SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. )*
STARWOOD LODGING TRUST
STARWOOD LODGING CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Shares of Beneficial Interest, $.01 par value
Common Stock, $.01 par value
---------------------------------------------
(Title of Class of Securities)
855905 20 4
-----------
(CUSIP Number)
James P. Walker, Esq. Gregory P. Patti, Jr., Esq.
c/o Prudential Real Estate Investors O'Melveny & Myers LLP
8 Campus Drive The Citicorp Center
Parsippany, New Jersey 07054 153 East 53rd Street, 54th Floor
(201) 683-1690 New York, New York 10022-4611
(212) 326-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 14, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
CUSIP No. 855905 20 4
- --------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
The Prudential Insurance Company of America
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(Intentionally Omitted)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES BENEFICIALLY 4,533,537 Paired Shares consisting of (i) 2,779,500
OWNED BY EACH Paired Shares beneficially owned by The Prudential
REPORTING PERSON Insurance Company of America and (ii) 1,754,037 Units
beneficially owned by The Prudential Insurance
Company of America that may be exchanged, under
certain circumstances, for Paired Shares on a
1-for-1 basis.
-----------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
4,533,537 Paired Shares consisting of (i)
2,779,500 Paired Shares beneficially owned by
The Prudential Insurance Company of America and
(ii) 1,754,037 Units beneficially owned by The
Prudential Insurance Company of America that may
be exchanged, under certain circumstances, for
Paired Shares on a 1-for-1 basis.
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
-----------------------------------------------------
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,533,537 Paired Shares consisting of (i) 2,779,500 Paired Shares
beneficially owned by The Prudential Insurance Company of America and (ii)
1,754,037 Units beneficially owned by The Prudential Insurance Company of
America that may be exchanged, under certain circumstances, for Paired Shares on
a 1-for-1 basis.
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES |X|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IC, CO, IA
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Page 2 of 14 Pages
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ITEM 1. SECURITY AND THE ISSUER
This Statement on Schedule 13D (this "Statement") relates to shares
of beneficial interest, par value $.01 per share (the "Trust Shares"), of
Starwood Lodging Trust, a Maryland real estate investment trust (the "Trust"),
and shares of common stock, par value $.01 per share (the "Corporation Shares"),
of Starwood Lodging Corporation, a Maryland corporation (the "Corporation" and
together with the Trust, the "Companies"). Pursuant to a pairing agreement
between the Trust and the Corporation, the Trust Shares and the Corporation
Shares are "paired" and may only be held and transferred in units consisting of
one Trust Share and one Corporation Share (collectively, a "Paired Share").
Accordingly, this Statement on Schedule 13D is filed with respect to Paired
Shares and relates to both the Trust and the Corporation.
The Trust is the general partner of SLT Realty Limited Partnership,
a Delaware limited partnership ("SLT"), and the Corporation is the general
partner of SLC Operating Limited Partnership, a Delaware limited partnership
("SLC"). The limited partnership interests of SLT and SLC (one limited
partnership unit in SLT, together with one limited partnership unit of SLC, are
together referred to herein as a "Unit") may be exchanged, under certain
circumstances, for Paired Shares on the basis of one Unit for one Paired Share.
The name and address of the principal executive offices of the Trust
are as follows: Starwood Lodging Trust, 2231 East Camelback Road, Suite 400,
Phoenix, AZ 85016. The name and address of the principal executive offices of
the Corporation are as follows: Starwood Lodging Corporation, 2231 East
Camelback Road, Suite 410, Phoenix, AZ 85016.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by The Prudential Insurance Company of
America, a New Jersey corporation ("Prudential"), with respect to the
acquisition by Prudential of Paired Shares and Units on February 14, 1997.
Prudential holds such Paired Shares and Units on behalf of one of its commingled
separate accounts, Prudential Property Investment Separate Account II ("PRISA
II"). PRISA II is not a legal entity separate from Prudential for purposes of
this Statement.
In addition, prior to February 14, 1997 Prudential held other Paired
Shares on behalf of one of its other commingled separate accounts, Prudential
Diversified Investment Strategies ("Prudential Diversified"), and continues to
hold such Paired Shares. Prudential Diversified is not a legal entity separate
from Prudential for purposes of this Statement.
Page 3 of 14 Pages
<PAGE>
Prudential is an insurance company, and the address of its principal
business and principal office is Prudential Plaza, 751 Broad Street, Newark, New
Jersey 07102.
During the past five years, none of Prudential and, to the knowledge
of Prudential, the executive officers or directors of Prudential has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
During the past five years, none of Prudential and, to the knowledge
of Prudential, the executive officers or directors of Prudential has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Certain information required by Item 2 concerning directors and
executive officers of Prudential is set forth on Schedule A hereto, which
Schedule A is incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a Contribution Agreement (the "Contribution Agreement")
dated as of January 15, 1997 by and among SLT, SLC, SLT Financing Partnership, a
Delaware general partnership ("SLT Financing" and together with SLT and SLC, the
"Starwood Partnerships"), the Trust, the Corporation, and the other parties
listed on the signature pages thereto, Prudential contributed to the Starwood
Partnerships (a)(i) certain limited liability company membership interests,
limited partnership interests, joint venture interests and general partnership
interests owned by Prudential on behalf of PRISA II in a total of ten limited
liability companies, limited partnerships, joint ventures and general
partnerships, each of which entities (the "Property Companies") owned a single
hotel (a "Hotel") and (ii) certain tangible and intangible personal property
assets owned by the Property Companies in connection with the operation of the
Hotels, in exchange for (b) (i) 4,529,037 Units, (ii) approximately $2,340,000
in cash, (iii) $72,000,000 represented by a joint note of Trust and SLT
(described more fully below) and (iv) the assumption by Trust and SLT of certain
debt encumbering the Hotels.
The Contribution Agreement contemplates that Prudential receive
Units, cash and the assumption of certain debt in exchange for its interests in
the Property Companies and the intangible and tangible assets referenced in
Page 4 of 14 Pages
<PAGE>
clause (a)(ii) above. In lieu of the payment of $72,000,000 in cash to
Prudential on the Closing Date pursuant to the terms of the Contribution
Agreement, Prudential orally agreed with SLT and the Trust to accept a joint
note in the principal amount of $72,000,000. Subsequent to such oral agreement,
Prudential agreed to make a short term loan to SLT and the Trust in the
principal amount of $25,500,000 to cover the cost of paying down certain debt on
the Hotels to be assumed by SLT and the Trust pursuant to the Contribution
Agreement. Accordingly, a joint note in the principal amount of $97,500,000 (the
"Note") was issued to Prudential by SLT and the Trust on February 14, 1997 (the
"Closing Date").
Pursuant to the terms of the Note, SLT and the Trust jointly and
severally agree to pay (i) $25,500,000, together with interest accrued thereon,
on or prior to February 20, 1997 and (ii) the balance of the Note, together with
interest accrued thereon, on April 15, 1997 (unless SLT and the Trust notify
Prudential on or prior to April 11, 1997 of their election to extend the date of
payment, in which case the date of payment shall be extended to May 14, 1997).
Interest on the unpaid principal amount of the Note accrues at a fixed rate per
annum equal to 7.00%; provided that any amount not paid when due bears interest
at a rate that is 6.00% per annum in excess of the rate of interest otherwise
payable under the Note. On February 20, 1997 SLT and the Trust paid $25,500,000,
plus accrued interest, to Prudential pursuant to the terms of the Note.
The foregoing descriptions of the Contribution Agreement and the
Note are qualified in their entirety by reference to the Contribution Agreement
and the Note, respectively, copies of which are filed as Exhibit I and Exhibit
II hereto and are incorporated herein by reference.
On the Closing Date, immediately after the closing of the
transactions contemplated by the Contribution Agreement, Prudential tendered
2,775,000 Units to the Companies pursuant to the Units Exchange Rights Agreement
referenced in Item 6 in exchange for 2,775,000 Paired Shares.
ITEM 4. PURPOSE OF TRANSACTION
Prudential acquired and is holding the Units and Paired Shares owned
by it on behalf of PRISA II and the Paired Shares owned by it on behalf of
Prudential Diversified for investment purposes and without the intention of
effecting a change in control of the Companies or SLT or SLC. Notwithstanding
the foregoing, depending on market conditions, Prudential may choose to acquire
additional Units or Paired Shares, exchange some of its Units for Paired Shares,
or dispose of some or all of its Units or Paired Shares.
Page 5 of 14 Pages
<PAGE>
Except as set forth in the three immediately following sentences,
neither Prudential, nor to Prudential's knowledge, any of the persons identified
on Schedule A has any plans or proposals that would result in or relate to any
of the transactions described in paragraphs (a) through (j) of Item 4 of
Schedule 13D. Pursuant to the terms of the Contribution Agreement, the Trust
shall not later than fifteen days after the Closing Date take all necessary
action to increase the number of trustees of the Trust by two and, subject to
certain approvals of the gaming authorities of Clark County, Nevada and the
State of Nevada, nominate and support for election to the board of trustees of
the Trust Gary M. Mendell, the President of the Trust (and one of the indirect
owners of the Property Companies prior to the Closing Date), and Roger S. Pratt,
a managing director of Prudential. Pursuant to the terms of the Contribution
Agreement, for so long as Prudential shall maintain the Minimum Share Ownership
(as defined below), Prudential shall continue to be entitled to designate,
subject to certain approvals of the gaming authorities of Clark County, Nevada
and the State of Nevada, one representative to be nominated for election to the
board of trustees of the Trust at any annual or special meeting of the
shareholders of the Trust called for the purpose of electing trustees. "Minimum
Share Ownership" means either (i) ownership by Prudential of a total number of
Units plus Paired Shares which (in the aggregate) equals fifty percent (50%) or
more of the aggregate number of Units received by Prudential on the Closing Date
pursuant to the Contribution Agreement, or (ii) that Prudential is one of the
five largest shareholders of the Trust on a fully diluted basis (assuming, for
purposes of such calculation, that all outstanding Units (other than those owned
by the Trust and the Corporation) have been converted into Paired Shares).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Prudential beneficially owns 2,779,500 Paired Shares, or
approximately 6.5% of the 42,924,490 Paired Shares issued and outstanding as of
the Closing Date (after giving effect to the issuance to Prudential of 2,775,000
Paired Shares on the Closing Date). Of such 2,779,500 Paired Shares, Prudential
beneficially owns 2,775,000 Paired Shares on behalf of PRISA II and 4,500 Paired
Shares on behalf of Prudential Diversified. In addition, Prudential beneficially
owns on behalf of PRISA II 1,754,037 Units that may be exchanged, under certain
circumstances, for Paired Shares on a 1-for-1 basis. If all of the Units
beneficially owned by Prudential were exchanged for Paired Shares, Prudential
would beneficially own 4,533,537 Paired Shares, or approximately 10.1% of the
44,678,527 Paired Shares that would be issued and outstanding after such
exchange, based on the number of Paired Shares issued and outstanding as of the
Closing Date. The
Page 6 of 14 Pages
<PAGE>
Declaration of Trust of the Trust and the Certificate of Incorporation of the
Corporation, however, prohibit any person from directly or indirectly owning
more than 8% of the Paired Shares.
Prudential Securities Inc., an indirect wholly-owned subsidiary of
Prudential ("PSI"), beneficially owns 27,875 Paired Shares in certain
discretionary accounts on behalf of clients of PSI. Prudential disclaims
beneficial ownership of such Paired Shares because the management of PSI, and
not Prudential, directs the disposition and/or voting, if any, of such Paired
Shares.
(b) Prudential has the sole power to vote or to direct the vote and
sole power to dispose or direct the disposition of the Paired Shares
beneficially owned by it.
(c) Except as specified above in Item 3, Prudential has not effected
any transactions in the Paired Shares or Units during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF ISSUER
As described in Item 3 above, Prudential entered into the
Contribution Agreement as of January 15, 1997. Pursuant to the terms of the
Contribution Agreement, on the Closing Date Prudential was issued 4,529,037
Units and entered into the partnership agreements of SLT and SLC. Immediately
following the issuance of such Units, Prudential exchanged 2,775,000 of such
Units for 2,775,000 Paired Shares. As described in Item 4 above, the
Contribution Agreement (i) obligates the Trust to nominate and support for
election to the board of trustees of the Trust Gary M. Mendell, the President of
the Trust (and one of the indirect owners of the Property Companies prior to the
Closing Date), and Roger S. Pratt, a managing director of Prudential and (ii)
grants Prudential the right to continue to be entitled to designate one
representative to be nominated for election to the board of trustees of the
Trust at any annual or special meeting of the shareholders of the Trust called
for the purpose of electing trustees for so long as Prudential maintains the
Minimum Share Ownership. The foregoing description of the Contribution Agreement
is qualified in its entirety by reference to the Contribution Agreement, a copy
of which is filed as Exhibit I hereto and is incorporated herein by reference.
Page 7 of 14 Pages
<PAGE>
Prudential also entered into a Registration Rights Agreement (the
"Registration Rights Agreement") dated as of February 14, 1997 among the Trust,
the Corporation, Prudential and the persons listed on the signature pages
thereto. Pursuant to the terms of the Registration Rights Agreement, the Trust
and the Corporation have agreed, prior to the date that is six months after the
date of the Registration Rights Agreement, to file a registration statement
under Rule 415 of the Securities Act of 1933, as amended, registering the Paired
Shares to be issued to Prudential and the other parties to the Registration
Rights Agreement upon the exchange of the Units issued to them pursuant to the
Contribution Agreement. The Trust and the Corporation agree in the Registration
Rights Agreement to use their reasonable efforts to keep such registration
statement effective until all of the Paired Shares covered thereby have been
sold. In the event that the Trust and the Corporation are unable to cause such
registration statement to be declared effective or are unable to keep such
registration statement effective for such period, Prudential and the other
parties thereto have been granted certain other demand, shelf and piggyback
registration rights as set forth therein. The foregoing description of the
Registration Rights Agreement is qualified in its entirely by reference to such
Registration Rights Agreement, a copy of which is filed as Exhibit III hereto
and is incorporated herein by reference.
Prudential also entered into a Units Exchange Rights Agreement (the
"Exchange Rights Agreement") dated as of February 14, 1997 among the Trust, the
Corporation, SLT, SLC, Prudential and the persons listed on the signature pages
thereto. Pursuant to the terms of the Exchange Rights Agreement, Prudential has
the right to tender the Units owned by it to the Trust and the Corporation. Not
later than fifteen days after such tender, the Trust and the Corporation shall
elect to pay for such Units by delivering to Prudential either (i) Paired Shares
(based on a one Unit for one Paired Share exchange ratio), (ii) cash (based on
the average closing price for Paired Shares for the ten trading day period
ending one day prior to the date of such tender) or (iii) a combination of
Paired Shares and cash. Under no circumstances may Paired Shares or cash be
issued or paid in respect of any tender of Units if, among other things: (i)
such issuance or payment would result in any entity owning Paired Shares in
excess of 8% of the outstanding Paired Shares, (ii) such issuance or payment
would result in the Trust not satisfying certain requirements under the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to the qualification
of the Trust under the Code as a real estate investment trust or (iii) if
certain regulatory approvals, including without limitation approvals of the
gaming authorities of the State of Nevada and Clark County, Nevada, with respect
to such issuance and payment have not been obtained. The foregoing description
of the Exchange
Page 8 of 14 Pages
<PAGE>
Rights Agreement is qualified in its entirety by reference to the Units Exchange
Rights Agreement, a copy of which is filed as Exhibit IV hereto and is
incorporated herein by reference.
The filing of this Statement should not be construed as an admission
that Prudential is or was for the purposes of Section 13 or Section 16 of the
Securities Exchange Act of 1934, as amended, the beneficial owner of the Paired
Shares listed herein
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit No. Description
----------- -----------
I Contribution Agreement
dated as of January 15,
1997
II Purchase Money
Promissory Note dated
as of February 14, 1997
III Registration Rights
Agreement dated as of
February 14, 1997
IV Units Exchange Rights
Agreement dated as of
February 14, 1997
Page 9 of 14 Pages
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
February 24, 1997
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Roger S. Pratt
-----------------------
Name: Roger S. Pratt
Title: Vice President
Page 10 of 14 Pages
<PAGE>
SCHEDULE A
Additional information required by Item 2 of Schedule 13D.
Set forth below is the name and business address of each executive officer
or director of Prudential. Each of such persons is a citizen of the United
States of America, except that Richard M. Thomson is a citizen of Canada.
