<PAGE> 1
As filed with the Securities and Exchange Commission on March 29, 1996
Registration Nos. 33-64335 and 33-64335-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
AMENDMENT NO. 4 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
<S> <C>
(Exact name of registrant as specified (Exact name of registrant as specified
in its governing instruments) in its governing instruments)
11835 West Olympic Blvd., Suite 695 11835 West Olympic Blvd., Suite 675
Los Angeles, California 90064 Los Angeles, California 90064
(310) 575-3900 (310) 575-3900
(Address of principal executive offices) (Address of principal executive offices)
</TABLE>
_______________________
<TABLE>
<CAPTION>
<S> <C>
Maryland Maryland
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization) of incorporation or organization)
52-0901263 52-1193298
(I.R.S. employer identification no.) (I.R.S. employer identification no.)
JEFFREY C. LAPIN KEVIN E. MALLORY
President and Chief Operating Officer Executive Vice President
11835 West Olympic Blvd., Suite 695 11835 West Olympic Blvd., Suite 675
Los Angeles, California 90064 Los Angeles, California 90064
(310) 575-3900 (310) 575-3900
(Name and address of agent for service) (Name and address of agent for service)
COPIES TO:
SHERWIN L. SAMUELS, Esq. JAMES M. ASHER, Esq.
Sidley & Austin ROBERT E. KING, JR., Esq.
555 West Fifth Street Rogers & Wells
Los Angeles, California 90013 200 Park Avenue
(213) 896-6000 New York, New York 10166
(212) 878-8000
</TABLE>
_______________________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
_______________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum Amount of
Title of each class of securities to be registered Aggregate Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares of beneficial interest, $0.01 par
value, of Starwood Lodging Trust Paired with
Shares of common stock, $0.01 par value, of
Starwood Lodging Corporation
Convertible Notes
Warrants to Purchase Debt Securities,
Preferred Shares or Paired Common Shares
Shares of Preferred Stock, $0.01 par value, of
Starwood Lodging Trust which may be
paired with
Shares of Preferred Stock, $0.01 par value, of
Starwood Lodging Corporation
Debt Securities
Total $500,000,000 $172,400
==============================================================================================================
</TABLE>
_______________________
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE> 3
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED MARCH __, 1996
PROSPECTUS
STARWOOD LODGING
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
$400,000,000 $100,000,000
COMMON STOCK, WARRANTS, PREFERRED
STOCK AND DEBT SECURITIES
Starwood Lodging Trust (the "Trust") and Starwood Lodging Corporation
(the "Corporation" and, with the Trust, the "Company") may from time to time
offer in one or more series securities with an aggregate public offering price
of up to $500,000,000 (or its equivalent in another currency based on the
exchange rate at the time of sale) in amounts, at prices and on terms to be
determined at the time of offering, including: (i) shares of beneficial
interest, $.01 par value, of the Trust (the "Trust Shares") and shares of
common stock, $.01 par value, of the Corporation (the "Corporation Shares")
which are "paired" and traded as units consisting of one Trust Share and one
Corporation Share (the "Paired Common Shares"); (ii) convertible notes of the
Trust and the Corporation (the "Convertible Notes"); (iii)(A) warrants to
purchase Trust Shares and warrants to purchase Corporation Shares which are
"paired" and traded as units consisting of one warrant to purchase Trust
Shares and one warrant to purchase a like number of Corporation Shares,
(B) warrants to purchase shares of preferred stock of the Trust or the
Corporation, or (C) warrants to purchase debt securities of the Trust or the
Corporation (collectively, the "Warrants"); (iv) shares of preferred stock,
$.01 par value, of the Trust (the "Trust Preferred Shares") and shares of
preferred stock, $.01 par value, of the Corporation (the "Corporation
Preferred Shares" and, with the Trust Preferred Shares, the "Preferred Shares")
which may, but are not required to, be "paired" with preferred stock of the
other entity; and (v) unsecured debt securities of the Trust or the Corporation
(the "Debt Securities"). The Trust or the Corporation may from time to time
offer in one or more series unsecured Debt Securities which may, but are not
required to, be paired with Debt Securities of the other entity. The Paired
Common Shares, Convertible Notes, Warrants, Preferred Shares and Debt
Securities, (collectively, the "Securities") may be offered, separately or
together, in separate series in amounts, at prices and on terms to be set
forth in one or more supplements to this Prospectus (each a "Prospectus
Supplement"). Of the $500,000,000 aggregate public offering price of
Securities, up to $400,000,000 will be offered by the Trust and up to
$100,000,000 will be offered by the Corporation.
The specific terms of the Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Paired Common
Shares, any initial public offering price; (ii) in the case of Convertible
Notes, any initial public offering price; (iii) in the case of Warrants, the
duration, offering price, securities purchasable upon exercise, exercise price
and detachability, if applicable; (iv) in the case of Preferred Shares, the
specific title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public offering price; and
(v) in the case of Debt Securities, the specific title, aggregate principal
amount, currency, form (which may be registered or bearer, or certificated or
global), authorized denominations, maturity, rate (or manner of calculation
thereof) and time of payment of interest, terms for redemption at the option of
the issuer or repayment at the option of the holder, terms for sinking fund
payments, covenants and any initial public offering price. In addition, such
specific terms may include limitations on direct or beneficial ownership and
restrictions on transfer of the Securities, in each case as may be appropriate
to preserve the status of the Trust as a real estate investment trust ("REIT")
for United States federal income tax purposes.
The applicable Prospectus Supplement will also contain information,
where applicable, relating to any listing on a securities exchange of the
securities covered by such Prospectus Supplement.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 4
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE GAMING
CONTROL BOARD HAS PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES
OFFERED HEREBY. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is March __, 1996.
The Securities may be offered directly, through agents designated from
time to time by the Trust or the Corporation or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such series of Securities.
-2-
<PAGE> 5
AVAILABLE INFORMATION
The Trust and the Corporation are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports, proxy or information
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy or information statements and other
information can be inspected and copied at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, New York, New York 10048
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Such reports, proxy statements and other
information concerning the Trust and the Corporation can also be inspected at
the offices of the New York Stock Exchange, Public Reference Section, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the contents of any contract or other documents are
not necessarily complete, and in each instance, reference is made to the copy
of such contract or documents filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Trust, the Corporation
and the Securities offered hereby, reference is made to the Registration
Statement and exhibits thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (SEC File Nos. 1-6828 and
1-7959) with the Commission under the Securities Act and the Exchange Act are
incorporated in this Prospectus by reference and are made a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (as amended by Form 10-K/A filed on March 29, 1996).
2. The Company's Current Reports on Form 8-K, dated January 4, 1996
(as amended by Form 8-K/A filed on March 19, 1996) and February 5, 1996
(as amended by Form 8-K/A filed on February 12, 1996).
3. The description of the Company's Paired Common Shares contained
in the Company's Registration Statement on Form 8-A, filed on October 3, 1986
and any amendments or reports filed for the purpose of updating such
descriptions which have been filed by the Company with the Commission.
-3-
<PAGE> 6
Each document filed by the Trust or the Corporation subsequent to the
date of this Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act and prior to termination of the offering of all Securities to
which this Prospectus relates shall be deemed to be incorporated by reference
in this Prospectus and shall be part hereof from the date of filing of such
document. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously-filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of
Securities or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any accompanying Prospectus Supplement. Subject to the
foregoing, all information appearing in this Prospectus and each accompanying
Prospectus Supplement is qualified in its entirety by the information appearing
in the documents incorporated by reference.
Copies of all documents incorporated by reference, other than exhibits
to such documents not specifically incorporated by reference therein, will be
provided without charge to each person to whom this Prospectus is delivered,
upon oral or written request to Jayne Gordon, 11835 West Olympic Boulevard,
Suite 695, Los Angeles, California 90064.
-4-
<PAGE> 7
THE COMPANY
The Company was reorganized, effective January 1, 1995, to combine the
hotel investment and operating businesses of the Company with certain hotel
investments of Starwood Capital Group, L.P. and certain of its affiliates
(collectively, "Starwood Capital"). Management believes that the Company's
unique "paired share" ownership structure gives it a competitive advantage over
other hotel REITs and other hotel owner/operators with respect to owning and
operating hotels, as discussed below. The Company has owned hotel assets since
1969 and has managed hotel assets since 1980. Starwood Capital has been an
active opportunistic investor in the hotel industry over the last three years.
As of December 31, 1995, the Company owned, operated and managed a
geographically diversified portfolio of hotel assets (the "Hotel Assets"),
including fee, ground lease and first mortgage interests in 49 hotel
properties, comprising over 10,500 rooms located in 21 states and the District
of Columbia. Thirty-four of such hotels are operated under licensing or
franchise agreements with national hotel organizations, including
Sheraton(TM), Marriott(TM), Doubletree(TM), Omni(TM), Radisson(TM),
Embassy Suites(TM), Holiday Inn(TM), Residence Inn(TM), Days Inn(TM), Best
Western(TM), Vagabond Inn(TM), Ramada(TM), Quality Inn(TM) and Harvey(TM).
Substantially all of the Company's interests in the Hotel Assets are
held by and its operations conducted through SLT Realty Limited Partnership (the
"Realty Partnership") or SLC Operating Partnership (the "Operating
Partnership"), respectively. Accordingly, substantially all of the income of
the Trust and the Corporation is derived from distributions of the Realty
Partnership and the Operating Partnership, respectively. The Company is the
sole general partner of each of the Realty Partnership and the Operating
Partnership and as of December 31, 1995, owned a controlling interest of
approximately 69.9% in each of the Realty Partnership and Operating Partnership.
The remaining 30.1% interest in each of the Realty Partnership and the Operating
Partnership is owned by Starwood Capital. As of December 31, 1995, Starwood
Capital owned 30.5% of the equity interests of the Company on a fully diluted
basis.
The Company's paired share ownership structure is unique for a hotel
REIT because its shareholders own both the owner, the Trust, and the operator,
the Corporation, of the Company's hotels. Therefore, the Company's
shareholders retain the economic benefits of both the lease payments received
by the Trust and the operating profits realized by the Corporation while
maintaining the tax benefits of the Trust's REIT status. The pairing
arrangement creates total commonality of ownership, as the shares of beneficial
interest of the Trust (the "Trust Shares") and the shares of common stock of
the Corporation (the "Corporation Shares") are paired on a one for one basis
and may only be held or transferred as units consisting of one Trust Share and
one Corporation Share ("Paired Common Shares").
The Trust was organized in 1969 as a Maryland real estate investment
trust. The Trust's executive offices are located at 11845 West Olympic
Boulevard, Suite 695, Los Angeles, California 90064; telephone (310) 575-3900.
The Corporation is a Maryland corporation formed in 1980. The
Corporation's executive offices are located at 11845 West Olympic Boulevard,
Suite 675, Los Angeles, California 90064; telephone (310) 575-3900.
USE OF PROCEEDS
The Company will use the net proceeds of any sale of Securities to (i)
either repay loans owing to the Realty Partnership or the Operating
Partnership, or (ii) make contributions to the Realty Partnership and the
Operating Partnership in return for securities of the Realty Partnership and
the Operating Partnership. The allocation of the net proceeds of any sale of
Securities between the Realty Partnership and the Operating Partnership shall
be set forth in the Prospectus Supplement relating to the sale of such
Securities.
Except as otherwise provided in the applicable Prospectus Supplement,
the Company, the Realty Partnership and the Operating Partnership intend to use
any such net proceeds for working capital and general business purposes, which
may include the reduction of certain outstanding indebtedness, the financing of
future acquisitions and the improvement of certain properties in their
portfolio.
-5-
<PAGE> 8
Pending application of the net proceeds, the Realty Partnership and
the Operating Partnership will invest such portion of the net proceeds in
interest-bearing accounts and short-term, interest-bearing securities, which,
in the case of the Realty Partnership, are consistent with the Trust's
intention to qualify for taxation as a REIT. Such investments may include, for
example, obligations of the Government National Mortgage Association, other
governmental and government agency securities, certificates of deposit,
interest-bearing bank deposits and mortgage loan participations.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
2.31x .74x(1) .54x(1) (.39x)(1) (.34x)(1) (.68x)(1)
</TABLE>
(1) Earnings were inadequate to cover fixed charges by $27,586,000 in
1990, $22,084,000 in 1991, $19,743,000 in 1992, $7,032,000 in 1993
and $4,663,000 in 1994. These deficiencies occurred prior to the
Reorganization in January 1995 and the public offering of Paired
Common Shares in July 1995.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings represent pretax income
from continuing operations. Fixed charges consist of interest expense
(including interest costs capitalized) and amortization of debt issuance costs.
To date, the Company has not issued any preferred stock; therefore, the ratios
of earnings to combined fixed charges and preferred stock dividends are the same
as the ratios presented above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under one or more indentures (an
"Indenture"), in each case among the Trust or the Corporation, as the case may
be, the Corporation, as guarantor (if applicable), and a trustee (a "Trustee").
Any Indenture will be subject to, and governed by, the Trust Indenture Act of
1939, as amended (the "TIA"). The statements made hereunder relating to any
Indenture and the Debt Securities to be issued thereunder are summaries of the
anticipated provisions thereof and do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Indentures and such Debt Securities.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Trust
or the Corporation, as the case may be, and will either rank equally with all
other unsecured and unsubordinated indebtedness of the issuing entity ("Senior
Securities") or, if so provided in the applicable Prospectus Supplement, be
subordinated in right of payment to the prior payment in full of the Senior
Debt as defined below) of the issuing entity as described under
"--Subordination" ("Subordinated Securities"). The Debt Securities may be
issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time in or pursuant to authority
granted by a resolution of the governing board of the Trust or the Corporation,
respectively, or as established in one or more indentures supplemental to the
applicable Indenture. All Debt Securities of one series need not be
-6-
<PAGE> 9
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series.
Debt securities issued by the Trust may be guaranteed by the
Corporation; however, the Trust may not guarantee Debt Securities issued by the
Corporation.
It is anticipated that any Indenture will provide that there may be
more than one Trustee thereunder, each with respect to one or more series of
Debt Securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of Debt Securities, and a successor Trustee may
be appointed to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee, and, except as otherwise indicated herein, any action described
herein to be taken by a Trustee may be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Debt Securities for
which it is Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) whether such Debt Securities are Senior Securities or
Subordinated Securities;
(4) if such Debt Securities will be issued by the Trust, whether
such Debt Securities will be guaranteed by the Corporation;
(5) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof, or (if applicable) the portion of the principal
amount of such Debt Securities that is convertible into Paired
Common Shares or Preferred Shares, or the method by which any
such portion shall be determined;
(6) if convertible, the terms on which such Debt Securities are
convertible, including the initial conversion price or rate
and the conversion period and any applicable limitations on
the ownership or transferability of the Paired Common Shares
or Preferred Shares receivable on conversion;
(7) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(8) the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(9) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which
any such interest will be payable, the record dates for such
interest payment dates, or the method by which any such date
shall be determined, the person to whom such interest shall be
payable, and the basis upon which interest shall be calculated
if other than that of a 360-day year of twelve 30-day months;
-7-
<PAGE> 10
(10) the place or places where the principal of (and premium, if
any) and interest, if any, on such Debt Securities will be
payable, such Debt Securities may be surrendered for
conversion or registration of transfer or exchange and where
notices or demands to or upon the Trust or the Corporation, as
the case may be, in respect of such Debt Securities, any
applicable Guarantees and the applicable Indenture may be
served;
(11) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities may be redeemed, as a whole or in part, at the
option of the Trust or the Corporation, as the case may be, if
the issuer is to have such an option;
(12) the obligation, if any, of the issuer to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and
the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, as a whole
or in part, pursuant to such obligation;
(13) if other than United States dollars, the currency or
currencies in which such Debt Securities are denominated and
payable, which may be a foreign currency or units of two or
more foreign currencies or a composite currency or currencies,
and the terms and conditions relating thereto;
(14) whether the amount of payments of principal of (and premium,
if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on
a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
(15) the events of default or covenants of such Debt Securities, to
the extent different from or in addition to those described
herein;
(16) whether such Debt Securities will be issued in certificated
and/or book-entry form;
(17) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and terms and
conditions relating thereto;
(18) the applicability, if any, of the defeasance and covenant
defeasance provisions described herein, or any modification
thereof;
(19) whether and under what circumstances the Trust or the
Corporation, as the case may be, will pay additional amounts
on such Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether such issuer will have
the option to redeem such Debt Securities in lieu of making
such payment; and
(20) any other terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). If material or applicable,
special United States federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable Prospectus Supplement.
-8-
<PAGE> 11
Except as described under "Merger, Consolidation or Sale" or as may be
set forth in any Prospectus Supplement, an Indenture will not contain any other
provisions that would limit the ability of either the Trust or the Corporation
to incur indebtedness or that would afford holders of the Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving the Trust or the Corporation, the management of the Trust or the
Corporation, or any affiliate of any such party, (ii) a change of control, or
(iii) a reorganization, restructuring, merger or similar transaction involving
the Trust or the Corporation that may adversely affect the holders of the Debt
Securities. Restrictions on ownership and transfers of the Paired Common
Shares and Preferred Shares are designed to preserve the Trust's status as a
REIT and, therefore, may act to prevent or hinder a change of control. See
"Description of Paired Common Shares--Ownership Limits; Restrictions on
Transfer; Repurchase and Redemption of Shares" and "Description of Preferred
Shares--Ownership Limits; Restrictions on Transfer; Repurchase and Redemption
of Shares." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the events of default or covenants that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
GUARANTEES
The Corporation may unconditionally and irrevocably guarantee, on a
senior or subordinated basis, the due and punctual payment of principal of,
premium, if any, and interest on Debt Securities issued by the Trust, and the
due and punctual payment of any sinking fund payments thereon, when and as the
same shall become due and payable, whether at a maturity date, by declaration of
acceleration, call for redemption or otherwise. The applicability and terms of
any such guarantee relating to a series of Debt Securities will be set forth in
the Prospectus Supplement relating to such Debt Securities.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement,
the Debt Securities of any series which are registered securities (other than
registered securities issued in global form, which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof.
Unless otherwise specified in the applicable Prospectus Supplement,
the principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee, the
address of which will be stated in the applicable Prospectus Supplement,
provided that, at the option of the Trust or the Corporation, as the case may
be, payment of interest may be made by check mailed to the address of the
person entitled thereto as it appears in the applicable register for such Debt
Securities or by wire transfer of funds, provided that payment by wire transfer
of immediately available funds will be required with respect to principal of
(and premium, if any) and interest on all Global Securities.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the relevant regular record date
and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the applicable
Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt
-9-
<PAGE> 12
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion or registration of transfer thereof at the corporate
trust office of the Trustee referred to above. Every Debt Security surrendered
for conversion, registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be
made for any registration of transfer or exchange of any Debt Securities, but
the Trustee, the Trust or the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. If the applicable Prospectus Supplement refers to any transfer
agent (in addition to the Trustee) initially designated by the Trust or the
Corporation, as the case may be, with respect to any series of Debt Securities,
such entity may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
except that the Trust or the Corporation, as the case may be, will be required
to maintain a transfer agent in each place of payment for such series. The
Trust or the Corporation, as the case may be, may at any time designate
additional transfer agents with respect to any series of Debt Securities.
Neither the Trust, the Corporation nor the Trustee shall be required
(i) to issue, register the transfer of or exchange any Debt Security if such
Debt Security may be among those selected for redemption during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of the Debt Securities to be redeemed and ending at the
close of business on (A) if such Debt Securities are issuable only as
registered securities, the day of the mailing of the relevant notice of
redemption and (B) if such Debt Securities are issuable as bearer securities,
the day of the first publication of the relevant notice of redemption or, if
such Debt Securities are also issuable as registered securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any registered security so selected for
redemption in whole or in part, except, in the case of any registered security
to be redeemed in part, the portion thereof not to be redeemed, or (iii) to
exchange any bearer security so selected for redemption except that such a
bearer security may be exchanged for a registered security of that series and
like tenor, provided that such registered security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Debt Security which has been surrendered for repayment at the
option of the holder, except the portion, if any, of such Debt Security not to
be so repaid.
MERGER, CONSOLIDATION OR SALE
Any of the Trust and the Corporation may consolidate with, or sell,
lease or convey all or substantially all of its assets to, or merge with or
into, any other entity, provided that (a) either the Trust or the Corporation,
as the case may be, shall be the continuing entity, or the successor entity (if
other than the Trust or the Corporation, as the case may be) formed by or
resulting from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of (and
premium, if any) and interest on all the Debt Securities and the due and
punctual performance and observance of all of the covenants and conditions
contained in the applicable indenture (b) immediately after giving effect to
such transaction, no event of default under the indentures, and no event which,
after notice or the lapse of time, or both, would become such an event of
default, shall have occurred and be continuing; and (c) an officer's certificate
and legal opinion covering such conditions shall be delivered to the Trustee.
If this Prospectus is being delivered in connection with a series of Debt
Securities that provides for the optional redemption, prepayment or conversion
of such Debt Securities upon the occurrence of a change of control of the
Company, the applicable Prospectus Supplement will disclose: (i) the effects
that such provisions may have in deterring certain mergers, tender offers or
other takeover attempts, as well as any possible adverse effect on the market
price of the Company's securities or the ability to obtain additional financing
in the future; (ii) that the Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other applicable securities laws in
connection with such provisions and any related offers by the Company and, to
the extent that convertible securities are the subject of a Prospectus
Supplement, that the Company will comply with Rule 13e-4 under the Exchange
Act; (iii) whether the occurrence of the specified events may give rise to
cross-defaults on other indebtedness such that payment on such Debt Securities
may be effectively subordinated; (iv) any limitations on the Company's
financial or legal ability to repurchase such Debt Securities upon the
triggering of an event risk provision requiring such a repurchase or offer to
repurchase; (v) the impact, if any, under the governing instrument of the
failure to repurchase, including whether such failure to make any required
repurchases in the event of that change of control will create an event of
default with respect to such Debt Securities or will become an event of default
only after the continuation of such failure for a specified period of time
after written notice is given to the Company by the trustee or to the Company
and the trustee by the holders of a specified percentage in aggregate principal
amount of such Debt Securities then outstanding; (vi) that there can be no
assurance that sufficient funds will be available at the time of the triggering
of an event risk provision to make any required repurchases; (vii) if such Debt
Securities are to be subordinated to other obligations of the Company or its
subsidiaries that would be accelerated upon the triggering of a change in
control, fundamental change or poison put feature, the material effect thereof
on the change in control, fundamental change or poison put option and such Debt
Securities; (viii) the extent that there is a definition of "Change in Control"
that includes the concept of "all or substantially all," a quantification of
such term or, in the alternative, the established meaning of the phrase under
the applicable governing law of the Indenture. If an established meaning for
the phrase is not available, then the effects of such an uncertainty on the
ability of a holder of such Debt Securities to determine when a "Change of
Control" has occurred; and (ix) if applicable, whether the "Change of Control"
provisions will be triggered if change in control of the Board of Directors
occurs as a result of a proxy contest involving the solicitation of revocable
proxies.
CERTAIN COVENANTS
Existence. Except as permitted under "--Merger, Consolidation or
Sale," each of the Trust and the Corporation will be required to do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that each of the Trust and
the Corporation shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business.
Maintenance of Properties. Each of the Trust and the Corporation will
be required to cause all of its material properties used or useful in the
conduct of its business or the business of any subsidiary to be maintained
-10-
<PAGE> 13
and kept in good condition, repair and working order and supplied with all
necessary equipment and to cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Trust or the Corporation, as the case may be, may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that each of the Trust and the
Corporation shall not be required to continue the operation or maintenance of
any such property or prevented from disposing of such property if it determines
that such discontinuance or disposal is desirable in the conduct of the
business.
Insurance. Each of the Trust and the Corporation will be required to,
and will be required to cause each of its subsidiaries to, keep all of its
insurable properties insured against loss or damage at least equal to their
then full insurable value with insurers of recognized responsibility.
Payment of Taxes and Other Claims. Each of the Trust and the
Corporation, as the case may be, will be required to pay or discharge or cause
to be paid or discharged before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges levied or imposed upon it
or any subsidiary or upon its income, profits or property or that of any
subsidiary, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a material lien upon the property of the Trust,
the Corporation or any subsidiary; provided, however, that the Trust and the
Corporation, as the case may be, shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Provision of Financial Information. Whether or not the Trust or the
Corporation, as the case may be, is subject to Section 13 or 15(d) of the
Exchange Act, the Trust or the Corporation, as the case may be, will, be
required within 15 days of each of the respective dates by which the Company
would have been required to file annual reports, quarterly reports and other
documents with the Commission if the Company were so subject to (i) transmit by
mail to all Holders of its Debt Securities, as their names and addresses appear
in the security register for such Debt Securities, without cost to such
Holders, copies of the annual reports and quarterly reports which the Trust or
the Corporation, as the case may be, would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Trust or
the Corporation, as the case may be, were subject to such Sections and (ii)
file with any Trustee copies of the annual reports, quarterly reports and other
documents which the Trust or the Corporation, as the case may be, would have
been required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act if the Trust or the Corporation, as the case may be, were
subject to such Sections and (iii) promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective holder.
Additional Covenants. Any additional or different covenants of the
Trust or the Corporation with respect to any series of Debt Securities will be
set forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (b) default in the payment of the principal of (or
premium, if any, on) any Debt Security of such series at its maturity; (c)
default in making any sinking fund payment as required for any Debt Security of
such series; (d) default in the performance, or breach, of any other covenant
of the Trust or the Corporation contained in the applicable Indenture (other
than a covenant added to such Indenture solely for the benefit of a series of
Debt Securities issued thereunder other than such series), such default having
continued for 60 days after written notice as provided in such Indenture; (e)
default in the payment of an aggregate principal amount exceeding a specified
amount of any evidence of indebtedness of the Trust or the Corporation, as the
case may be, or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
-11-
<PAGE> 14
resulted in the acceleration of the maturity of such indebtedness, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled; (f) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Trust or the
Corporation, as the case may be, or any Significant Subsidiary or any of their
respective property; and (g) any other event of default provided with respect
to a particular series of Debt Securities. The term "Significant Subsidiary"
means each significant subsidiary (as defined in Regulation S-X promulgated
under the Securities Act) of the Trust or the Corporation, as the case may be.
If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the holders of not less than 25%
in principal amount of the outstanding Debt Securities of that series may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all of the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Trust or the Corporation, as the case may be (and to the
applicable Trustee if given by the holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then outstanding under any Indenture, as the case may
be) has been made, but before a judgment or decree for payment of the money due
has been obtained by the applicable Trustee, the holders of not less than a
majority in principal amount of outstanding Debt Securities of such series (or
of all Debt Securities then outstanding under the applicable Indenture, as the
case may be) may rescind and annul such declaration and its consequences if (a)
the Trust or the Corporation, as the case may be, shall have deposited with the
applicable Trustee all required payments of the principal of (and premium, if
any) and interest on the Debt Securities of such series (or of all Debt
Securities then outstanding under any Indenture, as the case may be), plus
certain fees, expenses, disbursements and advances of the applicable Trustee
and (b) all events of default, other than the non-payment of accelerated
principal of (or specified portion thereof), with respect to Debt Securities of
such series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) have been cured or waived as provided in the
Indenture. Any Indenture will also provide that the holders of not less than a
majority in principal amount of the outstanding Debt Securities of any series
(or of all Debt Securities then outstanding under the applicable Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security or such series or (y) in
respect of a covenant or provision contained in the applicable Indenture that
cannot be modified or amended without the consent of the holder of each
outstanding Debt Security affected thereby.
Each Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default has been cured or waived; provided, however, that such Trustee may
withhold notice to the holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal
of (or premium, if any) or interest an any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if specified responsible officers of such Trustee consider such
withholding to be in the interest of such holders.
Each Indenture will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
the applicable Indenture or for any remedy thereunder, except in the case of
failure of the applicable Trustee, for 60 days, to act after it has received a
written request to institute proceedings in respect of an event of default from
the holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it. This provision will not prevent, however, any holder of
Debt Securities from instituting suit for the enforcement of payment of the
principal of (and premium, if any) and interest on such Debt Securities at the
respective due dates thereof.
Subject to provisions in each Indenture relating to its duties in case
of default, no Trustee will be under any obligation to exercise any of its
rights or powers under an Indenture at the request or direction of any holders
-12-
<PAGE> 15
of any series of Debt Securities then outstanding under such Indenture, unless
such holders shall have offered to the Trustee thereunder reasonable security
or indemnity. The holders of not less than a majority in principal amount of
the outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under an Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the applicable Trustee, or of exercising any trust or power
conferred upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable Indenture, which
may involve such Trustee in personal liability or which may be unduly
prejudicial to the holders of Debt Securities of such series not joining
therein.
Within 120 days after the close of each fiscal year, the Trust or the
Corporation, as the case may be, will be required to deliver to each Trustee a
certificate, signed by one of several specified officers of the Company,
stating whether or not such officer has knowledge of any default under the
applicable Indenture and, if so, specifying each such default and the nature
and status thereof.
MODIFICATION OF THE INDENTURES
Modifications and amendments of an Indenture will be permitted to be
made only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities or series of outstanding
Debt Securities which are affected by such modification or amendment, provided,
however, that no such modification or amendment may, without the consent of the
holder of each such Debt Security affected thereby: (a) change the stated
maturity of the principal of, or premium (if any) or any installment of
interest on, any such Debt Security; (b) reduce the principal amount of, or the
rate or amount of interest on, or any premium payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt
Security; (c) change the place of payment, or the coin or currency, for payment
of principal of, premium, if any, or interest on any such Debt Security; (d)
impair the right to institute suit for the enforcement of any payment on or
with respect to any such Debt Security; (e) reduce the above-stated percentage
of outstanding Debt Securities of any series necessary to modify or amend the
applicable Indenture, to waive compliance with certain provisions thereof or
certain defaults and consequences thereunder or to reduce the quorum or voting
requirements set forth in such Indenture; (f) modify any of the provisions set
forth in such Indenture relating to subordination; (g) change the redemption
provisions set forth in such Indenture in a manner adverse to the holders of
Debt Securities; or (h) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the holder of such Debt Security.
The holders of not less than a majority in principal amount of a
series of outstanding Debt Securities have the right to waive compliance by the
Trust or the Corporation, as the case may be, with certain covenants relating
to such series of Debt Securities in the Indenture.
Modifications and amendments of an Indenture will be permitted to be
made by the Trust or the Corporation, as the case may be, and the respective
Trustee thereunder without the consent of any holder of Debt Securities for any
of the following purposes: (i) to evidence the succession of another person to
the Trust, or the Corporation, as the case may be, as obligor under such
Indenture; (ii) to add to the covenants of the Trust or the Corporation, as the
case may be, for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Trust or the
Corporation, as the case may be, in such Indenture; (iii) to add events of
default for the benefit of the holders of all or any series of Securities; (iv)
to add or change any provisions of an Indenture to facilitate the issuance of,
or to liberalize certain terms of, Debt Securities in bearer form, or to permit
or facilitate the issuance of Debt Securities in uncertificated form, provided
that such action shall not adversely affect the interests of the holders of the
Debt Securities of any series in any material respect; (v) to change or
eliminate any provisions of an Indenture, provided that any such change or
elimination
-13-
<PAGE> 16
shall become effective only when there are no Debt Securities outstanding of
any series created prior thereto which are entitled to the benefit of such
provision; (vi) to secure the Debt Securities; (vii) to establish the form or
terms of Debt Securities of any series, including the provisions and
procedures, if applicable, for the conversion of such Debt Securities into
Paired Common Shares or Preferred Shares of the Company; (viii) to provide for
the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in an Indenture, provided that
such action shall not adversely affect the interests of holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of an Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities or of any
applicable guarantees, provided that such action shall not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect.
Each Indenture will provide that in determining whether the holders of
the requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the United States dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the United States dollar equivalent on the
issue date of such Debt Security of the amount determined as provided in (i)
above), (iii) the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of such indexed security at
original issuance, unless otherwise provided with respect to such indexed
security pursuant to such indenture, and (iv) Debt Securities owned by the
Trust, the Corporation or any other obligor upon the Debt Securities or any
affiliate of the Trust, the Corporation or of such other obligor shall be
disregarded.
Each Indenture will contain provisions for convening meetings of the
holders of Debt Securities of a series. A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Trust, the
Corporation, or other obligor of such Debt Securities or the holders of at
least 10% in principal amount of the outstanding Debt Securities of such
series, in any such case upon notice given as provided in such Indenture.
Except for any consent that must be given by the holder of each Debt Security
affected by certain modifications and amendments of an Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present will be permitted to be adopted by the affirmative vote of
the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage, which is less than a majority,
in principal amount of the outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the holders of such specified percentage in
principal amount of the outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of holders of Debt
Securities of any series duly held in accordance with an Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the holders of not less than a specified percentage in principal
amount of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series, will constitute a quorum.
Notwithstanding the foregoing provisions, any Indenture will provide
that if any action is to be taken at a meeting of holders of Debt Securities of
any series with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that such Indenture expressly provides
may be made, given or taken by the holders of a specified percentage in
principal amount of all outstanding Debt Securities affected thereby, or of the
-14-
<PAGE> 17
holders of such series and one or more additional series: (i) there shall be no
minimum quorum requirement for such meeting and (ii) the principal amount of
the outstanding Debt Securities of such series that vote in favor of such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been
made, given or taken under such Indenture.
SUBORDINATION
Upon any distribution to creditors of the Trust or the Corporation, as
the case may be, in a liquidation, dissolution or reorganization, the payment
of the principal of and interest on any Subordinated Securities will be
subordinated to the extent provided in the applicable Indenture in right of
payment to the prior payment in full of all Senior Debt (as defined below), but
the obligation of the Trust or the Corporation, as the case may be, to make
payment of the principal and interest on such Subordinated Securities will not
otherwise be affected. No payment of principal or interest will be permitted
to be made on Subordinated Securities at any time if a default on Senior Debt
exists that permits the holders of such Senior Debt to accelerate its maturity
and the default is the subject of judicial proceedings or the Trust or the
Corporation, as the case may be, receives notice of the default. By reason of
such subordination, in the event of a distribution of assets upon insolvency,
certain general creditors of the Trust or the Corporation, as the case may be,
may recover more, ratably, than holders of Subordinated Securities.
