and the Corporation, or any securities convertible or exchangeable into
or exercisable for such securities, without the prior written consent of
Starwood (which consent shall not be unreasonably withheld). Each of the Trust
and the Corporation hereby severally represents and warrants that it has not
previously entered into any agreement with respect to the Paired Shares
granting any registration rights to any Person.
12.10. SUBMISSION TO JURISDICTION. Each of the parties
hereto and each of the Holders irrevocably submits and consents to the
jurisdiction of the United States District Court
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for the Southern District of New York and United States District Court for the
Central District of California in connection with any action or proceeding
arising out of or relating to this Agreement, and irrevocably waives any
immunity from jurisdiction thereof and any claim of improper venue, forum non
conveniens or any similar basis to which it might otherwise be entitled in any
such action or proceeding.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first written above.
HOTEL INVESTORS TRUST
a Maryland real estate investment
trust
By:________________________________
Name:
Title:
HOTEL INVESTORS CORPORATION
a Maryland corporation
By:________________________________
Name:
Title:
STARWOOD CAPITAL GROUP, L.P.
By: BSS CAPITAL PARTNERS, L.P.
a Delaware limited partnership
General Partner
By: STERNLICHT HOLDINGS II, INC.
a Delaware corporation
General Partner
By:________________________
Name:
Title:
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SCHEDULE A
TO
REGISTRATION RIGHTS AGREEMENT
Holders
Berl Holdings, L.P.
Starwood-Apollo Hotel Partners VIII, L.P.
Starwood-Apollo Hotel Partners IX, L.P.
Starwood-Nomura Hotel Investors, L.P.
Starwood\Wichita Investors, L.P.
Starwood-Huntington Partners, L.P.
Woodstar Partners I, L.P.
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