DIRECTORS
Name Principal Occupation/ Address
Title
- ---- --------------------- -------
Franklin E. Agnew Business Consultant USX Tower
Suite 660
600 Grant Street
Pittsburgh, PA 15219
Frederic K. Becker President Wilentz Goldman & Spitzer
90 Woodbridge Center Drive
Suite 900
Woodbridge, NJ 07095
William W. Boeschenstein Former Chairman & CEO Owens-Corning Fiberglas
Corporation
One Seagate, Suite 1530
Toledo, OH 43604
Lisle C. Carter, Jr. Former Senior Vice The Prudential Insurance
President and General Company of America
Counsel, United Way of Prudential Plaza
America 751 Broad Street
Newark, NJ 07102
James G. Cullen Vice Chairman Bell Atlantic Corp.
1310 North Court House Road
11th Floor
Arlington, VA 22201
Carolyne K. Davis Health Care Advisor Ernst & Young
1225 Connecticut Avenue, NW
Washington, DC 20036
Roger A. Enrico Chief Executive Officer PespiCo
700 Anderson Hill Road
Purchase, NY 10577
Allan D. Gilmour Former Vice Chairman, The Prudential Insurance
Ford Motor Company Company of America
751 Broad Street
Newark, NJ 07102
William H. Gray III President and CEO United Negro College Fund,
Inc.
8260 Willow Oaks Corp.
Drive
P.O. Box 10444
Fairfax, VA 22031-4511
Page 11 of 14 Pages
<PAGE>
Jon F. Hanson Chairman Hampshire Management
Company
235 Moore Street, Suite 200
Hackensack, NJ 07601
Constance J. Horner Guest Scholar The Brookings Institution
1775 Massachusetts
Avenue, NW
Washington, DC 20036-2188
Allen F. Jacobson Former Chairman and CEO Minnesota Mining &
Manufacturing (3M)
3050 Minnesota World Trade
Center
30 Seventh Street East
St. Paul, MN 55101-4901
Burton G. Malkiel Professor Princeton University Dept.
of Economics
110 Fisher Hall
Prospect Avenue
Princeton, NJ 08544-1021
Arthur F. Ryan Chairman, CEO and The Prudential Insurance
President Company of America
751 Broad Street
Newark, NJ 07102
Charles R. Sitter Former President Exxon Corporation
5959 Las Colinas Boulevard
Irving, TX 75039-2298
Donald L. Staheli Chairman and CEO Continental Grain Company
277 Park Avenue
New York, NY 10172
Richard M. Thomson Chairman and CEO The Toronto-Dominion Bank
P.O. Box 1
Toronto-Dominion Centre
Toronto, Ontario
Canada M5K 1A2
James A. Unruh Chairman and CEO Unisys Corporation Township
Line and Union Meetings
Roads
P.O. Box 500
Blue Bell, PA 19424-0001
P. Roy Vagelos, M.D. Former Chairman and CEO Merck & Co., Inc.
One Crossroads Drive
Building A, 3rd Floor
Bedminster, NJ 07921
Stanley C. Van Ness, Esq. Counselor at Law Picco Herbert Kennedy
One State Street Square
Suite 1000
Trenton, NJ 08607-1388
Paul A. Volcker Chairman and CEO Wolfensohn & Co., Inc.
599 Lexington Avenue
New York, New York 10022
Joseph H. Williams Director The Williams Companies,
Inc.
One Williams Center
Tulsa, OK 74172
Page 12 of 14 Pages
<PAGE>
EXECUTIVE OFFICERS
Name Principal Occupation/ Address
Title
- ---- --------------------- -------
Arthur F. Ryan Chairman of the Board, The Prudential Insurance
Chief Executive Company of America
Officer and President Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
E. Michael Caulfield Chief Executive Officer, The Prudential Insurance
Money Management Group Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Michele Darling Executive Vice President, The Prudential Insurance
Human Resources Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Mark B. Grier Chief Financial Officer The Prudential Insurance
Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Roger A. Lawson Executive Vice President, The Prudential Insurance
Marketing and Planning Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
John V. Scicutella Operations and Systems The Prudential Insurance
Executive Officer Company of America
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
William F. Yelverton Chief Executive Officer, The Prudential Insurance
Individual Insurance Company of America
Group Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
Page 13 of 14 Pages
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Name Page No.
----------- ------------ --------
I Contribution Agreement dated
as of January 15, 1997
II Purchase Money Promissory Note
dated as of February 14, 1997
III Registration Rights Agreement
dated as of February 14, 1997
IV Units Exchange Rights Agreement
dated as of February 14, 1997
Page 14 of 14 Pages
================================================================================
CONTRIBUTION AGREEMENT
DATED AS OF JANUARY 15, 1997
BY AND AMONG
SLT REALTY LIMITED PARTNERSHIP
SLT FINANCING PARTNERSHIP
SLC OPERATING LIMITED PARTNERSHIP
STARWOOD LODGING TRUST
STARWOOD LODGING CORPORATION
AND THE INDIVIDUALS AND ENTITIES SET FORTH ON
SCHEDULES A-1 AND 1-2 HERETO
WHO ARE SIGNATORIES TO THIS AGREEMENT
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01 Property...................................................2
1.02 Certain Other Definitions..................................3
ARTICLE II CONTRIBUTION; CONSIDERATION; DEPOSIT
2.01 Agreement to Contribute...................................11
2.02 Reserved..................................................12
2.03 Consideration for Contribution............................12
2.04 [Reserved]................................................12
2.05 Deposit...................................................12
ARTICLE III TITLE
3.01 Title to Property.........................................13
ARTICLE IV NET WORKING CAPITAL ADJUSTMENT
4.01 Net Working Capital Adjustment............................15
(a) Estimated Closing Balance Sheet.....................15
(b) Adjustment..........................................15
(c) Final Closing Balance Sheet.........................16
(d) Independent Auditor.................................16
(e) Final Adjustment....................................17
4.02 Errors....................................................17
ARTICLE V [Reserved]
ARTICLE VI RISK OF LOSS
6.01 Risk of Loss..............................................18
6.02 Casualty..................................................18
6.03 Eminent Domain............................................18
6.04 Elections Upon Casualty or Eminent Domain.................18
(a) Minor Loss..........................................18
(b) Substantial Loss....................................18
(c) Major Casualty Damage...............................19
6.05 Adjustment Amount.........................................19
ARTICLE VII REPRESENTATIONS AND WARRANTIES
7.01 Contributing Party's Representation and Warranties........20
(a) Subsidiaries and Investments........................20
(b) Property Company Capitalization; Title to Property
Company Interests ..................................20
(c) Tax Matters.........................................21
(d) Insurance...........................................23
(e) Single-Purpose Entity...............................23
(f) Leases..............................................23
2
<PAGE>
(g) Compliance With Laws................................23
(h) Contracts...........................................24
(i) Employees...........................................24
(j) No Pending Condemnation Proceedings.................24
(k) Real Estate Taxes...................................24
(l) No Other Interests..................................24
(m) No Litigation.......................................24
(n) No Further Action; Execution and Delivery...........24
(o) Good Standing.......................................25
(p) Proprietary Rights..................................25
(q) Financial Statements................................25
(r) Events Subsequent to November 28, 1996..............25
(s) Absence of Undisclosed Liabilities..................26
(t) No "Foreign Person".................................26
(u) Environmental Matters - No Violations...............26
(v) Environmental Matters - Environmental Claims........27
(w) [Reserved]..........................................27
(x) Investment Representation...........................27
(y) Binding Effect......................................28
(z) Status of Constituent Documents.....................28
7.02 The Partnerships' Representations and Warranties..........28
(a) Power and Authority Non-contravention, Investment...28
(b) Good Standing.......................................29
(c) Binding Effect......................................29
(d) Status of the Constituent Documents.................29
(e) No Litigation; Proceedings..........................29
(f) Units...............................................29
(g) Financial Statements; Undisclosed Liabilities.......30
(h) Conduct in the Ordinary Course of Business..........30
(i) ERISA Matters.......................................30
7.03 The Corporation's Representation and Warranties...........31
(a) Power and Authority, Non-contravention..............31
(b) Good Standing.......................................31
(c) Binding Effect......................................31
(d) Status of the Constituent Documents.................31
(e) No Litigation; Proceedings..........................31
(f) Capitalization......................................31
(g) Financial Statements; Undisclosed Liabilities.......32
(h) Conduct in the Ordinary Course of Business..........32
(i) SEC Documents.......................................32
(j) Reservation of Shares...............................32
(k) ERISA Matters.......................................33
7.04 The Trust's Representations and Warranties................33
(a) Power and Authority, Non-contravention..............33
(b) Good Standing.......................................33
(c) Binding Effect......................................33
(d) Status of the Constituent Documents.................33
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(e) No Litigation; Proceedings..........................34
(f) Capitalization......................................34
(g) Financial Statements; Undisclosed Liabilities.......34
(h) Conduct in the Ordinary Course of Business..........34
(i) SEC Documents.......................................35
(j) Reservation of Shares...............................35
(k) ERISA Matters.......................................35
ARTICLE VIII CONDITIONS
8.01 Conditions to the Partnerships' Obligations...............35
(a) Exchange Rights Agreement...........................35
(b) HEI Contribution....................................35
(c) No Material Misrepresentation etc...................36
(d) Title to Property...................................36
(e) Contributing Parties' Proceedings...................36
(f) Contributing Party's Performance, Consents..........36
(g) Licenses............................................37
(h) Franchise License Agreements........................37
(i) Notices.............................................37
(j) ERISA Limitations...................................37
8.02 Conditions to Contributing Party's Obligations............37
(a) The Starwood Parties' Proceedings...................38
(b) The Starwood Parties' Performance...................38
(c) No Material Misrepresentation etc...................38
(d) Exchange Rights Agreement...........................38
(e) Registration Rights Agreement.......................38
(f) [Reserved]..........................................38
(g) HEI Contribution....................................38
(h) [Reserved]..........................................38
(i) Partnership Amendments..............................38
(j) ERISA Limitations...................................39
ARTICLE IX DOCUMENTS
9.01 The Contributing Parties' Closing Deliveries..............40
(a) Assignment of Property Company Interests............40
(b) Confirmation of Distribution of Contributed Assets..40
(c) Bills of Sale and General Assignment................40
(d) Affidavits Regarding Authority, "Foreign Person"....40
(e) Title Requirements..................................40
(f) Transfer Tax Returns................................40
(g) [Reserved]..........................................40
(h) Pay-Off Letters.....................................41
(i) Good Standing Certificate...........................41
(j) Others as Reasonably Required.......................41
9.02 The Partnerships Closing Deliveries.......................41
(a) Good Standing Certificate...........................41
(b) Partnership Amendments..............................41
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(c) Affidavit...........................................41
(d) Others as Reasonably Required.......................41
9.03 Closing Deliveries by the Trust and the Corporation.......41
(a) Good Standing.......................................41
(b) Paired Shares.......................................41
(c) Affidavit...........................................42
(d) Others as Reasonably Required.......................42
ARTICLE X COSTS
10.01 Transaction Costs.........................................42
ARTICLE XI BROKERAGE
11.01 Broker....................................................42
ARTICLE XII SCHEDULES, CLOSING, "AS IS"
12.01 Schedules.................................................43
12.02 Access....................................................43
(a) Access - Partnerships...............................43
(b) Access - Contributing Parties.......................43
12.03 Certain Definitions.......................................44
12.04 Deliveries................................................44
12.05 Effect of Inspections, "As Is"............................44
(c) [Reserved]..........................................45
12.06 Delivery of Property Company Records......................45
12.07 The Partnerships' Indemnification.........................45
12.08 Date and Location Closing.................................46
ARTICLE XIII EARNEST MONEY, DEFAULT AND REMEDIES
13.01 Duties of Escrow Agent....................................46
(a) Earnest Money Deposits..............................46
(b) Disputes............................................46
(c) Costs...............................................46
(d) Limited Duties......................................46
(e) Liability...........................................46
13.02 Default...................................................47
(a) Contributing Parties Default........................47
(b) Starwood Parties' Default...........................47
(c) [Reserved]..........................................48
ARTICLE XIV INDEMNIFICATION
14.01 Survival..................................................48
14.02 Indemnification by Contributing Parties...................48
14.03 Indemnification by Starwood Parties.......................49
14.04 Procedures................................................51
ARTICLE XV FURTHER ASSURANCES
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15.01 Further Assurances........................................54
ARTICLE XVI PRE-CLOSING OPERATIONS
16.01 Contributing Party's Conduct of Business..................54
16.02 On-Site Representative....................................55
ARTICLE XVII NOTICES
17.01 Procedure for Notice......................................55
ARTICLE XVIII ADDITIONAL COVENANTS
18.01 Board Representation......................................57
18.02 Obligation of the Contributing Parties As to Closing
Conditions...............................................58
18.03 Obligation of The Starwood Parties As to Closing
Conditions...............................................58
ARTICLE XIX [RESERVED]
ARTICLE XX MISCELLANEOUS
20.01 Modifications and Waivers.................................58
20.02 Governing Law.............................................58
20.03 Captions etc..............................................58
20.04 Rules of Construction.....................................59
20.05 Successors and Assigns....................................59
20.06 Entire Agreement..........................................59
20.07 Counterparts..............................................59
20.08 Starwood Lodging Trust....................................59
20.09 Confidentiality and Exclusivity...........................59
20.10 Joint Liability...........................................60
20.11 Press Releases............................................60
20.12 Expiration................................................60
LIST OF SCHEDULES...............................................63
LIST OF EXHIBITS................................................65
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CONTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of , by
and among SLT REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
("SLT"), SLT FINANCING PARTNERSHIP, a Delaware general partnership ("SLT
Financing") and SLC OPERATING LIMITED PARTNERSHIP, a Delaware limited
partnership ("SLC", and together with SLT and SLT Financing, the
"Partnerships"), STARWOOD LODGING TRUST, a Maryland real estate investment trust
(the "Trust"), STARWOOD LODGING CORPORATION, a Maryland corporation (the
"Corporation"), the individuals and entities listed on Schedule A-1 attached
hereto and made a part hereof (each a "Contributing Party" and collectively, the
"Contributing Parties") and the entities set forth on Schedule A-2 attached
hereto and made a part hereof (each a "Property Company" and collectively, the
"Property Companies"), each of whom are parties to this Agreement as evidenced
by their execution hereof.
RECITALS
A. The Contributing Parties are the direct or indirect owners of the
limited liability company membership interests, limited partnership interests
(as general or limited partners), joint venture interests or general partnership
interests, as applicable, in the respective Property Companies as set forth
opposite each Contributing Party's name on Schedule A-1 (collectively, the
"Property Company Interests").
B. The Property Companies are the owners of ten (10) hotels and the
related real and personal property, both tangible and intangible, all as more
particularly described in Article I below (each a "Hotel" and collectively, the
"Hotels"). Each Property Company owns the Hotel set forth opposite its name on
Schedule A-2 attached hereto.
C. The Partnerships, the Trust and the Corporation (collectively, the
"Starwood Parties") and the Contributing Parties desire to provide for the
following transactions to be effected simultaneously but in the order set forth
below, all upon the terms and conditions herein set forth:
(1) The Contributing Parties desire to cause the Property Companies
to distribute to the Contributing Parties certain tangible and intangible
personal property assets owned by the Property Companies in connection
with the operation of the Hotels, as such assets are more particularly
described on Schedule B attached hereto (the "Contributed Assets") and SLC
desires to acquire from the Contributing Parties such Contributed Assets
for the purpose of operating the Hotels in exchange for limited
partnership interests in SLC as set forth on Schedule B and the
Contributing Parties desire to contribute such assets to SLC and to
receive such consideration therefor all upon the terms and conditions
herein set forth.
(2) Certain Contributing Parties which are entities which are direct
owners of Hotel Company Interests shall distribute such Hotel Company
Interest to the Contributing Parties which own interests in such entities.
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(3) SLT Financing desires to acquire from the Contributing Parties
the Property Company Interests described on Schedule C attached hereto and
the Contributing Parties desire to transfer such Property Company
Interests to SLT Financing all upon the terms and conditions herein set
forth.
(4) SLT desires to acquire from the Contributing Parties the
Property Company Interests described on Schedule D attached hereto in
exchange for cash and limited partnership interests in SLT as set forth in
Schedule D and the Contributing Parties desire to contribute such Property
Company Interests to SLT and to receive such consideration therefor all
upon the terms and conditions herein set forth.
(5) The Contributing Parties desire to immediately upon closing
convert a portion of the limited partnership interests in SLT and SLC
received pursuant hereto into Paired Shares (as defined below) as more
particularly set forth on Schedule E attached hereto.
D. The Trust, on behalf of the Trust and on behalf of SLT (as the general
partner of SLT), and the Corporation, on behalf of the Corporation and on behalf
of SLC (as the managing general partner of SLC), entered into a letter of intent
with HEI Hotels, LLC and The Prudential Insurance Company of America on behalf
of Prudential Property Investment Separate Account II, collectively on behalf of
the Contributing Parties, which letter of intent is dated December 9, 1996 (the
"Letter of Intent"), regarding the transactions contemplated in this Agreement
and the HEI Contribution Agreement (as hereinafter defined). Upon execution of
this Agreement and the other Transaction Documents (as defined below) this
Agreement and the other Transaction Documents shall supersede the terms and
provisions of the Letter of Intent.