Unless otherwise specified in the applicable Prospectus Supplement,
Senior Debt will be defined in the applicable Indenture as the principal of and
interest on, or substantially similar payments to be made by the Trust or the
Corporation, as the case may be, in respect of, the following, whether
outstanding at the date of execution of the applicable indenture or thereafter
incurred, created or assumed: (a) indebtedness of the Trust or the Corporation,
as the case may be, for money borrowed or represented by purchase-money
obligations, (b) indebtedness of the Trust or the Corporation, as the case may
be, evidenced by notes, debentures, or bonds, or other securities issued under
the provisions of an indenture, fiscal agency agreement or other agreement, (c)
obligations of the Trust or the Corporation, as the case may be, as lessee
under leases of property either made as part of any sale and leaseback
transaction to which the Trust or the Corporation, as the case may be, is a
party or otherwise, (d) indebtedness of partnerships and joint ventures which
is included in the consolidated financial statements of the Company, (e)
indebtedness, obligations and liabilities of others in respect of which the
Trust or the Corporation, as the case may be, is liable contingently or
otherwise to pay or advance money or property or as guarantor, endorser or
otherwise or which the Trust or the Corporation, as the case may be, has agreed
to purchase or otherwise acquire, and (f) any binding commitment of the Trust
or the Corporation, as the case may be, to fund any real estate investment or
to fund any investment in any entity making such real estate investment, in
each case other than (1) any such indebtedness, obligation or liability
referred to in clauses (a) through (f) above as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is expressly provided that such indebtedness, obligation or liability is not
superior in right of payment to the subordinated Securities or ranks pari passu
with the Subordinated Securities, (2) any such indebtedness, obligation or
liability which is subordinated to indebtedness of the Trust or the
Corporation, as the case may be, to substantially the same extent as or to a
greater extent than the Subordinated Securities are subordinated, and (3) the
Subordinated Securities. There will not be any restrictions in an Indenture
relating to Subordinated Securities upon the creation of additional Senior
Debt.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the most recent fiscal
quarter of the Trust or Corporation, as the case may be.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
-15-
<PAGE> 18
The Trust or the Corporation, as the case may be, may be permitted
under the applicable Indenture to discharge certain obligations to holders of
any series of Debt Securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
An Indenture may provide that, if certain provisions thereof are made
applicable to the Debt Securities of or within any series pursuant to such
Indenture, each of the Trust or the Corporation, as the case may be, may elect
either (a) to defease and be discharged from any and all obligations with
respect to such Debt Securities except for the obligation to pay additional
amounts, if any, upon the occurrence of certain events of tax, assessment or
governmental charge with respect to payments on such Debt Securities and the
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency in respect of such Debt Securities and to hold
moneys for payment in trust) ("defeasance") or (b) to be released from its
obligations with respect to such Debt Securities under certain sections, of
such Indenture (including the restrictions described under "Certain Covenants")
and, if provided pursuant to such Indenture, its obligations with respect to
any other covenant, and any omission to comply with such obligations shall not
constitute a default or an event of default with respect to such Debt
Securities "covenant defeasance"), in either case upon the irrevocable deposit
by the Trust or the Corporation, as the case may be, with the Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
stated maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, an the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Trust or the Corporation, as the case may be, has delivered to the
Trustee an opinion of counsel (as specified in the applicable indenture) to the
effect that the holders of such Debt Securities will not recognize income, gain
or loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such opinion of counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service (the "IRS") or a
change in applicable United States federal income tax law occurring after the
date of the applicable Indenture.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt.
-16-
<PAGE> 19
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Trust or the Corporation, as the case may be, has deposited funds
and/or Government Obligations to effect defeasance or covenant defeasance with
respect to Debt Securities of any series, (a) the holder of a Debt Security of
such series is entitled to, and does elect pursuant to the applicable Indenture
or the terms of such Debt Security to receive payment in a currency, currency
unit or composite currency other than that in which such deposit has been made
in respect of such Debt Security, or (b) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in which
such deposit has been made, the indebtedness represented by such Debt Security
shall be deemed to have been, and will be, fully discharged and satisfied
through the payment of the principal of (and premium, if any) and interest on
such Debt Security as they become due out of the proceeds yielded by converting
the amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such Conversion Event based on the applicable
market exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institution of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Community or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in
the applicable Prospectus Supplement, all payments of principal of (and
premium, if any) and interest on any Debt Security that is payable in a foreign
currency that ceases to be used by its government of issuance shall be made in
United States dollars.
In the event the Trust or the Corporation, as the case may be, effects
covenant defeasance with respect to any Debt Securities and such Debt
Securities are declared due and payable because of the occurrence of any Event
of Default other than the Event of Default described in clause (d) under
"Events of Default, Notice and Waiver" with respect to specified sections of
the Indenture (which sections would no longer be applicable to such Debt
Securities) or described in clause (g) under "Events of Default, Notice and
Waiver" with respect to any other covenant as to which there had been covenant
defeasance, the amount in such currency, currency unit or composite currency in
which Such Debt Securities are payable, and Government Obligations on deposit
with the applicable Trustee, will be sufficient to pay amounts due on such Debt
Securities at the time of their stated maturity but may not be sufficient to
pay amounts due on such Debt Securities at the time of the acceleration
resulting from such Event of Default. However, the Trust or the Corporation,
as the case may be, would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance,
including any modifications to the provisions described above, with respect to
the Debt Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Debt
Securities is convertible into Paired Common Shares or Preferred Shares will be
set forth in the applicable Prospectus Supplement relating thereto. Such terms
will include whether such Debt Securities are convertible into Paired Common
Shares or Preferred Shares, the conversion price (or manner of calculation
thereof), the conversion period, provisions as to whether conversion will be at
the option of the holders or the Trust or the Corporation, as the case may be,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of Debt
Securities and any restrictions on conversion, including restrictions directed
at maintaining the Trust's REIT status.
GLOBAL SECURITIES
-17-
<PAGE> 20
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will
be deposited with, or on behalf of, a depositary ("the "Depositary") identified
in the applicable Prospectus Supplement relating to such series. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement
with respect to a series of Debt Securities will be described in the applicable
Prospectus Supplement relating to such series.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Declaration of Trust authorizes the Trust to issue 135 million
shares of beneficial interests in the Trust, including (i) 100 million Trust
Shares, with a par value of $0.01 per share, (ii) 20 million excess trust
shares, with a par value of $0.01 per share ("Excess Common Trust Shares") and
(iii) 5 million excess Preferred Shares, with a par value of $0.01 per share
("Excess Preferred Trust Shares" and, together with the Excess Common Trust
Shares, the "Excess Trust Shares"). The Declaration of Trust grants the Board
of Trustees the power to create and authorize the issuance of up to 110 million
shares (less any Trust Shares) of preferred shares ("Trust Preferred Shares")
in one or more classes or series, having such voting rights, such rights to
dividends and distribution and rights in liquidation, such conversion, exchange
and redemption rights and such designations, preferences and participations and
other limitations and restrictions as are not prohibited by the Declaration of
Trust or applicable law and as are specified by the Board of Trustees in its
discretion. As of September 30, 1995, the Board of Trustees had not created or
authorized any class or series of Trust Preferred Shares and no Excess Trust
Shares were outstanding.
The Articles of Incorporation authorize the Corporation to issue 135
million shares, consisting of (i) 10 million shares of preferred stock, with a
par value of $0.01 per share ("Corporation Preferred Shares"), (ii) 100 million
Corporation Shares, (iii) 20 million shares of excess common stock, with a par
value of $0.01 per share ("Excess Corporation Common Stock"), and (iv) 5
million shares of excess preferred stock, with a par value of $0.01 per share
("Excess Corporation Preferred Stock" and, together with the Excess Corporation
Common Stock, the "Excess Corporation Stock"). The Corporation Preferred
Shares are issuable in classes or series with such rights, preferences,
privileges and restrictions as the Board of Directors may determine, including
voting rights, redemption provisions, dividend rates, liquidation preferences
and conversion rights. As of September 30, 1995, no such class or series of
Corporation Preferred Shares had been established and no Excess Corporation
Stock was outstanding.
As of September 30, 1995 there were 13,809,658 Paired Common Shares
outstanding. Each outstanding Paired Common Share entitles the holder to one
vote on all matters presented to shareholders for a vote. The Trust and the
Corporation have reserved for issuance 5,943,578 Paired Common Shares upon
exchange of units of partnership interest ("Units") of the Realty Partnership
and the Operating Partnership currently held by Starwood Capital.
PREEMPTIVE RIGHTS
Holders of Trust Shares and Corporation Shares do not have preemptive
rights with respect to the issuance of additional shares. Accordingly, any
issuance of authorized but unissued shares could have the effect of diluting
the earnings per share and book value per share of currently outstanding
shares.
DESCRIPTION OF PREFERRED SHARES
The following description of the Preferred Shares sets forth certain
general terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate. The statements below describing the Preferred Shares
are in all respects subject to and qualified in their entirety by reference to
the applicable provisions of the
-18-
<PAGE> 21
Declaration of Trust and the Articles of Incorporation and any applicable
amendment to the Declaration of Trust or the Articles of Incorporation
designating terms of a series of Preferred Shares (a "Designating Amendment").
The Trust may authorize and issue Trust Preferred Shares without the
issuance by the Corporation of corresponding shares, and the Corporation may
authorize and issue Corporation Preferred Shares without the issuance by the
Trust of corresponding shares. Furthermore, the Pairing Agreement does not
limit the power of the Boards of the Trust and the Corporation to independently
determine the rights, preferences and restrictions of such shares. However, if
either the Trust or the Corporation were to issue Preferred Shares for which the
other entity did not issue corresponding (i.e., paired) shares in such an amount
that greater than 50% of such entity's beneficial equity interests were
represented by such unpaired Preferred Shares, then the Trust and the
Corporation could lose their status as "grandfathered" from the application of
Section 269B of the Internal Revenue Code of 1986 as amended (the "Code") and
jeopardize the Trust's ability to qualify as a REIT. Neither the Trust nor the
Corporation intends to issue unpaired Preferred Shares in excess of such
limitation.
TERMS
Subject to the limitations prescribed by the Declaration of Trust and
the Articles of Incorporation, respectively, each of the Board of Trustees and
the Board of Directors is authorized to fix the number of shares constituting
each series of Preferred Shares and the designations and powers, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the Board of Trustees and the Board of
Directors. The Preferred Shares will, when issued, be fully paid and
nonassessable by the Trust or the Corporation, as the case may be, (except as
described under "--Shareholder Liability" below) and will have no preemptive
rights.
Reference is made to the Prospectus Supplement relating to the
Preferred Shares offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Shares and
whether such Preferred Shares are paired;
(2) The number of shares of such Preferred Shares offered, the
liquidation preference per share and the offering price of
such Preferred Shares;
(3) The dividend rate(s), periodic and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Shares;
(4) The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for
such Preferred Shares;
(6) The provision for a sinking fund, if any, for such Preferred
Shares;
(7) The provision for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities
exchange.
(9) The terms and conditions, if applicable, upon which such
Preferred Shares will be convertible into Paired Common
Shares, including the conversion price (or manner of
calculation thereof);
(10) Whether interests in such Preferred Shares will be represented
by Depositary Shares;
-19-
<PAGE> 22
(11) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares;
(12) A discussion of federal income tax considerations applicable
to such Preferred Shares;
(13) The relative ranking and preferences of such Preferred Shares
as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of the Trust or the Corporation,
respectively;
(14) Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with such series of Preferred
Shares as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Trust or the
Corporation, respectively; and
(15) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate
to preserve the status of the Trust as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Trust or the Corporation, respectively, rank
(i) senior to all classes or series of Paired Common Shares, and to all equity
securities ranking junior to such Preferred Shares; (ii) on a parity with all
equity securities issued by the Trust or the Corporation, respectively, the
terms of which specifically provide that such equity securities rank on a
parity with the Preferred Shares; and (iii) junior to all equity securities
issued by the Trust or the Corporation, respectively, the terms of which
specifically provide that such equity securities rank senior to the Preferred
Shares. The term "equity securities" does not include convertible debt
securities.
DIVIDENDS
Holders of the Preferred Shares of each series will be entitled to
receive, when, as and if declared by the Board of Trustees or the Board of
Directors, as the case may be, out of the respective assets of the Trust and
the Corporation legally available for payment, cash dividends at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement.
Each such dividend shall be payable to holders of record us they appear on the
share transfer books of the Trust or the Corporation, as the case may be, on
such record dates as shall be fixed by the Board of Trustees or the Board of
Directors.
Dividends on any series of the Preferred Shares may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement, if the Board of Trustees or the Board of
Directors fails to declare a dividend payable on a dividend payment date on any
series of the Preferred Shares for which dividends are non-cumulative, then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Trust or the Corporation, as the case may be, will have no
obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
date.
If Preferred Shares of any series are outstanding, no dividends will
be declared or paid or set apart for payment on any capital stock of the Trust
or the Corporation, as the case may be, of any other series ranking, as to
dividends, on a parity with or junior to the Preferred Shares of such series
for any period unless (i) if such series of Preferred Shares has a cumulative
dividend, full cumulative dividends have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
such payment on the Preferred Shares of such series for all past dividend
periods and the then current dividend period or (ii) if such series of
Preferred Shares does not have a cumulative dividend, full dividends for the
then current dividend period
-20-
<PAGE> 23
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon Preferred Shares of
any series and the shares of any other series of Preferred Shares ranking on a
parity as to dividends with the Preferred Shares of such series, all dividends
declared upon Preferred Shares of such series and any other series of Preferred
Shares ranking on a parity as to dividends with such Preferred Shares shall be
declared pro rata so that the amount of dividends declared per share of
Preferred Shares of such series and such other series of Preferred Shares shall
in all cases bear to each other the same ratio that accrued dividends per share
on the Preferred Shares of such series (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
Preferred Shares does not have a cumulative dividend) and such other series of
Preferred Shares bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
Preferred Shares of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i)
if such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Shares does not have a
cumulative dividend, full dividends on the Preferred Shares of such series have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, no dividends (other than in shares of Paired Common Shares or
other capital shares ranking junior to the Preferred Shares of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution shall be declared or made upon the Paired Common
Shares, or any other capital shares of the Trust or the Corporation, as the
case may be, ranking junior to or on a parity with the Preferred Shares of such
series as to dividends or upon liquidation, nor shall any shares of Paired
Common Shares, or any other capital shares of the Trust or the Corporation, as
the case may be, ranking junior to or on a parity with the Preferred Shares of
such series as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the
Trust or the Corporation, as the case may be, except by conversion into or
exchange for other capital shares of the Trust or the Corporation, as the case
may be, ranking junior to the Preferred Shares of such series as to dividends
and upon liquidation).
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred
Shares will be subject to mandatory redemption or redemption at the option of
the Trust or the Corporation, as the case may be, as a whole or in part, in
each case upon the terms, at the times and at the redemption prices set forth
in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Shares
that is subject to mandatory redemption will specify the number of shares of
such Preferred Shares that shall be redeemed by the Trust or the Corporation,
as the case may be, in each year commencing after a date to be specified, at a
redemption price per share to be specified, together with an amount equal to
all accrued and unpaid dividends thereon (which shall not, if such Preferred
Shares do not have a cumulative dividend, include any accumulation in respect
of unpaid dividends for prior dividend periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in the
applicable Prospectus Supplement. If the redemption price for Preferred Shares
of any series is payable only from the net proceeds of the issuance of capital
shares of the Trust or the Corporation, as the case may be, the terms of such
Preferred Shares may provide that, if no such capital shares shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Shares
shall automatically and mandatorily be converted into the applicable capital
shares of the Trust or the Corporation, as the case may be, pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
-21-
<PAGE> 24
Notwithstanding the foregoing, unless (i) if such series of Preferred
Shares has a cumulative dividend, full cumulative dividends on all shares of
any series of Preferred Shares shall have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, and (ii) if such series of Preferred Shares does not have a cumulative
dividend, full dividends of the Preferred Shares of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for the then current dividend period,
no shares of any series of Preferred Shares shall be redeemed unless all
outstanding Preferred Shares of such series is simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Shares of such series to preserve the REIT status of
the Trust or pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Preferred Shares of such series. In addition,
unless (i) if such series of Preferred Shares has a cumulative dividend, full
cumulative dividends on all outstanding shares of any series of Preferred
Shares have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for all past
dividends periods and the then current dividend period, and (ii) if such series
of Preferred Shares does not have a cumulative dividend, full dividends on the
Preferred Shares of any series have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, the Trust or the Corporation, as
the case may be, shall not purchase or otherwise acquire directly or indirectly
any shares of Preferred Shares of such series (except by conversion into or
exchange for capital shares of the Trust or the Corporation, as the case may
be, ranking junior to the Preferred Shares of such series as to dividends and
upon liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of Preferred Shares of such series to preserve the REIT
status of the Trust or pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Preferred Shares of such series.
If fewer than all of the outstanding shares of Preferred Shares of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Trust or the Corporation, as the case may be, and such shares
may be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held or for which redemption is
requested by such holder (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Trust or the Corporation, as
the case may be.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred Shares
of any series to be redeemed at the address shown on the share transfer books
of the Trust or the Corporation, as the case may be. Each notice shall state:
(i) the redemption date, (ii) the number of shares and series of the Preferred
Shares to be redeemed; (iii) the redemption price; (iv) the place or places
where certificates for such Preferred Shares are to be surrendered for payment
of the redemption price; (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date; and (vi) the date upon which the
holder's conversion rights, if any, as to such shares shall terminate, if fewer
than all the shares of Preferred Shares of any series are to be redeemed, the
notice mailed to each such holder thereof shall also specify the number of
shares of Preferred Shares to be redeemed from each such holder. If notice of
redemption of any Preferred Shares has been given and if the funds necessary
for such redemption have been set aside by the Trust or the Corporation, as the
case may be, in trust for the benefit of the holders of any Preferred Shares so
called for redemption, then from and after the redemption date dividends will
cease to accrue on such Preferred Shares, and all rights of the holders of such
shares will terminate, except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Trust or the Corporation, as the case may be, then,
before any distribution or payment shall be made to the holders of any Paired
Common Shares or any other class or series of capital shares of the Trust or
the Corporation, as the case may be, ranking junior to the Preferred Shares in
the distribution of assets upon any liquidation, dissolution or winding up of
the Trust or the Corporation, as the case may be, the holders of each series of
Preferred Shares shall
-22-
<PAGE> 25
be entitled to receive out of assets of the Trust or the Corporation, as the
case may be, legally available for distribution to shareholders liquidating
distributions in the amount of the liquidation preference per share (set forth
in the applicable Prospectus Supplement), plus an amount equal to all dividends
accrued and unpaid thereon (which shall not include any accumulation in respect
of unpaid dividends for prior dividend periods if such Preferred Shares do not
have a cumulative dividend). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Preferred
Shares will have no right or claim to any of the remaining assets of the Trust
or the Corporation, as the case may be. In the event that, upon any such
voluntary or involuntary liquidation, dissolution or winding up, the available
assets of the Trust or the Corporation, as the case may be, are insufficient to
pay the amount of the liquidating distributions on all outstanding Preferred
Shares and the corresponding amounts payable on all shares of other classes or
series of capital shares of the Trust or the Corporation, as the case may be,
ranking on a parity with the Preferred Shares in the distribution of assets,
then the holders of the Preferred Shares and all other such classes or series
of capital shares shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If liquidating distributions shall have been made in full to all
holders of Preferred Shares, the remaining assets of the Trust or the
Corporation, as the case may be, shall be distributed among the holders of any
other classes or series of capital shares ranking junior to the Preferred
Shares upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Trust or the Corporation, as the case may be, with or into any other
corporation, trust or entity, or the sale, lease or conveyance of all or
substantially all of the property or business of the Trust or the Corporation,
as the case may be, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Trust or the Corporation, as the case may be.
VOTING RIGHTS
Holders of the Preferred Shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by law or
as indicated in the applicable Prospectus Supplement.
Whenever dividends on any shares of Preferred Shares shall be in
arrears for six or more consecutive quarterly periods, the holders of such
shares of Preferred Shares (voting separately as a class with all other series
of preferred stock upon which like voting rights have been conferred and are
exercisable) will be entitled to vote for the election of two additional
trustees or directors of the Trust or the Corporation, as the case may be, at a
special meeting called by the holders of record of at least ten percent (10%)
of any series of Preferred Shares so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of stockholders.
Directors so elected shall serve until the next annual meeting or until their
respective successors are elected and qualify, or if sooner until all dividends
in arrears have been fully paid or declared and a sum sufficient for the
payment thereof set aside for payment. In such case, the entire board of the
Trust or the Corporation, as the case may be, will be increased by two
trustees or directors.
Unless provided otherwise for any series of Preferred Shares, so long
as any shares of Preferred Shares remain outstanding, the Trust or the
Corporation, as the case may be, will not, without the affirmative vote or
consent of the holders of at least two-thirds of the shares of each series of
Preferred Shares outstanding at the time, given in person or by proxy, either
in writing or at a meeting (such series voting separately as a class), (i)
authorize or create, or increase the authorized or issued amount of any class
or series of capital stock ranking prior to such series of Preferred Shares
with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Trust or the Corporation, as the case may be, into such shares,
or create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or
repeal the provisions of the Declaration of Trust or the Articles of
Incorporation or the Designating Amendment for such series of Preferred Shares,
-23-
<PAGE> 26
whether by merger, consolidation or otherwise (an "Event"), so as to materially
and adversely affect any right, preference, privilege or voting power of such
series of Preferred Shares or the holders thereof; provided, however, with
respect to the occurrence of any of the Events set forth in (ii) above, so long
as the Preferred Shares remain outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event, the Trust
or the Corporation, as the case may be, may not be the surviving entity, the
occurrence of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power of holders of
Preferred Shares and provided further that (x) any increase in the amount of
the authorized Preferred Shares or the creation or issuance of any other series
of Preferred Shares, or (y) any increase in the amount of authorized shares of
such series or any other series of Preferred Shares, in each case ranking on a
parity with or junior to the Preferred Shares of such series with respect to
payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Shares
shall have been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred
Shares is convertible into Paired Common Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of Paired Common Shares into which the shares of Preferred Shares are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders or the Trust or the Corporation, as the case may be, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such series of Preferred Shares
and any restrictions on conversion, including restrictions directed at
maintaining the Trust's REIT status.
OWNERSHIP LIMITS; RESTRICTIONS ON TRANSFER; REPURCHASE AND REDEMPTION OF SHARES
As discussed below under "Description of Paired Common
Shares--Ownership Limits; Restrictions on Transfer; Repurchase and Redemption of
Shares," for the Trust to qualify as a REIT under the Code, the Trust must meet
several requirements concerning the ownership of its shares. To assist the
Trust in meeting this requirement, the Trust may take certain actions to limit
the beneficial ownership, directly or indirectly, by a single person of the
Trust's outstanding equity securities, including any Preferred Shares of the
Trust. Therefore, the Designating Amendment for each series of Preferred Shares
may contain provisions restricting the ownership and transfer of the Preferred
Shares. The applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Shares.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Shares will be set
forth in the applicable Prospectus Supplement.
DESCRIPTION OF PAIRED COMMON SHARES
GENERAL
All Paired Common Shares offered hereby will be duly authorized, fully
paid and nonassessable. Subject to the preferential rights of any other shares
or series of shares of beneficial interest and to the provisions of the
Declaration of Trust regarding Excess Trust Shares and the Articles of
Incorporation regarding Excess Corporation
-24-
<PAGE> 27
Stock, holders of Paired Common Shares will be entitled to receive dividends
if, as and when authorized and declared by the Board of Trustees or the Board
of Directors, as the case may be, out of assets legally available therefor and
to share ratably in the assets of the Trust or the Corporation legally
available for distribution to its shareholders in the event of its liquidation,
dissolution or winding-up after payment of, or adequate provision for, all
known debts and liabilities of the Trust or the Corporation.
The Paired Common Shares currently outstanding are listed for trading
on the New York Stock Exchange (the "NYSE"). The Trust and the Corporation
will apply to the NYSE to list the additional Paired Common Shares to be sold
pursuant to any Prospectus Supplement, and the Trust and the Corporation
anticipate that such shares will be so listed.
Subject to the provisions of the Declaration of Trust regarding Excess
Trust Shares and the Articles of Incorporation regarding Excess Corporation
Stock, each outstanding Paired Common Share entitles the holder to one vote on
all matters submitted to a vote of shareholders, including the election of
trustees or directors, and, except as otherwise required by law or except as
provided with respect to any other class or series of shares of beneficial
interest, the holders of such Paired Common Shares will possess the exclusive
voting power. There is no cumulative voting in the election of trustees or
directors, which means that the holders of a majority of the outstanding Paired
Common Shares can elect all of the trustees or directors then standing before
election and the holders of the remaining shares of beneficial interest, if
any, will not be able to elect any trustees or directors.
Holders of Paired Common Shares have no conversion, sinking fund,
redemption or preemptive rights to subscribe for any securities of the Trust of
the Corporation, as the case may be.
Subject to the provisions of the Declaration of Trust regarding Excess
Shares and the Articles of Incorporation regarding Excess Corporation Stock,
Paired Common Shares will have equal dividend, distribution, liquidation and
other rights, and will have no preference, exchange, or except as expressly
required by the Maryland statute governing real estate investment trusts formed
under Maryland law (the "Maryland REIT Law") and the Maryland General
Corporation Law, as amended (the "MGCL"), appraisal rights.
THE PAIRING AGREEMENT
The Trust and the Corporation have entered into an agreement dated
June 25, 1980, as amended (the "Pairing Agreement") pursuant to which all
outstanding Trust Shares and Corporation Shares are "paired" on a one-for-one
basis. The following is a summary of certain provisions of the Pairing
Agreement. This summary does not purport to be complete and is qualified in
its entirety by reference to the text of the Pairing Agreement, a copy of which
is incorporated by reference as an exhibit to the Registration Statement.
Transfer of Paired Common Shares. Under the Pairing Agreement, Trust
Shares are transferable only together with an equal number of Corporation
Shares, and Corporation Shares are transferable only together with an equal
number of Trust Shares. Certificates evidencing Trust Shares and Corporation
Shares are required by the Pairing Agreement to include a reference to this
transfer restriction. The Declaration of Trust and the Articles of
Incorporation contain similar restrictions on the transfer of Trust Shares and
Corporation Shares, as well as other restrictions on the transfer and ownership
of Trust Shares and Corporation Shares. The Pairing Agreement also provides
that any Excess Trust Shares and any Excess Corporation Stock which may be
issued will be paired in the same manner as the Trust Shares and Corporation
Shares are paired.
Issuance of Shares. Under the Pairing Agreement, the Trust may not
issue Trust Shares and the Corporation may not issue Corporation Shares unless
provision is made for the acquisition by the same person of the same number of
shares of the other entity. The Trust and the Corporation must agree on the
manner and basis of allocating the consideration to be received upon such
issuance, or on the payment by one entity to the other of
-25-
<PAGE> 28
cash or other consideration in lieu of a portion of the consideration to be
received upon issuance of such Paired Common Shares.
Share Dividends, Reclassifications and other Similar Events. Neither
the Trust nor the Corporation may declare or pay any dividend or other
distribution payable in Trust Shares or Corporation Shares, issue any rights or
warrants to purchase Trust Shares or Corporation Shares, or subdivide, combine
or otherwise reclassify such shares, unless the other entity concurrently takes
the same action.
Amendment and Termination. The Pairing Agreement may be amended by
the Board of Trustees and the Board of Directors, provided that an amendment
permitting the separate issuance and transfer of Trust Shares and Corporation
Shares must be approved by a majority of each of the outstanding Trust Shares
and the outstanding Corporation Shares. The Pairing Agreement may be
terminated only with the affirmative vote of the holders of a majority of each
of the outstanding Trust Shares and the outstanding Corporation Shares. Upon
such termination, the Trust Shares and the Corporation Shares could be delisted
by the NYSE if the Trust and the Corporation, respectively, did not as separate
entities then meet the listing requirements of such Exchange.
Preferred Shares. The Trust may authorize and issue other classes or
series of shares of beneficial interest in addition to the Trust Shares without
the issuance by the Corporation of corresponding shares, and the Corporation
may authorize and issue shares of Corporation Preferred Stock without the
issuance by the Trust of corresponding shares. Furthermore, the Pairing
Agreement does not limit the power of the Boards of the Trust and the
Corporation to independently determine the rights, preferences and restrictions
of such shares.
MARYLAND TAKEOVER LEGISLATION
Under the MGCL, certain "business combinations" (including mergers,
consolidations, share exchanges, or, in certain circumstances, asset transfers
or issuances or reclassifications of equity securities) between a Maryland
corporation or a Maryland real estate investment trust and any person who
beneficially owns 10% or more of the voting power of the corporation's or
trust's shares or an affiliate of the corporation or trust who, at any time
within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then-outstanding voting shares
of the corporation or trust (an "Interested Stockholder") or an affiliate
thereof, are prohibited or restricted unless exempted. The Company has
exempted all "business combinations" involving any party from the business
combination provisions of the MGCL.
Under Maryland law, under certain circumstances "control shares" of a
Maryland corporation or a Maryland real estate investment trust acquired in a
"control share acquisition" may have no voting rights. The Company has
exempted all control share acquisitions involving any person from the MGCL.
OWNERSHIP LIMITS; RESTRICTIONS ON TRANSFER; REPURCHASE AND REDEMPTION OF SHARES
The Declaration of Trust and the Articles of Incorporation provide
that, subject to certain exceptions specified in the Declaration of Trust and
the Articles of Incorporation, no shareholder may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 8.0% of the capital
stock, whether measured by vote, value or number of Paired Common Shares (other
than for shareholders who owned in excess of 8.0% as of the date the
Reorganization closed, who may not so own or be deemed to own more than the
lesser of 9.9% or the number of Paired Common Shares they held on such date) of
the outstanding Paired Common Shares or Preferred Shares which may be issued,
or any combination thereof. The Board of Trustees and the Board of Directors
may waive the Ownership Limitation if evidence satisfactory to the Board of
Trustees and the Board of Directors and the tax counsel to the Trust and the
Corporation is presented that such ownership will not jeopardize the Trust's
status as a REIT. As a condition of such waiver, each of the Board of Trustees
and the Board of Directors may require opinions of counsel satisfactory to it
and/or an undertaking from the applicant with respect to preserving the REIT
status of the Trust. If shares which would cause the Trust to be beneficially
owned by
-26-
<PAGE> 29
fewer than 100 persons are issued or transferred to any person, such issuance
or transfer shall be null and void and the intended transferee will acquire no
rights to the stock. Any acquisition of capital stock of the Trust or the
Corporation and continued holding or ownership of capital stock of the Trust or
the Corporation constitutes, under the Declaration of Trust and the Articles of
Incorporation, a continuous representation of compliance with the Ownership
Limitation.
In the event of a purported transfer or other event that would, if
effective, result in the ownership of Paired Common Shares or Preferred Shares
in violation of the Ownership Limitation, such transfer with respect to that
number of shares that would be owned by the transferee in excess of the
Ownership Limitation would be deemed void ab initio and such Paired Common
Shares or Preferred Shares would automatically be exchanged for Excess Shares
or Excess Preferred Stock, respectively (collectively, "Excess Stock"),
authorized by the Declaration of Trust and the Articles of Incorporation,
according to rules set forth in the Declaration of Trust and the Articles of
Incorporation, to the extent necessary to ensure that the purported transfer or
other event does not result in ownership of Paired Common Shares or Preferred
Shares or Excess Stock in violation of the Ownership Limitation. Any purported
transferee or other purported holder of Excess Stock is required to give
written notice to the Trust and the Corporation of a purported transfer or
other event that would result in the issuance of Excess Stock.
Any Excess Trust Shares and Excess Corporation Stock which may be
issued will be "paired" in the same manner that the Trust Shares and the
Corporation Shares are currently paired. Excess Stock is not Treasury stock
but rather continues as issued and outstanding capital stock of the Trust and
the Corporation. While outstanding, Excess Stock will be held in trust. The
trustees of such trusts shall be appointed by the Trust and the Corporation and
shall be independent of the Trust, the Corporation and the holder of Excess
Stock. The beneficiary of such trust shall be one or more charitable
organizations selected by the trustee. If, after the purported transfer or
other event resulting in an exchange of Paired Common Shares or Preferred
Shares for Excess Stock and prior to the discovery by the Trust and the
Corporation of such exchange, dividends or distributions are paid with respect
to the Paired Common Shares or Preferred Shares that were exchanged for Excess
Stock, then such dividends or distributions are to be repaid to the trustee
upon demand for payment to the charitable beneficiary. While Excess Stock is
held in trust, an interest in that trust may be transferred by the trustee only
to a person whose ownership of Paired Common Shares or Preferred Shares will
not violate the Ownership Limitation, at which time the Excess Stock will be
automatically exchanged for the same number of Paired Common Shares or
Preferred Shares of the same type and class as the Paired Common Shares or
Preferred Shares for which the Excess Stock was originally exchanged. The
Declaration of Trust and the Articles of Incorporation contain provisions that
are designed to ensure that the purported transferee or other purported holder
of the Excess Stock may not receive in return for such a transfer an amount
that reflects any appreciation in the Paired Common Shares or Preferred Shares
for which such Excess Stock was exchanged during the period that such Excess
Stock was outstanding. Any amount received by a purported transferee or other
purported holder in excess of the amount permitted to be received must be
turned over to the charitable beneficiary of the trust. If the foregoing
restrictions are determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the intended transferee or holder
of any Excess Stock may be deemed, at the option of the Trust and the
Corporation, to have acted as an agent on behalf of the Trust and the
Corporation in acquiring or holding such Excess Stock and to hold such Excess
Stock on behalf of the Trust and the Corporation.