IN CONSIDERATION of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement, intending to be bound legally and equitably, agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Property. The term "Property" means and includes with respect to each
Property Company, such Property Company's right title and interest in and to:
(a) the land described in Schedule 1.01 hereto designated thereon as owned by
such Property Company, together with all right, title and interest in and to any
land lying in the bed of any street, road, avenue or alleyway open, proposed or
closed in front of or adjoining such land, and all right, title and interest in
and to any strips, gores, easements, rights of way, riparian rights and
privileges belonging to or inuring to the benefit of such land and all right,
title and interest in and to any tenements, hereditaments and appurtenances
belonging or in anywise appertaining to any or all of the aforesaid (the
"Land"), (b) all buildings, structures and improvements now or hereafter erected
or situate on, over or beneath the Land, including, but not limited to, the
Hotels (the "Buildings"), (c) the Tenant Leases (the Land, the Buildings and the
Tenant Leases are sometimes collectively referred to herein as the "Real
Property"), (d) the FF&E, (e) the
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Inventory and other tangible personal property now or hereafter situate on,
attached or appurtenant to or used in connection with the Land and/or the
Buildings (collectively, with the FF&E, the "Tangible Personal Property"), (e)
the Intangible Property, (I) the Contracts, (g) the Proprietary Rights, and (h)
the Miscellaneous Interests, and in all cases whether owned by such Property
Company as of the date of this Agreement or acquired by such Property Company
prior to the Closing Date (defined below).
1.2 Certain Other Definitions.
(a) "ADA" means the Americans with Disabilities Act, as amended.
(b) "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
(c) "Assumed Debt" means those mortgage loan obligations of certain
of the Property Companies as set forth on Schedule 1.02(c).
(d) [Reserved]
(e) "Business Day" means any day other than Saturdays, Sundays and
legal holidays on which federal banks are not open for business.
(f) "Closing" and "Closing Date" are defined in Section 12.08.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Closing Value" of an OP Unit shall mean the greater of (i) the
average closing price of a Paired Share as reported as of the close of trading
on the New York Stock Exchange on the five (5) trading days immediately
preceding the date of Closing, or (ii) $49.25.
(i) [Reserved]
(j) "Constituent Documents" means:
(1) with respect to any Person that is a limited partnership: (i)
its agreement of limited partnership; (ii) its certificate of limited
partnership; (iii) any amendments or supplements to items (i) and (ii);
and (iv) any other certificate or instrument required to be filed in the
jurisdiction of formation of such Person to evidence the formation or
continued existence thereof;
(2) with respect to any Person that is a limited liability company:
(i) the operating agreement for such Person; (ii) the certificate of
formation for such Person; (iii) any amendments or supplements to the
items described in clauses (i) and (ii) above; and (iv) any other
certificate or instrument required to be filed in the jurisdiction of
formation of such Person to evidence the formation or continued existence
thereof;
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(3) with respect to a Person that is a corporation: (i) its articles
of incorporation; (ii) its by-laws; (iii) any amendments or supplements to
the items described in clauses (i) and (ii); and (iv) any other
certificate or instrument required to be filed in the jurisdiction of
formation of such Person to evidence the formation or continued existence
thereof;
(4) with respect to any Person that is a general partnership or
joint venture, the agreement of general partnership or joint venture
agreement for such person and any amendments or modifications thereto; and
(5) with respect to any Person that is a trust: (i) the declaration
of trust for such Person; (ii) the trust regulations, if any, pertaining
thereto; (iii) any amendment or supplement to the items set forth in
clauses (i) and (ii) above; and (iv) any other certificate or instrument
required to be filed in the jurisdiction of formation of such Person to
evidence its formation or continued existence.
(k) "Contracts" means with respect to each Property Company, the
interest of such Property Company in:
(1) those future reservations and advance bookings for the use of
all or any part of the Property, involving aggregate payments to the
Property Company of $25,000 or more in any 12 month period, and
(2) those other agreements, utility contracts, leases (other than
Tenant Leases), concession agreements, the License Agreements, service
contracts, and commitments which have an aggregate unpaid balance of
$25,000.00 or more by the Property Company or are not terminable without
payment of any fee or penalty on sixty (60) days or less notice.
(l) "Contributed Assets" is defined in Recital C(1).
(m) "Corporation Shares" has the meaning given in Section 7.03(f).
(n) "Deposit" has the meaning given in Section 2.05.
(o) "Eligible Investment" has the meaning given in Section 2.04(b).
(p) "Environmental Laws" means and includes any law or regulation of
any federal, state or local governing or administrative body relating to
pollution or protection or cleanup of the environment (including, but not
limited to, ambient air, surface water, groundwater, land surface or subsurface
strata) including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Resources
Conservation and Recovery Act of 1976, as amended ("RCRA") and other such Legal
Requirements relating to (i) release, containment, removal, remediation,
response, cleanup or abatement of any sort of hazardous substance, pollutant,
contaminant or waste, (ii) the manufacture, generation, formulation, processing,
labeling, distribution, introduction into commerce, use, treatment, handling,
storage, disposal or transportation of any chemical or toxic
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substance or (iii) the management, use, storage, disposal, cleanup or removal of
asbestos, asbestos-containing materials, polychlorinated biphenyls or any other
chemical or toxic substance.
(q) "Environmental Reports" has the meaning given in Section
7.01(u).
(r) "Equipment Leases" means, with respect to each Property Company,
any leases to which such Property Company is a party for telephone systems,
computer systems, electronic door lock systems, mini bars and other equipment
and systems used in connection with the Hotels.
(s) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations, interpretations and exemptions
promulgated thereunder.
(t) "Evaluation Materials" has the meaning given in Section 2.04(c).
(u) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(v) "Excluded Liabilities" is defined in Section 8.02(i).
(w) "FF&E" means with respect to each Property Company, the interest
of such Property Company in, all fixtures, furniture, furnishings, fittings,
equipment, computer hardware, machinery, apparatus, artwork, appliances, and
audio/visual equipment and used in connection with the ownership, operation and
maintenance of the Hotels owned by such Property Company (other than the
Inventory). FF&E shall also include funds in the aggregate amount of Two Million
Nine Hundred Thousand Dollars ($2,900,000.00), subject to adjustment as provided
for below, as a reserve for scheduled calendar year 1997 FF&E expenditures for
all of the Hotels; provided, however, that such sum shall be adjusted at
Closing:
(1) upwards to reflect the aggregate amount then unpaid for certain
FF&E expenditure items budgeted for the Hotels with respect to calendar
year 1996, as such items are described on Schedule 1.02(w), and
(2) downwards to reflect any amount expended prior to Closing for
certain FF&E expenditure items budgeted for the Hotels with respect to
calendar year 1997, as such items are described on Schedule 1.02(w);
i.e., such sum assumes that at Closing all FF&E expenditures budgeted for 1996
will have been paid and no FF&E expenditures budgeted for 1997 will have been
paid.
(x) "Financial Statements" is defined in Section 7.01(q).
(y) "GAAP" means United States generally accepted accounting
principles, applied on a consistent basis.
(z) "Government Entity" means any federal, state or municipal
governmental or quasi governmental body or agency or any subdivision thereof.
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(aa) "HEI" means HEI Hotels, LLC, a Delaware limited liability
company.
(ab) "HEI Contribution Agreement" means the Contribution Agreement
of even date herewith between the Partnerships, HEI and the other parties
thereto for the contribution of the "HEI Business" (as defined therein) to the
Partnerships pursuant to the terms thereof.
(ac) "HEI Contribution" has the meaning set forth in the HEI
Contribution Agreement.
(ad) "Intangible Property" means with respect to each Property
Company all use, occupancy, liquor and other operating permits and licenses
relating thereto used in connection with the Property owned by such Property
Company; the interest of the Property Company in all information and reservation
systems owned by such Property Company, including all computer programs,
software and documentation thereof relating to such systems (subject to the
limitations of any applicable license agreements pertaining thereto), and
including all electronic data processing systems, program specifications, source
codes, logs, input data and report layouts and forms, record file layouts,
diagrams, functional specifications and narrative descriptions, flow-charts and
other related materials used in connection therewith; and all contract rights.
The Intangible Property shall not include any rights to the name "Prudential" or
any derivative thereof.
(ae) "Inventory" means with respect to each Property Company, all
merchandise, inventories, materials and supplies used or intended for use at or
held for sale in connection with the operation of the Hotel and owned by such
Property Company (and not by tenants or concessionaires) including, without
limitation:
(i) All beer, wine, spirits and other alcoholic and
non-alcoholic beverages (to the extent the same may be
legally transferred to the Partnerships);
(ii) Food inventory, china, silverware, glassware and other
kitchen supplies and equipment;
(iii) Office and engineering supplies;
(iv) Housekeeping and other cleaning supplies, paper and
other supplies including, but not limited to,
stationery, toilet paper, writing pens, and menus;
(v) Towels, linens, bedding and other guest room supplies,
including without limitation, bathing and personal
hygiene supplies;
(vi) Inventory stocks of furniture, furnishings, carpeting,
drapery fabrics and wall coverings;
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(vii) Supplies used with respect to any recreational facility
comprising a portion of the Property; and
(viii)Inventories at all sundry shops or other retail outlets
located in or comprising a portion of the Real Property.
(af) "Investments" means, with respect to any Person, any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including, without limitation, partnership interests and joint venture
interests) in any other Person, and any capital contribution by such Person to
any other Person.
(ag) "Knowledge" as to the Starwood Parties shall mean the present
actual knowledge of Steve Goldman or any of the other persons identified on
Schedule 1.02(gg) with respect to the Starwood Parties, and as to the
Contributing Parties shall mean the present actual knowledge of Gary Mendell or
any of the other persons identified on Schedule 1.02(gg) with respect to the
Contributing Parties. As used herein, "Knowledge" of a breach of any covenant,
representation or warranty means the actual knowledge of any such individual of
the fact or circumstance which constitutes such a breach, whether or not such
individual actually knows such fact or circumstance does constitute a breach of
this Agreement or the other Transaction Documents.
(ah) "Legal Requirements" means all federal, state and local laws,
statutes, ordinances, rules and regulations affecting or in any way relating to
the Property or its operation, including, without limitation any Environmental
Laws, ADA and the Occupational Safety and Health Act of 1970 as amended.
(ai) "Liabilities" means any liability, obligation, cost or expense
of any nature whatsoever, whether now known or unknown, asserted or unasserted,
accrued or unaccrued, liquidated or unliquidated or due or to become due,
including, without limitation, any liability in respect of any Taxes or other
Legal Requirements.
(aj) "License Agreement" means with respect to each Property
Company, the franchise and license agreement to which such Property Company is a
party as identified opposite its name on Schedule 1.02(jj).
(ak) "Lien" means any lien, pledge, encumbrance, security agreement,
conditional sale agreement or other title retention device.
(al) "Management Agreement" means with respect to each Property
Company, the hotel management agreement to which HEI and such Property Company
are parties as identified on Schedule 1.02(ll) and "Manager" means HEI in such
capacity under the applicable Management Agreement.
(am) "Minimum Share Ownership" means either (i) ownership by PRISA
II of a total number of SLT OP Units and SLC OP Units plus Paired Shares which
(in the aggregate) equals fifty percent (50%) or more of the aggregate number of
SLT OP Units, SLC
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OP Units and Paired Shares (if any) received by PRISA II at Closing as a part of
the Contribution Amount, or (ii) that PRISA II is one of the five largest
shareholders of the Trust on a fully diluted basis (assuming, for purposes of
such calculation, that all outstanding SLT OP Units and SLC OP Units (other than
those owned by the Trust and the Corporation) have been converted into Paired
Shares).
(an) "Miscellaneous Interests" means with respect to each Property
Company, all of such Property Company's right, title and interest in and to (i)
the business operations conducted by such Property Company directly or through
agents with, in or upon the Land, Buildings and/or Tangible Personal Property
(the "Hotel Business") including, without limitation, the good will pertaining
thereto, (ii) all promotional and advertising literature and materials,
catalogs, booklets, manuals, records, guest, tenant and supplier lists and
correspondence with guests, tenants and/or suppliers, (iii) transferable
telephone exchange numbers, (iv) originals (or, where appropriate, copies) of
all financial, personnel and other books, records and files wherever located and
held by or on behalf of such Property Company or its agents in connection with
the Property, including without limitation, copies thereof in computer readable
form (where available) and (v) all other assets, properties, rights and claims
of the Property Companies which are used or held for use in connection with the
Property and/or the Hotel Business including, without limitation, guest
histories and the Hotels' sales and marketing plans.
(ao) "Net Working Capital" means as to each Property Company, the
aggregate amount as of the Closing Date of (i) all such Property Company's cash,
cash equivalents, accounts receivable and other current assets, minus (ii) the
aggregate amount of all such Property Company's accounts payable and all other
current liabilities, with all such items defined and measured in accordance with
GAAP, applied consistently with the Financial Statements for such Property
Company. If any item on (or which, under GAAP, should be reflected on) the
Financial Statements for such Property Company is not reflected in accordance
with GAAP, Net Working Capital for such Property Company will nonetheless be
computed in accordance with GAAP. In computing Net Working Capital, all
accounting entries will be taken into account regardless of their amount, all
known errors and omissions will be corrected and all known proper adjustments
will be made.
(ap) "New Encumbrances" has the meaning given in Section 3.01(b).
(aq) "Ownership Limitation" means the limitations contained in the
declaration of trust for the Trust and the Corporation's articles of
incorporation prohibiting actual or constructive ownership by any one person or
group of related persons of more than 8% of the issued and outstanding Paired
Shares taking into account the attribution rules of Section 544(a) of the Code
as modified by Section 856(h) of the Code or Section 318(a) of the Code as
modified by Section 856(d)(5) of the Code.
(ar) "Paired Shares" means one common share of beneficial interest,
par value $.01 per share of the Trust and one share of common stock, par value
$.01 per share, of the Corporation that are subject to a pairing agreement
between the Trust and the Corporation.
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(as) "Pairing Agreement" means the Pairing Agreement dated as of
June 25, 1980, as amended, between the Trust and the Corporation providing, in
relevant part, for the pairing of all outstanding Trust Shares and Corporation
Shares and requiring, as a condition of transfer, that Trust Shares are
transferable only together with an equal number of Corporation Shares and that
Corporation Shares are transferable only together with an equal number of Trust
Shares.
(at) "Partnership Agreements" means the limited partnership
agreements for SLC and SLT, including any amendments thereto.
(au) "Permitted Encumbrances" has the meaning given in Section
3.01(b).
(av) "Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a Governmental
Entity.
(aw) "PRISA II" means The Prudential Insurance Company of America on
behalf of Prudential Property Investment Separate Account II.
(ax) [Reserved]
(ay) "Proprietary Rights" means, with respect to any Property
Company, such Property Company's interest in the following (other than such
interest held under a License Agreement): all patents and applications therefor,
all trademarks, trademark registrations and applications therefor, all
copyrights, copyright registrations and applications owned or held by such
Property Company in connection with its Hotel, including, without limitation,
those listed on Schedule 1.02(yy) hereto and the right to use the names of the
Hotels and their restaurants, dining and meeting rooms (other than pursuant to a
License Agreement).
(az) "Pursuit Costs" is defined in Section 3.01(d).
(ba) "Plan Asset Regulation" is defined in Section 7.02(f).
(bb) "SEC Documents" means copies of all reports and statements
jointly filed by the Trust and the Corporation with the Securities and Exchange
Commission ("SEC") since January 1, 1995.
(bc) "Securities Act" means the Securities Act of 1933, as amended.
(bd) "Single-Purpose Entity" means a corporation, general or limited
partnership or limited liability company which was organized solely for the
purpose of owning a Hotel and at all times since its formation:
(i) has not engaged in any material business or owned material
assets unrelated to such Hotel;
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(ii) if such entity is a limited partnership, has as its only
general partners (A) general partners which were organized solely for the
purpose of owning such general partnership interest and which at all times
since their formation have not engaged in any material business or owned
any material assets unrelated to such general partnership interest, or (B)
PRISA II;
(iii) has maintained its accounts, books and records separate from
any other Person;
(iv) subject to the rights and interests of Manager under the
applicable Management Agreement for such Hotel (including such rights in
or with respect to any accounts for such Hotel), has not commingled its
funds or assets with those of any other Person;
(v) has conducted its business in its name except for the use of the
name of the Hotel and other tradenames in the conduct of its business,
which tradenames are set forth on Schedule 1.02(ddd);
(vi) has maintained its financial statements and accounting records
separate from any other Person;
(vii) has paid or reimbursed, directly or through Manager or other
independent contractors acting on its behalf, its own liabilities out of
its own funds and assets;
(viii) has complied in all material respects with the requirements
of its Constituent Documents and other applicable corporate, limited
liability company or partnership formalities;
(ix) has held and identified itself as a separate and distinct
entity under its own name (except as provided in clause (v) above) and not
as a division or part of any other Person or entity; and
(x) has not made loans to or guaranteed the loans or other
obligations of any Person or entity.