The Declaration of Trust and the Articles of Incorporation further
provide that the Trust and the Corporation may purchase, for a period of 90
days during the time the Excess Stock is held in trust, all or any portion of
the Excess Stock from the original transferee-shareholder at the lesser of the
price paid for the Paired Common Shares or Preferred Shares by the purported
transferee (or if no notice of such purchase price is given, at a price to be
determined by the Board of Trustees and the Board of Directors, in their sole
discretion, but no lower than the lowest market price of such stock (based on
the market price of the Paired Common Shares or Preferred Shares) at any time
during the period in which the Excess Stock is held in trust) and the closing
market price for the Paired Common Shares or Preferred Shares on the date the
Trust and the Corporation exercise their
-27-
<PAGE> 30
option to purchase. The 90-day period begins on the date of the violative
transfer if the original transferee-shareholder gives notice to the Trust and
the Corporation of the transfer or (if no notice is given) the date the Board
of Trustees and the Board of Directors determine that a violative transfer has
been made.
The Ownership Limitation will not be removed automatically even if the
REIT provisions of the Code are changed so as to no longer contain any
ownership concentration limitation or if the ownership concentration limitation
is increased. Except as otherwise described above, any change in the Ownership
Limitation would require an amendment to the Declaration of Trust and the
Articles of Incorporation. Amendments to the Declaration of Trust and to the
Articles of Incorporation generally require the affirmative vote of holders
owning a majority of the outstanding Trust Shares and Corporation Shares
respectively, except that changes to the Ownership Limitation require
two-thirds approval. In addition to preserving the Trust's status as a REIT,
the Ownership Limitation may have the effect of precluding an acquisition of
control of the Trust and the Corporation without the approval of the Board of
Trustees and the Board of Directors.
All persons who own, directly or by virtue of the attribution
provisions of the Code, 5% or more (or such other percentage as may be required
by the Code or regulations promulgated thereunder) of the outstanding Paired
Common Shares, Preferred Shares or Excess Stock must file an affidavit with the
Trust and the Corporation containing the information specified in the
Declaration of Trust and the Articles of Incorporation before January 30 of
each year. In addition, each shareholder shall upon demand be required to
disclose to the Trust and the Corporation in writing such information with
respect to the direct, indirect and constructive ownership of shares as the
Board of Trustees or the Board of Directors deems necessary to comply with the
provisions of the Declaration of Trust and the Articles of Incorporation or the
Code applicable to a REIT or to comply with the requirements of any taxing
authority or governmental agency.
CONVERTIBLE NOTES
In order to facilitate an underwritten offering by the Company of
Paired Common Shares or any other equity securities of the Trust or the
Corporation, underwriters may purchase a series of Starwood Lodging Convertible
Notes (the "Notes"). The Notes will be automatically converted into Paired
Common Shares or other equity securities (at a conversion price equal to the
public offering price of the Paired Common Shares or such other securities, as
the case may be) upon certification to the Trustee (defined below) of the
transfer of beneficial ownership of the Notes to any person or entity which is
not an underwriter or a selected dealer in the offering or an affiliate of any
of either. The automatic conversion will take place without physical delivery
of the Notes to any transferee of an underwriter, selected dealer or affiliate:
such transferee will receive only a certificate for the Paired Common Shares
issued upon such conversion. The structure of such an offering is designed to
avoid the possibility that the underwriters, selected dealers and the
affiliates of either, or any of them, acquire 8.0% or more of the Paired Common
Shares in violation of the Ownership Limitation. See "Description of Paired
Common Shares -- Ownership Limits; Restrictions on Transfer; Repurchase and
Redemption of Shares."
Because the Notes automatically will be converted into Paired Common
Shares upon sale to the public, no market for the Notes is expected to develop.
The following description of the Notes is provided in the event that any Notes
are acquired and held by any underwriter, selected dealer or affiliate of any
of either, in whose hands the Notes do not automatically convert into Paired
Common Shares.
The Notes are to be issued under an indenture (the "Note Indenture")
to be dated as of the date of such underwritten offering between the Company
and the trustee (the "Note Trustee"). The following statements relating to the
Notes and the Note Indenture are summaries, do not purport to be complete and
are qualified in their entirety by reference to the Notes and the Note
Indenture.
The Notes will not bear interest. The Notes will be issued in
registered form in denominations of the same dollar amount as a multiple of the
public offering price of the Paired Common Shares and will be unsecured,
-28-
<PAGE> 31
several obligations of the Trust and the Corporation maturing on the date six
months after the date of the Note Indenture. At the option of the Company, the
maturity date of the Notes may be extended at any time or from time to time, by
written notice to the Note Trustee prior to the maturity date, including any
extension thereof, to a date not later than the second anniversary of the
initial maturity date.
There are no redemption or sinking fund provisions applicable to the
Notes and the Notes are not subject to redemption prior to maturity by the
Trust and the Corporation or either of them.
The following are Events of Default under the Note Indenture: failure
of the Trust or the Corporation to pay principal owing by it in respect of any
Note when due; failure of the Trust or the Corporation to comply with any of
its other agreements in the Notes or the Note Indenture, continued for 90 days
after notice is given as provided in the Note Indenture; and certain events of
bankruptcy, insolvency or reorganization. If an Event of Default occurs and is
continuing, either the Note Trustee or the holders of at least 25% in aggregate
principal amount of the Notes outstanding may declare the entire principal
amount of the Notes to be due and payable immediately.
The Note Indenture provides that, subject to the duty of the Note
Trustee during default to act with the required standard of care, the Note
Trustee will be under no obligation to exercise any of its rights or powers
under the Note Indenture unless it shall have received reasonable security and
indemnity from the holders of the Notes against any costs, expenses or
liabilities. Subject to such provisions for the indemnification of the Note
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee or
exercising any trust or power conferred on the Note Trustee.
The Note Indenture does not require the Company to furnish to the Note
Trustee any periodic evidence as to the absence of any default under the Note
Indenture or the compliance by the Company with the terms of the Note
Indenture.
The Note Indenture or the Notes may be amended or supplemented without
the consent of the noteholders in certain circumstances and with the consent of
holders of at least a majority of the principal amount of the Notes at the time
outstanding, subject to certain exceptions. Any past default, or compliance
with any provision may be waived with the consent of the holders of a majority
of the principal amount of the Notes at the time outstanding.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Paired Common Shares is First
Interstate Bank, Ltd., Los Angeles, California.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Shares or Paired Common Shares. Warrants may be issued independently
or together with Debt Securities, Preferred Stock or Paired Common Shares
offered by any Prospectus Supplement and may be attached to or separate from
such Securities. Each series of Warrants will be issued under a separate
warrant agreement (a "Warrant Agreement") to be entered into between the
Company and a bank or trust company, as warrant agent (the "Warrant Agent"),
all as set forth in the Prospectus Supplement relating to the particular issue
of offered Warrants. The Warrant Agent will act solely as an agent of the
Company in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following summaries of certain provisions
of the Warrant Agreements and Warrants do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Warrant
-29-
<PAGE> 32
Agreement and the Warrant certificates relating to each series of the
Warrants which will be filed with the Commission and incorporated by reference
as an exhibit to the Registration Statement of which this Prospectus is a part
at or prior to the time of the issuance of such series of Warrants.
The applicable Prospectus Supplement will describe the terms of such
Warrants, including the following where applicable: (i) the title of such
Warrants; (ii) the aggregate number of such Warrants; (iii) the price or prices
at which such Warrants will be issued; (iv) the currencies in which the price
of such Warrants may be payable; (v) the designation, aggregate principal
amount and terms of the securities purchasable upon exercise of such Warrants;
(vi) the designation and terms of the series of Debt Securities, Preferred
Shares or Paired Common Shares with which such Warrants are being offered and
the number of such Warrants being offered with each such security; (vii) the
date, if any, on and after which such Warrants and the related securities will
be transferable separately; (viii) the price at which and currency or
currencies, including composite currencies, in which the securities purchasable
upon exercise of such Warrants may be purchased; (ix) the date on which the
right to exercise such Warrants shall commence and the date on which such right
shall expire (the "Expiration Date"); (x) any material United States federal
income tax consequences; (xi) the terms, if any, on which the Company may
accelerate the date by which the Warrants must be exercised; and (xii) any
other terms of such Warrants, including terms, procedures and limitations
relating to the exchange and exercise of such Warrants.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material federal income tax
considerations that may be relevant to a prospective holder of Securities.
This summary is for information purposes only and is not tax advice. Except as
discussed below, no ruling or determination letters from the IRS have been or
will be requested by the Company on any tax issue connected with this
Registration Statement. This summary is based upon the Code, as currently in
effect, applicable Treasury Regulations thereunder and judicial and
administrative interpretations thereof, all of which are subject to change,
including changes that may be retroactive. No assurance can be given that the
IRS will not challenge the propriety of one or more of the tax positions
described herein or that such a challenge would not be successful.
The tax treatment of a holder of any of the Securities will vary
depending upon the terms of the specific securities acquired by such holder, as
well as such holder's particular situation. The discussion below addresses
federal income tax considerations to holders of Paired Common Shares. Federal
income tax considerations relevant to holders of Securities other than Paired
Common Shares will be provided in the applicable Prospectus Supplement relating
thereto. This summary does not purport to deal with all aspects of taxation
that may be relevant to particular holders of Paired Common Shares or other
Securities in light of their personal investment or tax circumstances. Except
as specifically provided, the discussion below does not address foreign, state,
or local tax consequences, nor does it specifically address the tax
consequences to taxpayers subject to special treatment under the federal income
tax laws (including dealers in securities, foreign persons, life insurance
companies, tax-exempt organizations, financial institutions, and taxpayers
subject to the alternative minimum tax). The discussion below assumes that the
Paired Common Shares are or will be held as capital assets within the meaning
of Section 1221 of the Code. No assurance can be given that legislative,
judicial or administrative changes will not affect the accuracy of any
statements in this Prospectus with respect to transactions entered into or
contemplated prior to the effective date of such changes.
EACH PROSPECTIVE PURCHASER OF SECURITIES IS ADVISED TO CONSULT HIS OR
HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER
-30-
<PAGE> 33
OF THE PURCHASE, OWNERSHIP AND SALE OF SECURITIES, INCLUDING THE FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP
AND SALE AND OF POTENTIAL CHANGES IN THE APPLICABLE TAX LAWS.
FEDERAL INCOME TAXATION OF THE TRUST
BACKGROUND
In 1980, prior to the establishment of the Corporation and the pairing
of its shares with the shares of the Trust, the IRS issued a Private Letter
Ruling (the "Ruling") to the Trust in which the IRS held that the pairing of
the Trust Shares and the Corporation Shares and the operation of the
Corporation would not preclude the Trust from qualifying as a REIT. Subsequent
to the issuance of the Ruling, (i) the IRS announced that it would no longer
issue rulings to the effect that a REIT whose shares are paired with those of a
non-REIT will qualify as a REIT if the activities of the paired entities are
integrated, and (ii) Congress, in 1984, enacted Section 269B of the Code, which
treats a REIT and a non-REIT, the paired shares of which were not paired on or
before June 30, 1983, as one entity for purposes of determining whether either
company qualifies as a REIT. Section 269B of the Code has not applied to the
Trust and the Corporation (since the Trust Shares and the Corporation Shares
were paired prior to that date), and the Ruling's conclusions were not
adversely affected thereby.
In 1994, the Trust requested and received a determination letter from
the IRS (the "IRS Letter"). The IRS Letter provides that the Trust's failure to
send the shareholder demand letters required by the REIT Provisions (defined
below) terminated its election to be taxed as a REIT beginning with the Trust's
taxable year ended December 31, 1991 and permits the Trust to re-elect to be
taxed as a REIT commencing with its taxable year ended December 31, 1995. The
IRS Letter also directed the Trust to file amended federal income tax returns
for its taxable years ended December 31, 1991 and 1992 as a C corporation (and
not as a REIT) and to file its federal income tax returns for its taxable years
ended December 31, 1993 and 1994 as a C corporation. The Trust has filed such
returns. Because the Trust had net losses for federal income tax purposes and
did not pay any dividends during its taxable years ended December 31, 1991,
1992, 1993 and 1994, the IRS Letter did not result in the Trust owing any
federal income tax. The Trust has instituted REIT compliance controls that are
intended to prevent the reoccurrence of any such failure to comply with the
reporting and recordkeeping requirements for REITs.
GENERAL
The Trust will elect to be taxed as a REIT under Sections 856 through
860 of the Code and applicable Treasury Regulations (the "REIT Requirements"
or "REIT Provisions"), commencing with its taxable year ended December 31,
1995. The Trust believes that, commencing with such taxable year, it was
organized and operated in such a manner so as to qualify for taxation as a REIT
and the Trust intends to continue to operate in such a manner; however no
assurance can be given that the Trust has qualified as a REIT or will continue
to so qualify.
The REIT Provisions are highly technical and complex. The following
sets forth the material aspects of the REIT Provisions that govern the federal
income tax treatment of a REIT and its shareholders. This summary is qualified
in its entirety by the REIT Provisions and administrative and judicial
interpretations thereof.
Prior to the issuance of any of the Securities, Sidley & Austin,
counsel to the Company, will render an opinion to the effect that, commencing
with the Trust's taxable year ended December 31, 1995, the Trust was organized
-31-
<PAGE> 34
and has operated in conformity with the requirements for qualification as a
REIT, and its proposed method of operation will enable it to continue to meet
the requirements for qualification and taxation as a REIT under the Code for its
subsequent taxable years. It must be emphasized that Sidley & Austin's opinion
will be based on the IRS Letter and various assumptions and will be conditioned
upon certain representations made by the Trust and the Corporation as to factual
matters. In particular, Sidley & Austin's opinion will be based upon factual
representations of the Trust concerning its business and properties. Moreover,
such qualification and taxation as a REIT depends upon the Trust's ability to
meet, through actual annual operating results, certain distribution levels,
specified diversity of stock ownership, and various other qualification tests
imposed under the REIT Provisions, as discussed below. The Trust's annual
operating results will not be reviewed by Sidley & Austin. Accordingly, no
assurance can be given that the actual results of the Trust's operation for any
particular taxable year will satisfy such requirements. Further, the
anticipated federal income tax treatment described in this Prospectus may be
changed, perhaps retroactively, by legislative, administrative, or judicial
action at any time. For a discussion of the tax consequences of failure to
qualify as a REIT, see "--Failure to Qualify."
As long as the Trust qualifies for taxation as a REIT, it generally
will not be subject to federal corporate income taxes on net income that it
currently distributes to shareholders. This treatment substantially eliminates
the "double taxation" (once at the corporate level and again at the shareholder
level) that generally results from investment in a regular corporation.
Even if the Trust qualifies for taxation as a REIT, however, it may be
subject to federal income or excise tax as follows. First, the Trust will be
taxed at regular corporate rates on any undistributed REIT taxable income (as
discussed below), including undistributed net capital gains. Second, under
certain circumstances, the Trust may be subject to the "alternative minimum tax"
on its items of tax preference, if any. Third, if the Trust has (i) net income
from the sale or other disposition of "foreclosure property" (which is, in
general, property acquired on foreclosure or otherwise on default on a loan
secured by such property or a lease of such property) or (ii) other
non-qualifying income from foreclosure property, it will be subject to tax at
the highest corporate rate on such income. Fourth, if the Trust has net income
from "prohibited transactions" (which are, in general, certain sales or other
dispositions of property, other than foreclosure property, held primarily for
sale to customers in the ordinary course of business), such income will be
subject to a 100% tax. Fifth, if the Trust should fail to satisfy the 75% gross
income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the Trust fails the 75% or
95% test, multiplied by a fraction intended to reflect the Trust's
profitability. Sixth, if the Trust should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Trust will be subject to a
4% excise tax on the excess of such required distributions over the amounts
actually distributed. Seventh, pursuant to IRS Notice 88-19, if the Trust has a
net unrealized built-in gain, with respect to any asset (a "Built-in Gain
Asset") held by the Trust on January 1, 1995 or acquired by the Trust from a
corporation that is or has been a C corporation (i.e., generally a corporation
subject to full corporate-level tax) in certain transactions in which the basis
of the Built-in Gain Asset in the hands of the Trust is determined by reference
to the basis of the asset in the hands of the C corporation, and the Trust
directly or indirectly recognizes gain on the disposition of such asset
during the 10-year period (the "Recognition Period") beginning on January 1,
1995 with respect to assets held by the Trust on such date or, with respect to
other assets, the date on which such asset was acquired by the Trust, then, to
the extent of the Built-in Gain (i.e., the excess of (a) the fair market value
of such asset over (b) the Trust's adjusted basis in such asset, determined as
of the beginning of the Recognition Period), such gain will be subject to tax at
the highest regular corporate rate pursuant to Treasury Regulations that have
not yet been promulgated. The results described above with respect to the
recognition of Built-in Gain assume that the Trust will make an election
pursuant to IRS Notice 88-19. The Trust believes that it will have
Built-in-Gain
-32-
<PAGE> 35
Assets as of January 1, 1995 and, thus, direct or indirect sales of assets by
the Trust after 1994 could result in a federal income tax liability to the
Trust.
REQUIREMENTS FOR QUALIFICATION
To qualify as a REIT, the Trust must elect to be so treated and must
meet on a continuing basis certain requirements (as discussed below) relating
to the Trust's organization, sources of income, nature of assets, and
distribution of income to shareholders.
The Code defines a REIT as a corporation, trust or association: (i)
that is managed by one or more trustees or directors; (ii) the beneficial
ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest; (iii) that would be taxable as a domestic
corporation, but for the REIT Provisions; (iv) that is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(v) the beneficial ownership of which is held by 100 or more persons; (vi)
during the last half of each taxable year not more than 50% in value of the
outstanding stock of which is owned, directly or indirectly, by five or fewer
individuals (defined in the Code to include certain entities); (vii) as of the
close of the taxable year, has no earnings and profits accumulated in any
non-REIT year; (viii) is not electing to be taxed as a REIT prior to the fifth
taxable year which begins after the first taxable year for which its REIT
status terminated or was revoked or the IRS has waived the applicability of
such waiting period; (ix) that has the calendar year as its taxable year; and
(x) that meets certain other tests, described below, regarding the nature of
its income and assets. The REIT Provisions provide that conditions (i) to
(iv), inclusive, must be met during the entire taxable year and that condition
(v) must be met during at least 335 days of a taxable year of 12 months, or
during a proportionate part of a taxable year of less than 12 months.
Conditions (v) and (vi) will not apply until after the first taxable year for
which an election is made by the REIT to be taxed as a REIT.
The Trust believes that it satisfies conditions (i) through (x)
(described above). In addition, the Declaration of Trust and the Articles of
Incorporation provide for restrictions regarding the transfer and ownership of
shares, which restrictions are intended to assist the Trust in continuing to
satisfy the share ownership requirements described in conditions (v) and (vi)
above. See "Description of Paired Common Shares--Ownership Limits: Restrictions
on Transfer; Repurchase and Redemption of Shares." In order to elect to be
taxed as a REIT, the Trust must also maintain certain records and request
certain information from its shareholders designed to disclose the actual
ownership of its stock. The Trust believes that it has and will comply with
these requirements.
In the case of a REIT that is a partner in a partnership, the REIT
Provisions provide that the REIT is deemed to own its proportionate share of
the assets of the partnership and is deemed to be entitled to the income of the
partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership shall retain the same character in
the hands of the REIT for purposes of the REIT Requirements, including
satisfying the gross income tests and the asset tests, described below.
Similar treatment applies with respect to lower-tier partnerships which the
REIT indirectly owns through its interests in higher-tier partnerships. Thus,
the Trust's proportionate share of the assets, liabilities and items of income
of the Realty Partnership and the other partnerships and limited liability
companies in which the Trust owns a direct or indirect interest (collectively,
the "Subsidiary Entities"), will be treated as assets, liabilities and items of
income of the Trust for purposes of applying the requirements described herein,
-33-
<PAGE> 36
provided that the Realty Partnership and the Subsidiary Entities are treated as
partnerships for federal income tax purposes. See "--Federal Income Tax
Aspects of the Partnerships and the Subsidiary Entities" below.
Paired Shares. Section 269B of the Code provides that if the shares
of a REIT and a non-REIT are paired, then the REIT and the non-REIT shall be
treated as one entity for purposes of determining whether either company
qualifies as a REIT. If Section 269B applied to the Trust and the Corporation,
then the Trust would not be able to satisfy the gross income tests (described
below) and thus would not be eligible to be taxed as a REIT. Section 269B does
not apply, however, if the shares of the REIT and the non-REIT were paired on
or before June 30, 1983 and the REIT was taxable as a REIT on or before June
30, 1983. As a result of this grandfathering rule, Section 269B has not
applied to the Trust and the Corporation. This grandfathering rule does not,
by its terms, require that the Trust be taxed as a REIT at all times after June
30, 1983. Prior to the issuance of any of the Securities, Sidley & Austin will
render an opinion to the effect that the IRS Letter and the termination of the
Trust's REIT election for the taxable years ended December 31, 1991 through
1994 did not result in Section 269B becoming applicable to the Trust. There
are, however, no judicial or administrative authorities interpreting this
grandfathering rule. Therefore, Sidley & Austin's opinion will be based
solely on the literal language of the statutory grandfathering rule.
Even though Section 269B of the Code does not apply to the Trust and
the Corporation, the IRS could assert that the Trust and the Corporation should
be treated as one entity under general tax principles. In general, such an
assertion should only be upheld if the separate corporate identities are a sham
or unreal. Not all of the trustees of the Trust are also directors of the
Corporation and no individual serves as an officer of both the Trust and the
Corporation. In addition, the Trust, the Corporation, the Realty Partnership,
the Operating Partnership, each Subsidiary Entity and each partnership or
limited liability company owned in whole or in part by the Operating Partnership
("Operating Subsidiary Entity") have separate creditors and are subject to
different state law licensing and regulatory requirements. The Trust and the
Corporation have represented that they and the Realty Partnership, the Operating
Partnership, the Subsidiary Entities and the Operating Subsidiary Entities will
each maintain separate books and records and all material transactions among
them have been and will be negotiated and structured with the intention of
achieving an arm's-length result. Prior to the issuance of any of the
Securities, Sidley & Austin will render an opinion to the effect that, based on
the foregoing, the separate corporate identities of the Trust and the
Corporation will be respected.
Due to the paired structure, the Trust, the Corporation, the Realty
Partnership, the Operating Partnership, the Subsidiary Entities and the
Operating Subsidiary Entities are controlled by the same interests. As a
result, the IRS could, pursuant to Section 482 of the Code, seek to distribute,
apportion or allocate gross income, deductions, credits or allowances between or
among them if it determines that such distribution, apportionment or allocation
is necessary in order to prevent evasion of taxes or to clearly reflect income.
The Trust and the Corporation believe that all material transactions between
them and among them and the Realty Partnership, the Operating Partnership, the
Subsidiary Entities and the Operating Subsidiary Entities have been and will be
negotiated and structured with the intention of achieving an arm's-length
result. As a result, the potential application of Section 482 of the Code
should not have a material effect on the Trust or the Corporation.
Income Tests. In order to maintain qualification as a REIT, the Trust
must annually satisfy three gross income requirements (the "gross income
tests"). First, at least 75% of the Trust's gross income (excluding gross
income from prohibited transactions) for each taxable year must consist of
defined types of income derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property," as described below, and in certain circumstances, interest) or
from certain types of qualified temporary investments. Second, at least 95% of
the Trust's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived from the same items which qualify under
the 75% income test and from dividends, interest, and gain from the sale or
disposition of stock or securities that do not constitute dealer property or
from any combination of the foregoing. Third, short-term gain from the sale or
other disposition of stock or securities, gain from
-34-
<PAGE> 37
prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the Trust's
gross income (including gross income from prohibited transactions) for each
taxable year.
Rents received or deemed to be received by the Trust will qualify as
"rents from real property" for purposes of the gross income tests only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales (or items thereof). Second, the Code provides
that rents received from a tenant will not qualify as "rents from real
property" in satisfying the gross income tests if the REIT, or a direct or
indirect owner of 10% or more of the REIT directly or indirectly, owns 10% or
more of such tenant (a "Related Party Tenant"). Third, if rent attributable to
personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." Finally, a REIT may provide services to its tenants and the
income will qualify as "rents from real property" only if the services are of a
type that a tax-exempt organization can provide to its tenants without causing
its rental income to be unrelated business taxable income under the Code.
Services that would give rise to unrelated business taxable income if provided
by a tax-exempt organization ("Prohibited Services") must be provided by an
"independent contractor" who is adequately compensated and from whom the REIT
does not derive any income. Payments for services furnished (whether or not
rendered by an independent contractor) that are not customarily provided to
tenants in properties of a similar class in the geographic market in which the
REIT's property is located will not qualify as "rents from real property."
Substantially all of the Trust's income will be derived from its
partnership interest in the Realty Partnership and the Subsidiary Entities. The
Realty Partnership and the Subsidiary Entities lease for a fixed period all of
their fee and leasehold interests in their hotels and associated property to the
Operating Partnership, to the Operating Subsidiary Entities or to unrelated
persons (the "Leases"). The Leases are net leases which generally provide for
payment of rent equal to the greater of a fixed rent or a percentage rent. The
percentage rent is calculated by multiplying fixed percentages of the gross room
revenues and, for certain hotels, fixed percentages of other types of gross
revenues in excess of certain levels.
In order for the rents paid under the Leases to constitute "rents from
real property," the Leases must be respected as true leases for federal income
tax purposes and not treated as service contracts, joint ventures or some other
type of arrangement. The determination of whether the Leases are true leases
depends upon an analysis of all of the surrounding facts and circumstances. In
making such a determination, courts have considered a variety of factors,
including the intent of the parties, the form of the agreement, the degree of
control over the property that is retained by the property owner and the extent
to which the property owner retains the risk of loss with respect to the
property.
Prior to the issuance of any of the Securities, Sidley & Austin will
render an opinion to the effect that the Leases will be treated as true leases
for federal income tax purposes. This opinion will be based, in part, on the
following facts: (i) the lessors and the lessees intend for their relationship
to be that of lessor and lessee and each such relationship will be documented by
a lease agreement; (ii) the lessees will have the right to exclusive possession
and use and quiet enjoyment of the leased premises during the term of the
Leases; (iii) the lessees will bear the cost of, and be responsible for,
day-to-day maintenance and repair of the leased premises, other than the cost of
certain capital expenditures, and will dictate how the leased premises are
operated and maintained; (iv) the lessees will bear all of the costs and
expenses of operating the leased premises during the term of the Leases; (v) the
term of the Leases is less than the economic life of the leased premises and the
lessees do not have purchase options with respect to the leased premises; (vi)
the lessees are required to pay substantial fixed rent during the term of the
Leases; and (vii) each lessee stands to incur substantial losses or reap
substantial profits depending on how successfully it operates the leased
premises.
-35-
<PAGE> 38
Investors should be aware, however, that there are not controlling
authorities involving leases with terms substantially the same as the Leases.
Therefore, the opinion of Sidley & Austin will be based upon an analysis of
the facts and circumstances and upon rulings and judicial decisions involving
situations that are analogous. If any significant Lease is recharacterized
as a service contract or a partnership agreement, rather than as a true lease,
the Trust would not be able to satisfy either the 75% or 95% gross income
tests and, as a result, would lose its REIT status.
In order for rent payments under the Leases to qualify as "rents from
real property," the rent must not be based on the income or profits of any
person. The percentage rent under the Leases will qualify as "rents from real
property" if it is based on percentages of receipts or sales and the
percentages (i) are fixed at the time the Leases are entered into; (ii) are not
renegotiated during the term of the Leases in a manner that has the effect of
basing percentage rent on income or profits; and (iii) conform with normal
business practice. More generally, percentage rent will not qualify as "rents
from real property" if, considering the Leases and all the surrounding
circumstances, the arrangement does not conform with normal business practice,
but is in reality used as a means of basing the percentage rent on income or
profits. The Trust and the Corporation believe that the Leases conform with
normal business practice and the percentage rent will be treated as "rents from
real property" under this requirement. The Trust has further represented with
respect to hotel properties that the Realty Partnership may directly or
indirectly acquire in the future that it will not charge rent that is based in
whole or in part on the income or profits of any person (except by reason of
being based on a fixed percentage of receipts or sales, as described above).
Another requirement for rent payments under a Lease to constitute
"rents from real property" is that the rent attributable to personal property
under the Lease must not be greater than 15% of the rent received under the
Lease. For this purpose, rent attributable to personal property is the amount
that bears the same ratio to the total rent for the taxable year as the average
of the adjusted basis of the personal property at the beginning and at the end
of the taxable year bears to the average of the aggregate adjusted basis of
both the real property and personal property leased under, or in connection
with, such lease. The Trust believes that under each of the Leases less than
15% of the total rent is attributable to personal property and, as a result, no
portion of such rent will be treated as being for rental of personal property
for purposes of the 75% and 95% gross income tests. If the IRS were to
successfully assert that with respect to one or more of the Leases rent
attributable to personal property is greater than 15% of the total rent, then
it is possible that the Trust would not be able to satisfy either the 75% or
95% gross income tests and, as a result, would lose its REIT status. With
respect to both the Leases and future acquisitions, the Trust has represented
that it will monitor the 15% test to ensure continued qualification as a REIT.
A third requirement for qualification of rent under the Leases as
"rents from real property" is that the Trust must not own, directly or
constructively, 10% or more of the Operating Partnership or any Operating
Subsidiary Entity (or any other tenant under a Lease). If the Trust were to own
directly or indirectly, 10% or more of the Operating Partnership or any
Operating Subsidiary Entity (or such tenant), the rent paid by the tenant with
respect to the leased property would not qualify as income of the type that can
be received by a REIT. In order to prevent such a situation, which would likely
result in the disqualification of the Trust as a REIT, the Declaration of Trust
and the Articles of Incorporation contain restrictions on the amount of Trust
Shares and Corporation Shares that any one person can own. These restrictions
generally provide that any attempt by any one person to actually or
constructively acquire 8.0% or more of the outstanding Paired Common Shares will
be ineffective. See "Description of Paired Common Shares--Ownership Limits;
Restrictions on Transfer; Repurchase and Redemption of Shares." However,
notwithstanding such restrictions, because the Code's constructive ownership
rules for purposes of the 10% ownership limit are broad and it is not possible
to continually monitor direct and indirect ownership of Paired Common Shares, it
is possible that some person may at some time own sufficient Paired Common
Shares to cause the termination of the Trust's REIT status.
-36-
<PAGE> 39
Finally, rent under the Leases will not qualify as "rents from real
property" if either the Trust, the Realty Partnership or any Subsidiary Entity
renders or furnishes Prohibited Services to the occupants of the properties. So
long as the Leases are treated as true leases, none of the Trust, the Realty
Partnership or any Subsidiary Entity should be treated as rendering or
furnishing Prohibited Services to the occupants of the properties.
Based on the foregoing, prior to the issuance of any of the Securities,
Sidley & Austin will render an opinion to the effect that the rent payable
under the Leases will be treated as "rents from real property" for purposes of
the 75% and 95% gross income tests. There can, however, be no assurance that
the IRS will not successfully assert a contrary position or that there will not
be a change in circumstances (such as the entering into of new leases) which
would result in a portion of the rent received to fail to qualify as "rents
from real property." In such case, it is possible that the Trust would not be
able to satisfy either the 75% or 95% gross income test and, as a result, would
lose its REIT status.
For purposes of the gross income tests, the term "interest" generally
does not include any amount received or accrued (directly or indirectly) if the
determination of such amount depends in whole or in part on the income or
profits of any person. However, an amount received or accrued generally will
not be excluded from the term "interest" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. The Realty Partnership
and certain of the Subsidiary Entities hold notes and may advance money from
time to time to tenants for the purpose of financing tenant improvements,
making real estate loans or holding or acquiring additional notes. None of the
notes currently held by the Realty Partnership or the Subsidiary Entities
provide for the payment of any amount based on the income or profits of any
person other than amounts based, on a fixed percentage or percentages of
receipts or sales. In addition, none of the Trust, the Realty Partnership or
the Subsidiary Entities intend to charge interest that will depend in whole or
in part on the income or profits of any person or to make loans (not secured in
substantial part by real estate mortgages) in amounts that could jeopardize the
Trust's compliance with the 75% and 5% asset tests, discussed below. To the
extent the notes held by the Realty Partnership or the Subsidiary Entities are
secured by real property, the interest received or accrued with respect to such
notes should be treated as qualifying income for both the 75% and the 95% gross
income tests. Certain of the notes held by the Realty Partnership are not
secured by real property. Interest received or accrued with respect to such
notes should be treated as qualifying income for the 95% gross income test but
should not be treated as qualifying income for the 75% gross income tax.
However, the Company believes that the amount of such interest will not cause
the Trust to fail to satisfy the 75% gross income test.
Any gross income derived from a prohibited transaction is taken into
account in applying the 30% income test necessary to qualify as a REIT, and the
net income from that transaction is subject to a 100% tax. The Trust believes
that no asset directly or indirectly owned by it is held for sale to customers
and that sale of any such property will not be in the ordinary course of
business of the Trust, the Realty Partnership or any Subsidiary Entity.
If the Trust fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
It is not possible to state whether in all circumstances the Trust would
be entitled to the benefit of these relief provisions. Even if these relief
provisions apply, a tax would be imposed
-37-
<PAGE> 40
with respect to the excess net income. No similar mitigation provision applies
if the Trust fails the 30% income test. In such case, the Trust will cease to
qualify as a REIT.
Asset Tests. In order to maintain qualification as a REIT, the Trust,
at the close of each quarter of its taxable year, must also satisfy three tests
relating to the nature of its assets. First, at least 75% of the value of the
Trust's total assets must be represented by "real estate assets" (including
stock or debt instruments held for not more than one year purchased with the
proceeds of a stock offering or long-term (at least five years) debt offering
of the Trust), cash, cash items and government securities. Second, not more
than 25% of the Trust's total assets may be represented by securities other
than those in the 75% asset class. Third, of the investments included in the
25% asset class, the value of any one issuer's securities owned by the Trust
may not exceed 5% of the value of the Trust's total assets, and the Trust may
not own more than 10% of any one issuer's outstanding voting securities.
The Trust believes that commencing with its taxable year ended
December 31, 1995 it has complied with the asset tests. Substantially all of
the Trust's investments are in properties owned by the Realty Partnership and
the Subsidiary Entities, at least 75% of which represent qualifying real
estate assets. A substantial portion of the indebtedness of the Operating
Partnership to the Realty Partnership may not be qualifying assets under the
75% asset test. However, such portion does not exceed 5% of the value of the
assets of the Realty Partnership and, thus, will not cause the Trust to fail
the 5% asset test.
After initially meeting the asset tests at the close of any quarter,
the Trust will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition
of securities or other property during a quarter, the failure can be cured by
disposition of sufficient non-qualifying assets within 30 days after the close
of that quarter. The Trust intends to maintain adequate records of the value
of its assets to ensure compliance with the asset tests and to take such
actions within 30 days after the close of any quarter as may be required to
cure any non-compliance.
Annual Distribution Requirements. The Trust, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends)
to its shareholders in an amount at least equal to (i) the sum of (a) 95% of
the Trust's "REIT taxable income" (computed without regard to the dividends
paid deduction and the Trust's net capital gain) and (b) 95% of the net income
(after tax), if any, from foreclosure property, minus (ii) the sum of certain
items of non-cash income. In addition, if the Trust directly or indirectly
disposes of any Built-in Gain Asset during its Recognition Period, the Trust
will be required, pursuant to IRS regulations that have not yet been
promulgated, to distribute at least 95% of the Built-in Gain (after tax), if
any, recognized on the disposition of such asset. Distributions must be paid
in the taxable year to which they relate, or in the following taxable year if
declared before the Trust timely files its tax return for such year and if paid
on or before the first regular dividend payment after such declaration. To the
extent that the Trust does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax thereon at regular ordinary and capital
gain corporate tax rates. Furthermore, if the Trust should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT capital gain income for such year,
and (iii) any undistributed taxable income from prior periods, the Trust will be
subject to a 4% excise tax on the excess of such required distribution over the
amounts actually distributed.
-38-
<PAGE> 41
The Trust intends to make timely distributions sufficient to satisfy
the annual distribution requirements and to the extent practical, avoid payment
of material amounts of federal income or excise tax by the Trust. It is
possible, however, that the Trust, from time to time may not have sufficient
cash or other liquid assets to meet the distribution requirements described
above. In order to meet the distribution requirements in such cases, the
Trust, the Realty Partnership or a Subsidiary Entity may find it necessary to
arrange for short-term or possible long-term borrowings or to pay dividends
in the form of taxable stock dividends.
Under certain circumstances, the Trust may be able to rectify a
failure to meet the distribution requirements for a year by paying
"deficiency dividends" to shareholders in a later year, which may be included
in the Trust's deduction for dividends paid for the earlier year. Thus, the
Trust may be able to avoid being taxed on amounts distributed as deficiency
dividends; however, the Trust will be required to pay interest based upon the
amount of any deduction taken for deficiency dividends.
FAILURE TO QUALIFY
If the Trust fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the Trust will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which
the Trust fails to qualify will not be deductible by the Trust nor will they be
required to be made. As a result, the Trust's failure to qualify as a REIT
could reduce the cash available for distribution by the Trust to its
shareholders. In addition, if the Trust fails to qualify as a REIT, all
distributions to shareholders will be taxable as ordinary income to the extent
of the Trust's current and accumulated earnings and profits, and, subject to
certain limitations of the Code, corporate distributees may be eligible for the
dividends-received deduction. Unless entitled to relief under specific
statutory provisions, the Trust will also be disqualified from taxation as a
REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances the Trust
would be entitled to such statutory relief.
FEDERAL INCOME TAXATION OF THE CORPORATION
The Corporation is the common parent of an affiliated group of
corporations filing a consolidated return (the "Corporation Group"). After
obtaining certain necessary licenses and regulatory approvals of certain gaming
authorities, substantially all of the Corporation Group's taxable income will
consist of its distributive share of the Operating Partnership's taxable
income. The Corporation Group will be subject to federal
income tax on its taxable income.
FEDERAL INCOME TAXATION OF HOLDERS OF PAIRED COMMON SHARES
FEDERAL INCOME TAXATION OF TAXABLE U.S. HOLDERS
As used herein, the term "U.S. Shareholder" means a holder of Paired
Common Shares who is: (i) a citizen or resident of the United States; (ii) a
corporation, partnership, or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof; or (iii)
an estate or trust the income of which is subject to U.S. federal income
taxation regardless of its source. As long as the Trust qualifies as a REIT,
distributions made to the Trust's U.S. Shareholders up to the amount of the
-39-
<PAGE> 42
Trust's current or accumulated earnings and profits (and not designated as
capital gain dividends) will be taken into account by them as ordinary income
and will not be eligible for the dividends-received deduction for corporations.
Distributions that are properly designated by the Trust as capital gain
dividends will be taxed as long-term capital gain (to the extent they do not
exceed the Trust's actual net capital gain for the taxable year) without regard
to the period for which the holder has held its stock. However, corporate
holders may be required to treat up to 20% of certain capital gain dividends as
ordinary income, and capital gains dividends are not eligible for the
dividends-received deduction. Distributions in excess of the Trust's current
and accumulated earnings and profits will not be taxable to a holder to the
extent that they do not exceed the adjusted basis of the holder's Trust Shares,
but rather will reduce the adjusted basis of such Trust Shares. To the extent
that such distributions exceed the adjusted basis of a holder's Trust Shares
they will be included in income as long-term capital gain (or short-term
capital gain if the shares have been held for one year or less). In addition,
any dividend declared by the Trust in October, November or December of any year
payable to a holder of record on a specified date in any such month shall be
treated as both paid by the Trust and received by the holder on December 31 of
such year, provided that the dividend is actually paid by the Trust during
January of the following calendar year.
The Trust will be treated as having sufficient earnings and profits to
treat as a dividend any distribution by the Trust up to the amount required to
be distributed in order to avoid imposition of the 4% excise tax discussed
above. As a result, holders may be required to treat certain distributions
that would otherwise result in a tax-free return of capital as taxable
distributions. Moreover, any "deficiency dividend" will be treated as a
"dividend" (either as ordinary or capital gain dividend, as the case may be),
regardless of the Trust's earnings and profits.
Distributions from the Trust and gain from the disposition of the
Trust Shares will not be treated as passive activity income and, therefore,
shareholders will not be able to apply any "passive losses" against such income.
Dividends from the Trust (to the extent they do not constitute a return of
capital) will generally be treated as investment income for purposes of the
investment interest expense limitation. Gain from the disposition of shares
and capital gains dividends will not be treated as investment income unless the
holders elect to have the gain taxed at ordinary income rates.
Distributions from the Corporation up to the amount of the
Corporation's current or accumulated earnings and profits will be taken into
account by U.S. Shareholders as ordinary income and will be eligible for the
dividends-received deduction for corporations. Distributions in excess of the
Corporation's current and accumulated earnings and profits will not be taxable
to a holder to the extent that they do not exceed the adjusted basis of the
holder's Corporation Shares, but rather will reduce the adjusted basis of such
Corporation Shares. To the extent that such distributions exceed the adjusted
basis of a holder's Corporation Shares they will be included in income as
long-term capital gain (or short-term capital gain if the stock has been held
for one year or less).
In general, a U.S. Shareholder will realize capital gain or loss on
the disposition of Paired Common Shares equal to the difference between the
amount realized on such disposition and the holder's adjusted basis in such
Paired Common Shares. Such gain or loss will generally constitute long-term
capital gain or loss if the holder held such Paired Common Shares for more than
one year. However, any loss upon a sale or exchange of Trust Shares by a
holder who has held such shares for six months or less (after applying certain
holding period rules) will be treated as a long-term capital loss to the extent
of distributions from the Trust required to be treated by such holder as
long-term capital gain.
U.S. Shareholders may not include in their individual income tax
returns any net operating losses or capital losses of the Trust or the
Corporation.
FEDERAL TAXATION OF TAX-EXEMPT HOLDERS OF PAIRED COMMON SHARES
-40-
<PAGE> 43
The IRS has ruled that amounts distributed as dividends by a REIT to a
tax-exempt employee's pension trust do not constitute unrelated business
taxable income ("UBTI"). Based on this ruling and the analysis therein,
distributions by the Trust should not, subject to certain exceptions described
below, be UBTI to a qualified plan, IRA or other tax-exempt entity (a "Tax-
Exempt Shareholder") provided the Tax-Exempt Shareholder has not held its
shares as "debt financed property" within the meaning of the Code and the
shares are not otherwise used in an unrelated trade or business of the
Tax-Exempt Shareholder. Similarly, income from the sale of Trust Shares should
not, subject to certain exceptions described below, constitute UBTI unless the
Tax-Exempt Shareholder has held such Trust Shares as a dealer (under Section
512(b)(5)(B) of the Code) or as "debt-financed property" within the meaning of
Section 514 of the Code. Revenue rulings are interpretive in nature and
subject to revocation or modification by the IRS.
For Tax-Exempt Shareholders that are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans, exempt from federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code respectively, income from an
investment in the Trust will constitute UBTI unless the organization is able to
deduct properly amounts set aside or placed in reserve for certain purposes so
as to offset the income generated by its investment in the Trust. Such
prospective investors should consult their tax advisors concerning these
"set-aside" and reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by
a "pension held REIT" shall (subject to a de minimis exception) be treated as
UBTI as to any trust that (i) is described in Section 401 (a) of the Code, (ii)
is tax-exempt under Section 501(a) of the Code, and (iii) holds more than 10%
(by value) of the interests in the REIT. Due to the Ownership Limitation, the
Trust does not expect to be a "pension held REIT" within the meaning of the
Code.
FEDERAL TAXATION OF NON-US. HOLDERS OF PAIRED COMMON SHARES
The rules governing United States federal income taxation of the
ownership and disposition of stock by persons that are, for purposes of such
taxation, non-resident alien individuals, foreign corporations, foreign
partnerships, or foreign estates or trusts (collectively, "Non-U.S.
Shareholders") are complex, and no attempt is made herein to provide more than
a brief summary of such rules. Accordingly, the discussion does not address
all aspects of United States federal income tax and does not address state,
local or foreign tax consequences that may be relevant to a Non-U.S.
Shareholder in light of its particular circumstances. Prospective Non-U.S.
Shareholders should consult with their own tax advisors to determine the effect
of federal, state, local, and foreign income tax laws with regard to an
investment in Paired Common Shares, including any reporting requirements.
In general, a Non-U.S. Shareholder will be subject to regular United
States income tax with respect to its investment in Paired Common Shares if
such investment is "effectively connected" with the Non-U.S. Shareholder's
conduct of a trade or business in the United States. A corporate Non-U.S.
Shareholder that receives income that is (or is treated as) effectively
connected with a United States trade or business may also be subject to the
branch profits tax under Section 884 of the Code, which is payable in addition
to regular United States corporate income tax. The following discussion will
apply to Non-U.S. Shareholders whose investment in Paired Common Shares is not
so effectively connected.
-41-
<PAGE> 44
Distributions. Distributions by the Trust to a Non-U.S. Shareholder
that are neither attributable to gain from sales or exchanges by the Trust of
United States real property interests nor designated by the Trust as capital
gains dividends and distributions by the Corporation will be treated as
dividends of ordinary income to the extent that they are made out of current or
accumulated earnings and profits of the Trust or the Corporation, as the case
may be. Such distributions ordinarily will be subject to United States
withholding tax on a gross basis at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty. Distributions in excess of
current or accumulated earnings and profits of the Trust or the Corporation, as
the case may be, will not be taxable to a Non-U.S. Shareholder to the extent
that they do not exceed the adjusted basis of the Non-U.S. Shareholder's Trust
Shares or Corporation Shares, as the case may be, but rather will reduce the
adjusted basis of such shares. To the extent that such distributions exceed
the adjusted basis of a Non-U.S. Shareholder's Trust Shares or Corporation
Shares, as the case may be, they will give rise to gain from the sale or
exchange of Non-U.S. Shareholder's Paired Common Shares if the Non-U.S.
Shareholder otherwise would be subject to tax on any gain from the sale or
other disposition of Paired Common Shares, as described below. If it cannot be
determined at the time a distribution is made whether or not such distribution
will be in excess of current or accumulated earnings and profits, the
distribution will generally be treated as a dividend for withholding purposes.
However, amounts thus withheld are generally refundable if it is subsequently
determined that such distribution was, in fact, in excess of current or
accumulated earnings and profits of the Trust or the Corporation, as the case
may be. The Trust and the Corporation expect to withhold United States income
tax at the rate of 30% on the gross amount of any such distributions made to a
Non-U.S. Shareholder unless (i) a lower rate is provided for under an
applicable tax treaty and the shareholder files the required form evidencing
eligibility for that reduced rate with the Trust and the Corporation, or (ii)
the Non-U.S. Shareholder files an IRS Form 4224 with the Trust and the
Corporation claiming that the distribution is "effectively connected" income.
Distributions to a Non-U.S. Shareholder that are attributable to gain
from sales or exchanges by the Trust of United States real property interests
will cause the Non-U.S. Shareholder to be treated as recognizing such gain as
income effectively connected with a United States trade or business. Non-U.S.
Shareholders would thus generally be taxed at the same rates applicable to U.S.
Shareholders (subject to any applicable alternative minimum tax and a special
alternative minimum tax in the case of non-resident alien individuals). Also,
such gain may be subject to a 30% branch profits tax in the hands of a Non-U.S.
Shareholder that is a corporation, that is not entitled to an exemption under a
tax treaty. The Trust is required to withhold and remit to the IRS 35% of any
distribution that could be designated a capital gains dividend. That amount is
creditable against the Non-U.S. Shareholder's United States federal income tax
liability.
Sale of Paired Common Shares. Gain recognized by a Non-U.S.
Shareholder upon a sale or other disposition of Paired Common Shares generally
will not be subject to United States federal income tax, if (i) in the case of
Trust Shares, the Trust is a "domestically controlled REIT" or (ii) (A) the
Paired Common Shares are regularly traded on an established securities market
(e.g., the NYSE, where the Paired Common Shares are currently traded) and (B)
the Selling Non-U.S. Shareholder held 5% or less of the outstanding Paired
Common Shares at all times during specified period, unless, in the case of a
Non-U.S. Shareholder who is a non-resident alien individual, such individual
is present in the United States for 183 days or more and certain other
conditions apply. A domestically controlled REIT is defined generally as a
REIT in which at all times during a specified testing period less than 50% in
value of the stock was held directly or indirectly by foreign persons. The
Trust believes that it qualifies as a domestically controlled REIT.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
Under certain circumstances, U.S. Shareholders may be subject to
backup withholding at a rate of 31% on payments made with respect to, or on
cash proceeds of a sale or exchange of, Paired Common
-42-
<PAGE> 45
Shares. Backup withholding will apply only if the holder: (i) fails to furnish
its taxpayer identification number ("TIN") (which, for an individual, would be
his or her Social Security number); (ii) furnishes an incorrect TIN; (iii) is
notified by the IRS that the holder has failed to report properly payments of
interest and dividends; or (iv) under certain circumstances, fails to certify,
under penalty of perjury, that the holder has furnished a correct TIN and has
not been notified by the IRS that the holder is subject to backup withholding
for failure to report interest and dividend payments. Backup withholding will
not apply with respect to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. In addition, the Trust and the
Corporation may be required to withhold a portion of capital gain distributions
made to any holders who fail to certify their non-foreign status. Additional
issues may arise pertaining to information reporting and withholding with
respect to Non-U.S. Shareholders and each Non-U.S. Shareholder should consult
his or her tax advisor with respect to any such information reporting and
withholding requirements.
FEDERAL INCOME TAX ASPECTS OF THE PARTNERSHIPS AND THE SUBSIDIARY ENTITIES
Substantially all of the Trust's assets are held directly or indirectly
through the Realty Partnership and, after obtaining certain necessary licenses
and regulatory approvals of certain gaming authorities, substantially all of
the Corporation's (and its subsidiaries') assets will be held directly or
indirectly through the Operating Partnership.
The Realty Partnership, the Operating Partnership, the Subsidiary
Entities and the Operating Subsidiary Entities involve special tax
considerations, including the possibility of a challenge by the IRS of the
status of any of such partnerships or limited liability companies as a
partnership (as opposed to an association taxable as a corporation) for federal
income tax purposes. If any of such partnerships or limited liability
companies were to be treated as an association, it would be taxable as a
corporation and, therefore, subject to an entity level tax on its income. Such
an entity level tax is likely to substantially reduce the amount of cash
available for distribution to holders of Paired Common Shares. See "--Federal
Income Taxation of the Corporation" above. In addition, if the Realty
Partnership or any Subsidiary Entity were to be taxable as a corporation, the
Trust would not qualify as a REIT. Furthermore, any change in the status
of a partnership or limited liability company for tax purposes might be
treated as a taxable event in which case the Trust or the Corporation might
incur a tax liability without any related cash distributions.
The Company has not requested and does not intend to request, a ruling
from the IRS regarding treatment of any partnership or limited liability
-43-
<PAGE> 46
company in which it owns an interest as a partnership for federal income tax
purposes. Instead, prior to the issuance of any of the Securities, Sidley &
Austin will render an opinion to the effect that, based on certain factual
assumptions and representations, each of the Realty Partnership, the Operating
Partnership, the Subsidiary Entities and the Operating Subsidiary Entities
will be classified as a partnership for federal income tax purposes. Unlike
a private letter ruling, an opinion of counsel is not binding on the IRS, and
no assurance can be given that the IRS will not challenge the status of a
partnership or limited liability company as a partnership for federal income
tax purposes. If such a challenge were sustained by a court, the subject
partnership or limited liability company would be treated as an association
taxable as a corporation for federal income tax purposes. In addition, the
opinion of Sidley & Austin will be based on existing law. No assurance
can be given that administrative or judicial changes would not modify the
conclusions expressed in the opinion.
TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES
Pursuant to Section 704(c) of the Code, income, gain, loss and
deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership,
must be allocated in a manner such that the contributing partner is charged
with, or benefits from, respectively, the unrealized gain or unrealized loss
associated with the property at the time of the contribution. The amount of
such unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of the contributed property at the time of
contribution and the adjusted tax basis of such property at the time of
contribution (a "Book-Tax Difference"). Such allocations are solely for
federal income tax purposes and do not affect the book capital accounts or
other economic or legal arrangements among the partners. The Realty
Partnership and the Operating Parntership have been formed by way of
contributions of the Company's property and certain property held by Starwood
Capital. Consequently, allocations with respect to such contributed property
must be made in a manner consistent with Section 704(c) of the Code.
-44-
<PAGE> 47
The Treasury Regulations under Section 704(c) of the Code allow
partnerships to use any reasonable method of accounting for Book-Tax
Differences so that the contributing partner receives the tax benefits and
burdens of any built-in gain or loss associated with the contributed property.
However, the special allocation rules of Section 704(c) of the Code do not
always entirely eliminate the Book-Tax Difference on an annual basis or with
respect to a specific taxable transaction such as a sale. Thus, the carryover
basis of the contributed assets in the hands of the Realty Partnership or the
Operating Partnership may cause the Trust or the Corporation, as the case may
be, to be allocated lower depreciation and other deductions, and possibly an
amount of taxable income in the event of a sale of such contributed assets in
excess of the economic or book income allocated to it as a result of such sale.
This may cause the Trust or the Corporation to recognize taxable income in
excess of cash proceeds, which, in the case of the Trust, might adversely
affect the Trust's ability to comply with the REIT distribution requirements.
See "--Federal Income Taxation of the Trust--Requirements For Qualification--
Annual Distribution Requirements." The foregoing principles also apply in
determining the earnings and profits of the Trust and the Corporation for
purposes of determining the portion of distributions taxable as dividend
income. See "--Federal Income Taxation of Holders of Paired Common Shares."
The application of these rules over time may result in a higher portion of
distributions being taxed as dividends than would have occurred had the Trust
and the Corporation contributed assets with an adjusted tax basis equal to
their fair market values.
PARTNERSHIP ANTI-ABUSE RULE
The IRS has published regulations that provide an anti-abuse rule
(the "Anti-Abuse Rule") under the partnership provisions of the Code (the
"Partnership Provisions"). Under the Anti-Abuse Rule, if a partnership is
formed or availed of in connection with a transaction a principal purpose of
which is to reduce substantially the present value of the partners' aggregate
federal tax liability in a manner that is inconsistent with the intent of the
Partnership Provisions, the IRS can recast the transaction for federal tax
-45-
<PAGE> 48
purposes to achieve tax results that are consistent with the intent of the
Partnership Provisions. This analysis is to be made based on all facts and
circumstances. The Anti-Abuse Rule states that the intent of the Partnership
Provisions incorporates the following requirements: (i) the partnership must be
bona fide and each partnership transaction or series of related transactions
must be entered into for a substantial business purpose; (ii) the form of each
partnership transaction must be respected under substance over form principles;
and (iii) with certain exceptions, the tax consequences under the Partnership
Provisions to each partner of partnership operations and the transactions
between the partner and the partnership must accurately reflect the partner's
economic agreement and clearly reflect the partner's income.
Prior to the issuance of any of the Securities, Sidley & Austin will
render an opinion to the effect that the Company's structure is not
inconsistent with the intent of the Partnership Provisions and that, therefore,
the IRS should not be able to invoke the Anti-Abuse Rule to recast the
structure of the Company for federal income tax purposes. This opinion will be
based on examples contained in the Anti-Abuse Rule. However, no assurance
can be given that the IRS or a court will concur with such opinion.
The Anti-Abuse Rule also provides that, unless a provision of the Code
or the Treasury Regulations prescribes the treatment of a partnership as an
entity, in whole or in part, and that treatment and the ultimate tax results,
taking into account all the relevant facts and circumstances, are clearly
contemplated by that provision, the IRS can treat a partnership as an aggregate
of its partners, in whole or in part, as appropriate to carry out the purpose
of any provision of the Code or the Treasury Regulations. Treatment of either
Partnership or any of the Subsidiary Entities, in whole or in part, as an
aggregate rather than an entity is unlikely to materially change the federal
tax consequences to any partner. In addition, the REIT Provisions generally
treat a partnership as an aggregate rather than an entity for purposes of
applying the REIT Requirements. Therefore, the Anti-Abuse Rule should not have
a material adverse effect on the federal income tax consequences to any partner
or on the ability of the Trust to qualify as a REIT.
OTHER TAX CONSEQUENCES
The Company and the holders of Securities may be subject to state or
local taxation in various jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Trust,
the Corporation and the holders of Securities may not conform to the federal
income tax consequences discussed above. CONSEQUENTLY, HOLDERS OF SECURITIES
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL
TAX LAWS ON THE PURCHASE, OWNERSHIP AND SALE OF SECURITIES.
PLAN OF DISTRIBUTION
The Trust and the Corporation may sell Securities to or through
underwriters, and also may sell Securities directly to either purchasers or
through agents.
The distribution of the Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Trust, the Corporation, or from purchasers of Securities,
for whom they may act as agents, in the form of discounts, concessions, or
commissions. Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions, or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers, and agents that
participate in the distribution of Securities may be deemed to be underwriters,
and any discounts or commissions
-46-
<PAGE> 49
they receive from the Trust or the Corporation and any profit on the resale of
Securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Trust or the
Corporation will be described, in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Paired Common Shares which are listed on the NYSE. Any Paired
Common Shares sold pursuant to a Prospectus Supplement will be listed on such
exchange. The Trust or the Corporation may elect to list any series of Debt
Securities or Preferred Shares on an exchange, but is not obligated to do so.
It is possible that one or more underwriters may make a market in a series of
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of the trading market for any of the Securities.
Under agreements the Trust and the Corporation may enter into,
underwriters, dealers, and agents who participate in the distribution of
Securities may be entitled to indemnification by the Trust or the Corporation
against certain liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Trust or the Corporation in the
ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Trust or
the Corporation, as the case may be, will authorize underwriters or other
persons acting as the Trust's or the Corporation's agents to solicit offers by
certain institutions to purchase Securities from the Trust or the Corporation
pursuant to contracts providing for payment and delivery at a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Trust or the Corporation, as the case may
be. The obligations of any purchaser under any such contract will be subject
to the condition that the purchase of the Securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
LEGAL MATTERS
Sidley & Austin, Chicago, Illinois, has passed upon the validity of
the issuance of the Securities offered pursuant to this Prospectus. Lawyers at
Sidley & Austin own or hold options to purchase an aggregate of 12,227 Paired
Common Shares. Rogers & Wells, New York, New York will act as counsel to any
underwriters, dealers or agents. Rogers & Wells acted as counsel to Starwood
Capital in connection with the Reorganization. Sidley & Austin and Rogers &
Wells will rely upon the opinion of Piper & Marbury L.L.P., Baltimore,
Maryland, as to certain matters of Maryland law.
EXPERTS
The separate and combined financial statements and financial statement
schedules of Starwood Lodging Trust and Starwood Lodging Corporation as of
December 31, 1995 and for the year then ended, appearing in the Company's
Annual Report on Form 10-K for the year December 31, 1995, and the financial
statements of the Terrace Gardens and Lenox Inn for the year ended December 31,
1995, appearing in the Company's Current Report on Form 8-K, dated January 4,
1996, incorporated by reference in this Prospectus, have been audited by
Coopers & Lybrand L.L.P., independent auditors, as stated in their reports also
incorporated by reference herein. Such financial statements and financial
statement schedules have been incorporated by reference herein in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The separate and combined financial statements and financial statement
schedules of Starwood Lodging Trust and Starwood Lodging Corporation as of
December 31, 1994 and for each of the two years in the period ended December
31, 1994 incorporated by reference in this Prospectus, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports also
incorporated by reference herein. Such financial statements and financial
statement schedules have been incorporated by reference herein in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
-47-
<PAGE> 50
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT, DEALER OR
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OR AN OFFER TO BUY, ANY SECURITY OTHER THAN THE REGISTERED
SECURITIES OF THE COMPANY OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES BY ANYONE IN
ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
__________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Ratios of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Paired Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
===============================================================================
===============================================================================
STARWOOD LODGING
TRUST
$400,000,000
STARWOOD LODGING
CORPORATION
$100,000,000
COMMON STOCK, WARRANTS,
PREFERRED STOCK AND
DEBT SECURITIES
__________________
PROSPECTUS
__________________
===============================================================================
-48-
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 172,400
NASD Filing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,500
NYSE Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Rating Agencies Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Printing and Engraving Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Fees and Expenses of Transfer Agent, Trustee and Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,222,900
</TABLE>
*Expenses are estimated except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Certain provisions of the MGCL provide that the Company may, and in
some circumstances must, indemnify the trustees, directors and officers of the
Company against liabilities and expenses incurred by such person by reason of
the fact that such person was serving in such capacity, subject to certain
limitations and conditions set forth in the statute. The Corporation's
Articles of Incorporation and the Trust's Declaration of Trust provide that the
Corporation and Trust shall indemnify its directors, trustees and officers to
the extent permitted by the MGCL.
The Company has entered into indemnification agreements with its
directors, trustees and executive officers providing for the maintenance of
directors, trustees and officers liability insurance, subject to certain
conditions, and the indemnification of and advancement of expenses to such
directors, trustees and executive officers.
II-1
<PAGE> 52
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
1.1 Form of Underwriting Agreement.
2.1* Formation Agreement dated as of November 11, 1994 among the Trust, the Corporation, Starwood
Capital Group, L.P., Berl Holdings L.P., Starwood Apollo Hotel Partners I, L.P., Starwood Apollo
Hotel Partners VIII, L.P., Starwood Apollo Hotel Partners IX, L.P. and Starwood Nomura Hotel
Investors, L.P. (incorporated by reference to Exhibit 2 to the Trust's and the Corporation's
Joint Current Report on Form 8-K dated November 16, 1994 (the "November 1994 Form 8-K")).
2.2* Form of Amendment No. 1 to Formation Agreement among the Trust, the Corporation and the Starwood
Partners (incorporated by reference to Exhibit 10.23 to the Trust's and the Corporation's
Registration Statement on Form S-2 filed with the Securities and Exchange Commission (Registration
Nos. 33-59155 and 33-59155-01)).
3.1* Amended and Restated Declaration of Trust of the Trust dated June 6, 1988, as amended
(incorporated by reference to Exhibit 3A to the Trust's and the Corporation's Joint Current
Report on Form 8-K dated January 31, 1995 (the "January 1995") Form 8-K")).
3.2* Amendment and Restatement of Articles of Incorporation of the Corporation, as amended
(incorporated by referenced to Exhibit 3B to the January 1995 Form 8-K).
3.3* Trustees' Regulations of the Trust, as amended (incorporated by referenced to Exhibit 3.3 to the
Trust's and the Corporation's Joint Annual Report on Form 10-K for the year ended December 31,
1994 (the "1994 Form 10-K")).
3.4* By-laws of the Corporation, as amended (incorporated by reference to Exhibit 3.4 to the 1994
Form 10-K).
4.1* Form of Indenture for Debt Securities.
4.2* Form of Indenture for Convertible Notes.
4.3* Form of Convertible Notes (included in Exhibit 4.2).
5 Opinion of Counsel.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5).
24* Powers of Attorney.
26.1(1) Form T-1 of Trustee for the Notes.
26.2* Form T-1 of Trustee for the Convertible Notes.
99.1 Form of Preliminary Prospectus Supplement.
</TABLE>
______________
(1)To be filed by amendment.
*Previously filed.
ITEM 17 UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of such Registrant
pursuant to the provisions described in Item 15 above, or otherwise, such
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
II-2
<PAGE> 53
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrants hereby further undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of 17 C.F.R.) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the
Registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby further undertake that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrants' annual reports pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrants further undertake that:
(a) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
II-3
<PAGE> 54
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on the 28th day of March, 1996.
STARWOOD LODGING TRUST
By:
/s/ Jeffrey C. Lapin
-----------------------------
President and Chief Operating
Officer
II-5
<PAGE> 56
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* Chairman, Chief Executive Officer and Trustee March 28, 1996
- ----------------------------------- (Principal Executive Officer)
Barry S. Sternlicht
/s/ Jeffrey C. Lapin President, Chief Operating Officer and Trustee March 28, 1996
- -----------------------------------
Jeffrey C. Lapin
* Vice President (Principal Financial and March 28, 1996
- ----------------------------------- Accounting Officer)
Ronald C. Brown
* Trustee March 28, 1996
- -----------------------------------
Bruce W. Duncan
* Trustee March 28, 1996
- -----------------------------------
Madison F. Grose
* Trustee March 28, 1996
- -----------------------------------
Stephen R. Quazzo
* Trustee March 28, 1996
- -----------------------------------
William E. Simms
* Trustee March 28, 1996
- -----------------------------------
Daniel H. Stern
*By /s/ Jeffrey C. Lapin
- -----------------------------------
Jeffrey C. Lapin
Attorney-in-fact
</TABLE>
II-6
<PAGE> 57
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing a Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California on
the 28th day of March, 1996.
STARWOOD LODGING CORPORATION
By: /s/ Kevin E. Mallory
---------------------------
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* Chairman of the Board of Directors and March 28, 1996
- ----------------------------------- Director
Earle F. Jones
/s/ Kevin E. Mallory Executive Vice President (Principal Executive March 28, 1996
- ----------------------------------- Officer)
Kevin E. Mallory
/s/ Alan M. Schnaid Corporate Controller (Principal March 28, 1996
- ----------------------------------- Accounting Officer)
Alan M. Schnaid
* Director March 28, 1996
- -----------------------------------
Bruce M. Ford
* Director March 28, 1996
- -----------------------------------
Graeme W. Henderson
*By: /s/ Kevin E. Mallory
- -----------------------------------
Kevin E. Mallory
Attorney-in-fact
</TABLE>
II-7
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION> SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION OF EXHIBIT PAGE
------- ---------------------- -------
<S> <C> <C>
1.1 Form of Underwriting Agreement.
2.1* Formation Agreement dated as of November 11, 1994 among the Trust, the Corporation, Starwood
Capital Group, L.P., Berl Holdings L.P., Starwood Apollo Hotel Partners I, L.P., Starwood Apollo
Hotel Partners VIII, L.P., Starwood Apollo Hotel Partners IX, L.P. and Starwood Nomura Hotel
Investors, L.P. (incorporated by reference to Exhibit 2 to the Trust's and the Corporation's
Joint Current Report on Form 8-K dated November 16, 1994 (the "November 1994 Form 8-K")).
2.2* Form of Amendment No. 1 to Formation Agreement among the Trust, the Corporation and the Starwood
Partners (incorporated by reference to Exhibit 10.23 to the Trust's and the Corporation's
Registration Statement on Form S-2 filed with the Securities and Exchange Commission (Registration
Nos. 33-59155 and 33-59155-01)).
3.1* Amended and Restated Declaration of Trust of the Trust dated June 6, 1988, as amended
(incorporated by reference to Exhibit 3A to the Trust's and the Corporation's Joint Current
Report on Form 8-K dated January 31, 1995 (the "January 1995") Form 8-K")).
3.2* Amendment and Restatement of Articles of Incorporation of the Corporation, as amended
(incorporated by referenced to Exhibit 3B to the January 1995 Form 8-K).