(be) "SLC OP Units" has the meaning given in Section 2.03.
(bf) "SLT OP Units" has the meaning given in Section 2.03.
(bg) "Starwood Parties" is defined in Recital C.
(bh) "Subsidiary" means any Person with respect to which a specified
Person has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors or persons performing similar functions or
with respect to which such Person acts as a general partner or managing member
or otherwise controls the day-to-day operations of such entity.
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(bi) "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
and including any obligation to indemnify or otherwise assume or succeed to such
tax liability of any other Person.
(bj) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
(bk) "Title Commitments" has the meaning given in Section 3.01(b).
(bl) "Title Insurer" means First American Title Insurance Company.
(bm) "Title Policies" has the meaning given in Section 8.01(d) .
(bn) "Tenant Lease(s)" means with respect to any Hotel, any lease,
license or other occupancy agreement granting to any Person (excluding HEI and
the Property Company which owns such Hotel) the right to use and occupy any
portion of such Hotel, other than guest room reservations or advance booking
agreements entered into in the ordinary course of business or otherwise
disclosed in the Schedules to this Agreement.
(bo) "Transaction Documents" means this Agreement, the Exchange
Rights Agreement, the Registration Rights Agreement, the HEI Contribution
Agreement, the Co-Investment Agreement, and all other agreements, instruments,
certificates and other documents to be entered into or delivered by any party in
connection with the transactions contemplated to be consummated by any of the
foregoing.
(bp) "Trust Shares" has the meaning given in Section 7.04(f).
(bq) "Unpermitted Title Exceptions" has the meaning given in Section
3.01(b).
ARTICLE II
CONTRIBUTION; CONSIDERATION; DEPOSIT
2.1 Agreement to Contribute. Each of the Contributing Parties hereby
jointly and severally agrees to: (i) cause the Property Company in which such
Contributing Party owns a Property Company Interest to distribute the
Contributed Assets owned by such Property Company to the Contributing Parties
owning such Property Company Interests in-kind in proportion to their respective
Property Company Interests in such Property Company, (ii) contribute to SLC the
Contributed Assets received by such Contributing Party in exchange for SLC OP
Units as set forth below; (iii) contribute to SLT a portion of the Property
Company
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Interests owned by such Contributing Party in exchange for Cash and SLT OP Units
as set forth below; and (iv) contribute to SLT Financing the remaining portion
of the Property Company Interests owned by such Contributing Party in exchange
for Cash as set forth below.
2.2 Reserved.
2.3 Consideration for Contribution. In consideration of the contribution
of the Contributed Assets and Property Company Interests to the Partnerships by
the Contributing Parties, the Partnerships shall cause to be delivered to the
Contributing Parties at Closing the following items of value having an agreed
upon aggregate value equal to Three Hundred Twelve Million Three Hundred Eighty
Thousand Dollars ($312,380,000), (the "Contribution Amount"), subject to
adjustment as provided in this Agreement:
(1) pay cash in the amount of $80,525,000.00 (the "Cash");
(2) assume or take subject to the Assumed Debt (which shall be
repayable by SLT without prepayment penalty or premium); and
(3) the balance of the Contribution Amount in limited partnership
interests ("OP Units") in the Partnerships (based upon $49.25 per Paired
Share), consisting of an equal number of OP Units of SLT ("SLT OP Units")
and OP Units of SLC ("SLC OP Units"), exchangeable, subject to the
Ownership Limitation, into an equal number of Paired Shares as provided in
and subject to the limitations of the Exchange Rights Agreement. The
Contributing Parties shall have the right to convert a portion of the SLT
OP Units and SLC OP Units so received into Paired Shares immediately
following the issuance thereof in accordance with Schedule E attached
hereto.
The parties agree the allocation of the Contribution Amount among the
Contributing Parties shall be as set forth on Schedule 2.03 and that each of the
Partnerships is receiving assets with a fair market value substantially equal to
the Cash and OP Units in such Partnership issued in exchange therefor. Any sales
tax due upon the contribution of the Contributed Assets shall constitute a
Transaction Cost (as defined in Section 10.01).
2.4 [Reserved]
2.5 Deposit.
(a) The Contributing Parties acknowledge that SLT shall on the date
of execution hereof make an earnest money deposit (together with any interest
earned thereon, the "Initial Deposit") in the amount of Five Million Dollars
($5,000,000) with First American Title Insurance Company (the "Escrow Agent")
pursuant to the terms of the escrow instructions (the "Escrow Agreement") in the
form attached as Exhibit "A" hereto. Provided this Agreement has not been sooner
terminated, upon the approval or deemed approval of the Schedules of this
Agreement (as provided in Section 12.01), SLT shall deposit with the Escrow
Agent on or prior to 6:00 P.M. (EST) on January 17, 1997 an additional
$5,000,000.00 (the "Additional Deposit" and together with the Initial Deposit
and any interest or other earnings on either the "Deposit"),
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for a total deposit of $10,000,000.00. The Deposit shall be non-refundable
except as provided herein.
(b) If the Closing shall occur, the Deposit shall be applied to the
Cash portion of the Contribution Amount. If this Agreement is terminated
pursuant to Section 12.01, the Initial Deposit shall be returned by the Escrow
Agreement to SLT. If the Partnerships fail or refuse to close for any reason
other than (x) an uncured default by one or more of the Contributing Parties
under Section 13.02 of this Agreement, (y) the failure of one or more of the
conditions in Section 8.01, or (z) termination of this Agreement pursuant to
Article VI, the Deposit shall be paid to the Contributing Parties, as liquidated
damages as their sole and exclusive remedy for such default. If (1) one or more
of the Contributing Parties fail or refuse to perform their obligations under
this Agreement, or (2) if one or more of the conditions set forth in Section
8.01 is not satisfied or waived by the Partnerships, or (3) this Agreement is
terminated pursuant to Article VI, then subject to the provisions of Section
13.02, the Deposit shall be refunded and repaid to SLT.
(c) The Deposit shall be invested in accordance with the terms of
the Escrow Agreement and interest shall accrue for the benefit of and be paid to
the party to whom the Deposit is paid pursuant to this Section 2.05.
(d) The duties of the Escrow Agent hereunder are purely ministerial
in nature, and the Escrow Agent shall have no liability to either party so long
as it acts in good faith in accordance with the provisions of the Escrow
Agreement.
ARTICLE III
TITLE
3.1 Title to Property.
(a) Prior to or contemporaneously with the execution and delivery of
this Agreement, each of the Contributing Parties will deliver to SLT a copy of
the most recent surveys of the Real Property as the Contributing Parties have in
their possession (the "Old Surveys"). If required by the Title Insurer as a
condition to the removal of any survey exceptions from the Title Policies, the
Starwood Parties may obtain prior to the Closing a recertification of one or
more of the Surveys or a new survey of each parcel of the Real Property,
prepared by a licensed surveyor, satisfactory to SLT, and conforming to 1992
ALTA/ACSM Minimum Requirements for Urban Land Title Surveys ("New Surveys" and,
together with the Old Surveys, the "Surveys"), including Table A Items Nos. 1-4
and 6-14, and such other standards as the Title Insurer may require. The Surveys
shall be so certified (or recertified) to SLT, and Title Insurer in a form
satisfactory to such parties.
(b) The Partnerships have had a bringdown of title to the Real
Property performed by the Title Insurer and shall provide copies thereof (the
"Title Commitments") to the applicable Contributing Parties and shall obtain
such UCC searches and other evidence of title to the Property Company Interests
and the remainder of the Property as the Partnerships
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shall deem appropriate (the "Searches"). Except as set forth on Schedule 3.01
hereto, the matters disclosed by the Title Commitments and the Old surveys are
referred to herein as the "Permitted Encumbrances". The matters set forth on
Schedule 3.01 shall be limited to such matters that
materially impair the current use, value or continued operation of the affected
Hotel and such matters are referred to as "Unpermitted Title Exceptions".
Notwithstanding the foregoing, Permitted Encumbrances shall include (and
Unpermitted Title Exceptions shall exclude) any and all Liens securing:
(i) the Assumed Debt;
(ii) unpaid real estate taxes and assessments not yet due and
payable;
(iii) Uniform Commercial Code vendor liens securing the
non-delinquent payment for goods; and
(iv) obligations of any Property Company which will be
credited at Closing in the Net Working Capital adjustment provided
for in Article IV, i.e., Liens securing any current liabilities of
such Property Company.
In the event that (i) the Searches disclose Liens or other encumbrances not
disclosed by the Title Commitments or that are not otherwise Permitted
Encumbrances; or (ii) the Partnerships obtain any New Surveys, or any subsequent
bringdowns of the Title Commitments or the Searches, and the same disclose
matters which are not disclosed by the Old Surveys, Title Commitments or the
Searches and are not otherwise Permitted Encumbrances in accordance with the
foregoing, the Partnerships shall promptly so notify the applicable Contributing
Party, but such additional matters ("New Encumbrances") shall be Permitted
Encumbrances unless objected to in writing by the Partnerships prior to Closing,
in which event the matters so objected to shall be Unpermitted Title Exceptions,
unless the Starwood Parties proceed to consummate the Closing transactions
provided for herein notwithstanding such matters, as provided for in Section
3.01(d) below, in which event all matters disclosed to the Starwood Parties
prior to Closing shall constitute Permitted Exceptions for purposes of this
Agreement.
(c) As to any Unpermitted Title Exceptions, the Contributing Parties
shall notify the Partnerships as soon as reasonably practicable but in all
events prior to Closing, whether the Contributing Parties:
(i) will cause the same to be discharged or removed at or
prior to Closing (whereupon the Contributing Parties will be
obligated to do so); or
(ii) will not cause the same to be so discharged.
The Contributing Parties' failure to respond shall constitute such Contributing
Parties' election to proceed under clause (ii).
(d) If the Contributing Parties shall notify the Partnerships
pursuant to paragraph (c)(ii) that the Contributing Parties will not cause an
Unpermitted Title Exception to be discharged at or prior to Closing, or shall be
deemed to have made such election, the Closing
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shall be deferred, if necessary, to the date which is five (5) business days
after receipt of such notice by the Partnerships, and the Partnerships shall
notify the Contributing Parties within such five (5) business day period of the
Partnerships' election in its sole discretion, either:
(i) to accept title subject to such Unpermitted Title
Exception(s) as the Contributing Parties shall have declined to
cure, without reduction in or offset to the Contribution Amount; or
(ii) to terminate this Agreement and receive a prompt refund
of the Deposit; provided, however, that if any such Unpermitted
Title Exception is a New Encumbrance, the Partnerships shall also be
entitled to receive reimbursement by the Contributing Parties of the
reasonable out-of-pocket fees and expenses actually incurred by the
Starwood Parties in pursuing the transactions contemplated hereby
including, without limitation: travel expenses; fees and expenses of
third party service providers providing legal, accounting,
engineering, or other services in connection with such pursuit;
title insurance, survey and other search fees; and other customary
analytical or due diligence expenses (collectively, the "Pursuit
Costs") up to an amount not to exceed One Million Dollars
($1,000,000) within fifteen (15) days after providing to the
Contributing Parties an invoice setting forth in reasonable detail
the amount of such Pursuit Costs.
The Partnerships' failure to respond on a timely basis shall constitute the
Partnerships' election to proceed under clause (ii). The foregoing shall
constitute the sole remedies of the Starwood Parties with respect to the matters
provided for in this Section 3.01(d) (without limiting the generality of the
foregoing, the provisions of Section 13.02(a) shall not apply thereto).
ARTICLE IV
NET WORKING CAPITAL ADJUSTMENT
4.1 Net Working Capital Adjustment.
(a) Estimated Closing Balance Sheet. Net Working Capital for each of
the Property Companies shall be determined as of the Closing Date in accordance
with the procedure set forth below, and the Cash portion of the Contribution
Amount shall be adjusted up or down in accordance with such determination. At
least two (2) business days prior to the Closing, each Property Company and the
Partnerships in good faith shall prepare an unaudited estimated balance sheet of
such Property Company as of the Closing Date (the "Estimated Closing Balance
Sheet") and an estimate of the Net Working Capital of the Property Company as of
the close of business on the Closing Date (the "Estimated Closing Net Working
Capital") based on the Property Company's books and records and other
information then available. For purposes of the determination of Estimated Net
Working Capital, all of the guest room revenue and applicable tax for the night
preceding the Closing Date shall be treated as accounts receivable of such
Property Company for the day preceding the Closing Date, but the Starwood
Parties shall receive a credit in the determination of Net Working Capital equal
to one-half (1/2)
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of the amount of such accounts receivable for guest room revenue and applicable
tax for the night preceding the Closing Date.
(b) Adjustment. If the Estimated Closing Net Working Capital for any
Property Company is greater than zero, the Cash portion of the Contribution
Amount allocated to the Property Company Interests in such Property Company
shall be adjusted upwards by such excess. If Estimated Closing Net Working
Capital for any Property Company is less than zero, the Cash portion of the
Contribution Amount allocated to the Property Company Interest in such Property
Company shall be adjusted downwards by such shortfall until the Cash Portion is
zero, and thereafter the number of OP Units included in the portion of the
Contribution Amount allocated to Property Company Interests in such Property
Company shall be reduced based upon the Closing Value, until such shortfall is
fully offset.
(c) Final Closing Balance Sheet. As promptly as practicable, but in
no event later than ninety (90) days after Closing, the Partnerships will cause
HEI to deliver to the Contributing Parties a balance sheet of each of the
Property Companies as of the Closing (the "Closing Balance Sheet") prepared by
HEI on a basis consistent with the most recent balance sheet on the Financial
Statements for such Property Company, which Closing Balance Sheet will reflect
the HEI's determination (as certified by the chief financial officer of HEI) of
the Net Working Capital as of the close of business on the Closing Date (the
"Closing Net Working Capital") of such Property Company.
(d) Independent Auditor.
(i) If the Contributing Parties disagree with HEI's
determination of Closing Net Working Capital, the
Contributing Parties shall notify the Partnerships in
writing of such disagreement (such notice setting forth
the basis for such disagreement in reasonable detail)
and the Partnerships and the Contributing Parties
thereafter shall negotiate in good faith to resolve any
such disagreements. If the Partnerships and the
Contributing Parties are unable to resolve any such
disagreements within thirty (30) days after the
Partnerships cause HEI to deliver the Closing Balance
Sheet to the Contributing Parties, the Partnerships and
the Contributing Parties shall subject the dispute to a
"Big Six" public accounting firm jointly selected by the
Partnerships and the Contributing Parties (the
"Independent Auditor") for resolution. If the
Partnerships and the Contributing, Parties are unable to
agree upon an Independent Auditor, the independent
Auditor shall be selected by lot from a list of four
"Big Six" accounting firms (of which two firms shall be
selected by each of the Partnerships and the
Contributing Parties, but excluding any firm which has
previously audited such Property Company's or any of the
Starwood Parties' financial statements).
(ii) The Partnerships and the Contributing Parties shall use
their reasonable best efforts to cause the Independent
Auditor to resolve all disagreements over the Closing
Net Working Capital as soon as
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practicable, but in any event within 60 days after
submission of the disputes to the Independent Auditor.
The resolution of such disagreements and the
determination of Closing Net Working Capital by the
Independent Auditor shall be final and binding on the
Partnerships and the Contributing Parties.
(iii) The Independent Auditor will determine the allocation of
its costs and expenses in determining the Closing Net
Working Capital based upon the percentage which the
portion of the contested amount not awarded to each
party bears to the amount actually contested by such
party. For example, if the Contributing Parties claim
the Closing Net Working Capital is $1,000 greater than
the amount determined by the Partnership's accountants,
and the Partnerships contest only $500 of the amount
claimed by the Contributing Parties, and if the
Independent Auditor ultimately resolves the dispute by
awarding the Contributing Parties $300 of the $500
contested, then the costs and expenses of arbitration
will be allocated 60% (i.e., 300 500) to the
Partnerships and 40% (i.e., 200 500) to the Contributing
Parties.