3.3* Trustees' Regulations of the Trust, as amended (incorporated by referenced to Exhibit 3.3 to the
Trust's and the Corporation's Joint Annual Report on Form 10-K for the year ended December 31,
1994 (the "1994 Form 10-K")).
3.4* By-laws of the Corporation, as amended (incorporated by reference to Exhibit 3.4 to the 1994
Form 10-K).
4.1* Form of Indenture for Debt Securities.
4.2* Form of Indenture for Convertible Notes.
4.3* Form of Convertible Notes (included in Exhibit 4.2).
5 Opinion of Counsel.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5).
24* Powers of Attorney (contained in the signature pages hereto).
26.1(1) Form T-1 of Trustee for the Notes.
26.2* Form T-1 of Trustee for the Convertible Notes.
99.1 Form of Preliminary Prospectus Supplement.
</TABLE>
______________
(1)To be filed by amendment.
*Previously filed.
<PAGE> 1
EXHIBIT 1.1
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
(A MARYLAND REAL ESTATE INVESTMENT TRUST) (A MARYLAND CORPORATION)
Paired Shares, Convertible Notes, Warrants,
Preferred Shares and Debt Securities
UNDERWRITING AGREEMENT
April __, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281-1305
Ladies and Gentlemen:
Starwood Lodging Trust, a Maryland real estate investment trust (the
"Trust"), and Starwood Lodging Corporation, a Maryland corporation (the
"Corporation" and, with the Trust, the "Company"), may from time to time offer
in one or more series: (i) shares of beneficial interest, $.01 par value, of the
Trust (the "Trust Shares") and shares of common stock, $.01 par value, of the
Corporation (the "Corporation Shares") which are "paired" and traded as units
consisting of one Trust Share and one Corporation Share (the "Paired Shares");
(ii) convertible notes of the Trust and the Corporation (the "Convertible
Notes"); (iii) (A) warrants to purchase Trust Shares and warrants to purchase
Corporation Shares which are "paired" and traded as units consisting of one
warrant to purchase Trust Shares and one warrant to purchase a like number of
Corporation Shares, (B) warrants to purchase shares of preferred stock of the
Trust or the Corporation, or (C) warrants to purchase debt securities of the
Trust or the Corporation (collectively, the "Warrants"); (iv) shares of
preferred stock of the Trust (the "Trust Preferred Shares") and/or shares of
preferred stock of the Corporation (the "Corporation Preferred Shares" and, with
the Trust Preferred Shares, the "Preferred Shares") which may, but are not
required to, be "paired" with preferred stock of the other entity; and (v)
unsecured debt securities of the Trust or the Corporation (the "Debt
Securities") with an aggregate public offering price of up to $500,000,000 (or
its equivalent in another currency based on the exchange rate at the time of
sale) in amounts, at prices and on terms to be determined at the time of
offering. The Trust or the Corporation may from time to time offer in one or
more series unsecured Debt Securities which may, but are not required to, be
paired with Debt Securities of the other entity. The Paired Shares, Convertible
Notes, Warrants, Preferred Shares and Debt Securities (collectively, the
"Securities"), may be offered, separately or together, in separate series in
amounts, at prices and on terms to be set forth in one or more Prospectus
Supplements as hereinafter defined. The Convertible Notes and the Debt
Securities will be issued under one or more indentures, as amended or
supplemented (each, an "Indenture"), between the Trust and/or the Corporation,
as applicable, and a trustee (a "Trustee"). Each series of Debt Securities may
vary, as applicable, as to aggregate principal amount, maturity date, interest
rate or formula and timing of payments thereof, redemption or repayment
provisions, and any other variable terms which the Indenture contemplates may be
set forth in the Debt Securities as issued from time to time. As used herein,
"the Representatives," unless the context otherwise requires, shall mean the
party to
<PAGE> 2
whom this Agreement is addressed together with the other parties, if any,
identified in the applicable Pricing Agreement (as hereinafter defined) as
additional co-managers with respect to Underwritten Securities (as hereinafter
defined) purchased pursuant thereto.
Whenever the Company determines to make an offering of Securities
through the Representatives or through an underwriting syndicate managed by the
Representatives, the Company will enter into an agreement (the "Pricing
Agreement") providing for the sale of such Securities (the "Underwritten
Securities") to, and the purchase and offering thereof by, the Representatives
and such other underwriters, if any, selected by the Representatives as have
authorized the Representatives to enter into such Pricing Agreement on their
behalf (the "Underwriters," which term shall include the Representatives whether
acting alone in the sale of the Underwritten Securities or as a member of an
underwriting syndicate and any Underwriter substituted pursuant to Section
hereof). The Pricing Agreement relating to the offering of Underwritten
Securities shall specify the amount of Underwritten Securities to be initially
issued (the "Initial Underwritten Securities"), the names of the Underwriters
participating in such offering (subject to substitution as provided in Section
hereof), the amount of Initial Underwritten Securities which each such
Underwriter severally agrees to purchase, the names of such of the
Representatives or such other Underwriters acting as co-managers, if any, in
connection with such offering, the price at which the Initial Underwritten
Securities are to be purchased by the Underwriters from the Company, the initial
public offering price, if any, of the Initial Underwritten Securities, the time
and place of delivery and payment, any delayed delivery arrangements and any
other variable terms of the Initial Underwritten Securities (including, but not
limited to, current ratings, designations, liquidation preferences, voting and
other rights, denominations, interest rates or formulas, interest payment dates,
maturity dates and redemption or repayment provisions applicable to the Initial
Underwritten Securities). In addition, each Pricing Agreement shall specify
whether the Underwriters will be granted an option to purchase additional
Underwritten Securities to cover over-allotments, if any, and the aggregate
amount of Underwritten Securities subject to such option (the "Option
Securities"). As used herein, the term "Underwritten Securities" shall include
the Initial Underwritten Securities and all or any portion of the Option
Securities agreed to be purchased by the Underwriters as provided herein, if
any. The Pricing Agreement, which shall be substantially in the form of Exhibit
A hereto, may take the form of an exchange of any standard form of written
telecommunication between the Representatives and the Company. Each offering of
Underwritten Securities through the Representatives or through an underwriting
syndicate managed by the Representatives will be governed by this Agreement, as
supplemented by the applicable Pricing Agreement.
The Trust and the Corporation have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Nos. 33-64335 and 33-64335-01) for the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof
from time to time in accordance with Rule 430A or Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
and the Trust and the Corporation have filed such amendments thereto as may have
been required prior to the execution of the applicable Pricing Agreement. Such
registration statement (as amended, if applicable) has been declared effective
by the Commission. Such registration statement and the prospectus constituting a
part thereof (including in each case the information, if any, deemed to be part
thereof pursuant to Rule 430A(b) of the 1933 Act Regulations), and each
prospectus supplement relating to the offering of Underwritten Securities
pursuant to Rule 415 of the 1933 Act Regulations (the "Prospectus Supplement"),
including all documents incorporated therein by reference, as from time to time
amended or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act") or otherwise, are collectively referred to
herein as the "Registration Statement" and the "Prospectus," respectively;
provided, that if any revised prospectus shall be provided to the
Representatives by the Trust and the Corporation for use in connection with the
offering of Underwritten Securities which differs from the Prospectus on file at
the Commission at the time the Registration Statement becomes effective (whether
or not such revised prospectus is required to be filed by the Trust and the
Corporation pursuant to Rule 424(b) of the 1933 Act Regulations), the term
"Prospectus" shall refer to each such revised prospectus from and after the time
it is first provided to the Representatives for such use; provided, further,
that a Prospectus Supplement shall be deemed to have supplemented the Prospectus
only with respect to the offering of Underwritten Securities to which it
relates. Any registration statement (including any supplement thereto or
information which is deemed part thereof) filed by the Trust and the Corporation
under Rule 462(b) of the 1933 Act
2
<PAGE> 3
Regulations (a "Rule 462(b) Registration Statement") shall be deemed to be part
of the Registration Statement. Any prospectus (including any amendment or
supplement thereto or information which is deemed part thereof) included in the
Rule 462(b) Registration Statement and any term sheet as contemplated by Rule
434 of the 1933 Act Regulations (a "Term Sheet") shall be deemed to be part of
the Prospectus. All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
SECTION 1. Representations and Warranties of the Transaction Entities
a. Each of the Trust, the Corporation, SLT Realty Limited
Partnership, a Delaware limited partnership (the "Realty Partnership"), and SLC
Operating Limited Partnership, a Delaware limited partnership (the "Operating
Partnership" and collectively with the Trust, the Corporation, the Realty
Partnership, the Operating Partnership being sometimes hereinafter collectively
referred to as the "Transaction Entities" and individually as a "Transaction
Entity"), represent and warrant, jointly and severally, to the Representatives,
as of the date hereof, and to the Representatives and each other Underwriter
named in the applicable Pricing Agreement, as of the date thereof (in each case,
a "Representation Date"), as follows:
i. The Registration Statement and the Prospectus, at the time
the Registration Statement became effective, complied, and as of each
Representation Date will comply, in all material respects with the
requirements of the 1933 Act and the rules and regulation thereunder
(the "1933 Act Regulations") and the 1939 Act and the rules and
regulations thereunder (the "1939 Act Regulations"). The Registration
Statement, at the time the Registration Statement became effective, did
not, and as of each Representation Date, will not, contain an 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. The Prospectus, as of the date hereof does not, and as of
each Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to you by the Trust and the
Corporation for use in connection with an offering of Underwritten
Securities which differs from the Prospectus on file at the Commission
at the time the Registration Statement becomes effective, in which case
at the time it is first provided to you for such use) and Closing Time
(as such term is defined in Section below) will comply in all material
respects with the requirements of the 1933 Act and the 1933 Regulations
and will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the Trust
or the Corporation in writing by any Underwriter through the
Representatives expressly for use in the Registration Statement or the
Prospectus. If a Rule 462(b) Registration Statement is required in
connection with the offering and sale of the Securities, the Trust and
the Corporation have complied or will comply with the requirements of
Rule 111 under the 1933 Act Regulations relating to the payment of
filing fees therefor.
ii. Each preliminary prospectus, Prospectus, preliminary
prospectus supplement and Prospectus Supplement filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied or
will comply when so filed in all material respects with the 1933 Act
and the 1933 Act Regulations thereunder.
iii. The documents incorporated or deemed to be incorporated
by reference in the Prospectus pursuant to Item 12 of Form S-3 under
the 1933 Act, at the time they were or hereafter are filed
3
<PAGE> 4
with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations of
the Commission under the 1934 Act (the "1934 Act Regulations"), and,
when read together with the other information in the Prospectus, at the
time the Registration Statement became effective and as of the
applicable Representation Date or Closing Time or during the period
specified in Section below, did not and will not include an 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, in
the light of the circumstances under which they were made, not
misleading.
iv. Coopers & Lybrand L.L.P. and Deloitte & Touche LLP,
the accounting firms that audited the financial statements and
supporting schedules included in, or incorporated by reference into,
the Registration Statement and Prospectus, are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
v. All financial statements (including the notes thereto)
required to be included or incorporated by reference in the
Registration Statement and the Prospectus by the 1933 Act and the 1933
Act Regulations are contained or incorporated by reference therein, and
such financial statements present fairly the financial position of the
respective entity or entities presented therein at the respective dates
indicated and the results of their operations for the respective
periods specified; except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein;
and the Company's ratios of earnings to fixed charges (actual and, if
any, proforma) included in the Prospectus under the caption "Ratios of
Earnings to Fixed Charges" and in Exhibit 12.1 to the Registration
Statement have been calculated in compliance with Item 503(d) of
Regulation S-K of the Commission. The financial information and data
included in the Registration Statement and the Prospectus present
fairly the information included therein and have been prepared on a
basis consistent, except as may be noted therein, with that of the
financial statements included in or incorporated by reference in the
Registration Statement and the Prospectus and the books and records of
the respective entities or group presented therein. The pro forma
financial information included in or incorporated by reference in the
Registration Statement and the Prospectus has been prepared in
accordance with the applicable requirements of the 1933 Act, the 1933
Act Regulations (including, without limitation, Rule 11-02 of
Regulation S-X of the Commission) and guidelines of the American
Institute of Certified Public Accountants with respect to pro forma
financial information and includes all adjustments necessary to present
fairly the pro forma financial position of the Trust and the
Corporation at the respective dates indicated and the results of
operations for the respective periods specified.
vi. No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Trust and the Corporation, threatened by the Commission or by the
state securities authority of any jurisdiction. No order preventing or
suspending the use of the Prospectus has been issued and no proceeding
for that purpose has been instituted or, to the knowledge of the Trust
or the Corporation, threatened by the Commission or by the state
securities authority of any jurisdiction.
vii. Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated or contemplated therein, (A) there has been no adverse
change in the condition, financial or otherwise, or in the earnings,
assets, business affairs or business prospects of the Transaction
Entities and their respective subsidiaries, considered as one
enterprise, or in the fee, ground lease and mortgage interests, in
hotel properties which the Transaction Entities and their respective
subsidiaries will own and/or operate as of the Closing Time (the "Hotel
Assets"), whether or not arising in the ordinary course of business,
which would be material to the Transaction Entities and their
respective subsidiaries, considered as one enterprise (anything which
would be material to the Transaction Entities and their respective
subsidiaries, considered as one enterprise, being hereinafter
4
<PAGE> 5
referred to as "Material"), (B) there have been no transactions or
acquisitions entered into by the Transaction Entities or any of their
respective subsidiaries, other than those in the ordinary course of
business, which would reasonably be expected to be Material, (C) there
has been no dividend or distribution of any kind declared, paid or made
by the Trust or the Corporation on any class of its respective capital
stock and (D) there has been no change in the capital stock of the
Trust or the Corporation (except for issuances, if any, pursuant to
outstanding options or warrants of the Trust or the Corporation
described in the Prospectus), or the partnership interests of the
Operating Partnership or the Realty Partnership or any increase in the
indebtedness of the Transaction Entities, or any of their respective
subsidiaries or in the indebtedness encumbering the Hotel Assets which
would reasonably be expected to be Material.
viii. The Trust has been duly formed and is validly existing
as a real estate investment trust in good standing under the laws of
the State of Maryland, with trust power and authority to own, lease and
operate its properties and to conduct the business in which it is
engaged or proposes to engage as described in the Prospectus and to
enter into and perform its obligations under this Agreement and the
Pricing Agreement and the other Operative Documents (as defined in
subsection xvi below) to which it is a party; and the Trust is duly
qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have an adverse effect
on the condition, financial or otherwise, or the earnings, assets or
business affairs or business prospects of the Transaction Entities and
their respective subsidiaries, considered as one enterprise, or the
Hotel Assets which would reasonably be expected to be Material (a
"Material Adverse Effect"). The Trust has no significant subsidiaries
(other than the Realty Partnership and SLT Realty LLC, a Delaware
limited liability company (the "LLC")) within the meaning of Regulation
S-X under the 1933 Act.
ix. Each of the Corporation and its subsidiaries has each been
duly incorporated and is validly existing as a corporation in good
standing under the laws of their respective jurisdictions of
incorporation (except with respect to those subsidiaries which are not
significant subsidiaries, where such failure to be duly incorporated or
to be in good standing would reasonably be expected not have a Material
Adverse Effect), with corporate power and authority to own, lease and
operate its properties and to conduct the business in which it is
engaged or proposes to engage as described in the Prospectus and to
enter into and perform its obligations under this Agreement and the
Pricing Agreement and the other Operative Documents to which it is a
party; and each of the Corporation and its subsidiaries duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not reasonably
be expected to have a Material Adverse Effect. The Corporation has no
significant subsidiaries (other than the Operating Partnership and
Hotel Investors Corporation of Nevada, a Nevada corporation) within the
meaning of Regulation S-X under the 1933 Act.
x. Each of the Realty Partnership and the LLC, has been duly
formed and is validly existing as a limited partnership or limited
liability company, as the case may be, in good standing under the laws
of the State of Delaware, with requisite power and authority to own,
lease and operate its properties, to conduct the business in which it
is engaged and proposes to engage as described in the Prospectus and to
enter into and perform its obligations under this Agreement and the
other Operative Documents, in each case, to which it is a party. The
Realty Partnership and the LLC are duly qualified or registered as a
foreign entity and are in good standing in each jurisdiction in which
such qualification or registration is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify or register would not reasonably be
expected to have a Material Adverse Effect. The Trust is the sole
general partner and Starwood Capital Group, L.P., Berl Holdings L.P.,
Starwood Apollo Hotel Partners I, L.P., Starwood Apollo Hotel Partners
VIII, L.P., Starwood Apollo Hotel Partners IX, LP and Starwood Nomura
Hotel Investors, L.P. (collectively, "Starwood Capital") are the
limited partners of the Realty Partnership. The agreement of limited
5
<PAGE> 6
partnership of the Realty Partnership, as amended, and the limited
liability company agreement of the LLC, as amended, are in full force
and effect, and the percentage interests of the partners or members, as
the case may be, in the Realty Partnership and the LLC will be (at
Closing) as set forth in the Prospectus. To the extent any portion of
the over-allotment option described in Section hereof is exercised at
the Closing Time, the percentage interests of the partners in the
Realty Partnership will be adjusted accordingly. Additionally, to the
extent any portion of such over-allotment option is exercised
subsequent to Closing Time, the Trust will contribute the proceeds from
the sale of the Option Securities to the Realty Partnership in exchange
for a number of units of partnership interest in the Realty Partnership
("Realty Units") equal to the number of Option Securities issued. The
Realty Partnership has no significant subsidiaries (other than the LLC)
within the meaning of Regulation S-X under the 1933 Act.
xi. The Operating Partnership has been duly formed and is
validly existing as a limited partnership in good standing under the
laws of the State of Delaware, with partnership power and authority to
own, lease and operate its properties, to conduct the business in which
it is engaged and proposes to engage as described in the Prospectus and
to enter into and perform its obligations under this Agreement and the
other Operative Documents to which it is a party. The Operating
Partnership is duly qualified or registered as a foreign partnership
and is in good standing in each jurisdiction in which such
qualification or registration is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or register would not reasonably be
expected to have a Material Adverse Effect. The Corporation and certain
of its wholly-owned subsidiaries are the general partners and Starwood
Capital are the sole limited partners of the Operating Partnership. The
agreement of limited partnership of the Operating Partnership, as
amended through the date hereof, is in full force and effect, and the
percentage interests of the partners in the Operating Partnership will
be (at Closing) as set forth in the Prospectus. To the extent any
portion of the over-allotment option described in Section hereof is
exercised at the Closing Time, the percentage interests of the partners
in the Operating Partnership will be adjusted accordingly.
Additionally, to the extent any portion of such over-allotment option
is exercised subsequent to Closing Time, the Corporation will
contribute the proceeds from the sale of the Option Securities to the
Operating Partnership in exchange for a number of units of partnership
interest in the Operating Partnership ("Operating Units," and
collectively with Realty Units, "Units") equal to the number of Option
Securities issued. The Operating Partnership has no significant
subsidiaries within the meaning of Regulation S-X under the 1933 Act.
xii. All the issued and outstanding Trust Shares and
Corporation Shares have been duly authorized and are validly issued,
fully paid and non-assessable. No shares of the capital stock of either
the Trust or the Corporation are reserved for any purpose except as
disclosed in the Prospectus. Except as described in the Prospectus,
there are no outstanding securities convertible into or exchangeable
for any capital stock of the Trust or the Corporation and there are no
outstanding options, rights (preemptive or otherwise) or warrants to
purchase or to subscribe for shares of the capital stock or any other
securities of the Trust or the Corporation. The Paired Shares issuable
upon conversion of the units of partnership interest in the Realty
Partnership and the Operating Partnership (the "Units") have been duly
and validly authorized by all necessary corporate action and such
Paired Shares, when issued upon such conversion or exercise, will be
duly and validly issued, fully paid and non-assessable.
xiii. The Securities (and the securities, if any, into which
they may be convertible) have been duly authorized for issuance and
sale to the Underwriters pursuant to the Indenture, if applicable, and
this Agreement, and, when issued and delivered by the Trust and the
Corporation pursuant to the Indenture, if applicable, and this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued, fully paid and non-assessable. Upon
payment of the purchase price and delivery of the Securities in
accordance herewith, each of the Underwriters will receive good, valid
and marketable title to the Securities, free and clear of all security
interests, mortgages, pledges, liens, encumbrances, claims or equities,
and immediately upon conversion of the Convertible Notes, if any, into
Paired Shares pursuant to the terms of the Indenture, each holder
thereof will receive marketable title to
6
<PAGE> 7
the Paired Shares, in each case, free and clear of all security
interests, mortgages, pledges, liens, encumbrances, claims or equities.
The terms of the Securities conform in all material respects to all
statements and descriptions related thereto contained in the
Prospectus. The issuance of the Securities is not subject to any
preemptive or other similar rights.
xiv. All the issued and outstanding Realty Units and the
Operating Units have been duly authorized and are validly issued, fully
paid and non-assessable and have been offered and sold or exchanged in
compliance with all applicable laws (including, without limitation,
federal and state securities laws). There are no outstanding securities
convertible into or exchangeable for any Units and no outstanding
options, rights (preemptive or otherwise) or warrants to purchase or to
subscribe for Units.
xv. None of the Transaction Entities or any of their
respective subsidiaries is in violation of its declaration of trust,
trustee's regulation of the trust, charter, by-laws, certificate of
limited partnership, agreement of limited partnership or other
governance documents, as the case may be, and none of the Transaction
Entities or any of their respective subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which such entity is a
party or by which such entity may be bound, or to which any of its or
its subsidiaries' property or assets is subject, except for such
violations and defaults that would not reasonably be expected to have a
Material Adverse Effect.
xvi. (A) This Agreement has been duly and validly authorized,
executed and delivered by each Transaction Entity and assuming due
authorization, execution and delivery by the Representatives, is a
valid and binding agreement of each of the Transaction Entities,
enforceable against the Transaction Entities in accordance with its
terms; (B) at the Representation Date, the Pricing Agreement will have
been duly and validly authorized, executed and delivered by the Trust
and the Corporation, and assuming due authorization, execution and
delivery by the Representatives, will be a valid and binding agreement
of the Trust and the Corporation, enforceable against the Trust and the
Corporation in accordance with its terms; and (C) the Indenture, if
any, at the Closing Time, will have been duly and validly authorized,
executed and delivered by the Trust and the Corporation and, assuming
due authorization, execution and delivery by the Trustee thereto, will
be a valid and binding agreement, enforceable against the Trust and the
Corporation in accordance with its terms. This Agreement, the Pricing
Agreement and the Indenture, if any, are sometimes hereinafter
collectively referred to as "Operative Documents."
xvii. The execution and delivery of each of the Operative
Documents, the performance of the obligations set forth herein or
therein, and the consummation of the transactions contemplated hereby
or thereby or in the Prospectus by the Transaction Entities will not
conflict with or constitute a breach or violation by such parties of,
or default under, (A) any contract, indenture, mortgage, loan
agreement, note, lease, joint venture or partnership agreement or other
instrument or agreement to which such Transaction Entity is a party or
by which they or, any of them, or any of their respective properties or
other assets or any Hotel Asset may be bound or subject, (B) the
declaration of trust, trustee's regulations of the trust, charter,
by-laws, certificate of limited partnership or partnership agreement,
as the case may be, of any Transaction Entity or (C) any applicable
law, rule, order, administrative regulation or administrative or court
decree, in each case except for conflicts, breaches, violations or
defaults that, individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
xviii. The Indenture, if any, shall be duly qualified under
the Trust Indenture Act. The Convertible Notes and/or the Debt
Securities, if any, shall represent debt obligations of the Trust and
the Corporation, which, to their knowledge and information, are not
subject to any subordination agreement (except to the extent provided
in the Indenture), and do not entitle any holder thereof to any rights
as a shareholder of either the Trust or the Corporation. Such
Convertible Notes and/or Debt Securities, if any, and the Indenture
will not contain any provision which conditions the obligation of
payment by the Trust and the Corporation thereunder or which
subordinates the indebtedness evidenced thereby in right of
7
<PAGE> 8
payment to any other indebtedness of the Trust or the Corporation,
except to the extent the Indenture provides for a priority for
compensation and expenses of the Trustee over payments to holders of
such Convertible Notes and/or Debt Securities.
xix. (A) No labor dispute with the employees of any
Transaction Entity or any of their respective subsidiaries exists or,
to the knowledge of the Transaction Entities is imminent, and (B) none
of the Transaction Entities is aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors, which, in the case of either (A) or (B),
would reasonably be expected to have a Material Adverse Effect.
xx. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Transaction Entities, threatened against or
affecting any Transaction Entity or any of their respective
subsidiaries, any Hotel Asset or any officer or director of the Trust
or the Corporation or any of their respective subsidiaries, which is
required to be disclosed in the Registration Statement or the
Prospectus (other than as disclosed therein), or that, if determined
adversely to any Transaction Entity, any Hotel Asset, or any such
officer or director, will or would reasonably be expected to (A) have a
Material Adverse Effect, or (B) materially and adversely affect the
consummation of the transactions contemplated by this Agreement. There
are no pending legal or governmental proceedings to which any
Transaction Entity or any of their respective subsidiaries is a party
or of which they or any of their respective properties or assets or any
Hotel Asset is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, that, considered in the aggregate, could reasonably be
expected to have a Material Adverse Effect. There are no contracts or
documents of any Transaction Entity or any of their respective
subsidiaries which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
xxi. Commencing with their taxable years ending December 31,
1995, the Transaction Entities and their respective subsidiaries, are
and will be organized and operated in conformity with the requirements
for qualification of the Trust as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"), and the
proposed method of operation of the Transaction Entities and their
respective subsidiaries will enable the Trust to meet the requirements
for taxation as a real estate investment trust under the Code. Section
269B(a)(3) of the Code does not and will continue not to apply to the
Trust and the Corporation.
xxii. None of the Transaction Entities or any of their
respective subsidiaries is, or at Closing Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the
"1940 Act").
xxiii. The Transaction Entities and their respective
subsidiaries own or possess, or can acquire on reasonable terms, the
licenses, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, "proprietary rights") presently employed by each of them
in connection with the business now operated by them, and none of the
Transaction Entities nor any of their respective subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any proprietary
rights, or of any facts which would render any proprietary rights
invalid or inadequate to protect the interest of such Transaction
Entity or its subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
xxiv. No authorization, approval, consent or order of any
court or governmental authority or agency or other entity or person is
necessary in connection with the offering, issuance or sale
8
<PAGE> 9
of the Securities (or the securities, if any, into which the Securities
are convertible) hereunder, except as may be required under the 1933
Act or the 1933 Act Regulations, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), state securities or real estate
syndication laws or the by-laws and rules of the National Association
of Securities Dealers, Inc. (the "NASD"), all of which have been
obtained or will have been obtain prior to Closing Time or such as have
been received prior to the date of this Agreement, and except for
approval by the Nevada Gaming Commission of certain contributions by
the Corporation to the Operating Partnership.
xxv. Each of the Transaction Entities possesses such
certificates, authorizations or permits issued by the appropriate
local, state, federal or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it, or proposed to be
conducted by it, and none of the Transaction Entities has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a Material Adverse
Effect.
xxvi. Except as disclosed in the Prospectus, there are no
persons with registration or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Trust and the Corporation under the 1933
Act.
xxvii. At the Closing Time, the Securities (and the
securities, if any, into which the Securities may be convertible) will
have been approved for listing on the New York Stock Exchange upon
notice of issuance.
xxviii. (A) The Transaction Entities or their respective
subsidiaries have good and marketable title to their respective Hotel
Assets free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are (i) described in the
Prospectus, (ii) serving as security for loans described in the
Prospectus, or (iii) not Material; (B) all liens, charges,
encumbrances, claims or restrictions on or affecting any of the Hotel
Assets and the assets of any Transaction Entity and their respective
subsidiaries which are required to be disclosed in the Prospectus are
disclosed therein; (C) none of the Transaction Entities or any of their
respective subsidiaries is in default under any of the ground leases
(as lessee), relating to, or any of the mortgages or other security
documents or other agreements encumbering or otherwise recorded
against, the Hotel Assets, and none of the Transaction Entities knows
of any event which, but for the passage of time or the giving of
notice, or both, would constitute a default under any of such documents
or agreements, other than such defaults that would not reasonably be
expected to have a Material Adverse Effect; (D) each of the Hotel
Assets complies with all applicable codes, laws and regulations
(including, without limitation, building and zoning codes, laws and
regulations and laws relating to access to the Hotel Assets), except
for such failures to comply that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (E) none
of the Transaction Entities has knowledge of any pending or threatened
condemnation proceeding, zoning change, or other proceeding or action
that will in any manner affect the size of, use of, improvements on,
construction on or access to, the Hotel Assets, except such proceedings
or actions that individually or in the aggregate would not reasonably
have a Material Adverse Effect.
xxix. Each of the Transaction Entities and their respective
subsidiaries has obtained title insurance on such Transaction Entity's
or subsidiary's fee and/or leasehold interests, as applicable, in each
of the Hotel Assets, except for such failures to obtain title insurance
that would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
xxx. Except as disclosed in the Prospectus, and, except for
activities, conditions, circumstances or matters that would not have a
Material Adverse Effect; (A) to the knowledge of the Transaction
Entities, the operations of the Transaction Entities are in compliance
with all Environmental Laws and all requirements of applicable permits,
licenses, approvals and other authorizations issued
9
<PAGE> 10
pursuant to Environmental Laws; (B) none of the Transaction Entities or
any of their respective subsidiaries has caused or to the knowledge of
the Transaction Entities suffered to occur any Release (as defined
below) of any Hazardous Substance (as defined below) into the
Environment (as defined below) on, in, under or from any Hotel Asset,
and no condition exists on, in, under or, to the knowledge of the
Transaction Entities, adjacent to any Hotel Asset that could result in
the incurrence of liabilities or any violations of any Environmental
Law (as defined below) in either case which would be Material or give
rise to the imposition of any Lien (as defined below) under any
Environmental Law; (C) none of the Transaction Entities or any of their
respective subsidiaries has received any notice of a claim under or
pursuant to any Environmental Law or under common law pertaining to
Hazardous Substances on, in, under or originating from any Hotel Asset;
(D) none of the Transaction Entities or any of their respective
subsidiaries has received any notice from any Governmental Authority
(as defined below) or other Person claiming any violation of any
Environmental Law or evidencing the intent to undertake and/or
requesting the investigation, remediation, clean-up or removal of any
Hazardous Substance released into the Environment on, in, under or from
any Hotel Asset; and (E) no Hotel Asset is included or, to the
knowledge of the Transaction Entities, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA (as defined below)
by the United States Environmental Protection Agency (the "EPA") or on
the Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA, and, to the
knowledge of the Transaction Entities, has not otherwise been
identified by the EPA as a potential CERCLA removal, remedial or
response site or included or, to the knowledge of the Transaction
Entities, proposed for inclusion on, any similar list of potentially
contaminated sites pursuant to any other Environmental Law.
As used herein, "Hazardous Substance" shall include any
hazardous substance, hazardous waste, toxic substance, pollutant,
hazardous material or similarly designated materials, including,
without limitation, oil, petroleum or any petroleum-derived substance
or waste, asbestos or asbestos-containing materials, PCBs, pesticides,
explosives, radioactive materials, dioxins, urea formaldehyde
insulation or any constituent of any such substance, pollutant or waste
which is identified, regulated, prohibited or limited under any
Environmental Law (including, without limitation, materials listed in
the United States Department of Transportation Optional Hazardous
Material Table, 49 C.F.R. Section 172.101, as the same may now or
hereafter be amended, or in the EPA's List of Hazardous Substances and
Reportable Quantities, 40 C.F.R. Part 302, as the same may now or
hereafter be amended); "Environment" shall mean any surface water,
drinking water, ground water, land surface, subsurface strata, river
sediment, buildings, structures, and ambient, workplace and indoor and
outdoor air; "Environmental Law" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 C. Section 9601 et seq.) ("CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended (42 C. Section 6901,
et seq.), the Clean Air Act, as amended (42 C. Section 7401, et seq.),
the Clean Water Act, as amended (33 C. Section 1251, et seq.), the
Toxic Substances Control Act, as amended (15 C. Section 2601, et seq.),
the Occupational Safety and Health Act of 1970, as amended (29 C.
Section 651, et seq.), the Hazardous Materials Transportation Act, as
amended (49 C. Section 1801, et seq.), and all other federal, state and
local laws, ordinances, regulations, rules and orders relating to the
protection of the environments or of human health from environmental
effects; "Governmental Authority" shall mean any federal, state or
local governmental office, agency or authority having the duty or
authority to promulgate, implement or enforce any Environmental Law;
"Lien" shall mean, with respect to any Hotel Asset, any mortgage, deed
of trust, pledge, security interest, lien, encumbrance, penalty, fine,
charge, assessment, judgment or other liability in, on or affecting
such Hotel Asset; and "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, emanating or disposing of any Hazardous Substance
into the Environment, including, without limitation, the abandonment or
discard of barrels, containers, tanks (including, without limitation,
underground storage tanks) or other receptacles containing or
previously containing any Hazardous Substance or any release, emission,
discharge or similar term, as those terms are defined or used in any
Environmental Law.
xxxi. Each of the Transaction Entities has filed all federal,
state, local and foreign income tax returns which have been required to
be filed (except in any case in which the failure to so file
10
<PAGE> 11
would not reasonably be expected to have a Material Adverse Effect), and has
paid all taxes required to be paid and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except, in all cases, for any such tax, assessment, fine or penalty that is
being contested in good faith.
b. Any certificate delivered hereunder or under any Operative
Document and signed by any officer or authorized representative of any
Transaction Entity and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by such entity or
person, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
a. The several commitments of the Underwriters to purchase the
Underwritten Securities pursuant to the applicable Pricing Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions set forth
herein or in the applicable Pricing Agreement.
b. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust and/or the Corporation, as applicable, may grant, if so
provided in the applicable Pricing Agreement relating to the Initial
Underwritten Securities, an option to the Underwriters named in such Pricing
Agreement, severally and not jointly, to purchase up to the number of Option
Securities set forth therein at the same price per Option Security as is
applicable to the Initial Underwritten Securities. Such option, if granted, will
expire 30 days (or such lesser number of days as may be specified in the
applicable Pricing Agreement) after the Representation Date relating to the
Initial Underwritten Securities, and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Underwritten
Securities upon notice by the Representatives to the Trust and/or the
Corporation, as applicable, setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time, date and
place of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days nor
earlier than two full business days after the exercise of said option, nor in
any event prior to the Closing Time, unless otherwise agreed upon by the
Representatives and the Trust and/or the Corporation, as applicable. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Underwritten Securities each such Underwriter has
severally agreed to purchase as set forth in the applicable Pricing Agreement
bears to the total number of Initial Underwritten Securities (except as
otherwise provided in the applicable Pricing Agreement), subject to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional Underwritten Securities.
c. Payment of the purchase price for, and delivery of
certificates for, the Underwritten Securities to be purchased by the
Underwriters shall be made at the offices of Rogers & Wells, 200 Park Avenue,
New York, New York 10166, or at such other place as shall be agreed upon by the
Representatives and the Trust and/or the Corporation, as applicable, at 10:00
A.M. on the fourth business day (or the third business day if required under
Rule 15c6-1 of the 1934 Act, or unless postponed in accordance with the
provisions of Section ) following the date of the applicable Pricing Agreement
or at such other time as shall be agreed upon by the Representatives and the
Trust and the Corporation (each referred to herein as the "Closing Time"). In
addition, in the event that any or all of the Option Securities are purchased by
the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices of Rogers & Wells, or at such other place as shall be agreed upon by the
Representatives and the Trust and/or the Corporation, as applicable, on each
Date of Delivery as specified in the notice from the Representatives to the
Trust and/or the Corporation, as applicable. Payment shall be made to the Trust
and/or the Corporation, as applicable, by certified or official bank check or
checks drawn in New York Clearing House funds or similar next day funds payable
to the
11
<PAGE> 12
order of the Trust and the Corporation, against delivery to the Representatives
for the respective accounts of the Underwriters of certificates for the
Underwritten Securities to be purchased by them. Certificates for the
Underwritten Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representatives may request in
writing at least two business days before the Closing Time or the relevant Date
of Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Underwritten Securities and
the Option Securities, if any, which it has agreed to purchase. The
Representatives, individually and not as representatives of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Underwritten Securities or the Option Securities, if any, to be purchased by any
Underwriter whose check has not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but any such payment shall not
relieve such Underwriter from its obligations hereunder. The certificates for
the Initial Underwritten Securities and the Option Securities, if any, will be
made available for examination and packaging by the Representatives not later
than 10:00 A.M. on the last business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be, in New York, New York.
SECTION 3. Covenants of the Trust and the Corporation. Each of the
Trust and the Corporation covenants with the Representatives, and with each
Underwriter participating in the offering of Underwritten Securities, as
follows:
a. In respect to each offering of Underwritten Securities, the
Company will prepare a Prospectus Supplement setting forth the number
of Underwritten Securities covered thereby and their terms not
otherwise specified in the Prospectus pursuant to which the
Underwritten Securities are being issued, the names of the Underwriters
participating in the offering and the number of Underwritten Securities
which each severally has agreed to purchase, the names of the
Underwriters acting as co-managers in connection with the offering, the
price at which the Underwritten Securities are to be purchased by the
Underwriters from the Company the initial public offering price, if
any, the selling concession and reallowance, if any, and such other
information as the Representatives and the Company deem appropriate in
connection with the offering of the Underwritten Securities; and the
Company will promptly transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations and will furnish to the Underwriters named therein as many
copies of the Prospectus (including such Prospectus Supplement) as the
Representatives shall reasonably request.
b. If, at the time the Prospectus Supplement was filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, any
information shall have been omitted therefrom in reliance upon Rule
430A of the 1933 Act Regulations, then immediately following the
execution of the Pricing Agreement, the Trust and the Corporation will
prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, a copy of an amended Prospectus, or, if required by such
Rule 430A, a post-effective amendment to the Registration Statement
(including amended Prospectuses), containing all information so
omitted. If required, the Trust and the Corporation will prepare and
file or transmit for filing a Rule 462(b) Registration Statement not
later than the date of execution of the Pricing Agreement. If a Rule
462(b) Registration Statement is filed, the Trust and the Corporation
shall make payment of, or arrange for payment of, the additional
registration fee owing to the Commission required by Rule 111 of the
1933 Act Regulations.
c. The Trust and the Corporation will notify the
Representatives immediately, and confirm such notice in writing, of (i)
the effectiveness of any amendment to the Registration Statement, (ii)
the transmittal to the Commission for filing of any Prospectus
Supplement or other supplement or amendment to the Prospectus to be
filed pursuant to the 1933 Act, (iii) the receipt of any comments from
the Commission, (iv) any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (v) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose; and the Trust and the Corporation will make every reasonable
effort
12
<PAGE> 13
to prevent the issuance of any such stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
d. At any time when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act in connection with sales of the
Underwritten Securities, the Trust and the Corporation will give the
Representatives notice of its intention to file or prepare any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus, whether pursuant to the 1933 Act, 1934 Act or
otherwise, will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing and, unless required by law, will not file or use any
such amendment or supplement or other documents in a form to which the
Representatives or counsel for the Underwriters shall reasonably
object.
e. The Trust and the Corporation will deliver to the
Representatives as soon as possible as many signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference therein) as
the Representatives may reasonably request and will also deliver to the
Representatives as many conformed copies of the Registration Statement
as originally filed and of each amendment thereto (including documents
incorporated by reference into the Prospectus) as the Representatives
may reasonably request.
f. The Trust and the Corporation will furnish to each
Underwriter, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request for the purposes contemplated by the
1933 Act or the 1934 Act or the respective applicable rules and
regulations of the Commission thereunder.
g. If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriters,
to amend or supplement the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, the Trust and the Corporation will
forthwith amend or supplement the Prospectus (in form and substance
reasonably satisfactory to counsel for the Underwriters) so that, as so
amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Trust and the Corporation will furnish to the
Underwriters a reasonable number of copies of such amendment or
supplement.
h. The Trust and the Corporation will endeavor, in cooperation
with the Underwriters, to qualify the Underwritten Securities for
offering and sale under the applicable securities laws and real estate
syndication laws of such states and other jurisdictions as the
Representatives may designate. In each jurisdiction in which the
Underwritten Securities have been so qualified, the Trust and the
Corporation will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect
for so long as may be required for the distribution of the Underwritten
Securities.
i. With respect to each sale of Underwritten Securities, the
Trust and the Corporation will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day
of the Trust and the Corporation's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration
Statement.
j. Each of the Trust and the Corporation will use the net
proceeds received by it from the sale of the Underwritten Securities in
the manner specified in the Prospectus under "Use of Proceeds."
13
<PAGE> 14
k. The Trust and the Corporation, if applicable, during the
period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, will file all documents required to be filed with
the Commission pursuant to Sections 13, 14 or 15 of the 1934 Act within
the time periods required by the 1934 Act and the 1934 Act Regulations.
l. The Trust and the Corporation will file with the New York
Stock Exchange all documents and notices required by the New York Stock
Exchange of companies that have securities listed on such exchange and,
unless otherwise agreed upon with respect to Preferred Shares and Debt
Securities, will use its best efforts to secure and maintain the
listing of any Underwritten Securities (or the securities, if any, into
which an Underwritten Security may be convertible) listed on the New
York Stock Exchange.
m. In respect to each offering of Debt Securities, the Trust
and the Corporation will qualify an Indenture under the 1939 Act and
will endeavor to have a Statement of Eligibility submitted on behalf of
the Trustee.
n. The Trust and the Corporation will take all reasonable
action necessary to enable Standard & Poor's Corporation ("S&P"),
Moody's Investors Service, Inc. ("Moody's") or any other nationally
recognized statistical rating organization to provide their respective
credit ratings of any Underwritten Securities, if applicable.
o. During a period of 90 days from the date of any Prospectus
Supplement, the Trust and the Corporation will not, without the prior
written consent of the Representatives, directly or indirectly, sell,
offer to sell, grant any option for the sale of, enter into any
agreement to sell, or otherwise dispose of any Paired Shares or any
security convertible into or exchangeable or exercisable for Paired
Shares (except for (i) the issuance of Paired Shares pursuant to
outstanding options and warrants, (ii) the grant of options under the
Trust's and the Corporation's 1995 Share Option Plan and (iii) in
connection with acquisitions by the Trust and the Corporation).
p. The Trust and the Corporation will each use its best
efforts to continue to meet the requirements for the Trust to qualify
as a "real estate investment trust" under the Code.
q. During the period from the Closing Time until five years
after the Closing Time, the Trust and the Corporation will deliver to
the Representatives, (i) promptly upon their becoming available, copies
of all current, regular and periodic reports of the Trust and the
Corporation mailed to its stockholders or filed with any securities
exchange or with the Commission or any governmental authority
succeeding to any of the Commission's functions, and (ii) such other
information concerning the Trust and the Corporation as the
Representatives may reasonably request.
SECTION 4. Payment of Expenses. The Trust and the Corporation will pay
all expenses incident to the performance of their respective obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement as originally filed and of each amendment thereto
(including, without limitation, all reasonable expenses and disbursements of
Rogers & Wells, counsel to the Underwriters, in connection with the preparation,
printing and filing of the Registration Statement), (ii) the printing, or
reproducing, and distributing to the Underwriters copies of this Agreement and
the Pricing Agreement, (iii) the fees and disbursements of the Trust's and the
Corporation's counsel and accountants, (iv) the qualification of the Securities
under securities laws in accordance with the provisions of Section hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey, (v) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto, of each preliminary prospectus, and of the Prospectus and any
amendments or supplements thereto, (vi) the cost of printing, or reproducing,
and delivering to the Underwriters copies of the Blue Sky Survey, (vii) the fee
of the NASD, (viii) the fees and expenses incurred in connection with the
listing of the Paired Shares on the New York Stock Exchange (ix) any fees
charged by nationally recognized statistical rating
14
<PAGE> 15
organizations for the rating of the Debt Securities, if any, (x) the printing
and delivery to the Underwriters of copies of the Indenture, if any, (xi) the
fees and expenses of the Trustee, if any, including the reasonable fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Underwritten Securities, and (xii) any transfer taxes imposed on the sale of
the Securities to the several Underwriters. If this Agreement is cancelled or
terminated by the Representatives in accordance with the provisions of Section
or Section (i) hereof, the Trust and the Corporation shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters hereunder are subject to the accuracy, as of the date hereof
and at Closing Time, of the representations and warranties of the Trust and the
Corporation herein contained, to the performance by the Trust and the
Corporation of their respective obligations hereunder, and to the following
further conditions:
a. At Closing Time, (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, (ii) if the Company has elected to rely upon Rule 430A
of the 1933 Act Regulations, the public offering price of and the
interest rate on the Underwritten Securities, as the case may be, and
any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the
1933 Act Regulations within the prescribed time period, and prior to
the applicable Closing Time, the Company shall have provided evidence
satisfactory to the Representatives of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the
requirements of Rule 430A of the 1933 Act Regulations, (iii) the rating
assigned by any nationally recognized statistical rating organization
to any long-term debt securities of the Company as of the date of the
applicable Pricing Agreement shall not have been lowered since such
date nor shall any such rating organization have publicly announced
that it has placed any long-term debt securities of the Company on what
is commonly termed a "watch list" for possible downgrading, and (iv)
there shall not have come to the attention of the Representatives any
facts that would cause the Representatives to believe that the
Prospectus, together with the applicable Prospectus Supplement, at the
time it was required to be delivered to purchasers of the Underwritten
Securities, included an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at such time, not
misleading. If a Rule 462(b) Registration Statement is required, such
Rule 462(b) Registration Statement shall have been transmitted to the
Commission for filing and have become effective within the prescribed
time period, and, prior to Closing Time, the Trust and the Corporation
shall have provided to the Underwriters evidence of such filing and
effectiveness in accordance with Rule 462(b) of the 1933 Act
Regulations.
b. At Closing Time the Representatives shall have received:
(1) The favorable opinions, each in form and substance
reasonably satisfactory to counsel or the Underwriters, dated as of
Closing Time of (A) Sidley & Austin, counsel for Transaction Entities,
with respect to the matters set forth in items (v), (vi), (vii) (only
with respect to the second sentence thereof), and (viii) - (xx) below
and (B) Piper & Marbury, Maryland counsel to the Transaction Entities,
with respect to the matters set forth in items (i) - (iv), (vii) (only
with respect to the first and last sentences thereof) and (xvii) (with
respect to Maryland law):
(i) The Trust has been duly formed and is validly
existing as a real estate investment trust in good standing
under the laws of the State of Maryland.
(ii) The Corporation and its subsidiaries have each
been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective
jurisdiction of incorporation (except, with respect to those
subsidiaries
15
<PAGE> 16
which are not significant subsidiaries, where the
failure to be so validly existing as a corporation in
good standing would not be reasonably expected to
have a Material Adverse Effect).
(iii) The Trust has the power and authority
to own, lease and operate its properties, to conduct
the business in which it is engaged or proposes to
engage as described in the Prospectus and to enter
into and perform its obligations under this Agreement
and the other Operative Documents to which it is a
party. The Trust is duly qualified to transact
business and is in good standing in each jurisdiction
that is shown in the Prospectus as a jurisdiction in
which the Trust or the Realty Partnership manages,
owns or leases real property, except where the
failure to so qualify would not reasonably be
expected to have a Material Adverse Effect.
(iv) Each of the Corporation and its
subsidiaries have the corporate power and authority
to own, lease and operate its properties, to conduct
the business in which it is engaged or proposes to
engage as described in the Prospectus and to enter
into and perform its obligations under this Agreement
and the other Operative Documents to which it is a
party. Each of the Corporation and its subsidiaries
is duly qualified as a foreign corporation to
transact business and is in good standing in each
jurisdiction that is shown in Prospectus as a
jurisdiction in which such party or the Operating
Partnership manages, owns or leases real property,
except where the failure to so qualify would not
reasonably be expected to have a Material Adverse
Effect.
(v) Each of the Realty Partnership, the LLC
and the Operating Partnership has been duly formed
and is validly existing as a limited partnership or
limited liability company, as the case may be, in
good standing under the laws of the State of
Delaware. Each of the Realty Partnership, the LLC and
the Operating Partnership has all requisite power and
authority to own, lease and operate its properties,
to conduct the business in which it is engaged and
proposes to engage as described in the Prospectus and
to enter into and perform its obligations under this
Agreement and the other Operative Documents, in each
case, to which it is a party. Each of the Realty
Partnership, the LLC and the Operating Partnership is
duly qualified or registered as a foreign entity and
is in good standing in each jurisdiction that is
shown in the Prospectus as a jurisdiction in which it
manages, owns or leases real property, except where
the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect.
(vi) To the knowledge of such counsel, no
shares of capital stock of the Trust or the
Corporation are reserved for any purpose except as
disclosed in the Prospectus. To the knowledge of such
counsel, except as described in the Prospectus, there
are no outstanding securities convertible into or
exchangeable for any capital stock of the Trust or
the Corporation and there are no outstanding options,
rights (preemptive or otherwise) or warrants to
purchase or subscribe for shares of the capital stock
or any other securities of the Trust or the
Corporation, in each case from the Transaction
Entities or any of their respective subsidiaries.
(vii) The Securities have been duly and
validly authorized by all necessary trust and
corporate action for issuance and sale to the
Underwriters pursuant to this Agreement and, when
issued and delivered by the Trust and the Corporation
pursuant to the Indenture, if any, and this Agreement
against payment of the consideration set forth in the
Pricing Agreement, will be validly issued, fully-paid
and non-assessable. Each of the Underwriters is
receiving marketable title to the Securities, free
and clear of all security interests, mortgages,
pledges, liens, encumbrances, claims or equities. The
16
<PAGE> 17
Paired Shares to be issued upon conversion
of the Convertible Notes, if any, have been duly
authorized for issuance by all necessary trust and
corporate action, and when issued and delivered by
the Trust and the Corporation upon conversion of the
Convertible Notes, will be validly issued, fully paid
and non-assessable. The issuance of the Securities is
not subject to any preemptive or other similar rights
arising under the laws of the State of Maryland, the
Declaration of Trust or Trustee's Regulation of
Trust, the Articles of Incorporation or by-laws of
the Corporation, any Operative Document or agreement
filed as an exhibit to the Registration Statement.
(viii) The Realty Units and Operating Units
issued through the Closing Time, including, without
limitation, the Realty Units and Operating Units
issued to the Trust and the Corporation,
respectively, were duly authorized for issuance by
the Realty Partnership or the Operating Partnership,
as the case may be, to the holders thereof, and are
validly issued, fully paid and non-assessable. All
such Units have been offered and sold at or prior to
Closing Time in compliance in all material respects
with applicable laws of the United States and the
State of Delaware. The terms of the Units conform in
all material respects to the statements and
descriptions related thereto contained in the
Prospectus.
(ix) To the knowledge of such counsel, none
of the Transaction Entities is in violation of its
declaration of trust, charter, trustee's regulation
of trust charter, by-laws, certificate of limited
partnership or partnership agreement, as the case may
be, and none of the Transaction Entities is in
default in the performance or observance of any
obligation, agreement, covenant or condition
contained in any Operative Document or agreement or
other instrument filed as an exhibit to the
Registration Statement, except for violations or
defaults which in the aggregate would not reasonably
be expected to have a Material Adverse Effect.
(x) The Indenture, if any, shall be duly
qualified under the Trust Indenture Act. The
Convertible Notes and/or the Debt Securities, if any,
shall represent obligations of the Trust and the
Corporation, which, to the knowledge of such counsel,
are not subject to any subordination agreement
(except to the extent provided in the Indenture), and
do not entitle any holder thereof to any rights as a
shareholder of either the Trust or the Corporation.
Such Convertible Notes and/or Debt Securities, if
any, and the Indenture do not contain any provision
which conditions the obligation of payment by the
Trust and the Corporation thereunder or which
subordinates the indebtedness evidenced thereby in
right of payment to any other indebtedness of the
Trust or the Corporation, except to the extent the
Indenture provides for a priority for compensation
and expenses of the Trustee over payments to holders
of such Convertible Notes and/or Debt Securities, if
any.
(xi) This Agreement and the Pricing
Agreement were each duly and validly authorized,
executed and delivered by the Transaction Entities,
as applicable.
(xii) The Indenture, if any, shall be duly
and validly authorized, executed and delivered by the
Transaction Entities, as applicable, and, assuming
due authorization, execution and delivery by any
party thereto which is not a Transaction Entity,
shall be a valid and binding agreement of the
Transaction Entities that are parties thereto,
enforceable against the Transaction Entities that are
parties thereto in accordance with its terms, except
as such enforceability may be subject to (1)
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer or similar laws
affecting
17
<PAGE> 18
creditors rights and (2) general principles
of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(xiii) The execution and delivery of each of
the Operative Documents, the performance of the
obligations set forth herein or therein, and the
consummation of the transactions contemplated hereby
or thereby or in the Prospectus by the Transaction
Entities did not, do not and will not constitute a
breach or violation by such parties of, or default
under: (1) any other Operative Documents; (2) any
agreement or other instrument filed as an exhibit to
the Registration Statement which would reasonably be
expected to have a Material Adverse Effect, and of
which such counsel is aware; (3) the declaration of
trust, trustee's regulation of trust, charter,
by-laws, certificate of limited partnership or
partnership agreement, as the case may be, of any
Transaction Entity; or (4) any applicable law, rule
or administrative regulation of the United States or
the jurisdiction of its incorporation or formation;
or (5) any order or administrative or court decree of
which such counsel is aware, except in each case for
breaches, violations or defaults that in the
aggregate would not reasonably be expected to have a
Material Adverse Effect.
(xiv) There is no action, suit or proceeding
before or by any court or governmental agency or
body, domestic or foreign, now pending, or, to the
knowledge of the Transaction Entities, threatened
against or affecting any Transaction Entity or any of
their respective subsidiaries, any Hotel Asset or any
officer or director of the Trust or the Corporation
or any of their respective subsidiaries, which is
required to be disclosed in the Registration
Statement or the Prospectus (other than as disclosed
therein), or that, if determined adversely to any
Transaction Entity, any Hotel Asset, or any such
officer or director, will or would reasonably be
expected to (A) have a Material Adverse Effect, or
(B) materially and adversely affect the consummation
of the transactions contemplated by this Agreement.
There are no pending legal or governmental
proceedings to which any Transaction Entity or any of
their respective subsidiaries is a party or of which
they or any of their respective properties or assets
or any Hotel Asset is the subject which are not
described in the Registration Statement, including
ordinary routine litigation incidental to the
business, that, considered in the aggregate, could
reasonably be expected to have a Material Adverse
Effect. There are no contracts or documents of any
Transaction Entity or any of their respective
subsidiaries which are required to be filed as
exhibits to the Registration Statement by the 1933
Act or by the 1933 Act Regulations which have not
been so filed.
(xv) Commencing with their taxable years
ending December 31, 1995, the Transaction Entities
and their respective subsidiaries are and will be
organized in conformity with the requirements for
qualification of the Trust as a real estate
investment trust under the Code, and the proposed
method of operation of the Transaction Entities and
their respective subsidiaries will enable the Trust
to meet the requirements for taxation as a real
estate investment trust under the Code. The
provisions of Section 269B(a)(3) of the Code does not
and will continue not to apply to the Trust.
(xvi) None of the Transaction Entities or
any of their respective subsidiaries is required to
be registered under the 1940 Act.
(xvii) No authorization, approval, consent
or order of any court or governmental authority or
agency or, to the knowledge of such counsel, any
other entity or person is necessary in connection
with the offering, issuance or sale of the Securities
hereunder or the issuance of the Paired Shares
issuable upon conversion of the
18
<PAGE> 19
Convertible Notes, if any, except as may be
required under the 1933 Act, the 1933 Act Regulations
or the Trust Indenture Act or the by-laws and rules
of the NASD, or state securities laws, real estate
syndication laws or such as have been received prior
to the date of this Agreement.
(xviii) To such counsel's knowledge, there
is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or
foreign, now pending, or, threatened against or
affecting any Transaction Entity, any Hotel Asset or
any officer or director of the Trust or the
Corporation, which is required to be disclosed in the
Registration Statement, other than those disclosed
therein, and there is no pending legal or
governmental proceedings that, if determined
adversely to any Transaction Entity, any Hotel Asset,
or any such officer or director, will or would
reasonably be expected to materially and adversely
affect the consummation of the transactions
contemplated by this Agreement.
(xix) At the time the Registration Statement
became effective and at the Representation Date, the
Registration Statement (other than the financial
statements and supporting schedules and other
financial and statistical data included therein, as
to which no opinion need be rendered) complied as to
form in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations.
(xx) The information in the Prospectus under
"Risk Factors," "Structure of the Company" and
"Federal Income Tax Considerations," in each case to
the extent that it constitutes statements of law,
descriptions of statutes, rules or regulations,
summaries of documents, or legal conclusions, has
been reviewed by them and is correct in all material
respects and presents fairly the information required
to be disclosed therein.
(xxi) To such counsel's knowledge, there are
no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be
described or referred to in the Registration
Statement or to be filed as exhibits thereto by the
1933 Act Regulations other than those described or
referred to therein or filed as exhibits thereto, and
the descriptions thereof or references thereto are
accurate in all material respects.
(xxii) To such counsel's knowledge except as
disclosed in the Prospectus, there are no persons
with registration or other similar rights to have any
securities registered pursuant to the Registration
Statement.
(xxiii) The Registration Statement is
effective under the 1933 Act and, to the knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission.
In giving its opinion, such counsel may rely, (A) as
to all matters of fact, upon certificates and written
statements of officers, directors, partners and employees of
and accountants for each of the Transaction Entities, (B) as
to matters of Maryland law, on the opinion of Piper & Marbury,
Baltimore, Maryland, which opinion shall be in form and
substance reasonably satisfactory to counsel for the
Underwriters, and (C) as to the good standing and
qualification of the Transaction Entities to do business in
any state or jurisdiction, upon certificates of appropriate
government officials or opinions of counsel in such
jurisdictions. Counsel need express no opinion with respect to
the requirements of, or compliance with, any state securities
or "Blue Sky" laws.
19
<PAGE> 20
In addition, Sidley & Austin shall state that in
connection with the preparation of the Registration Statement
and the Prospectus, Sidley & Austin has participated in
conferences with officers and other representatives of the
Trust and the Corporation and the independent public
accountants for the Trust and the Corporation at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed and has considered as to
materiality, the judgment of officers and other
representatives of the Trust and the Corporation. On the basis
of such participation and review, but without independent
verification by such counsel of, and without assuming any
responsibility for, the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus or any amendments or supplements thereto, no facts
have come to its attention that lead it to believe that (i)
the Registration Statement, at the time such Registration
Statement became effective and at the Representation Date,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading or (ii) the Prospectus, as of its date or at
Closing Time, contained or contains any untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that Sidley & Austin need express no opinion with
respect to the financial statements, schedules and other
financial and statistical data included in the Registration
Statement or the Prospectus).
(2) The favorable opinion, dated as of the Closing
Time, of Rogers & Wells, counsel for the Underwriters, with
respect to the matters set forth in (vii) (with respect to the
first sentence only) and (x) of subsection b.(1) of this
Section 5.
In giving its opinion, Rogers & Wells may rely, (A)
as to all matters of fact, upon certificates and written
statements of officers and employees of and accountants for
the Transaction Entities, (B) as to the good standing and
qualification of the Company to do business in any state or
jurisdiction, upon certificates of appropriate government
officials or opinions of counsel in such jurisdictions, which
opinions shall be in form and substance satisfactory to
counsel for the Underwriters, and (C) as to certain matters of
law, upon the opinions given pursuant to Section 5.b.(1)
above.
In addition, Rogers & Wells shall state that in
connection with the preparation of the Registration Statement
and the Prospectus, Rogers & Wells has participated in
conferences with officers and other representatives of the
Trust and the Corporation and the independent public
accountants for the Trust and the Corporation at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed. On the basis of such
participation and review, but without independent verification
by such counsel of, and without assuming any responsibility
for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus or
any amendments or supplements thereto, no facts have come to
its attention that lead it to believe that (i) the
Registration Statement, at the time such Registration
Statement became effective and at the Representation Date,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading or (ii) the Prospectus, as of its date or at
Closing Time, contained or contains any untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that Rogers & Wells need express no opinion with
respect to the financial statements, schedules and other
financial and statistical data included in the Registration
Statement or the Prospectus).
c. At Closing Time, (i) the Registration Statement and the
Prospectus shall contain all statements that are required to be stated
therein in accordance with the 1933 Act and the 1933 Act Regulations
and in all material respects shall conform to the requirements of the
1933 Act and the 1933 Act
20
<PAGE> 21
Regulations, and neither the Registration Statement nor the Prospectus
shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, and no action, suit or proceeding at law or
in equity shall be pending or, to the knowledge of any Transaction
Entity, threatened against such entity, any Hotel Asset which would be
required to be set forth in the Prospectus other than as set forth
therein, (ii) there shall not have been, since the date hereof or since
the respective dates as of which information is given in the
Registration Statement and the Prospectus, any adverse change in the
condition, financial or otherwise, or in the earnings, assets, business
affairs or business prospects of the Transaction Entities whether or
not arising in the ordinary course of business which would be Material,
(iii) no proceedings shall be pending or to the knowledge of the
Transaction Entities, threatened against any Transaction Entity, or any
Hotel Asset before or by any federal, state or other commission, board
or administrative agency wherein an unfavorable decision, ruling or
finding might result in any adverse change in the condition, financial
or otherwise, or in the earnings, assets, or business affairs of the
Transaction Entities, and the Hotel Assets which would be Material,
other than as set forth in the Prospectus, (iv) no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and, to the knowledge of the Transaction
Entities, no proceedings for that purpose shall have been instituted or
threatened by the Commission or by the state securities authority of
any jurisdiction, and (v) the Representatives shall have received a
certificate of the President or a Vice President of the Trust and the
Corporation and of the chief financial or chief accounting officer of
each such entity, dated as of the Closing Time, evidencing compliance
with the provisions of this subsection c. and stating that the
representations and warranties in Section 1 hereof are true and
correct, with the same force and effect as though expressly made at and
as of Closing Time.
d. At the time of the execution of this Agreement, the
Representatives shall have received from each of Coopers & Lybrand
L.L.P. and Deloitte & Touche LLP, a letter dated such date, in
form and substance satisfactory to the Representatives, to
the effect that: (i) they are independent public accountants
with respect to the Trust and the Corporation as required by
the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion
that the financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations; (iii) based
upon limited procedures set forth in detail in such letter, including a
reading of the latest available interim financial statements of the
Trust and the Corporation, a reading of the minute books of each of the
Trust and the Corporation, inquiries of officials of the Trust and the
Corporation responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing has come to their attention which causes them to believe that
(A) the unaudited financial statements and supporting schedules of the
Trust and the Corporation included in the Registration Statement do not
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations or
are not in conformity with generally accepted accounting principles
applied on a basis consistent with that of the audited financial
statements included in the Registration Statement, (B) the operating
data and balance sheet data set forth in the Prospectus under the
captions "Prospectus Summary - Summary Combined Selected Financial
Data" and "Selected Combined Financial Data" were not determined on a
basis consistent with that used in determining the corresponding
amounts in the audited financial statements included in the
Registration Statement, (C) the pro forma financial information
included in the Registration Statement was not prepared in accordance
with the applicable requirements of the 1933 Act, the 1933 Act
Regulations with respect to pro forma financial information or was not
determined on a basis consistent with that of the audited financial
statements included in the Registration Statement or (D), with respect
to the letter from Deloitte & Touche LLP, at a specified date not more
than five days prior to the date of this Agreement, there has been any
change in the capital stock of the Trust or the Corporation, or any
increase in the debt of the Trust or the Corporation or any decrease in
the net assets of the Trust or the Corporation, as compared with the
amounts shown in the March 31, 1995 balance sheets of the Trust and the
Corporation, included in the Registration Statement or, during the
period from March 31, 1995 to a specified date not more than five days
prior to the date of
21
<PAGE> 22
this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in revenues, net income or
funds from operations of the Trust and the Corporation, except in all
instances for changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur; and
(iv) in addition to the examination referred to in their opinions and
the limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus and
which are specified by the Representatives, and have found such
amounts, percentages and financial information to be in agreement with
the relevant accounting, financial and other records of the Trust and
the Corporation identified in such letter.
e. At Closing Time the Representatives shall have received
from each of Coopers & Lybrand L.L.P. and Deloitte & Touche LLP,
a letter, dated the Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to
subsection d. of this Section, except that the "specified date"
referred to shall be a date not more than five days prior to
Closing Time and, if the Trust and the Corporation has elected to rely
on Rule 430A of the 1933 Act Regulations, to the further effect that
they have carried out procedures as specified in clause (iv) of
subsection d. of this Section with respect to certain amounts,
percentages and financial information specified by the Representatives
and deemed to be a part of the Registration Statement pursuant to Rule
430A(b) and have found such amounts, percentages and financial
information to be in agreement with the records specified in such
clause (iv).
f. At Closing Time the Underwritten Securities (or any
securities into which an Underwritten Security may be convertible)
shall have been approved for listing on the New York Stock Exchange
upon notice of issuance.
g. At Closing Time and at each Date of Delivery, if any,
counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities
as herein contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Trust and the Corporation in connection with
the issuance and sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters.
h. In the event that the Underwriters exercise their option
provided in Section hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Transaction
Entities contained herein and the statements in any certificates
furnished by the Transaction Entities hereunder shall be true and
correct in all material respects as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(1) A certificate, dated such Date of Delivery, of
the President or a Vice President of each of the Trust and the
Corporation and of the chief financial or chief accounting
officer of each of such entity confirming that their
respective certificates delivered at Closing Time pursuant to
Section hereof remain true and correct as of such Date of
Delivery.
(2) The favorable opinions of Sidley & Austin and
Piper & Marbury, in form and substance reasonably satisfactory
to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion
required by Section 5.b.(1) hereof.
22
<PAGE> 23
(3) The favorable opinion of Rogers & Wells, counsel
for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by
Section 5.b.(2) hereof.
*(4) Letters from Coopers & Lybrand L.L.P. and
Deloitte & Touche LLP, in form and substance satisfactory
to the Representatives and dated such Date of Delivery,
substantially the same in form and substance as the letter
furnished to the Representatives pursuant to Section 5.e.
hereof, except that the "specified date" in the letter
furnished pursuant to this Section 5.g.(4) shall be a date
not more than five days prior to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company, at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof.