(e) Final Adjustment. If the Closing Net Working Capital for any
Property Company (as finally determined pursuant to Section 4.01(c) or (d), as
applicable) is greater than the Estimated Closing Net Working Capital, the
Partnerships shall, within three (3) business days after the Closing Net Working
Capital is so finally determined, pay to the Contributing Parties owning
Property Company Interests in such Property Company in immediately available
funds, the difference between the Closing Net Working Capital and the Estimated
Closing Net Working Capital. If the Closing Net Working Capital for such
Property Company is less than the Estimated Closing Net Working Capital for such
Property Company, the Contributing Parties owning Property Company Interests in
such Property Company shall, within three (3) business days after the Closing
Net Working Capital for such Property Company is so finally determined, pay to
the Partnerships, in immediately available funds, the difference between Closing
Net Working Capital and Estimated Closing Net Working Capital for such Property
Company. All amounts owed pursuant to this Section 4.01 (e) shall include
interest thereon, from and excluding the day which is fifteen (15) days after
the date on which the party entitled to receive such amount makes written demand
for its payment to and including the date of payment, at the "prime" rate as
announced by Chase Manhattan Bank N.A. on the date on which such demand is made
calculated on the basis of a 365-day year. All determinations pursuant to this
Section 4.01(e) shall be made in accordance with GAAP.
4.2 Errors. Notwithstanding the foregoing and in addition to the
provisions of Subsections 4.01(a) - (e), if at any time within one year
following Closing either party discovers any items which should have been
included in the Net Working Capital Adjustments but which were omitted
therefrom, or any error in the computation of such adjustments, or any items not
previously capable of determination, such items or error shall be properly
adjusted as of Closing without interest thereon.
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ARTICLE V
[Reserved]
ARTICLE VI
RISK OF LOSS
6.1 Risk of Loss. Subject to the following provisions of this Article VI,
the Contributing Parties shall bear all risk of all loss or damage to the
Property from all causes until Closing.
6.2 Casualty. If one or more of the Hotels is materially damaged by any
fire or other casualty prior to Closing, the Property Company owning such
damaged Hotel will immediately notify the Partnerships in writing of the same (a
"Casualty Notice"). The Casualty Notice will include a reasonably detailed
description of the property damage and such Property Company's best estimate of
the cost and time required to repair such damage. The cost of repairing such
damage to any Hotel as estimated by an architect or other qualified consultant
retained by such Property Company is herein referred to as a "Casualty Loss"
with respect to such Hotel.
6.3 Eminent Domain. In the event that a portion of one or more of the
Hotels are taken by eminent domain or becomes subject to a taking by eminent
domain or a deed in lieu of condemnation prior to Closing, the affected Property
Company will immediately notify the Partnerships in writing, of the same (a
"Eminent Domain Notice"). The reasonably estimated value of the portion of any
Hotel taken or subject to taking by eminent domain is herein referred to as a
"Condemnation Loss" with respect to such Hotel.
6.4 Elections Upon Casualty or Eminent Domain. If any of the events
described in Section 6.02 or Section 6.03 occurs prior to Closing, then the
provisions of this Section 6.04 shall apply:
(a) Minor Loss. Subject to Section 6.04(c) below, if the amount of
the Casualty Loss or the Condemnation Loss, as applicable (the "Loss"), to any
Hotel is equal to or less than One Million Dollars ($1,000,000), then the
Partnerships shall receive a credit to the Cash portion of the Contribution
Amount equal to the Adjustment Amount (as defined in Section 6.05), and in such
event the Closing will be as otherwise provided herein with respect to the
Property Company Interests and Contributed Assets of the Property Company which
owns the Hotel subject to such Loss.
(b) Substantial Loss. Subject to Section 6.04(c) below, if the
amount of the Loss to any Hotel is greater than One Million Dollars
($1,000,000), then the Partnerships, must elect (as their sole and exclusive
remedy) with respect to the Property Company Interests and Contributed Assets of
the Property Company owning such Hotel either:
(i) to proceed with the transaction without the Property
Company Interests and Contributed Assets of such Property Company,
with a reduction in the Contribution Amount based on Schedule 2.03;
provided, however, that the Partnerships
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shall not have the right to make such election under this clause (i)
with respect to more than two Hotels; or
(ii) to proceed with the transaction contemplated by this
Agreement with such Property Company Interests and Contributed
Assets, including (as assets of such Property Company) such Property
Company's rights in any insurance or condemnation proceeds (as
applicable) which remain unpaid to such Property Company in
connection with such Loss and a credit against the Cash portion of
the Contribution Amount equal to the Adjustment Amount, and in such
event the Closing will be as otherwise provided herein.
Such election must be made by the Partnerships within ten (10) business days
following receipt of the Casualty Notice or Eminent Domain Notice (the "Loss
Election Date"), as applicable (the "Loss Notice"), and the Closing Date shall
be extended, if necessary, to the third (3rd) Business Day following the Loss
Election Date. The Partnerships' failure to give timely notice under this
Section 6.04(b) will be deemed to be an election under clause (ii).
(c) Major Casualty Damage. If the aggregate amount of the Loss with
respect to any Hotel is greater than Five Million Dollars ($5,000,000), or if
three or more Hotels each have a Loss in excess of One Million Dollars
($1,000,000), then the Partnerships must elect (as their sole and exclusive
remedy) either:
(i) to proceed in accordance with Section 6.04(b) above; or
(ii) to terminate this Agreement by giving notice to such
effect to the Contributing Parties not later than the Loss Election
Date. In the event of such termination, then the entire amount of
the Deposit will be refunded to SLT.
The Partnerships' failure to give timely notice under this Section 6.04(c) will
be deemed to be an election under clause (ii) of this Section 6.04(c).
6.5 Adjustment Amount. As used in this Article VI, "Adjustment Amount"
means the sum of (i) in the case of casualty damage covered by a Property
Company's property casualty insurance, the amount of the deductible under such
insurance policy with respect to such casualty damage (not to exceed the amount
of such casualty damage), plus (ii) any amounts previously paid to such Property
Company as insurance or condemnation proceeds, as applicable, and not expended
by such Property Company prior to Closing for the purpose for which received
(including but not limited to expenditures for restoration of the affected Hotel
in connection with such casualty or condemnation); provided, however, that in
determining the adjustments to be made to the Cash portion of the Contribution
Amount at Closing for the Adjustment Amount (in accordance with this Article VI)
and for Net Working Capital (in accordance with Article IV), appropriate
adjustment shall be made so as to not double count as current assets of a
Property Company any unexpended amounts received by a Property Company as
insurance or condemnation proceeds or the right of a Property Company to receive
any insurance or condemnation proceeds, and so as to not double count as current
liabilities of such Property Company any liabilities of a Property Company for
which such insurance or condemnation proceeds have been or will be payable.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Contributing Party's Representation and Warranties. To induce the
Starwood Parties to enter into this Agreement each Contributing Party makes the
following representations and warranties on behalf of such Contributing Party,
and on behalf of or with respect to the Property Company in which such
Contributing Party owns Property Company Interests all of which (i) are now
true, and (ii) except as expressly provided herein to the contrary, shall be
true as of Closing, subject, in each case, to the exceptions set forth on the
Schedules attached to this Agreement and on any supplemental schedules thereof
as may be delivered to the Starwood Parties prior to the Closing, provided,
however, that:
(1) prior to Closing, the remedies of the Starwood Properties
for any breach of such representations and warranties shall be
limited in accordance with Section 13.02(a);
(2) an election by the Starwood Parties to complete Closing
notwithstanding Knowledge of any breach thereof shall constitute a
waiver of such breach in accordance with Section 12.05(b); and
(3) after Closing, the liability of the Contributing Parties
for any breach of such representations and warranties shall be
limited in accordance with Section 14.02(b).
Subject to the foregoing, the Contributing Parties represent and warrant as
follows:
(a) Subsidiaries and Investments. The Property Company has no
subsidiaries and does not own, directly or indirectly, any stock, membership
interests, partnership interests or joint venture interests in, or similar
equity ownership interest issued by, any other Person.
(b) Property Company Capitalization; Title to Property Company
Interests.
(i) The capitalization of the Property Company is completely
set forth on Schedule 7.01(b) hereto. There are no restrictions on the transfer
of the Property Company Interests other than those set forth in the Property
Company's Constituent Documents, true, correct and complete copies of which have
been provided to the Partnerships, and those arising from federal and applicable
state securities laws. All currently issued and outstanding Property Company
Interests were duly authorized and validly issued in accordance with the terms
of the Property Company's Constituent Documents and in compliance with
applicable laws, and are fully paid and non-assessable. Except as set forth on
Schedule 7.01(b) and except as created by this Agreement, there are no
outstanding interests, equity interests, subscriptions, purchase rights,
subscription rights, conversion rights, exchange rights, options, warrants,
preemptive rights, rights of first refusal, rights of first offer, or other
rights or other arrangements or commitments outstanding or obligating the
Property Company to issue, sell or otherwise cause to be outstanding any
Property Company Interests, any security convertible into or exercisable or
exchangeable for Property Company Interests, or any other equity participation
in the
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Property Company. At the Closing, upon receipt of the Property Company
Interests, SLT and SLT Financing will be admitted as a member partner or joint
venturer (as applicable) of the Property Company.
(ii) Each Contributing Party severally represents and warrants
as follows in this subsection (b)(ii) with respect to the Property Company
Interest(s) set forth opposite its name on Schedule 7.01(b) hereto. Such
Contributing Party owns all of such Property Company Interest(s) and there are
no other holders of all or any portion of or interests in such Property Company
Interest(s). Such Property Company Interest(s) contributed to the Partnerships
at Closing by such Contributing Party will be free and clear of all Liens.
Except as set forth on Schedule 7.01(b) and except as created by this Agreement,
there are no outstanding interests, equity interests, subscriptions, purchase
rights, subscription rights, conversion rights, exchange rights, options,
warrants, preemptive rights, rights of first refusal, rights of first offer, or
other rights or other arrangements or commitments outstanding with respect to
such Property Company Interest(s) or obligating such Contributing Party to
issue, sell or otherwise cause to be outstanding any Property Company Interests,
any security convertible into or exercisable or exchangeable for Property
Company Interests, or any other equity participation in the Property Company.
Such Property Company Interest(s) are not subject to any voting trusts, proxies,
or other agreements or understandings. Each Contributing Party that is a Person
other than an individual has full power and authority to enter into this
Agreement and to assume and perform all of its obligations hereunder and the
execution and delivery of this Agreement and the performance by such
non-individual Contributing Party of its obligations hereunder have been duly
authorized by such partnership, trust, limited liability and/or corporate action
(including, without limitation approval by each of the partners and/or
shareholders thereof of such Contributing Party) as may be required.
Notwithstanding any other provision of this Agreement or the other Transaction
Documents, the liability of each Contributing Party for the representations and
warranties of such Contributing Party pursuant to this subsection (b)(ii) shall
be several and not joint, and no Contributing Party shall be liable or
responsible for the representations and warranties made by any other
Contributing Party pursuant to this subsection (b)(ii) or pursuant to any
similar provision of the other Transaction Documents.
(c) Tax Matters. Except as set forth on Schedule 7.01(c):
(i) the Property Company has timely filed or shall timely
file all Tax Returns which are required to be filed, and
all such Tax Returns are true, complete and accurate in
all respects and have been prepared in compliance with
applicable law. The Property Company is taxed as a
"partnership" as defined in ss.761(a) of the Code;
(ii) all Taxes due and payable as of the Closing Date by the
Property Company, whether or not shown on a Tax Return,
have been paid or shall be paid by the Property Company
or the Contributing Parties, or adjusted for pursuant to
Article IV, and all Taxes accrued but not yet due are
shown on the Financial Statements provided pursuant to
Section 7.01(q) or the Estimated Closing
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Balance Sheet or the Closing Balance Sheet in accordance
with Section 4.01 and no Taxes are delinquent;
(iii) no deficiency for any amount of Tax has been asserted or
assessed by a taxing authority against the Property
Company or any Contributing Party with respect to the
operations of the Property Company and the Contributing
Parties have no Knowledge that any such assessment or
asserted Tax liability shall be made;
(iv) no audits or investigations by any taxing authority are
currently pending, or to the Knowledge of the
Contributing Parties threatened, and to the Contributing
Parties' Knowledge, the Property Company does not
reasonably expect any taxing authority to claim or
assess any additional Taxes for any period;
(v) the Property Company has not consented to extend the
time beyond the Closing in which any Tax may be assessed
or collected by any Taxing authority;
(vi) the Property Company has not been a member of an
Affiliated Group (as defined in Section 1504 of the
Code) or any similar group defined under local, state or
foreign Tax law and has no liability for Taxes of any
other Person under Treasury Regulations Section 1.1502-6
or any similar provision of local, state or foreign Tax
law;
(vii) the Property Company is not a party to or, to the
Knowledge of the Contributing Parties, bound by any Tax
allocation or Tax sharing agreement and has no
contractual obligation to indemnify any other person
with respect to Taxes;
(viii)the Property Company does not have any obligation to
make any payment that will be non-deductible under
Section 280G of the Code (or any corresponding provision
of state, local or foreign Tax law);
(ix) to the Knowledge of the Contributing Parties, no claim
has ever been made by a taxing authority in a
jurisdiction where the Property Company does not pay Tax
or file Tax Returns that the Property Company is subject
to Taxes assessed by such jurisdiction;
(x) the Property Company has no liability for any Taxes, if
any, required to have been withheld and paid in
connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party
other than amounts adjusted for pursuant to Article IV;
and
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(xi) Schedule 7.01(c) contains a list of all states,
territories and jurisdictions (whether foreign or
domestic) in which the Property Company is required to
file Tax Returns.
(d) Insurance. Schedule 7.01(d) attached hereto lists and briefly
describes each insurance policy maintained by the Property Company with respect
to its properties, assets and business. All of such insurance policies are in
full force and effect and will not, by their terms, terminate by reason of the
transactions provided for herein at Closing, and the Property Company is not in
default with respect to its obligations under any of such insurance policies and
has not received any notification of cancellation of any of such insurance
policies and has no claim outstanding which could be expected to cause a
material increase in the Property Company's insurance rates.
(e) Single-Purpose Entity. Except as set forth on Schedule 7.01(e),
the Property Company, at all times since its formation has been a Single-Purpose
Entity.
(f) Leases. Schedule 7.01(f) contains a true and complete list of
all Tenant Lease(s) under which the aggregate remaining payments to the Property
Company owning the affected Hotel exceed $25,000.00, including all addenda,
amendments and modifications thereto, and the Contributing Party has previously
provided to the Partnerships true and correct copies of each such item. Except
as noted on Schedule 7.01(f): (i) the Contributing Parties have no Knowledge
that the lessor or the lessee under any Lease has failed to pay, perform or
observe any of the terms, covenants and conditions on the such party's part to
be paid, performed and observed thereunder; (ii) all brokerage, leasing and
other commissions and all other compensation and fees due and payable in
connection with the Tenant Lease(s), have been fully paid, shall be included in
the Net Working Capital adjustment at Closing in accordance with Article IV, or
shall be fully paid by the Contributing Party prior to the Closing; (iii) except
as shown on Schedule 7.01(f), no tenant has prepaid rent for more than the
following month, has received or is entitled to receive a rent concession in
connection with its tenancy, or is entitled to any work (not yet performed) or
consideration (not yet given) in connection with its tenancy, (iv) the Property
Company is the holder of the lessor's interest under each of the Tenant Leases
and has not assigned or hypothecated any of such rights other than in respect of
the Assumed Debt.
(g) Compliance With Laws. The Contributing Parties have no Knowledge
of a violation of any Legal Requirements, or any standards and regulations of
appropriate supervising Boards of Fire Underwriters and similar agencies,
bearing on construction, operation or use of the Property or any part thereof
(other than as to matters previously cured), or that any investigation has been
commenced or is contemplated respecting any such possible violation other than
as disclosed in the written information made available to the Starwood Parties.
To the Contributing Parties' Knowledge, all notices, licenses, permits,
certificates and authority required in connection with the construction,
completion, use or occupancy of the Real Property or any part thereof by the
Property Company have been obtained and are and on the Closing Date will be in
effect and in good standing. This subsection (g) shall exclude, however, any
representation concerning the Edison Crowne Plaza, or the Property Company which
owns that Hotel, with regard to all Legal Requirements which constitute
Environmental Laws.
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(h) Contracts. True and complete copies of all Contracts (including
all amendments thereto) to which the Property Company is a party or by which it
is bound have been delivered to the Partnerships. Except as set forth in
Schedule 7.01(h): (i) there are no Contracts to which the Property Company is a
party or by which it is bound; (ii) the Property Company has complied with all
material provisions of such Contracts and, to the Knowledge of the Contributing
Parties, no party thereto is in material default under any of them; and (iii) to
the Knowledge of the Contributing Parties, all such Contracts are in full force
and effect and no event has occurred which constitutes or which with the passage
of time or the giving of notice, or both, would constitute a default under any
thereof or would excuse performance by any party thereto.