SECTION 6. Indemnification.
a. Each of the Transaction Entities agrees, jointly and
severally, to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act as follows:
i. against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant to
Rule 430A(b) of the 1933 Act Regulations, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon
and in conformity with written information furnished to any Transaction
Entity by any Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto); and provided,
further, that this indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, liabilities, claims, damages or
expenses purchased Securities (or any securities into which a Security
may be convertible), or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if any
Transaction Entity shall have furnished any such amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or prior to
the written confirmation of the sale of such Securities to such person
and if the Prospectus (as so amended or supplemented) would have
corrected the defect giving rise to such loss, liability, claim, damage
or expense.
ii. against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever for which
indemnification is provided under subsection (i) above if such
settlement is effected with the prior written consent of the
indemnifying party; and
23
<PAGE> 24
iii. against any and all expense whatsoever, as
incurred (including, subject to Section 6.c. hereof, the reasonable
fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever for
which indemnification is provided under subsection (i) above, to the
extent that any such expense is not paid under (i) or (ii) above;
b. Each Underwriter severally agrees to indemnify and hold harmless the
Transaction Entities, the Trust's and the Corporation's trustees and directors,
as the case may be, and each of the Trust's and the Corporation's officers who
signs the Registration Statement or any amendment thereto and each person, if
any, who controls the Trust or the Corporation within the meaning of Section 15
of the 1933 Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection a. of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to any Transaction Entity by such Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
c. Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any claims asserted against or any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have otherwise than on
account of this indemnity agreement except to the extent the indemnifying party
has been prejudiced in any material respect by such failure. An indemnifying
party may participate at its own expense in the defense of any such action. If
it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving such
notice, may assume the defense of such action with counsel chosen by it and
reasonably approved by the indemnified parties defendant in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them which are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 6 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its prior written consent; provided, that
such consent was not unreasonably withheld.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Transaction
Entities and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Transaction Entities and the Underwriters
(a) in such proportion as is appropriate to reflect the relative benefits
received by the Transaction Entities and the Underwriters from the offering of
the Securities, or (b) if the allocation provided by clause (a) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (a) above but also the relative
fault (as determined by a court of competent jurisdiction or a panel of
arbitration) of the Transaction Entities and the Underwriters in connection with
the statements or omissions that resulted in such losses, liabilities, claims,
damages, and expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Transaction Entities and the Underwriters
shall be deemed to be in the same proportions as the total gross proceeds from
the offering (before deducting expenses) received by the Trust and the
Corporation bear to the total underwriting discount received by the
Underwriters. The relative fault of the Transaction Entities and the
24
<PAGE> 25
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Transaction
Entities or by the Underwriters and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission.
The parties agree that it would not be just or equitable if
contribution pursuant to this Section 7 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 the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
The Underwriters' obligations to contribute pursuant to this Section 7
are several in proportion to their respective underwriting commitments and not
joint. For purposes of this Section 7, the Transaction Entities shall be deemed
one party and jointly and severally liable for any obligations hereunder. For
purposes of this Section 7, each person, if any, who controls a Underwriter
within the meaning of Section 15 of the 1933 Act, and any director, officer,
employee or affiliate of a Underwriter or such controlling person, shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Transaction Entities within the meaning of Section 15 of the
1933 Act, or any director, officer, employee or affiliate of any Transaction
Entity or such controlling person, shall have the same rights to contribution as
the Transaction Entities.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers or
authorized representatives of the Transaction Entities submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Transaction Entities and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
a. The Representatives may terminate this Agreement, by notice to the
Trust and the Corporation, at any time at or prior to Closing Time (i) if there
has been, since the date of this Agreement or since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition, financial or otherwise, or in the earnings, assets,
business affairs or business prospects of the Transaction Entities and their
respective subsidiaries, considered as one enterprise, or Hotel Assets, whether
or not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of existing hostilities or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of such Securities or
(iii) if trading in the Securities has been suspended by the Commission or if
trading generally on either the New York Stock Exchange or the American Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said Exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by any Federal, New York
or Maryland authorities.
b. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Sections and 10 hereof. Notwithstanding any such termination, the
provisions of Sections 4, 6 and 7 shall remain in effect.
25
<PAGE> 26
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Initial
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
a. if the number of Defaulted Securities does not exceed 10%
of the Securities, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
b. if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives, on the one hand, or the Trust and
the Corporation, on the other hand, shall have the right to postpone Closing
Time for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1326, attention of Mr. Martin J. Cicco, Managing Director; notices to the
Trust or the Realty Partnership shall be directed to either of them at c/o
Starwood Lodging Trust, 11835 West Olympic Blvd., Suite 695, Los Angeles,
California 90064, attention of Mr. Jeffrey C. Lapin, President, with a copy to
Sidley & Austin, 555 West Fifth Street, Los Angeles, California 90013, attention
of Sherwin L. Samuels, Esq.; notices to the Corporation or the Operating
Partnership shall be directed to either of them c/o Starwood Lodging
Corporation, 11835 West Olympic Blvd., Suite 675, Los Angeles, California 90064,
attention of Mr. Kevin E. Mallory, Executive Vice President, with a copy to
Sidley & Austin at the above address.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the parties hereto and their
respective successors. Nothing expressed or mentioned in this Agreement or the
Pricing Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Transaction Entities, the Underwriters and their
respective successor and the persons referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or the Pricing Agreement or any provision
herein or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the parties hereto and thereto and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. The Trust. Each of the parties hereto acknowledge and agree
that the name "Starwood Lodging Trust" is a designation of the Trust and its
Trustees (as Trustees but not personally) under a Declaration of Trust dated
August 25, 1969, as amended and restated, 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 the Trustees, officers, agents and
26
<PAGE> 27
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 14. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE PRICING
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID
STATE. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
27
<PAGE> 28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust and the Corporation a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement among the Underwriters and the Transaction Entities in
accordance with its terms.
Very truly yours,
STARWOOD LODGING TRUST
By:
-----------------------------------
Name:
STARWOOD LODGING CORPORATION
By:
-----------------------------------
Name:
SLT REALTY LIMITED PARTNERSHIP
By: Starwood Lodging Trust
its General Partner
By:
-----------------------------------
Name:
SLC OPERATING LIMITED PARTNERSHIP
By: Starwood Lodging Corporation
its General Partner
By:
-----------------------------------
Name:
<PAGE> 29
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
--------------------------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
<PAGE> 30
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name of Underwriter Initial Securities
- ------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated....................
Total...............................................
</TABLE>
Sch. A-1
<PAGE> 31
EXHIBIT A
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
(A MARYLAND REAL ESTATE INVESTMENT TRUST) (A MARYLAND CORPORATION)
Common Stock, Warrants, Preferred Shares,
Convertible Notes and Debt Securities
PRICING AGREEMENT
Dated: [________], 199[__]
To: Starwood Lodging Trust
Starwood Lodging Corporation
c/o Starwood Lodging [_________]
[________________]
[________________]
Attention: Chairman of the Board of Directors
Ladies and Gentlemen:
We (the "Representatives") understand that Starwood Lodging Trust, a
Maryland real estate investment trust (the "Trust"), and Starwood Lodging
Corporation, a Maryland corporation (the "Corporation" and, with the Trust, the
"Company") proposes to issue and sell [__________] of its [shares of beneficial
interest, $.01 par value, of the Trust (the "Trust Shares") and shares of common
stock, $.01 par value, of the Corporation (the "Corporation Shares") which are
"paired" and traded as units consisting of one Trust Share and one Corporation
Share (the "Paired Shares")][convertible notes of the Trust and the Corporation
(the "Convertible Notes")][(A) warrants to purchase Trust Shares and warrants to
purchase Corporation Shares which are "paired" and traded as units consisting of
one warrant to purchase Trust Shares and one warrant to purchase a like number
of Corporation Shares, (B) warrants to purchase shares of preferred stock of the
Trust or the Corporation, or (C) warrants to purchase debt securities of the
Trust or the Corporation (collectively, the "Warrants")] [shares of preferred
stock of the Trust (the "Trust Preferred Shares") and shares of preferred stock
of the Corporation (the "Corporation Preferred Shares" and, with the Trust
Preferred Shares, the "Preferred Shares") which may, but are not required to, be
"paired" with preferred stock of the other entity] [unsecured debt securities of
the Trust or the Corporation with an aggregate public offering price of up to
$500,000,000 (the "Debt Securities")(such [Common Shares], [Convertible Notes],
[Warrants], [Preferred Shares] and [Debt Securities] being collectively
hereinafter referred to as the "Underwritten Securities"). Subject to the terms
and conditions set forth or incorporated by reference herein, the underwriters
named below (the "Underwriters") offer to purchase, severally and not jointly,
the respective numbers of Initial Underwritten Securities (as defined in the
Underwriting Agreement referred to below) set forth below opposite their
respective names, and a proportionate share of Option Securities (as defined in
the Underwriting Agreement referred to below) to the extent any are purchased,
at the purchase price set forth below.
A-1
<PAGE> 32
<TABLE>
<CAPTION>
[Number of Shares]
[Principal Amount]
Of Initial
Underwriter Underwritten Securities
----------- -----------------------
<S> <C>
--------------
Total $
--------------
</TABLE>
The Underwritten Securities shall have the following terms:
[COMMON STOCK] [WARRANTS] [CONVERTIBLE NOTES] [PREFERRED SHARES]
Title of Securities:
Number of Shares:
[Current Ratings:]
[Dividend Rate: [$ ] [ %], Payable:]
[Stated Value:]
[Liquidation Preference:]
[Ranking:]
Public offering price per share: $ [, plus accumulated dividends, if any,
from , 199 .]
Purchase price per share: $ [, plus accumulated dividends, if any,
from , 199 .]
[Conversion provisions:] [Voting and other rights:] Number of Option
Securities, if any, that may be purchased by the Underwriters:
Additional co-managers, if any: Other terms: Closing time, date and location:
The Underwritten Securities shall have the following terms:
[DEBT SECURITIES]
Title of Securities:
Currency:
Principal amount to be issued:
Current ratings: Moody's Investors Service, Inc. ______;
Standard & Poor's Corporation ______; [other rating agencies];
Interest rate or formula:
Interest payment dates:
Interest reset dates:
Interest determination date:
Stated maturity date:
Redemption or repayment provisions:
Number of Option Securities, if any, that may be purchased by the Underwriters:
Delayed Delivery Contracts: [authorized] [not authorized]
[Date of Delivery:
Minimum contract:
Maximum aggregate principal amount:
Fee: ___%]
[Initial public offering price: ___%, plus accrued interest,
if any, or amortized original issue discount, if any, from
19__.]
A-2
<PAGE> 33
Purchase price: ___%, plus accrued interest, if any, or
amortized original issue discount, if any, from
____________, 19__ (payable in [same] [next] day funds).
Other terms:
Closing date and location:
All the provisions contained in the document attached as Annex A hereto
entitled "Starwood Lodging Trust and Starwood Lodging Corporation -- Common
Stock, Warrants, Preferred Shares, Convertible Notes and Debt Securities
Underwriting Agreement" are hereby incorporated by reference in their entirety
herein and shall be deemed to be a part of this Pricing Agreement to the same
extent as if such provisions had been set forth in full herein. Terms defined in
such document are used herein as therein defined.
A-3
<PAGE> 34
Please accept this offer no later than [_____] o'clock P.M. (New York City time)
on [_____] by signing a copy of this Pricing Agreement in the space set forth
below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
[OTHER REPRESENTATIVES]
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
------------------------------------
For themselves and as Representatives
of the other named Underwriters.
Accepted:
STARWOOD LODGING TRUST
By:
---------------------------------------
Name:
Title:
STARWOOD LODGING CORPORATION
By:
---------------------------------------
Name:
Title:
B-1
<PAGE> 1
EXHIBIT 5.1.(A)
SIDLEY & AUSTIN
March 27, 1996
Starwood Lodging Trust
11835 W. Olympic Boulevard, Suite 695
Los Angeles, California 90064
Starwood Lodging Corporation
11835 W. Olympic Boulevard, Suite 675
Los Angeles, California 90064
Re: $400,000,000 in Starwood Lodging Trust Securities
and $100,000,000 in Starwood Lodging Corporation
Securities
Ladies and Gentlemen:
We are Counsel to Starwood Lodging Trust, a Maryland real
estate investment trust (the "Trust") and Starwood Lodging Corporation, a
Maryland corporation (the "Corporation" and, together with the Trust, the
"Company"), and have represented the Company with respect to the Registration
Statement on Form S-3 (the "Registration Statement") filed by the Company with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the registration of
securities (the "Securities") of the Trust and the Corporation with aggregate
offering prices of $400,000,000 and $100,000,000, respectively, (or its
equivalent in another currency based on the exchange rate at the time of sale)
consisting of (i) convertible notes of the Trust and the Corporation (the
"Convertible Notes"); (ii) shares of beneficial interest, $.01 par value, of the
Trust (the "Trust Shares") and shares of common stock, $.01 par value, of the
Corporation (the "Corporation Shares") which are paired and traded as units
consisting of one Trust Share and one Corporation Share (the "Paired Common
Shares") issuable upon conversion of the Convertible Notes; (iii) shares of
preferred stock, $.01 par value, of the Trust (the "Trust Preferred Shares") and
shares of preferred stock, $.01 par value, of the Corporation (the "Corporation
Preferred Shares" and, together with the Trust Preferred Shares, the "Preferred
Shares"), which may, but are not required to be "paired" with preferred stock of
the other entity; (iv) unsecured debt securities of the Trust or the Corporation
(the "Debt Securities"); and (v) warrants to purchase Debt Securities, Preferred
Shares or Paired Common Shares (the "Warrants").
In rendering this opinion, we have examined and relied upon a
copy of the Registration Statement. We have also examined
<PAGE> 2
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 2
originals, or copies of originals certified to our satisfaction, of such
agreements, documents, certificates and other statements of governmental
officials and other instruments, and have examined such questions of law and
have satisfied ourselves as to such matters of fact, as we have considered
relevant and necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures, the legal capacity of all natural persons and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
Based on the foregoing, it is our opinion that:
1. The Convertible Notes will be legally issued and
binding obligations of the Trust and the Corporation
(except to the extent enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws
affecting the enforcement of creditors' rights
generally and by the effect of general principles of
equity, regardless of whether enforceability is
considered in a proceeding in equity or at law) when
(i) the Registration Statement, as finally amended
(including any necessary post-effective amendments),
shall have become effective under the Securities Act
and the indenture filed as Exhibit 4.2 to the
Registration Statement (the "Convertible Note
Indenture"), including any necessary supplemental
indenture, or any alternate indenture, including any
necessary supplemental indenture, filed as an exhibit
to the Registration Statement, as the case may be,
shall have been qualified under the Trust Indenture
Act of 1939, as amended, and, the Convertible Note
Indenture or such alternate indenture, shall have
been duly executed and delivered by the Trust, the
Corporation and a trustee to be named (the
"Convertible Note Trustee"); (ii) a Prospectus
Supplement with respect to such Convertible Notes
and the Paired Common Shares issuable upon
conversion of the Convertible Notes shall have been
filed (or mailed for filing) with the Commission
pursuant to Rule 424 under the Securities
Act; (iii) each of the Trust's Board of Trustees or a
duly authorized committee thereof and the
Corporation's Board of Directors or a duly authorized
committee thereof shall have duly adopted final
resolutions authorizing the issuance and sale of the
Convertible Notes in an amount that upon
<PAGE> 3
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 3
conversion will not exceed the authorized but
unissued capital stock of each of the Trust and the
Corporation and as contemplated by the Registration
Statement and any Prospectus Supplement relating
thereto; and (iv) Convertible Notes shall have been
duly executed by the Trust and the Corporation and
authenticated by the Convertible Note Trustee as
provided in the Convertible Note Indenture and the
final authorizing resolution and shall have been duly
delivered to the purchasers thereof against payment
of the agreed consideration therefor as provided in
the Registration Statement and any Prospectus
Supplement relating thereto.
2. The Paired Common Shares issued upon conversion of
the Convertible Notes in accordance with the terms of
the Convertible Notes and the Convertible Note
Indenture will be legally issued, fully paid and non-
assessable (assuming that the requisite number of
authorized but unissued Paired Common Shares then
exists) when certificates representing the Paired
Common Shares shall have been duly executed,
countersigned and registered and duly delivered to
the persons entitled thereto against payment of the
agreed consideration therefor (which consideration
will not be less than the $.01 par value per share),
as provided in the Convertible Note Indenture.
3. The Preferred Shares will be legally issued, fully
paid and non-assessable (assuming that the requisite
number of authorized but unissued Preferred Shares
then exists) when (i) the Registration Statement, as
finally amended (including any necessary
post-effective amendments), shall have become
effective under the Securities Act; (ii) a Prospectus
Supplement with respect to such Preferred Shares
shall have been filed (or mailed for filing) with the
Commission pursuant to Rule 424 under the Securities
Act; (iii) the Trust's Board of Trustees or a duly
authorized committee thereof or the Corporation's
Board of Directors or a duly authorized committee
thereof, as the case may be, shall have duly adopted
final resolutions setting forth the terms of any
particular series of Preferred Shares and authorizing
the issuance and sale of such Preferred Shares in an
amount not exceeding the authorized but unissued
capital stock of the Trust
<PAGE> 4
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 4
or the Corporation, as the case may be, and as
contemplated by the Registration Statement and any
Prospectus Supplement relating thereto; (iv) the
Articles Supplementary setting forth the terms of
such series of Preferred Shares, including setting a
quantity of unissued Preferred Shares as will
permit the issuance of the Preferred Shares
authorized for issuance and setting forth a
description of such Preferred Shares, including the
preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption,
consistent with the final authorizing resolution
shall have been filed with, and accepted for record
by, the Department of Assessments and Taxation of the
State of Maryland; and (v) certificates representing
the Preferred Shares shall have been duly executed,
countersigned and registered and duly delivered to
the purchasers thereof against payment of the agreed
consideration therefor (which consideration will not
be less than the $.01 par value per share), as
provided in the Registration Statement and any
Prospectus Supplement relating thereto and the final
authorizing resolution.
4. The Warrants will be duly authorized and legally
issued and valid and binding obligations of the Trust
or the Corporation, as the case may be, (except to
the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws
affecting the enforcement of creditors' rights
generally and by the effect of general principles of
equity, regardless of whether enforceability is
considered in a proceeding in equity or at law) when
(i) the Registration Statement, as finally amended
(including any necessary post-effective amendments),
shall have become effective under the Securities Act;
(ii) a Prospectus Supplement with respect to such
Warrants shall have been filed (or mailed for filing)
with the Commission pursuant to Rule 424 under the
Securities Act; (iii) the Trust's Board of Trustees
or a duly authorized committee thereof and the
Corporation's Board of Directors or a duly authorized
committee thereof, as the case may be, shall have
duly adopted final resolutions setting forth the
terms of any particular series of Warrants,
authorizing the
<PAGE> 5
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 5
issuance and sale of the Warrants in an amount that
upon exercise will not exceed the authorized capital
stock of the Trust or the Corporation, as the case
may be, if applicable, and as contemplated by the
Registration Statement and any Prospectus Supplement
relating thereto and approving one or more warrant
agreements (each, a "Warrant Agreement"), to be among
the Trust or the Corporation, as the case may be, and
a financial institution identified therein as warrant
agent (each, a "Warrant Agent"), establishing the
terms of such Warrants; and (iv) the Warrants shall
have been duly executed, authenticated by the Warrant
Agent and registered and duly delivered to the
purchasers thereof against payment of the agreed
consideration therefor, as provided in the
Registration Statement and any Prospectus Supplement
relating thereto and the final authorizing resolution
and the Warrant Agreement applicable thereto.
5. Each series of Debt Securities will be legally issued
and binding obligations of the Trust or the
Corporation, as the case may be, (except to the
extent enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and by
the effect of general principles of equity,
regardless of whether enforceability is considered in
a proceeding in equity or at law) when (i) the
Registration Statement, as finally amended (including
any necessary post-effective amendments), shall have
become effective under the Securities Act and the
indenture filed as Exhibit 4.1 to the Registration
Statement (the "Debt Indenture"), including any
necessary supplemental indenture, or any alternate
indenture, including any necessary supplemental
indenture, filed as an exhibit to the Registration
Statement, as the case may be, shall have been
qualified under the Trust Indenture Act of 1939, as
amended, and, the Debt Indenture or such alternative
indenture, shall have been duly executed and
delivered by the Trust or the Corporation, as the
case may be, and a trustee to be named (the "Debt
Trustee"); (ii) a Prospectus Supplement with the
respect to such series of Debt Securities shall
have been filed (or mailed for filing) with the
Commission pursuant to Rule 424 under the
<PAGE> 6
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 6
Securities Act; (iii) the Trust's Board of Trustees
or a duly authorized committee thereof or the
Corporation's Board of Directors or a duly authorized
committee thereof, as the case may be, shall have
duly adopted final resolutions authorizing the
issuance and sale of such series of Debt Securities
as contemplated by the Registration Statement and any
Prospectus Supplement relating thereto; and (iv) such
series of Debt Securities shall have been duly
executed by the Trust or the Corporation, as the case
may be, and authenticated by the Debt Trustee as
provided in the Debt Indenture and the final
authorizing resolution and shall have been duly
delivered to the purchasers thereof against payment
of the agreed consideration therefor, as provided for
in the Registration Statement and any Prospectus
Supplement relating thereto.
We do not find it necessary for the purposes of this opinion
to cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the sale of the
Securities.
Except as expressly stated in the next sentence, this opinion
is limited to the laws of the States of California and New York and the laws of
the United States of America, to the extent applicable. Insofar as the
opinions expressed above relate to matters governed by the laws of the State of
Maryland, we have not made an independent examination of such laws, but have
relied exclusively as to such laws, subject to the exceptions, qualifications
and limitations therein expressed, upon the opinion of Piper & Marbury L.L.P.
of Baltimore, Maryland (a copy of which is attached hereto).
We hereby consent to the filing of this opinion as an Exhibit
to the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement.
Very truly yours,
SIDLEY & AUSTIN
<PAGE> 1
EXHIBIT 5.1.(B)
PIPER & MARBURY L.L.P.
March 27, 1996
Starwood Lodging Trust
Starwood Lodging Corporation
11835 West Olympic Boulevard
Suite 695
Los Angeles, California 90064
Ladies and Gentlemen:
We have acted as special Maryland counsel in connection with the public
offering by Starwood Lodging Trust, a Maryland real estate investment trust (the
"Trust"), and Starwood Lodging Corporation, a Maryland corporation (the
"Corporation"), of (i) shares of beneficial interest, $.01 par value, of the
Trust (the "Trust Shares") and shares of common stock, $.01 par value, of the
Corporation (the "Corporation Shares") which are "paired" and traded as units
consisting of one Trust Share and one Corporation Share (the "Paired Common
Shares"); (ii) convertible notes of the Trust and the Corporation (the
"Convertible Notes"); (iii) (A) warrants to purchase Trust Shares and warrants
to purchase Corporation Shares, which are "paired" and traded as units
consisting of one warrant to purchase Trust Shares and one warrant to purchase a
like number of Corporation Shares, (B) warrants to purchase shares of preferred
stock of the Trust or the Corporation, or (C) warrants to purchase debt
securities of the Trust or the Corporation (collectively, the "Warrants"); (iv)
shares of preferred stock, $.01 par value, of the Trust (the "Trust Preferred
Shares") and shares of preferred stock, $.01 par value, of the Corporation (the
"Corporation Preferred Shares" and, with the Trust Preferred Shares, the
"Preferred Shares") which may, but are not required to, be "paired" with
preferred stock of the other entity; and (v) unsecured debt securities of the
Trust or the Corporation (the "Debt Securities"). The Paired Common Shares,
Convertible Notes, Warrants, Preferred Shares and Debt Securities are referred
to herein collectively as the "Securities." The Securities to be issued by the
Trust and the Corporation may have an aggregate public offering price of up to
$400,000,000 and $100,000,000, respectively, (or its equivalent in another
currency based on the exchange rate at the time of sale) in amounts, at prices
and on terms to be determined at the time of offering.
<PAGE> 2
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 2
In our capacity as special Maryland counsel, we have reviewed the
following:
(a) The Declaration of Trust of the Trust, as amended to date,
certified by an officer of the Trust (the "Declaration of Trust");
(b) The Charter of the Corporation, as amended to date, certified by
an officer of the Corporation (the "Charter");
(c) A copy of the Trustees Regulations of the Trust as in effect on the
date hereof (the "Trust Regulations");
(d) A copy of the By-laws of the Corporation as in effect on the date
hereof (the "Corporation By-laws");
(e) The Registration Statement on Form S-3, relating to the Securities,
filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, on November 16,
1995, as amended by Amendment No. 1 filed with the Commission on
February 6, 1996 and Amendment No. 2 filed with the Commission on
March 1, 1996 (as so amended and together with all exhibits
thereto, the "Registration Statement");
(f) Certified resolutions of the Board of Trustees of the Trust
relating to the filing of the Registration Statement;
(g) Certified resolutions of the Board of Directors of the Corporation
relating to the filing of the Registration Statement;
<PAGE> 3
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 3
(h) A good standing certificate for the Trust, dated March 11, 1996
issued by the Maryland State Department of Assessments and Taxation
(the "Department");
(i) A good standing certificate for the Corporation, dated March 11,
1996, issued by the Department;
(j) An Officer's Certificate of the Trust dated as of the date hereof as
to certain factual matters (the "Trust Officers' Certificate");
(k) An Officer's Certificate of the Corporation dated as of the date
hereof as to certain factual matters (the "Corporation Officers'
Certificate"); and
(l) Such other documents as we have considered necessary to the rendering
of the opinions expressed below.
In such examination, we have assumed, without independent
investigation, the genuineness of all signatures, the legal capacity of all
individuals who have executed any of the aforesaid documents, the authenticity
of all documents submitted to us as originals, and the conformity with originals
of all documents submitted to us as copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied
solely upon the Trust Officer's Certificate and the Corporation Officer's
Certificate and have not independently verified the matters stated therein.
We assume also that the issuance, sale, amount and terms of the
Securities to be offered from time to time will be authorized and determined
by proper action of the Board of Trustees of the Trust and the Board of
Directors of the Corporation, as the case may be, in accordance with the
parameters described in the Registration Statement (each, a "Board Action") and
in accordance with the Declaration of Trust and the Charter, respectively, and
applicable Maryland law. We further assume that (i) any Debt Securities will be
issued pursuant to an indenture, a form of which is filed as Exhibit 4.1 to the
Registration Statement (the "Indenture") among the Trust, the Corporation and a
trustee to be named (the "Trustee"); (ii) any Convertible Notes will be issued
pursuant to an indenture, a form of which is filed as Exhibit 4.2 to the
Registration Statement (the "Note Indenture") among the Trust, the Corporation
and a trustee to be named (the "Note Trustee"); (iii) prior to the issuance of
any Corporation Shares, Corporation Preferred
<PAGE> 4
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 4
Shares, Trust Shares, Trust Preferred Shares or Warrants, there will exist,
under the Declaration of Trust or the Charter, as the case may be, the requisite
number of authorized but unissued Corporation Shares, Corporation Preferred
Shares, Trust Shares or Trust Preferred Shares, as the case may be; and (iv) any
Warrants will be issued under one or more warrant agreements (each, a "Warrant
Agreement"), to be among the Trust, the Corporation and a financial institution
identified therein as warrant agent (each, a "Warrant Agent").
Based upon the foregoing, we are of the opinion that
(i) The Trust has been duly formed and is validly existing
in good standing as a real estate investment trust under the laws of the State
of Maryland.
(ii) The Corporation has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Maryland.
(iii) (A) When specifically authorized for issuance by the
Corporation's Board of Directors (the "Corporation Authorizing Resolution") in
an amount not exceeding the authorized but unissued capital stock of the
Corporation, (B) when issued as described in the Registration Statement and an
applicable Prospectus Supplement that is consistent with the Corporation
Authorizing Resolution, (C) upon receipt by the Corporation of the
consideration provided for in the Corporation Authorizing Resolution (which
consideration will not be less than the $.01 par value per share in the case of
Corporation Shares or Corporation Preferred Shares), and (D) in the case of the
Corporation Preferred Shares, when the Board of Directors authorizes and the
Corporation prepares and files, in accordance with the laws of the State of
Maryland, articles supplementary which set the terms of a series of Corporation
Preferred Shares, including setting a quantity of unissued Corporation
Preferred Shares as will permit the issuance of the shares of Corporation
Preferred Shares authorized for issuance in the Corporation Authorizing
Resolution and sets forth a description of the Corporation Preferred Shares,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption, that is consistent with the Corporation Authorizing
Resolution, the Corporation Shares and the Corporation Preferred Shares will be
legally issued, fully paid and nonassessable.
<PAGE> 5
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 5
(iv)(A) When specifically authorized for issuance by the Trust's Board
of Trustees (the "Trust Authorizing Resolution") in an amount not exceeding the
authorized but unissued capital stock of the Trust, (B) when issued as
described in the Registration Statement and an applicable Prospectus Supplement
that is consistent with the Trust Authorizing Resolution, (C) upon receipt by
the Trust of the consideration provided for in the Trust Authorizing Resolution
(which consideration will not be less than the $.01 par value per share in the
case of Trust Shares or Trust Preferred Shares), and (D), in the case of the
Trust Preferred Shares, when the Board of Trustees authorizes and the Trust
prepares and files, in accordance with the laws of the State of Maryland,
articles supplementary which set the terms of a series of Trust Preferred
Shares, including setting a quantity of unissued Trust Preferred Shares as will
permit the issuance of the shares of Trust Preferred Shares authorized for
issuance in the Trust Authorizing Resolution and sets forth a description of
the Trust Preferred Shares, including the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, that is consistent with
the Trust Authorizing Resolution, the Trust Shares and the Trust Preferred
Shares will be legally issued, fully paid and nonassessable.
(v) When the Debt Securities have been (a) duly established by the
Indenture, (b) duly authenticated by the Trustee and duly authorized and
established by applicable Board Action, and (c) duly executed and delivered on
behalf of the Trust or the Corporation, as the case may be, against payment
therefor in accordance with the terms and provisions of such Board Action, the
Indenture, any applicable supplemental indenture and as contemplated by the
Registration Statement or an applicable prospectus supplement, the Debt
Securities will be duly authorized and will constitute valid obligations of the
Trust or the Corporation, as the case may be.
(vi) When the Convertible Notes have been (a) duly established by
the Note Indenture, (b) duly authenticated by the Note Trustee and duly
authorized and established by applicable Board Action, and (c) duly executed
and delivered on behalf of the Trust or the Corporation, as the case may be,
against payment therefor in accordance with the terms and provisions of such
Board Action, the Note Indenture, any applicable supplemental indenture and as
contemplated by the Registration Statement or an applicable prospectus
supplement, the Convertible Notes will be duly authorized and will constitute
valid obligations of the Trust or the Corporation, as the case may be.
<PAGE> 6
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 6
(vii) When, pursuant to requisite Board Action, Warrants have been
duly authorized for issuance, the terms of the Warrants have been duly
established, the Securities underlying the Warrants so approved for issuance
have been duly authorized for issuance and reserved in an amount not exceeding
the authorized but unissued capital stock of the Trust or the Corporation, as
the case may be, or, in the case of Debt Securities, established in accordance
with the terms of the Indenture, or, in the case of Convertible Notes,
established in accordance with the terms of the Note Indenture, and when the
Warrants are duly executed and delivered by the Corporation or the Trust in
accordance with the requisite Board Action and the terms of any Warrant
Agreement and authenticated by the Warrant Agent, upon receipt of the specified
consideration therefor, the Warrants will be valid and binding obligations of
the Trust or the Corporation, except as may be limited by bankruptcy,
insolvency, reorganization or other laws relating to the enforcement of
creditors rights generally or general principles of equity.
To the extent that the obligations of the Trust or the Corporation under
the Indenture or the Note Indenture may be dependent upon such matters, we
assume for purposes of this opinion that the Trustee or the Note Trustee, as the
case may be, is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Trustee or the Note Trustee,
as the case may be, is duly qualified to engage in the activities contemplated
by the Indenture or the Note Indenture; that the Indenture or the Note Indenture
has been duly authorized, executed and delivered by the Trustee or the Note
Trustee, as the case may be, and constitutes the legally valid and binding
obligation of the Trustee, or the Note Trustee, enforceable against the Trustee
or the Note Trustee, in accordance with its terms; that the Trustee or the Note
Trustee is in compliance, generally, with respect to acting as a trustee under
the Indenture or the Note Indenture, as the case may be, with all applicable
laws and regulations; and that the Trustee or the Note Trustee has the requisite
organizational and legal power and authority to perform its obligations under
the Indenture or the Note Indenture, as the case may be.
To the extent that the obligations of the Trust or the Corporation
under any Warrant Agreement may be dependent upon such matters, we assume for
purposes of this opinion that the applicable Warrant Agent is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; that the Warrant Agent is duly qualified to engage in the
activities contemplated by the Warrant Agreement; that the Warrant Agreement
has been duly authorized, executed and delivered by the Warrant Agent and
constitutes the legally valid and binding obligation of the Warrant Agent
<PAGE> 7
PIPER & MARBURY
LLP
Starwood Lodging Trust
Starwood Lodging Corporation
March 27, 1996
Page 7
enforceable against the Warrant Agent in accordance with its terms; that the
Warrant Agent is in compliance, generally with respect to acting as a warrant
agent under the Warrant Agreement, with all applicable laws and regulations;
and that the Warrant Agent has the requisite organization and legal power and
authority to perform its obligations under the Warrant Agreement.
The opinions expressed above are limited to the law of Maryland,
exclusive of the securities or "blue sky" laws of the State of Maryland. We
hereby consent to the filing of this opinion with the Commission as Exhibit 5.1
to the Registration Statement and to the reference to our firm under the
heading "Legal Matters" in the Registration Statement.
Very truly yours,
PIPER & MARBURY L.L.P.
<PAGE> 1
Exhibit 12.1
Starwood Lodging Trust and Starwood Lodging Corporation
Combined Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
12 Months Ending
-------------------------------------------------------------------------------------------
12-31-95 12-31-94 12-31-93 12-31-92 12-31-91 12-31-90
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income taxes $18,138,000 $(4,663,000) $(7,032,000) $(19,743,000) $(22,084,000) $(27,586,000)
Add
Amortization of debt issuance
costs 670,000 86,000 -- -- -- --
Interest expense 13,138,000 17,606,000 15,187,000 14,208,000 16,458,000 16,408,000
-------------------------------------------------------------------------------------------
Income as adjusted 31,946,000 13,029,000 8,155,000 (5,535,000) (5,626,000) (11,178,000)
===========================================================================================
Fixed charges:
Interest expense 13,138,000 17,606,000 15,187,000 14,208,000 16,458,000 16,408,000
Amortization of debt issuance costs 670,000 86,000 -- -- -- --
-------------------------------------------------------------------------------------------
Total fixed charges $13,808,000 $17,692,000 $15,187,000 $14,208,000 $16,458,000 $16,408,000
============================================================================================
Ratio of Earnings to Fixed
Charges 2.31x .74x .54x (.39x) (.34x) (.68x)
Earnings inadequate to cover
fixed charges by: n/a $4,663,000 $7,032,000 $19,743,000 $22,084,000 $27,586,000
</TABLE>
<PAGE> 1
EXHIBIT 23.1.(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Amendment No. 4 to
Registration Statements Nos. 33-64335 and 33-64335-01 of Starwood Lodging Trust
and Starwood Lodging Corporation (the "Companies") on Form S-3 of our report
dated March 24, 1995 on the separate and combined financial statements and
financial statement schedules of Starwood Lodging Trust and Starwood Lodging
Corporation appearing in the Companies' Annual Report on Form 10-K for the year
ended December 31, 1995.
We also consent to the reference to us under the heading "Experts" in
the Prospectus, which is a part of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Los Angeles, California
March 27, 1996
<PAGE> 1
EXHIBIT 23.1.(b)
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 33-64335 and 33-64335-01 of Starwood Lodging Trust and Starwood
Lodging Corporation on Form S-3 of our report dated January 31, 1996 appearing
in the Annual Report on Form 10-K of Starwood Lodging Trust and Starwood
Lodging Corporation for the year ended December 31, 1995 and of our report
dated February 9, 1996 appearing in the Company's Current Report on Form 8-K,
dated January 4, 1996, of the Terrace Gardens and Lenox Inn for the year ended
December 31, 1995.
Coopers & Lybrand L.L.P.
Los Angeles, California
March 27, 1996
<PAGE> 1
EXHIBIT 99.1
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS SUPPLEMENT DATED MARCH __, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH __, 1996)
___________ PAIRED COMMON SHARES
STARWOOD LODGING
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
Starwood Lodging Trust (the "Trust") and Starwood Lodging Corporation (the
"Corporation" and, with the Trust, the "Company") own and operate hotels. At
December 31, 1995, the Company held fee interests, ground leaseholds and
mortgage loan interests in 49 hotel properties containing over 10,100 rooms
located in 20 states and the District of Columbia. All of the securities
offered hereby (the "Offering") are being offered by the Company and consist of
shares of the Trust (the "Trust Shares") and shares of the Corporation (the
"Corporation Shares") which are "paired" and trade as units consisting of one
Trust Share and one Corporation Share (the "Paired Common Shares"). The Trust
intends to qualify as a real estate investment trust for federal income tax
purposes (a "REIT") beginning with its tax year ended December 31, 1995. The
Trust is the only publicly traded REIT with a paired share structure investing
in hotel properties. To ensure that the Trust qualifies as a REIT, ownership by
any person is limited to 8.0% of the Paired Common Shares, subject to certain
exceptions. Upon completion of the Offering, approximately __% of the Paired
Common Shares on a fully diluted basis would be owned by Starwood Capital Group,
L.P. and its affiliates, subject to the ownership limitation provisions
described herein.
The Paired Common Shares are listed on the New York Stock Exchange
("NYSE") under the symbol "HOT." On March __, 1996, the last reported sale
price of the Paired Common Shares on the NYSE was $_____ per Paired Common
Share.
See "Risk Factors" on page S-4 for certain factors relevant to an
investment in the Company.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE GAMING
CONTROL BOARD HAS PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES
OFFERED HEREBY. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 2
The Underwriter has agreed to purchase from the Company notes
convertible into the Paired Common Shares offered hereby for an aggregate
purchase price of $________. The Company has granted to the Underwriter a
30-day option to purchase additional notes convertible into up to ____
additional Paired Common Shares at a purchase price of $______ per Paired Common
Share, solely to cover over-allotments, if any. If such option is exercised in
full, the total proceeds to the Company will be $________, before deducting
expenses payable by the Company, estimated at approximately $_______.
The Paired Common Shares will be offered by the Underwriter from
time to time in one or more transaction on the NYSE or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices. See "Underwriting."
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
____________________
The Paired Common Shares are offered by the Underwriter, subject to
prior sale, to withdrawal, cancellation or modification of the offer without
notice, to delivery and acceptance of the convertible notes by the Underwriter
and to certain further conditions. It is expected that delivery of the Paired
Common Shares will be made on or about April ___, 1996 in New York, New York.
MERRILL LYNCH & CO.
March __, 1996
S-2
<PAGE> 3
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PAIRED
COMMON SHARES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
The following information contained in this Prospectus Supplement is
qualified in its entirety by the detailed information appearing elsewhere in
this Prospectus Supplement or the accompanying Prospectus or incorporated
therein by reference. Certain terms used but not defined herein are as defined
in the accompanying Prospectus. Unless otherwise indicated, the information
contained in this Prospectus Supplement is presented as of December 31, 1995.
All references to the "Company" refer to the Trust and the Corporation, and all
references to the "Trust" and to the "Corporation" include the Trust and the
Corporation and those entities respectively owned or controlled by the Trust or
the Corporation, including SLT Realty Limited Partnership (the "Realty
Partnership") and SLC Operating Limited Partnership (the "Operating
Partnership"). The Realty Partnership and the Operating Partnership are
referred to collectively as the "Partnerships." Other than when used in the
financial statements incorporated herein or in the accompanying Prospectus by
reference, the term "on a fully diluted basis" assumes the exchange by Starwood
Capital Group, L.P., and certain of its affiliates (collectively, "Starwood
Capital") of all of their exchangeable interests in the Partnerships ("Units")
for Paired Common Shares but not the exercise of outstanding options or
warrants.
THE COMPANY
The Company is a fully integrated owner/operator of hotels which is
comprised of the Trust, which has owned hotel assets since 1969, and the
Corporation, which has managed hotel assets since 1980. As of
December 31, 1995, the Company owned, operated and managed a geographically
diversified portfolio of hotel assets (the "Hotel Assets"), including fee,
ground lease and first mortgage interests in 49 hotel properties, comprising
over 10,500 rooms located in 21 states and the District of Columbia.
Thirty-five of such hotels are operated under licensing or franchise agreements
with national hotel organizations, including Sheraton(TM), Marriott(TM),
Doubletree(TM), Omni(TM), Radisson(TM), Embassy Suites(TM), Holiday Inn(TM),
Residence Inn(TM), Days Inn(TM), Best Western(TM), Vagabond Inn(TM),
Ramada(TM), Quality Inn(TM) and Harvey(TM). Management believes
that the Company's unique "paired share" ownership structure gives it a
competitive advantage over other hotel REITs and other hotel owner/operators
with respect to owning and operating hotels, as discussed below.
The Company expects to continue to enhance, expand and diversify its
hotel portfolio by continuing to make opportunistic hotel acquisitions,
reinvesting strategically in its existing portfolio and aggressively managing
the Company's owned hotels. The Company will continue to pursue the
acquisition of hotels, primarily in the midscale and upscale segments, at
prices which are below replacement cost, and that have attractive yields on
investment that the Company believes can be sustained and improved over time.
Consistent with this strategy, the Company invested approximately $174.7
million in new hotel acquisitions during 1995. See "Recent Developments." In
addition, due to the aggressive growth of the Company since the consummation of
its reorganization in January 1995, the Company has sought and continues to
seek to augment and enhance its management team, both through recruiting
qualified individuals and the potential acquisition of management groups.
Substantially all of the Company's interests in the Hotel Assets are
held by and its operations conducted through the Realty Partnership and the
Operating Partnership, respectively. The Company is the sole general partner
of the Realty Partnership and the managing general partner of the Operating
Partnership and as of December 31, 1995, owned a controlling interest of
approximately 69.9% in each of the Partnerships. The remaining 30.1% interest
in each of the Partnerships is owned by Starwood Capital. As
S-3
<PAGE> 4
of December 31, 1995, Starwood Capital, a private investment firm which has
made substantial opportunistic hotel investments, owned 30.5% of the
equity interests of the Company on a fully diluted basis.
The Company's paired share ownership structure is unique for a hotel
REIT. Other hotel REITs cannot operate their hotels and must enter into
agreements with third party lessees/operators. The Company's shareholders own
both the owner, the Trust, and the lessee/operator, the Corporation, of the
Company's hotels and retain the economic benefits of both the lease payments
received by the Trust and the operating profits realized by the Corporation
while maintaining the tax benefits of the Trust's REIT status. The pairing
arrangement creates total commonality of ownership, as the shares of beneficial
interest of the Trust (the "Trust Shares") and the shares of common stock of
the Corporation (the "Corporation Shares") are paired on a one for one basis
and may only be held or transferred as units consisting of one Trust Share and
one Corporation Share ("Paired Common Shares").
THE OFFERING
<TABLE>
<S> <C>
Paired Common Shares Offered Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____ shares (1)
Paired Common Shares Outstanding After the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____ shares (2)
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The net proceeds of the Offering,
which are expected to be
approximately $___ million, will
be used to reduce existing
indebtedness, to fund current and
future acquisitions and for
general business purposes.
New York Stock Exchange Symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HOT
</TABLE>
__________
(1) Assumes the Underwriters' over-allotment option to purchase up to
_________ Paired Common Shares is not exercised. See "Underwriting."
(2) Includes 5,944,027 Paired Common Shares which are issuable upon the
exchange of Units. Excludes 1,002,361 Paired Common Shares issuable
pursuant to outstanding options and 291,662 Paired Common Shares
issuable pursuant to warrants 276,662 of which expire in 1996 and
which have an exercise price of $101.70 per Paired Common Share.
RISK FACTORS
Prospective investors should carefully consider, among other factors,
the matters described below.
TAX RISKS
Failure to Qualify as a REIT. The Trust believes that it has operated
so as to qualify as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), commencing with its taxable year ended December 31, 1995 and
intends to continue to so operate. No assurance, however, can be given that
the Trust
S-4
<PAGE> 5
will qualify or remain qualified as a REIT. Qualification as a REIT involves
the application of highly technical and complex Code provisions for which there
are only limited judicial or administrative interpretations. The complexity of
these provisions is greater in the case of a REIT that owns hotels and leases
them to a corporation with which its stock is paired. The determination of
various factual matters and circumstances not entirely within the Trust's
control may affect its ability to qualify as a REIT. In addition, no assurance
can be given that legislation, new regulations, administrative interpretations
or court decisions will not significantly change the tax laws with respect to
qualification as a REIT or the federal income tax consequences of such
qualification. Furthermore, the qualification of the Trust as a REIT will
depend on the Trust's continuing ability to meet various requirements
concerning, among other things, the ownership of Paired Common Shares, the
nature of its assets, the source of its income and the amount of its
distributions to its shareholders.
If in any taxable year the Trust were to fail to qualify as a REIT,
the Trust would not be allowed a deduction for distributions to shareholders in
computing its taxable income and would be subject to federal income tax on its
taxable income at regular corporate rates. Unless entitled to relief under
certain Code provisions, the Trust would also be disqualified from treatment as
a REIT for the four taxable years following the year during which qualification
was lost. As a result, the funds available for distribution to the Trust's
shareholders would be reduced for each of the years involved.
Required Distributions to Shareholders. In order to obtain and
retain REIT status, the Trust must distribute to its shareholders at least 95%
of its REIT taxable income (excluding any net capital gain). In addition,
the Trust will be subject to tax on its undistributed net taxable income and
net capital gain, and a 4% nondeductible excise tax on the amount, if any, by
which certain distributions paid by it with respect to any calendar year are
less than the sum of (i) 85% of its ordinary income, (ii) 95% of its capital
gain net income for that year, and (iii) 100% of its undistributed income from
prior years. The Trust intends to make distributions to its shareholders to
comply with the distribution requirements of the Code and to avoid federal
income taxes and the nondeductible federal excise tax. The Trust (or the
Realty Partnership) could be required to borrow funds on a short-term basis
to meet the REIT distribution requirements, which borrowing may not otherwise
be advisable for the Company.
LIMITS ON CHANGE OF CONTROL AND OWNERSHIP LIMITATION
Limits on Change of Control. Certain provisions of the Trust's
Declaration of Trust (the "Declaration of Trust") and the Corporation's Articles
of Incorporation (the "Articles of Incorporation") including, without
limitation, the ability to issue preferred shares and the maintenance of
staggered terms for trustees and directors, may have the effect of discouraging
a third party from making an acquisition proposal for the Trust and the
Corporation and may thereby inhibit a change in control under circumstances that
could give the holders of Paired Common Shares the opportunity to realize a
premium over the then-prevailing market prices.
Ownership Limitation. In order for the Trust to maintain its
qualification as a REIT, not more than 50% in value of its outstanding shares
may be owned, directly or indirectly, by five or fewer individuals (as defined
in the Code to include certain entities). Furthermore, actual or constructive
ownership of a sufficient number of the Paired Common Shares could cause the
Operating Partnership or the Corporation to become a related party tenant of
the Trust which would result in the loss of the Trust's REIT status. In order
to help preserve the Trust's REIT status, the Trust's Declaration of Trust and
the Corporation's Articles of Incorporation prohibit actual or constructive
ownership by any one person or group of related persons of more than 8.0% of
the Paired Common Shares (the "Ownership Limitation"). Generally, the Paired
Common Shares owned by related or affiliated persons will be aggregated and
certain options and warrants will be treated as exercised for purposes of the
Ownership Limitation.
The constructive ownership rules of the Code are extensive and complex
and may cause Paired Common Shares owned, directly or indirectly, by all direct
or indirect partners in any partnership, including
S-5
<PAGE> 6
the direct and indirect owners of interests in the Realty Partnership and the
Operating Partnership, and other classes of related individuals and/or entities
to be deemed to be constructively owned by one individual or entity. As a
result, the acquisition of less than 8.0% of the Paired Common Shares (or the
acquisition of an interest in an entity which owns Paired Common Shares) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 8.0% of the Paired
Common Shares, and thus subject such Paired Common Shares to the Ownership
Limitation. Direct or constructive ownership in excess of the Ownership
Limitation would cause the violative transfer or ownership to be void, or cause
such shares to be converted into "Excess Shares," which have limited economic
rights, to the extent necessary to ensure that the purported transfer or other
event does not result in a violation of the Ownership Limitation.
Notwithstanding the Ownership Limitation, given the breadth of the Code's
constructive ownership rules and that it is not possible for the Trust and the
Corporation to continuously monitor direct and constructive ownership of Paired
Common Shares, it is possible that an individual or entity could at some time
constructively own sufficient Paired Common Shares to cause termination of the
Trust's REIT status.
RISK OF INFLUENCE BY STARWOOD CAPITAL
Individuals employed by or otherwise affiliated with Starwood Capital
hold two positions on the Board of Trustees and two positions on the
management committee of the Operating Partnership and will hold at least two
positions on the Board of Directors subject to receipt of certain regulatory
approvals. Accordingly, although the Company has a policy requiring a majority
of its trustees and directors to be "independent," Starwood Capital may have
the ability to exercise certain influence over the affairs of the Company. Due
to its different tax situation, prior to the exchange of its Units, Starwood
Capital's objectives regarding the pricing, structure and timing of any sale of
certain properties or the restructuring or sale of certain mortgage loans may
differ from the objectives of the shareholders of the Company or current
management of the Company. Barry S. Sternlicht is the President and Chief
Executive Officer of, and controls, Starwood Capital. Mr. Sternlicht is a
trustee of the Trust and the Chairman and Chief Executive Officer of the Trust.
In addition, Mr. Sternlicht is a member of the management committee of the
Operating Partnership and, upon the receipt of certain regulatory approvals, he
will be a director of the Corporation. As a consequence, Mr. Sternlicht has
the ability to exercise certain influence over the affairs of the Company.
RISK OF DEBT FINANCING
As a result of incurring debt, the Company would be subject to the
risks normally associated with debt financing, including the risk that cash
flow from operations will be insufficient to meet required payments of
principal and interest. The Line of Credit Agreement, dated as of October 25,
1995 (as amended, the "Credit Facility"), under which the Company has borrowed
approximately $130 million, matures in October 1998. The Mortgage Loan
Funding Facility Agreement, dated as of July 25, 1995 (as amended, the
"Mortgage Facility"), under which the Company has borrowed approximately
$71 million, matures in January 1997. In addition, the Loan Agreement, dated as
of March 22, 1996 (the "Midland Loan"), under which the Company has borrowed
approximately $24 million, matures in March 1997. Although the Company
anticipates that it will be able to repay or refinance such indebtedness
and any other indebtedness, there can be no assurance that it will be
able to do so or that the terms of such refinancings will be favorable to the
Company.
LIMITATION ON STARWOOD CAPITAL AND WESTIN NONCOMPETE OBLIGATIONS
Starwood Capital has agreed that, subject to certain exceptions and
limitations, until the later of June 1998 or the time at which no officer,
director, general partner or employee of Starwood Capital is on either the
Board of Trustees or the Board of Directors, Starwood Capital will not compete
with the Realty Partnership or the Operating Partnership (the "Starwood
Noncompete") and will present to the partnerships certain investments in hotel
properties in the United States. Mr. Sternlicht is also bound by a similar
noncompete agreement. The termination of either of those noncompete agreements
and the exceptions to and limitations thereon could have a material adverse
effect on the Company.
In addition, Starwood Capital owns an interest in the Westin Hotel
Company and certain affiliates ("Westin"), which own equity interests in
domestic and international hotels and which manage, franchise or represent
hotels worldwide. The Company has entered into an agreement (the "Westin
Agreement") with Westin pursuant to which Westin has agreed that, subject to
certain exceptions and limitations, Westin will not acquire or seek to acquire
United States hotel equity interests. The termination of the Westin Agreement
and the exceptions to and limitations on the Westin Agreement could have a
material adverse effect on the Company.
POSSIBLE LIABILITY OF TRUST SHAREHOLDERS
Both the Maryland statute governing real estate investment trusts
formed under the laws of that state (the "Maryland REIT Law") and the
Declaration of Trust provide that no shareholder of the Trust will be
personally liable for any obligation of the Trust solely as a result of his
status as a shareholder of the Trust. The Declaration of Trust further
provides that the Trust shall indemnify each shareholder against any claim or
liability to which the shareholder may become subject by reason of his being or
having been a shareholder. In addition, it is the Trust's policy to include a
clause in its contracts which provides that shareholders assume no personal
liability for obligations entered into on behalf of the Trust. However, with
respect to tort claims, contractual claims where shareholder liability is not
so negated, claims for taxes and certain statutory liability, the shareholders
may, in some jurisdictions, be personally liable to the extent that such claims
are not satisfied by the Trust. Inasmuch as the Trust will carry public
liability insurance which it considers adequate, any risk of personal liability
to shareholders is limited to situations in which the Trust's assets plus its
insurance coverage would be insufficient to satisfy the claims against the
Trust and its shareholders.
HOTEL INDUSTRY RISKS
Operating Risks. The properties of the Company are subject to all
operating risks common to the hotel industry. These risks include: changes in
general economic conditions; the level of demand for rooms and related
services; cyclical over-building in the hotel industry; restrictive
changes in zoning and similar land use laws and regulations or in health,
safety and environmental laws, rules and regulations; the inability to secure
property and liability insurance to fully protect against all losses or to
obtain such insurance at reasonable rates; and changes in travel patterns. In
addition, the hotel industry is highly competitive. The properties of the
Company compete with other hotel properties in their geographic markets.
However, some of the Company's competitors may have substantially greater
marketing and financial resources than the Company.
Franchise Agreement Risks. At December 31, 1995, all but fourteen of
the Company's Hotel Assets were operated pursuant to existing franchise or
license agreements (the "Franchise Agreements"). Franchise agreements
generally contain specific standards for, and restrictions and limitations on,
the operation and maintenance of a hotel property in order to maintain
uniformity in the system created by the franchisor. In addition, compliance
with such standards could require a franchisee to incur significant expenses or
capital expenditures. Certain of the Franchise Agreements require the Company
to obtain the consent of the franchisor to certain matters, including certain
securities offerings. Although the Company has been able to
S-6
<PAGE> 7
obtain similar consents under such agreements in the past, the failure to
obtain any such consent could be grounds for termination of such Franchise
Agreements.
Seasonality of Hotel Business. The hotel industry is seasonal in
nature. Generally, hotel revenues are greater in the second and third quarters
than in the first and fourth quarters. As a result, the Trust may be required
from time to time to borrow to provide funds necessary to make quarterly
distributions.
Regulation of Gaming Operations. The Company's casino gaming
facilities located in Las Vegas, Nevada are subject to extensive licensing
and regulatory control by the Nevada Gaming Commission (the "Nevada
Commission") and other Nevada authorities. These regulatory authorities
have broad powers with respect to the licensing of gaming operations, and
may revoke, suspend, condition or limit the gaming approvals and licenses
of the Corporation and its gaming subsidiary, impose substantial fines
and take other actions, any of which could have a material adverse affect
on the Corporation's business and the going concern value of the Trust's
hotel/casinos. Directors, officers and certain key employees of the
Corporation and its gaming subsidiary are subject to licensing or suitability
determinations by the Nevada Commission and local gaming authorities. If the
Nevada Commission were to find a person occupying any such position unsuitable,
the Corporation would be required to sever its relationship with that person.
Any beneficial holder of the Corporation's voting securities may be required to
file an application, be investigated, and have his suitability as a holder of
such securities determined if the Nevada Commission has reason to believe that
such ownership would be inconsistent with the policies of the State of Nevada.
Any person who acquires more than 5% of the Corporation Shares must report such
acquisition to the Nevada Commission. Beneficial owners of more than 10% of
the Corporation Shares must apply to be found suitable by the Nevada
Commission. In addition, changes in control of the Corporation may not occur
without the prior approval of the Nevada Commission.
REAL ESTATE INVESTMENT RISKS
General Risks. Real property investments are subject to varying
degrees of risk. The investment returns available from equity investments in
real estate depend in large part on the amount of income earned and capital
appreciation generated by the related properties as well as the expenses
incurred. If the properties of the Company do not generate revenue sufficient
to meet operating expenses, including debt service and capital expenditures,
the income of the Company and its ability to make distributions to its
shareholders will be adversely affected. In addition, income from properties
and real estate values are also affected by a variety of other factors, such as
governmental regulations and applicable laws (including real estate, zoning and
tax laws), interest rate levels and the availability of financing. In
addition, equity real estate investments, such as the investments held by the
Company and any additional properties that may be acquired by the Company, are
relatively illiquid.
Possible Liability Relating to Environmental Matters. Under various
federal, state and local environmental laws, ordinances and regulations, a
current or previous owner or operator of real property may become liable for
the costs of removal or remediation of hazardous or toxic substances on, under
or in such property. Such laws often impose liability without regard to
whether the owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. The presence of hazardous or toxic
substances, or the failure properly to remediate such substances when present,
may adversely affect the owner's ability to sell or rent such real property or
to borrow using such real property as collateral. Persons who arrange for the
disposal or treatment of hazardous or toxic wastes may be liable for the costs
of removal or remediation of such wastes at the disposal or treatment facility,
regardless of whether such facility is owned or operated by such person. Other
federal, state and local laws, ordinances and regulations require abatement or
removal of certain asbestos-containing materials in the event of demolition or
certain renovations or remodeling and govern emissions of and exposure to
asbestos fibers in the air. The operation and subsequent removal of certain
underground storage tanks also are regulated by federal and state laws. Future
remediation costs are not expected to have a material adverse effect on the
Company's results of operations or financial position and
S-7
<PAGE> 8
compliance with environmental laws has not had and is not expected to have a
material effect on the capital expenditures, earnings or competitive position
of the Company.
RECENT DEVELOPMENTS
Acquisitions. Consistent with its strategy of expanding through
opportunistic hotel acquisitions, since December 31, 1995, the Company (i)
completed the acquisition of the Grand Hotel in Washington, D.C. for an
additional $13.5 million (January 1996); (ii) and for approximately $41.6
million, acquired a 58.2% interest in
S-8
<PAGE> 9
a joint venture that acquired the Boston Park Plaza Hotel and related real
estate assets in Boston, Massachusetts (January 1996); and (iii) acquired the
Midland Hotel in Chicago, Illinois for approximately $21.0 million
(March 1996).
The Company is evaluating numerous other hotel properties for
acquisition, and as of March 15, 1995 has entered into agreements to
purchase and has made offers on eight properties in the aggregate amount of
approximately $170 million, all but one of which are subject to the
satisfaction of a number of conditions prior to closing. The Company has fully
performed under such other agreement to purchase; however, the closing remains
subject to certain limited conditions on the part of the other parties.
Starwood Lodging intends to finance the acquisition of these or other hotel
properties through cash flow from operations, through borrowings under credit
facilities and, when market conditions warrant, through the issuance of debt or
equity securities.
Financing. During the first three months of 1996, the Company
increased its borrowings under the Mortgage Facility and the Credit Facility by
the aggregate amount of approximately $81.1 million.
In January 1996, the Company entered into $100 million notional
amount interest rate hedging transactions known as Treasury locks (each,
a "Treasury Lock Transaction"), which have the effect of fixing the base
interest rate at 5.7 percent for up to $100 million of debt issued by the
Realty Partnership. The actual rate of interest is expected to be the base
rate plus an amount determined at the time of issuance of any such debt.
At settlement, the Trust will pay or receive an amount related to the
difference between the contractual base rate and the then current base rate.
In March 1996, the Company obtained the $24 million Midland Loan to
provide it with acquisition financing. The Loan bears interest at a rate
equal to the one-month LIBOR plus 1.95% and matures in March 1997.
USE OF PROCEEDS
The net proceeds to the Company from the Offering (after deducting
expenses of the Offering estimated to be approximately $___________ million)
are estimated to be approximately $__________ (approximately $______________ if
the Underwriters' over-allotment option is exercised in full). The Company
will contribute the entire net proceeds from the Offering to the Realty
Partnership and the Operating Partnership in return for a number of Units in
each Partnership equal to the number of Paired Common Shares sold in the
Offering. The Realty Partnership will receive 95% and the Operating
Partnership will receive 5% of the net proceeds of the Offering.
The Company will use the foregoing as follows: approximately $_____
million to reduce existing balances under the Credit Facility or the
Mortgage Facility; and the remainder to fund current and future acquisitions
and for general corporate purposes. The Company does not expect to use any of
the net proceeds of the Offering for or in connection with its gaming assets.
If the Underwriters' over-allotment option is exercised in full, the
additional net proceeds therefrom of $_____ million will be contributed to the
Partnerships and be used to reduce debt and for general corporate purposes
including renovations and future acquisitions.
Pending application of the net proceeds, the Realty Partnership and
the Operating Partnership will invest such portion of the net proceeds in
interest-bearing accounts and short-term, interest-bearing securities, which,
in the case of the Realty Partnership, are consistent with the Trust's
intention to qualify for taxation as a REIT. Such investments may include, for
example, obligations of the Government National Mortgage Association, other
governmental and government agency securities, certificates of deposit,
interest-bearing bank deposits and mortgage loan participations.
S-9
<PAGE> 10
PRICE RANGES OF PAIRED COMMON SHARES
The Paired Common Shares are traded principally on the New York Stock
Exchange (the "NYSE") under the symbol "HOT." The following table sets forth,
for the fiscal periods indicated, the high and low sales prices per Paired
Common Share on the NYSE (after giving effect to the one-for-six reverse stock
split effected in June 1995).
<TABLE>
<CAPTION>
PRICE
--------------------
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
1996
First Quarter (through March __) . . . . . . . . . . . . . . . . . . . . $___ $___
1995
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30 $26 7/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29 1/8 $23 5/8
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24 3/4 $21
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24 $15 3/4
1994
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20 1/4 $15 3/4
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20 1/4 $17 1/4
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18 $ 9 3/4
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 $11 1/4
1993
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20 1/4 $12
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18 3/4 $ 9 3/4
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 $ 7 1/2
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10 1/2 $ 6
</TABLE>
On March __, 1996, the last reported sale price for the Paired Common
Shares on the NYSE was $_______ per Paired Common Share. As of March , 1996,
there were approximately __ holders of record of Paired Common Shares.
Commencing with the quarter ended September 30, 1995, the Trust has declared
and paid quarterly dividends of $0.47 per Paired Common Share. In this regard,
on March 28, 1996, the Trust declared a $0.47 per Paired Common Share dividend
payable on April 25, 1996 to shareholders of record on April 12, 1996. The
Trust intends to continue to pay regular quarterly distributions to holders
of Paired Common Shares. The Corporation has not paid any dividends in the
periods set forth in the table above and does not anticipate that it will
make any such distributions in the foreseeable future.
In order to maintain its qualification as a REIT, the Trust must make
annual distributions to its shareholders of at least 95% of its taxable income
(which does not include net capital gains). Under certain circumstances, the
Trust may be required to make distributions in excess of cash available for
distribution in order to meet such distribution requirements. In such event,
the Trust (or the Realty Partnership) would seek to borrow the amount of the
deficiency or sell assets to obtain the cash necessary to make the
distributions necessary to retain the Trust's qualification as a REIT for
federal income tax purposes.
Distributions made by the Trust will be determined by its Board of
Trustees and will depend on a number of factors, including the amount of cash
flow from operations, the Realty Partnership's financial condition, capital
expenditure requirements for the Company's properties, the annual distribution
requirements under the REIT provisions of the Code and such other factors as
the Board of Trustees deems relevant.
Under the terms of the Mortgage Facility and the Credit Facility, the
Trust is generally permitted to distribute to its shareholders on an annual
basis an amount equal to the greatest of (1) 100% of funds from operations for
any four consecutive calendar quarters; (2) an amount sufficient to maintain
the Trust's tax status as a real estate investment trust; (3) the amount
necessary for the Trust to avoid the payment of federal income or excise tax;
and (4) through June 30, 1996, $0.47 per Paired Share per quarter.
S-10
<PAGE> 11
UNDERWRITING
Subject to the terms and conditions contained in the terms agreement
and the related purchase agreement between Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Underwriter"), and the Company (collectively, the
"Purchase Agreement"), the Underwriter has agreed to purchase from the
Company, and the Company has agreed to sell to the Underwriter, Convertible
Notes convertible into ________ Paired Common Shares.
The Purchase Agreement provides that the Underwriter's obligation to
purchase the Convertible Notes is subject to the satisfaction of certain
conditions, including the receipt of certain legal opinions. The nature of the
Underwriter's obligation is such that it is committed to purchase all of the
Convertible Notes if any are purchased.
The Underwriter has advised the Company that it proposes to offer the
Paired Common Shares (into which the Convertible Notes will automatically be
converted upon purchase by the public) offered hereby for sale, from time to
time, to purchasers directly or through agents, or through brokers in brokerage
transactions on the NYSE, or to underwriters or dealers in negotiated
transactions or in a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Brokers, dealers, agents and underwriters that participate in the
distribution of the Paired Common Shares (or the related Convertible Notes)
offered hereby may be deemed to be underwriters under the Securities Act of
1933. Those who act as underwriter, broker, dealer or agent in connection
with the sale of the Paired Common Shares (or the related Convertible Notes)
offered hereby will be selected by the Underwriter and may have other
business relationships with the Company and its subsidiaries or affiliates
in the ordinary course of business.
The Company has granted to the Underwriter an option to purchase
additional Convertible Notes convertible into up to ____________ Paired Common
Shares at a purchase price of $________ per Paired Common Share, to solely
cover over-allotments, if any. Such option may be exercised at any time until
30 days after the date of this Prospectus Supplement.
The Company has agreed, subject to certain exceptions (including the
issuance of Paired Common Shares pursuant to transactions exempt from
registration under the Securities Act of 1933, reservations, employee benefit
plans and certain other agreements), not to offer, sell, enter into any
agreement to sell or otherwise dispose of any Convertible Notes or Paired
Common Shares for a period of 30 days after the date of this Prospectus
Supplement.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
The Company and Starwood Capital retained the Underwriter for
financial advisory services in connection with the Company's reorganization
in January 1995 (the "Reorganization") and the Company paid the Underwriter
a fee of $100,000. The Company also paid the Underwriter an additional
$50,000 in July 1995 and $50,000 in reimbursement of out-of-pocket expenses
incurred in connection with its engagement. The Company also paid the
Underwriter a fee for advisory services in connection with the Reorganization
equal to approximately $1.8 million.
In connection with its July 1995 offering of Paired Common Shares (the
"1995 Offering"), the Company paid the Underwriter customary underwriting
discounts and commissions. In addition, the Company repaid all of its senior
debt from the proceeds of the 1995 Offering, including senior indebtedness of
approximately $130.4 million and a first mortgage loan of approximately $6.3
million secured by the Omni Chapel Hill, both of which were held by an
affiliate of the Underwriter and for which such affiliate was paid aggregate
fees of approximately $2.4 million.
The Underwriter from time to time provides investment banking and
financial advisory services to the Company and Starwood Capital and other
entities affiliated with Mr. Sternlicht and has explored and continues to
explore other business activities with the Company and Starwood Capital. In
addition, the Trust entered into a Treasury Lock Transaction with the
Underwriter.
S-11
<PAGE> 12
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. IF GIVEN
OR MAKE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OR AN
OFFER TO BUY, ANY SECURITY OTHER THAN THE REGISTERED SECURITIES OF THE COMPANY
OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES BY ANYONE IN ANY JURISDICTION
WHERE SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
__________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PROSPECTUS SUPPLEMENT
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Price Ranges of Paired Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratios of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Paired Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
_______ PAIRED COMMON SHARES
STARWOOD LODGING
TRUST
STARWOOD LODGING
CORPORATION
______________________________
PROSPECTUS SUPPLEMENT
______________________________
MERRILL LYNCH & CO.
March __, 1996