(i) Employees. Except as set forth on Schedule 7.01(i), there are no
union contracts, collective bargaining agreements or other labor contracts
affecting the Property or any of the employees thereof (other than tenants,
concessionaires or other independent contractors other than Manager). The
Property Company has no employees and to the Contributing Parties' Knowledge,
there are no employees of Manager who by reason of any Legal Requirement, union
contract, collective bargaining agreement or other Contract would become
employees of the Partnerships by reason of the acquisition of the Property
Company Interests by the Partnerships. The Property Company has no
single-employer or multi-employer defined benefit pension plans covered by Title
IV of ERISA.
(j) No Pending Condemnation Proceedings. The Contributing Parties
have no Knowledge of pending or proposed condemnation proceedings affecting the
Property or any part thereof.
(k) Real Estate Taxes. Except as set forth on Schedule 7.01(k), (i)
the Property Company has not commenced any proceedings which are pending for the
reduction of the assessed valuation of the Real Property or any portion thereof,
and (ii) the Contributing Parties have no Knowledge of any special assessment
affecting the Property.
(l) No Other Interests. Except as set forth on Schedule 7.01(l), to
the Knowledge of the Contributing Parties, no Person other than the Contributing
Parties has any right to acquire any interest in the Property or any part
thereof.
(m) No Litigation. Except as set forth on Schedule 7.01(m), neither
the Contributing Party, nor the Property Company is a party to, and to the
Contributing Parties' Knowledge there is no pending or threatened litigation,
claim, action or proceeding by any Person which would materially impair the use,
occupancy or value of the Property or any part thereof or which otherwise
relates to the Property or the Contributing Parties' Property Company Interests.
(n) No Further Action; Execution and Delivery. No further action or
approval by any Person is required in order to constitute this Agreement as a
binding and enforceable obligation of each Contributing Party. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereunder on the part of the Contributing Party do not and will not violate its
Constituent Documents (if any) or the Constituent Documents of the applicable
Property Company, and do not and will not conflict with or result in the breach
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of any condition or provision of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrances upon any of the
property or assets of the applicable Property Company or upon any Property
Company Interest by reason of the terms of any contract, mortgage, lien, lease,
agreement, indenture, instrument or judgment to which the Contributing Party is
a party or which is binding upon the Contributing Party or the applicable
Property Company.
(o) Good Standing. The Property Company, and each Contributing Party
which is a Person other than an individual, is duly organized, validly existing
and in good standing under the laws of the State of its organization and the
Property Company is qualified to do business and is in good standing in the
State in which the Real Property is located.
(p) Proprietary Rights. To the best of the Contributing Parties'
Knowledge, Schedule 1.02(ll) contains a true and complete list of all
Proprietary Rights (including registration numbers, where applicable) and all
license agreements (whether as licensor or licensee) relating to such
Proprietary Rights. Except as otherwise set forth in Schedule 1.02(ll), the
Property Company owns or has the right to use all Proprietary Rights currently
used by it in the Property's business as presently conducted, all of which
ownership rights are in good standing and, to the Contributing Parties'
Knowledge, uncontested. The Contributing Parties have no Knowledge of any claim,
action, proceeding or investigation pending or threatened against the Property
Company with respect to any such Proprietary Rights or that any party thereto is
in substantial default under any license or other agreement relating to such
Proprietary Rights, or that any such licenses and agreements are not valid,
enforceable and in full force and effect.
(q) Financial Statements. Representatives of the Contributing
Parties have delivered to the Starwood Parties true and complete copies of all
financial statements with respect to each of the Hotels (i) as were delivered to
the applicable Property Company by the entity from which the Property Company
acquired the Hotel, and (ii) as have been prepared by Manager on behalf of the
applicable Property Company with respect to periods since the acquisition of
such Hotel by Property Company through the four-week fiscal period which ended
November 28, 1996 (collectively, the "Financial Statements"). To the Knowledge
of the Contributing Parties, the Financial Statements for each Property Company
have been based on information contained in the Property Company's books and
records, fairly present the Property Company's financial condition and results
of operations as of the times and for the periods referred to therein, and have
been prepared in accordance with GAAP.
(r) Events Subsequent to November 28, 1996. Since November 28, 1996,
to the Contributing Parties' Knowledge, there has not been any material adverse
change in the business, assets, financial condition or operating results of the
Property Company. Since that date, except as set forth on Schedule 7.01(r)
attached hereto, the Property Company has conducted its business in the ordinary
course of business consistent with past custom and practice, and has incurred no
Liabilities other than in the ordinary course of business consistent with past
custom and practice. Except as hereinafter provided, this subsection (r) shall
exclude, however, any representation concerning the Edison Crowne Plaza, or the
Property Company which owns that Hotel, with regard to Liabilities in respect of
those Legal Requirements which
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<PAGE>
constitute Environmental Laws, provided that to the Contributing Parties'
Knowledge, there is no material violation of such representation as it relates
to such Hotel.
(s) Absence of Undisclosed Liabilities. Except as set forth on
Schedule 7.01(s), to the Knowledge of the Contributing Parties, the Property
Company has no Liabilities of the nature required by GAAP to be shown on a
balance sheet, except for;
(i) Liabilities reflected or reserved against on the unaudited
balance sheet of the Property Company as of November 28, 1996 in the
liabilities section of such balance sheet;
(ii) Liabilities which have arisen since November 28, 1996 in
the ordinary course of business of the Property Company (none of
which relates to breach of contract, default, breach of warranty,
tort, infringement, violation of any Legal Requirement, or any other
action, suit or proceeding); and
(iii) Liabilities which will be reflected or reserved against
on the Estimated Closing Balance Sheet (as provided for in Section
4.01(a) above) or on the Closing Balance Sheet (as provided for in
Section 4.01(c) above) in the liabilities sections of such balance
sheets.
Except as hereinafter provided, this subsection (s) shall exclude, however, any
representation concerning the Edison Crowne Plaza, or the Property Company which
owns that Hotel, with regard to Liabilities in respect of those Legal
Requirements which constitute Environmental Laws, provided that to the
Contributing Parties' Knowledge, there is no material violation of such
representation as it relates to such Hotel.
(t) No "Foreign Person". The Contributing Party is not a "foreign
person," as such term is defined in Section 1445 of the Code. The sale
transaction contemplated by this Agreement is not subject to Section 897 of the
Code or to the withholding requirements of Section 1445 of the Code.
(u) Environmental Matters - No Violations.
(i) Except as to the Edison Crowne Plaza, all environmental
reports (including all revisions and updates thereto) pertaining to the Property
prepared by or on behalf of the Contributing Party or the Property Company or
otherwise in its possession or control (the "Environmental Reports") are listed
on Schedule 7.01(u) and true and complete copies of such Environmental Reports
have been delivered to the Partnerships. As to the Edison Crowne Plaza, to the
Knowledge of the Contributing Party, Schedule 7.01(u) lists all Environmental
Reports pertaining to such Hotel which disclose material information relating to
the environmental condition of such Hotel. The representations and warranties in
Section 7.01(u)(ii) and in Section 7.01(v) shall not apply to the Edison Crowne
Plaza Hotel or to the Property Company which owns such Hotel, and the
representations and warranties in Section 7.01(g), with respect to the Edison
Crowne Plaza and such Property Company shall be limited to exclude Environmental
Laws from the Legal Requirements applicable to such representations and
warranties.
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(ii) Subject to Section 7.01(u)(i) above, the Contributing
Parties have no Knowledge that any condition exists on the Property as a result
of its operation or activities thereon which condition constitutes a violation
of or which will give rise to Environmental Clean-Up Liabilities or
Environmental Claims pursuant to any Environmental Laws relating to the
Property. "Environmental Cleanup Liability" means any cost or expense of any
nature whatsoever required to be undertaken under or pursuant to any
Environmental Law to contain, remove, remedy, respond to, clean up or abate any
release of hazardous substance, pollutant, contaminant or waste, or other
contamination of surface water, groundwater, land surface or subsurface strata,
whether on-site or off-site, arising from activities at the Property including,
but not limited to, manufacture, generation, formulation, processing, labeling,
distribution, introduction into commerce or on-site or off-site use, treatment,
handling, storage, disposal or transportation of any hazardous substance,
pollutant, contaminant or waste, but excluding cleaning supplies used in
connection with the Hotel Business which are properly packaged and stored, and
used in compliance with all Environmental Laws.
(v) Environmental Matters - Environmental Claims. Subject to Section
7.01(u)(i) above, except as set forth in the Environmental Reports, the
Contributing Parties have no Knowledge of any pending, threatened or
contemplated Environmental Claims affecting the Property (excluding the Edison
Crowne Plaza). "Environmental Claims" means any claim for reimbursement of
remediation expense, personal injury, property damage or damage to natural
resources made, asserted or prosecuted by or on behalf of any third party
(whether based on negligent acts or omissions, statutory liability, strict
liability without fault or otherwise) including, without limitation, any
governmental entity, employee, former employee or guest, or their respective
legal representatives, heirs, beneficiaries and estates, relating to or arising
out of the release of any hazardous substance, pollutant, contaminant or waste
or the violation of any Environmental Law.
(w) [Reserved]
(x) Investment Representation. The Contributing Party is receiving
the SLT OP Units and the SLC OP Units (collectively, the "Units") to be
delivered pursuant hereto for its own account (other than with respect to PRISA
II) with the present intention of holding such Units for purposes of investment,
and each such party has no intention of selling Units in a distribution in
violation of the federal securities laws or any applicable state securities
laws. Except for the individuals listed on Schedule 7.01(x), the Contributing
Party and, for each Contributing Party other than PRISA II which is not an
individual, each Person owning equity interests in such Contributing Party other
than PRISA II (an "Equity Owner"), is an accredited investor as defined in Rule
501 of the Securities Act (an "Accredited Investor") and has sufficient
knowledge and experience in financial and business matters and investing in
entities similar to the Trust, the Corporation, SLT and SLC so as to be able to
evaluate the risks and merits of its investment in SLT and SLC and the
Contributing Party, and any Equity Owner therein, has had an opportunity to
discuss the business, management and financial affairs of the Trust, the
Corporation, SLT and SLC with the management of the Trust and the Corporation.
Except for the individuals listed on Schedule 7.01(x), each Permitted Transferee
(as defined in the Transfer Restriction and Exchange Rights Agreement) is, and
immediately prior to receiving any Units will be, an Accredited Investor. The
Contributing Party and any Equity Owner therein understands that (i) the Paired
Shares and Units have not been registered under the
27
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Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act, and (ii) upon any
issuance of the Paired Shares pursuant to the Transfer Restriction and Exchange
Agreement, such Paired Shares must be held indefinitely unless such Shares are
registered upon receipt thereof, or unless a subsequent disposition thereof is
registered under the Securities Act and applicable state securities laws or is
exempt from such registration.
(y) Binding Effect. When executed and delivered by each Contributing
Party, the Transaction Documents required to be executed by the respective
Contributing Parties will each be duly authorized, valid and binding upon such
Contributing Party.
(z) Status of Constituent Documents. Schedule 7.01(z) sets forth a
true and complete list of each Property Company's Constituent Documents. Each of
the Property Company's Constituent Documents is in full force and effect, and
true, complete and correct copies thereof have been delivered to the
Partnerships. There are no dissolution, termination or liquidation proceedings
pending or, to the Knowledge of the Contributing Parties, contemplated with
respect to the Property Company. To the Contributing Parties' Knowledge there
are no uncured defaults or breaches by any Person under the Constituent
Documents for such Property Company.
7.2 The Partnerships' Representations and Warranties. To induce the
Contributing Parties to enter into this Agreement, each Partnership makes the
following representations and warranties, as to itself, all of which (i) are now
true and (ii) shall be true as of the Closing:
(a) Power and Authority Non-contravention, Investment. The
Partnership has full power and authority to enter into this Agreement and to
assume and perform all of its obligations hereunder; the execution and delivery
of this Agreement and the performance by the Partnership of its obligations
hereunder have been duly authorized by such action as may be required, and no
further action or approval is required in order to constitute this Agreement as
a binding and enforceable obligation of the Partnership. Neither the execution
nor delivery of this Agreement by the Partnership, nor consummation of the
transactions contemplated hereby or compliance with or fulfillment of the terms
and provisions hereof by the Partnership, will (i) conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights, or result in the creation or imposition of any
encumbrance upon any of the assets of the Partnerships under the Partnership's
Constituent Documents, or any other instrument, agreement, mortgage, indenture,
deed of trust, permit, concession, grant, franchise, license, judgment, order,
award, decree or other restriction of which the Partnership is a party or any of
its properties is subject or by which any of them is bound or any Legal
Requirement affecting any of them, or (ii) require the approval, consent or
authorization of, or the making of any declaration, filing or registration with,
any third party or any foreign, federal, state or local court, Government Entity
or regulatory body, by or on behalf of the Partnership, except for (A) the
applicable requirements of the gaming authorities of the State of Nevada and of
the Clark County, Nevada Liquor and Gaming Licensing Board (the "Nevada Gaming
Approvals") and (B) the filing of appropriate documents with the SEC under the
Securities Act. The Partnerships are receiving the Property Company Interests to
be delivered hereto for their
28
<PAGE>
own account with the present intention of holding such Property Company
Interests for purposes of investment, and each Partnership has no intention of
selling such Property Company Interests in a distribution in violation of
federal securities, laws or any applicable state securities laws. The
Partnerships are Accredited Investors and have sufficient knowledge and
experience in financial and business matters and investing in entities similar
to the Property Companies so as to be able to evaluate the risks and merits of
their investment in the Property Companies and the Partnerships have had an
opportunity to discuss the business, management and financial affairs of the
Property Companies with the management of the Property Companies.
(b) Good Standing. The Partnership is duly organized, validly
existing and in good standing under the laws of the state of its formation and
are qualified to do business in all jurisdictions in which such qualification
legally is required.
(c) Binding Effect. When executed and delivered by each Partnership,
the Transaction Documents required to be executed by the Partnership hereunder
will each be duly authorized, valid and shall be binding upon the Partnership.
(d) Status of the Constituent Documents. Schedule 7.02(d) sets forth
a true and complete list of all of the Partnerships' Constituent Documents. Each
of the Partnership's Constituent Documents is in full force and effect, and
true, complete and correct copies thereof have been delivered to the
Contributing Party. There are no dissolution, termination or liquidation
proceedings pending or, to the Knowledge of the Starwood Parties, contemplated
with respect to the Partnership. There are no uncured defaults or breaches by
the general partner or to the Knowledge of the Starwood Parties, any limited
partner under the Partnerships' Constituent Documents.
(e) No Litigation; Proceedings. Except as set forth on Schedule
7.02(e), there are no pending or, to Starwood Parties' Knowledge, threatened
actions, suits, proceedings or claims against or affecting the Partnership at
law or in equity or before or by any Government Entity.
(f) Units. The capitalization of each of the Partnerships is as set
forth in their respective Partnership Agreements. As of December 31, 1996,
32,682,481 OP Units of each of SLC and SLT were issued and outstanding, of which
at least the OP Units of SLT and SLC set forth on Schedule 7.02(f) were held by
limited partners that are not affiliated with the Trust within the meaning of
the Department of Labor's ERISA plan asset regulation, 29 C.F.R.
ss.2510.3-101(f) (the "Plan Asset Regulation"). There are no restrictions on the
transfer of the SLT OP Units and SLC OP Units to be issued pursuant to Section
2.03 other than those contained in the respective Partnership's Constituent
Documents, the Transfer Restriction and Exchange Rights Agreement or the
Registration Rights Agreement and those arising from federal and applicable
state securities laws. All currently issued and outstanding OP Units were duly
authorized and validly issued in accordance with the terms of the respective
Partnership's Constituent Documents and in compliance with applicable laws and
are convertible into Paired Shares in accordance with the terms of the Transfer
Restriction and Exchange Rights Agreement. Except as set forth on Schedule
7.02(f) and except as created by this Agreement, as of the date hereof, there
are no outstanding subscriptions, options, warrants, preemptive or other rights
or other arrangements or commitments obligating the Partnerships to issue any
Units. If and when
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<PAGE>
issued, the Paired Shares issuable upon exchange of the Units delivered
hereunder pursuant to the Transfer Restriction and Exchange Rights Agreement
will be duly authorized, validly issued, fully paid and non-assessable. At the
Closing, upon receipt of the Property Company Interests and Contributed Assets,
the Partnerships will have transferred the Units to be issued hereunder free and
clear of all Liens (other than any Liens in favor of the partners of the
Partnership pursuant to the Partnership's Constituent Documents), and as of the
Closing, the Contributing Partners will be admitted as limited partners of the
Partnerships. The issuance of the Units to the Contributing Parties at the
Closing will not require any approval or consent of any Person except any such
approval that shall have been obtained on or prior to the Closing. Assuming the
accuracy of the representations in Section 7.01(x), the issuance of the Units to
the Contributing Parties hereunder is exempt from registration under the
Securities Act and applicable state securities laws.
(g) Financial Statements; Undisclosed Liabilities. True and complete
copies of (i) the audited financial statements of SLC and SLT as of December 31,
1995, together with all related notes and schedules thereto, accompanied by the
reports thereon of SLC's and SLT's independent auditors, and (ii) the unaudited
financial statements of SLC and SLT as of September 30, 1996 and for the nine
months then ended, together with all related notes and schedules thereto
(collectively, the "Partnerships' Financial Statements"), have been delivered to
the Contributing Parties. The Partnerships' Financial Statements were prepared
in accordance with the books of account and other financial records of SLC and
SLT, present fairly the consolidated financial condition and results of
operations of SLC and SLT as of the dates thereof or for the periods covered
thereby, and have been prepared in accordance with GAAP. Except as disclosed on
Schedule 7.02(g), (i) there are no Liabilities of SLC and SLT of the nature
required by GAAP to be shown on a balance sheet, other than Liabilities
reflected or reserved against on the balance sheets of SLC and SLT as of
September 30, 1996, and (ii) Liabilities which have arisen since that date in
the ordinary course of business.
(h) Conduct in the Ordinary Course of Business. Except as set forth
on Schedule 7.02(h), since September 30, 1996, the business of each of the
Partnerships has been conducted in all material respects in the ordinary course,
consistent with past practice, and the business of each of the Partnerships will
be conducted as aforesaid through the Closing.
(i) ERISA Matters. The terms of this transaction are not materially
less favorable to PRISA II than the terms that would be available generally in
an arms'-length transaction between unrelated parties. Neither Partnership
maintains or contributes to an employee benefit plan maintained by an employer
or employee organization identified on Schedule 7.02(i).
(j) Tax Status. Each Partnership is taxable as a "partnership" as
defined in Section 7701(a) of the Code, and is not taxable as a corporation by
reason of being a publicly traded partnership within the meaning of Section 7704
of the Code.
7.3 The Corporation's Representation and Warranties. To induce the
Contributing Parties to enter into this Agreement, the Corporation makes the
following representations and warranties, all of which (i) are now true and (ii)
shall be true as of the Closing:
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(a) Power and Authority, Non-contravention. The Corporation has full
power and authority to enter into this Agreement and to assume and perform all
of its obligations hereunder, the execution and delivery of this Agreement and
the performance by the Corporation of its obligations hereunder have been duly
authorized by such action as may be required, and no further action or approval
is required in order to constitute this Agreement as a binding and enforceable
obligation of the Corporation; neither the execution or delivery of this
Agreement by the Corporation, nor consummation of the transactions contemplated
hereby or compliance with or fulfillment of the terms and provisions hereof by
the Corporation, will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the assets of the Corporation, under the Corporation's Constituent Documents,
the Pairing Agreement or any other instrument, agreement, mortgage, indenture,
deed of trust, permit, concession, grant, franchise, license, judgment, order,
award, decree or other restriction of which the Corporation is a party or any of
its respective properties is subject or by which any of them is bound, or under
any Legal Requirements affecting any of them, or (ii) require the approval,
consent or authorization of, or the making of any declaration, filing or
registration with, any third party or any foreign, federal, state or local
court, Governmental Entity or regulatory body, by or on behalf of the
Corporation, except for (A) the Nevada Gaming Approvals, or (B) the filing of
appropriate documents with the SEC under the Exchange Act.
(b) Good Standing. The Corporation is duly organized, validly
existing and in good standing under the laws of the state of its formation and
is qualified to do business in all jurisdictions in which such qualification
legally is required.
(c) Binding Effect. When executed and delivered by the Corporation,
the documents required to be executed by the Corporation hereunder will each be
duly authorized, valid and shall be binding upon the Corporation.
(d) Status of the Constituent Documents. Schedule 7.03(d) sets forth
a true and complete list of the Corporation's Constituent Documents. The
Corporation's Constituent Documents are in full force and effect, and true,
complete and correct copies thereof have been delivered to the Contributing
Party. There are no dissolution, termination or liquidation proceedings pending,
or contemplated with respect to the Corporation.
(e) No Litigation; Proceedings. Except as set forth on Schedule
7.03(e), there are no pending or, to the Starwood Parties' Knowledge, threatened
actions, suits, proceedings or claims against or affecting the Corporation at
law or in equity or before or by any Government Entity.
(f) Capitalization. As of December 31, 1996, the entire authorized
capital stock of the Corporation (the "Corporation Shares") consisted of
100,000,000 shares of which 26,718,649 were issued and outstanding and
73,281,351 shares were held in treasury. Each issued and outstanding Corporation
Share has been paired with an issued and outstanding Trust Share (as hereinafter
defined) pursuant to the terms of the Pairing Agreement. The Paired Shares
issued to the Contributing Parties at Closing will be duly authorized, validly
issued, fully paid and nonassessable and shall be issued hereunder free and
clear of all Liens. Except as set
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forth on Schedule 7.03(f), there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that require the Corporation to issue,
sell, or otherwise cause to become outstanding any Corporation Shares. The
Issuance of the Paired Shares to the Contributing Parties at the Closing will
not require any approval or consent of any Person except for any such approval
that shall have been obtained on or prior to the Closing. Assuming the accuracy
of the representations in Section 7.01(x), the issuance of the Paired Shares to
the Contributing Parties is exempt from registration under the Securities Act
and applicable state securities laws. There are no restrictions on the transfer
of the Paired Shares other than those in the Constituent Documents of the Trust
and the Corporation, the Transfer Restriction and Exchange Rights Agreement, or
the Registration Rights Agreement and those arising from federal and applicable
state securities laws.
(g) Financial Statements; Undisclosed Liabilities. True and complete
copies of (i) the audited financial statements of the Corporation as of December
31, 1995, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Corporation's independent auditors, and (ii) the
unaudited financial statements of the Corporation as of September 30, 1996 and
for the nine months then ended, together with all related notes and schedules
thereto (collectively, the "Corporation's Financial Statements"), have been
delivered to the Contributing Parties. The Corporation's Financial Statements
were prepared in accordance with the books of account and other financial
records of the Corporation, present fairly the consolidated financial condition
and results of operations of the Corporation as of the dates thereof or for the
periods covered thereby, and have been prepared in accordance with GAAP. Except
as disclosed on Schedule 7.03(g), (i) there are no Liabilities of the
Corporation of the nature required by GAAP to be shown on a balance sheet, other
than Liabilities reflected or reserved against on the balance sheets of the
Corporation as of September 30, 1996, and (ii) Liabilities which have arisen
since that date in the ordinary course of business.
(h) Conduct in the Ordinary Course of Business. Except as set forth
on Schedule 7.03(h), since September 30, 1996, the business of the Corporation
has been conducted in all material respects in the ordinary course, consistent
with past practice, and the business of the Corporation will be conducted as
aforesaid through the Closing.
(i) SEC Documents. The SEC Documents taken as a whole do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(j) Reservation of Shares. Upon Closing, the Corporation shall have
reserved for issuance a number of Corporation Shares equal to the number of
Paired Shares into which the SLC OP Units included in the Contribution Amount
are exchangeable pursuant to the Transfer Restriction and Exchange Rights
Agreement.
(k) ERISA Matters. The terms of this transaction are not materially
less favorable to PRISA II than the terms that would be available generally in
an arms'-length transaction between unrelated parties. The Corporation does not
maintain or contribute to an employee benefit plan maintained by an employer or
employee organization identified on Schedule 7.03(k).
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7.4 The Trust's Representations and Warranties. To induce the Contributing
Parties to enter into this Agreement, the Trust makes the following
representations and warranties, all of which (i) are now true and (ii) shall be
true as of the Closing:
(a) Power and Authority, Non-contravention. The Trust has full power
and authority to enter into this Agreement and to assume and perform all of its
obligations hereunder; the execution and delivery of this Agreement and the
performance by the Trust of its obligations hereunder have been duly authorized
by such action as may be required, and no further action or approval is required
in order to constitute this Agreement as a binding and enforceable obligation of
the Trust; neither the execution or delivery of this Agreement by the Trust, nor
consummation of the transactions contemplated hereby or compliance with or
fulfillment of the terms and provisions hereof by the Trust, will (i) conflict
with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights, or result in the
creation or imposition of any encumbrance upon any of the assets of the Trust
under the Trust's Constituent Documents, the Pairing Agreement or any other
instrument, agreement, mortgage, indenture, deed of trust, permit, concession,
grant, franchise, license, judgment, order, award, decree or other restriction
to which the Trust is a party or any of its properties is subject or by which it
is bound, or under any Legal Requirements affecting it, or (ii) require the
approval, consent or authorization of, or the making of any declaration, filing
or registration with, any third party or any foreign, federal, state or local
court, Government Entity or regulatory body, by or on behalf of the Trust,
except for (A) the Nevada Gaming Approvals, or (B) the filing of appropriate
documents with the SEC under the Securities Act.
(b) Good Standing. The Trust is duly organized, validly existing and
in good standing under the laws of the state of its formation and is qualified
to do business in all jurisdictions in which such qualification legally is
required.
(c) Binding Effect. When executed and delivered by the Trust, the
documents required to be executed by the Trust hereunder will each be duly
authorized, valid and shall be binding upon each Trust.
(d) Status of the Constituent Documents. Schedule 7.04(d) sets forth
a true and complete list of the Trust's Constituent Documents. The Trust's
Constituent Documents are in full force and effect, and a true, complete and
correct copy thereof has been delivered to the Contributing Party. There are no
dissolution, termination or liquidation proceedings pending or contemplated with
respect to the Trust. The Trust has elected to be taxed as a REIT (as defined
below) for its taxable year ending December 31, 1995 and the Trust is organized
and operated in such a manner as to qualify for taxation as a "real estate
investment trust" as defined in Section 856 of the Code ("REIT") for the taxable
year ending December 31, 1995 and through the Closing Date. The Trust is
grandfathered from the application of Section 269B of the Code pursuant to
Section 136(c)(3) of the Deficit Reduction Act of 1984.
(e) No Litigation; Proceedings. Except as set forth on Schedule
7.04(e), there are no pending or, to the Starwood Parties' Knowledge, threatened
actions, suits, proceedings or claims against or affecting the Trust at Law or
in equity or before or by any (Government Entity which would prevent or impair
the transactions contemplated hereby.
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(f) Capitalization. The entire authorized shares of beneficial
interest of the Trust (the "Trust Shares") as of December 31, 1996 consisted of
100,000,000 shares of which 26,718,649 were issued and outstanding and
73,281,351 shares were held in treasury. Each issued and outstanding Trust Share
has been paired with an issued and outstanding of Corporation Share pursuant to
the terms of the Pairing Agreement. The Paired Shares issued to the Contributing
Parties at Closing will be duly authorized, validly issued, full paid and
non-assessable and shall be issued hereunder free and clear of all Liens. Except
as set forth on Schedule 7.04(f), there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other Contracts or commitments that require the Trust to
issue, sell or otherwise cause to become outstanding any Paired Shares. The
Issuance of the Paired Shares to the Contributing Parties at the Closing will
not require any approval or consent of any Person except for any such approval
that shall have been obtained on or prior to the Closing. Assuming the accuracy
of the representations in Section 7.01(x), the issuance of the Paired Shares to
the Contributing Parties is exempt from registration under the Securities Act
and applicable state securities laws. There are no restrictions on the transfer
of the Paired Shares other than those in the Constituent Documents of the Trust
and the Corporation, the Transfer Restriction and Exchange Rights Agreement, or
the Registration Rights Agreement and those arising from federal and applicable
state securities laws.
(g) Financial Statements; Undisclosed Liabilities. True and complete
copies of (i) the audited financial statements of the Trust as of December 31,
1995, together with all related notes and schedules thereto, accompanied by the
reports thereon of the Trust's independent auditors, and (ii) the unaudited
financial statements of the Trust as of September 30, 1996 and for the nine
months then ended, together with all related notes and schedules thereto
(collectively, the "Trust's Financial Statements"), have been delivered to the
Contributing Parties. The Trust's Financial Statements were prepared in
accordance with the books of account and other financial records of the Trust,
present fairly the consolidated financial condition and results of operations of
the Trust as of the dates thereof or for the periods covered thereby, and have
been prepared in accordance with GAAP. Except as disclosed on Schedule 7.04(g),
(i) there are no Liabilities of the Trust of the nature required by GAAP to be
shown on a balance sheet, other than Liabilities reflected or reserved against
on the balance sheets of the Trust as of September 30, 1996, and (ii)
Liabilities which have arisen since that date in the ordinary course of
business.
(h) Conduct in the Ordinary Course of Business. Except as set forth
on Schedule 7.04(h), since September 30, 1996, the business of the Trust has
been conducted in all material respects in the ordinary course, consistent with
past practice, and the business of the Trust will be conducted as aforesaid
through the Closing.
(i) SEC Documents. The SEC Documents taken as a whole do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(j) Reservation of Shares. Upon Closing, the Trust shall have
reserved for issuance a number of Trust Shares equal to the number of Paired
Shares into which the SLT OP Units included in the Contribution Amount are
exchangeable pursuant to the Transfer Restriction and Exchange Rights Agreement.
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(k) ERISA Matters. The terms of this transaction are not less
favorable to PRISA II than the terms that would be available generally in an
arms'-length transaction between unrelated parties. The Trust does not maintain
or contribute to an employee benefit plan maintained by an employer or employee
organization identified on Schedule 7.04(k).
ARTICLE VIII
CONDITIONS
8.1 Conditions to the Partnerships' Obligations. The obligation of the
Partnerships to acquire the Property Company Interests and the Contributed
Assets from the Contributing Parties and to pay the Contribution Amount is
subject to satisfaction prior to or simultaneously with the Closing of the
following conditions, any of which may be waived in writing in whole or in part
by the Partnerships. Subject to Section 12.05(b), a failure of the circumstances
made a condition under this Section 8.01 shall not constitute a waiver of any
covenants, warranties and representations provided for elsewhere in this
Agreement; provided, however, that notwithstanding the foregoing,
(i) the Partnerships' sole remedies in the event any such
conditions are not satisfied or waived shall be to terminate this
Agreement and receive a refund of the Deposit or to proceed as
otherwise contemplated by the provisions of Section 13.02(a); and
(ii) if Closing occurs, the liability of the Contributing
Parties in connection with any breach of the covenants,
representations or warranties provided elsewhere in this Agreement
shall be limited as provided in Section 12.05(b) and Section
14.02(a):
(a) Exchange Rights Agreement. The Contributing Parties shall have
entered into the Transfer Restriction and Exchange Rights Agreement in the form
of Exhibit "B" attached hereto (the "Exchange Rights Agreement"), and the
Exchange Rights Agreement shall be in full force and effect.
(b) HEI Contribution. The HEI Contribution shall have been completed
in accordance with the terms of the HEI Contribution Agreement.
(c) No Material Misrepresentation etc. There shall not be any
material error, misstatement or omission in the representations or warranties
made by any Contributing Party in this Agreement.
(d) Title to Property. SLT shall have obtained from the Title
Insurer an ALTA Owners Policy of Title Insurance, Form B-1970 (or such other
form acceptable to SLT), for each of the parcels of Real Property based upon the
Title Commitments ("Title Policies"). The Title Policies will be dated as of the
Closing Date and must:
(i) insure title to the applicable parcels of Real Property
and all recorded easements benefiting such parcels, subject only to
Permitted Encumbrances;
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(ii) contain an "extended coverage endorsement" insuring over
the general exceptions contained customarily in such policies; and
(iii) contain non-imputation and "Fairway" endorsements.
The Title Policies must not raise any material survey defect or encroachment
from or onto any of the Real Property which has not been cured or insured over
prior to the Closing. Title to the Property other than the Real Property shall
be subject to no Liens other than Permitted Encumbrances.
In addition to the requirements of the Title Policies set forth above, the
Partnerships may, at their sole cost and expense, obtain such additional
endorsements as they may desire, but the non-availability of any such optional
additional endorsements shall not constitute a failure of a condition to
Closing.
(e) Contributing Parties' Proceedings. All proceedings to be taken
by the Contributing Parties and Property Companies in connection with the
transactions contemplated by this Agreement shall have been contemplated and all
documents to be furnished by them incident thereto shall be reasonably
satisfactory in substance and in form to the Partnerships and the Partnerships'
counsel.
(f) Contributing Party's Performance, Consents. Subject to the
provisions of Section 8.01(g) regarding licenses and Section 8.01(h) regarding
License Agreements, all covenants, actions and agreements made by each
Contributing Party which are to be performed or completed on or before the
Closing shall have been performed or completed in all material respects, and all
documents to be delivered by each Contributing Party at the Closing shall have
been delivered, and each Contributing Party and Property Company shall have
received all consents, authorizations and approvals required in connection with
the transactions contemplated in this Agreement except where the failure to
obtain such consent does not and would not reasonably be expected to have a
material adverse effect on the use or value of the Property, the performance by
the affected Contributing Party of its obligations hereunder or the ability to
operate the affected Hotel after Closing in substantially the same manner in
which it is presently operated.
(g) Licenses. There shall have been issued all appropriate licenses
and/or approvals required to permit the continued operation of all portions of
the Property, including without limitation full liquor service at the Property,
from and after the Closing, provided that the Contributing Parties and the
Partnerships shall cooperate fully to effect the transfer of all licenses,
permits and approvals as of Closing, but if despite such efforts any license
cannot be transferred as of Closing, the Contributing Parties and the
Partnerships shall agree to reasonable alternate arrangements customary in the
applicable jurisdiction so as to permit the continued operation of the affected
Hotel(s) in the manner in which presently operated and Closing shall proceed as
scheduled.
(h) Franchise License Agreements. With respect to each License
Agreement, the applicable Property Company, shall have received all consents or
other relief required from
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the licensor thereunder to permit the transaction contemplated hereby or shall
have terminated such License Agreement effective as of the Closing Date,
provided:
(i) that the Contributing Parties and the Partnerships shall
cooperate fully to attempt to negotiate a mutually acceptable
resolution of such matters with each franchisor or licensor under a
License Agreement, but if despite such efforts such resolution has
not been fully negotiated and agreed to by Closing, the Contributing
Parties and the Partnerships shall agree to reasonable alternate
arrangements and Closing shall proceed as scheduled; and
(ii) that any fees or capital expenditures required to be paid
under or in connection with such License Agreement as a condition
for the approval by the licensor or franchisor of the transfer,
termination or reissuance of the same shall, subject to Section
10.01 hereof, be borne by the Partnerships.
(i) Notices. Each Contributing Party or Property Company, as
appropriate, shall execute and deliver all notices required by any Contract or
permit issued by any Governmental Entity for the transactions contemplated
herein.
(j) ERISA Limitations. Any limitations on OP Unit ownership by the
Contributing Parties reasonably necessary to comply with the Plan Asset
Regulation so as to avoid the result that the assets of SLT and/or SLC
constitute "Plan Assets" for purposes of the Plan Asset Regulation and which may
arise due to the transactions contemplated in this Agreement and in the other
Transaction Documents shall be resolved in a manner mutually satisfactory to the
Contributing Parties and the Starwood Parties. In resolving any such
limitations, the Starwood Parties and the Contributing Parties shall first
consider equal decreases in the number of OP Units and increases in the number
of Paired Shares to be issued immediately after Closing, and, if the parties do
not mutually agree to do so, the parties may alternatively agree to decrease the
number of OP Units to be delivered to the Contributing Parties pursuant to
Section 2.03 and increase the Cash portion of the Contribution Amount based on
the Closing Value of the OP Units not delivered. The parties currently
contemplate that immediately following the issuance of the OP Units at the
Closing, PRISA II shall convert approximately 1,850,000 OP Units into Paired
Shares, leaving PRISA II with approximately 1,150,000 OP Units in each of SLT
and SLC. The parties hereby agree to cooperate in all reasonable respects to
endeavor to resolve any such limitations without the necessity of increasing the
Cash portion of the Contribution Amount.
8.2 Conditions to Contributing Party's Obligations. The obligation of the
Contributing Parties to contribute the Property Company Interests and
Contributed Assets to the Partnerships is subject to satisfaction simultaneously
with the Closing of the following conditions (any of which may be waived in
whole or in part by the Contributing Parties, but only in writing at or prior to
the Closing). Subject to Section 12.05(b), a failure to discover any
circumstances made a condition under this Section 8.02 shall not constitute a
waiver of any covenants, warranties and representations provided for elsewhere
in this Agreement and the Contributing Parties sole remedies in the event any
such conditions are not satisfied or waived shall be to proceed as contemplated
by Section 13.02(b) or Article XIV.
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(a) The Starwood Parties' Proceedings. All proceedings to be taken
by the Starwood Parties in connection with the transactions contemplated by this
Agreement shall have been completed and all documents to be furnished by them
incident thereto shall be reasonably satisfactory in substance and in form to
the Contributing Parties and their counsel.
(b) The Starwood Parties' Performance. All covenants, actions and
agreements made by each Starwood Party which are to be performed or completed on
or before the Closing shall have been performed or completed in all material
respects, including, without limitation, payment of the Contribution Amount, and
all documents to be delivered by each Starwood Party at the Closing shall have
been delivered, and each Starwood Party shall have received all consents
required in connection with the transactions contemplated in this Agreement
except where the failure to obtain such consent does not and would not
reasonably be expected to have a material adverse effect on the performance by
the affected Starwood Party of its obligations hereunder.
(c) No Material Misrepresentation etc. There shall not be any
material error, misstatement or omission in the representations or warranties
made by the Starwood Parties in this Agreement.
(d) Exchange Rights Agreement. The Starwood Parties shall have
entered into the Exchange Rights Agreement and the Exchange Rights Agreement
shall be in full force and effect.
(e) Registration Rights Agreement. The Starwood Parties shall have
entered into the Registration Rights Agreement in the form of Exhibit "C"
attached hereto (the "Registration Rights Agreement"), and the Registration
Rights Agreement shall be in full force and effect.
(f) [Reserved]
(g) HEI Contribution. The HEI Contribution shall have been completed
in accordance with the HEI Contribution Agreement.
(h) [Reserved]
(i) Partnership Amendments. The Contributing Parties shall have been
admitted as limited partners to SLT and SLC pursuant to the terms of an
amendment to the partnership agreements of each of SLT and SLC reflecting the
issuance of the OP Units to the Contributing Parties and their admission to the
respective Partnerships, which amendments shall be in form and substance
reasonably satisfactory to the Contributing Parties and their counsel. Such
amendments shall provide, in part, that upon receipt by the Partnerships of the
Property Company Interests and the Contributed Assets and the admission of the
Contributing Parties to the Partnerships, the Partnerships shall indemnify and
hold harmless the Contributing Parties of
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and from Liabilities of the Property Company whose interests have been acquired
except for any undisclosed material Liability of such Property Company as of the
Closing Date (collectively, the "Excluded Liabilities"); provided, however, that
the Excluded Liabilities shall not include:
(i) any Liability incurred in the ordinary course of operating
the applicable Hotel prior to the Closing Date;
(ii) any Liability disclosed by the Transaction Documents, the
Schedules or Exhibits thereto, any supplement to such schedules or
exhibits delivered to the Starwood Parties prior to Closing, the
agreements, reports or other documents referred to in any of the
foregoing, the Financial Statements, the financial statements
prepared in connection with the Net Working Capital adjustment
provided for in Article IV;
(iii) any Liability of which the Starwood Parties otherwise
had Knowledge prior to Closing; or
(iv) any Liability incurred on or after the Closing Date;
and the Partnerships shall be obligated to hold the Contributing Parties
harmless from all such enumerated Liabilities.
(j) ERISA Limitations. Any limitations on OP Unit ownership by the
Contributing Parties reasonably necessary to comply with the Plan Asset
Regulation so as to avoid the result that the assets of SLT and/or SLC
constitute "Plan Assets" for purposes of the Plan Asset Regulation and which may
arise due to the transactions contemplated in this Agreement and in the other
Transaction Documents shall be resolved in a manner mutually satisfactory to the
Contributing Parties and the Starwood Parties. In resolving any such
limitations, the Starwood Parties and the Contributing Parties shall first
consider equal decreases in the number of OP Units and increases in the number
of Paired Shares to be issued immediately after Closing, and, if the parties do
not mutually agree to do so, the parties may alternatively agree to decrease the
number of OP Units to be delivered to the Contributing Parties pursuant to
Section 2.03 and increase the Cash portion of the Contribution Amount based on
the Closing Value of the OP Units not delivered. The parties currently
contemplate that immediately following the issuance of the OP Units at the
Closing, PRISA II shall convert approximately 1,850,000 OP Units into Paired
Shares, leaving PRISA II with approximately 1,150,000 OP Units in each of SLT
and SLC. The parties hereby agree to cooperate in all reasonable respects to
endeavor to resolve any such limitations without the necessity of increasing the
Cash portion of the Contribution Amount.
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ARTICLE IX
DOCUMENTS
9.1 The Contributing Parties' Closing Deliveries. At the closing, each
Contributing Party shall execute as necessary and deliver or cause to be
delivered the following:
(a) Assignment of Property Company Interests. Duly executed and
acknowledged Assignment and Assumption of the Property Company Interests in form
and substance reasonably satisfactory to the Parties and their counsel and
sufficient to transfer and convey all right, title and interest in, to and under
the Property Company Interests to the respective Partnerships who shall
countersign and return a copy of the same to signify such Partnership's
assumption of obligations thereunder arising after the Closing, subject to the
provisions of Section 8.02(i).
(b) Confirmation of Distribution of Contributed Assets. Copies of
duly executed instruments whereby each Property Company distributes title to the
Contributed Assets owned by such Property Company to the Contributing Parties
holding Property Company Interests therein (to permit such Contributing Parties
to contribute such assets to SLC in accordance with this Agreement).
(c) Bills of Sale and General Assignment. A duly executed and
acknowledged Bill of Sale and General Assignment from the Contributing Parties
in form and substance reasonably satisfactory to the Parties and their counsel
and sufficient to transfer and convey the Contributed Assets to SLC.
(d) Affidavits Regarding Authority, "Foreign Person". Affidavits
sworn to by each Contributing Party to the effect (1) that the signatures on the
instruments executed and delivered by such Contributing Party in connection with
the transactions contemplated hereby are sufficient to bind such party; (2), if
such Contributing Party is not an individual, that all requisite consents or
approvals to the Closing transactions required under the applicable Constituent
Documents have been obtained; (3) that the Contributing Party is not a "foreign
person" as that term is defined in Section 1445(f)(3) of the Code; and (4) that
the U.S. taxpayer identification number of each Contributing Party is as set
forth in such affidavit.
(e) Title Requirements. Subject to the Constituent Parties'
obligations under Section 3.01, any and all certificates, affidavits and other
instruments and documents which the Title Company shall reasonably require to
permit it to issue the Title Policies in the condition required herein.
(f) Transfer Tax Returns. All transfer and other tax returns and
information returns as may be required in connection with the transactions
contemplated by this Agreement, duly executed by the applicable Property
Company.
(g) [Reserved]
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(h) Pay-Off Letters. Pay-off letters with respect to the Assumed
Debt indicating all sums required to satisfy and permit the discharge of record
of any lien securing the Assumed Debt.
(i) Good Standing Certificate. A Certificate (dated not more than
ten business days prior to the Closing) of the Secretary of State of the state
of formation for each Property Company as to the good standing in such state of
each of the Property Companies.
(j) Others as Reasonably Required. Such other documents as may be
reasonably required to consummate the transactions herein contemplated.
9.2 The Partnerships Closing Deliveries. The Partnerships at Closing shall
pay or cause to be paid the Contribution Amount to the Contributing Parties and
shall execute, acknowledge and/or deliver to the Contributing Parties:
(a) Good Standing Certificate. A certificate (dated not more than
ten business days prior to the Closing) of the Secretary of State of the State
of Delaware as to the good standing of each of the Partnerships in the State of
Delaware.
(b) Partnership Amendments. The amendments to the Partnership
Agreements for SLT and SLC required by Section 8.02(i).
(c) Affidavit. An affidavit sworn to by a general partner or officer
of each of the Partnerships to the effect that (1) the signatures on the
instruments executed and delivered by the Partnerships in connection with this
transaction are sufficient to bind the Partnerships, (2) all requisite consents
or approvals to the Closing transactions required under the applicable
Constituent Documents have been obtained, and (3) the consummation of the
transaction by the Partnerships are not prohibited or restricted in any way
either under the Constituent Documents or under Legal Requirements applicable to
the transaction.
(d) Others as Reasonably Required. Such other documents as may be
reasonably required to consummate the transactions herein contemplated.
9.3 Closing Deliveries by the Trust and the Corporation. At Closing, each
of the Trust and the Corporation shall respectively execute and deliver to the
Contributing Parties the following:
(a) Good Standing. A certificate (dated not more than ten business
days prior to the Closing) of the Secretary of State of the State of Maryland
for each of the Trust and the Corporation as to the good standing of each of the
Trust and the Corporation respectively in the State of Maryland.
(b) Paired Shares. Such stock certificates or other evidence of the
issuance of the Paired Shares, if any, to the Contributing Parties as the
Contributing Parties may reasonably request.
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(c) Affidavit. Affidavits sworn to by an officer of the Corporation
and the Trust to the effect that (1) the signatures on the instruments executed
and delivered by the Corporation and Trust in connection with this transaction
are sufficient to bind the Corporation and the Trust (2) all requisite consents
or approvals to the Closing transactions required under the applicable
Constituent Documents have been obtained, and (3) the consummation of the
transaction by the Corporation and the Trust are not prohibited or restricted in
any way either under the Constituent Documents or under Legal Requirements
applicable to the transaction.
(d) Others as Reasonably Required. Such other documents as may be
reasonably required to consummate the transactions herein contemplated.
ARTICLE X
COSTS
10.1 Transaction Costs. The Partnerships and the Contributing Parties
shall each pay one-half (1/2) of the amount of all costs associated with
transfer taxes, deed stamps, gains taxes, sales or use taxes relating to the
transfer of personal property (collectively "Transfer Costs") and the costs
associated with title searches and the issuance of the Title Policies (other
than optional endorsements) and preparation of surveys (collectively "Title
Costs"). The Partnerships and the Contributing Parties shall each bear and pay
one-half (1/2) of any escrow costs and recording fees and charges. Fees, costs
and expenses incurred in terminating or assigning the License Agreements or in
obtaining replacement franchise agreements therefor shall be borne by the
Partnerships; provided, however, that if such costs shall exceed $500,000 with
respect to the Atlanta Embassy Suites Hotel, all such costs in excess of such
amount with respect to such Hotel shall be borne equally by the Contributing
Parties and the Starwood Parties. Fees, costs and expenses incurred in
connection with the issuance of all appropriate licenses and/or approvals
required to permit the continued operation of full liquor service at the
Property shall be borne by the Partnerships. All other costs and expenses
incurred by the Contributing Parties in connection herewith, including, without
limitation, all attorneys' fees and costs shall be borne by the Contributing
Parties. All other costs and expenses incurred by the Starwood Parties in
connection herewith, including, without limitation, all attorneys' fees and
costs shall be borne by the Starwood Parties.
ARTICLE XI
BROKERAGE
11.1 Broker. Each Contributing Party and each of the Starwood Parties
represents and warrants that it has not dealt with any broker in connection with
this transaction other than (i) Goldman, Sachs & Co., whose fees shall be paid
by the Contributing Parties, (ii) Prudential Securities Incorporated whose fees
shall be paid by HEI (as provided in the HEI Contribution Agreement) and (iii)
Merrill, Lynch & Co., whose fees shall be paid by HEI pursuant to its agreement
with Merrill, Lynch & Co. Each of the Starwood Parties and each Contributing
Party hereby agrees to indemnify, defend and hold the other parties to this
Agreement harmless from and against any claim, cost, damage or expense including
reasonable attorneys' fees in defense
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thereof, made by any other broker claiming to have been retained by such Person
in connection with the transactions contemplated hereby.
ARTICLE XII
SCHEDULES, CLOSING, "AS IS"
12.1 Schedules. Each of the parties hereto shall cause to be prepared and
delivered to the other parties hereto all Schedules pertaining to such party as
soon as reasonably practicable after the date hereof. If, prior to 6:00 P.M.
(EST) on January 17, 1997, the Starwood Parties have not terminated this
Agreement in accordance with the following sentence, the Starwood Parties shall
be deemed to have approved such Schedules and SLT shall be obligated to
immediately increase the Deposit by $5,000,000 as provided for in Section 2.05
above. If the Schedules disclose matters which, taken as a whole, materially
adversely affect the business prospects, assets, liabilities, financial
condition or operating results of the party on whose behalf such Schedule was
submitted, then, the party for whose benefit such Schedule was submitted, may,
by notice to the party on whose behalf such Schedule was submitted, elect to
terminate this Agreement, in which event this Agreement (and all other
Transaction Documents) shall terminate and be of no further force and effect,
except for those provisions which specifically survive such termination, and the
Initial Deposit shall be returned to SLT.
12.2 Access.
(a) Access - Partnerships. The Contributing Parties shall permit the
Partnerships and their authorized representatives at such time or times as the
Partnerships may reasonably request (and either before or after Closing) (i)
upon reasonable prior notice, to inspect, review, or copy the books and records,
including, without limitation, any financial statements (collectively, the
"Property Company Records") of each of the Property Companies and/or their
respective agents' relating to the ownership, management and operation of the
Property for any periods prior to the Closing Date (the "Property Company
Records Review"), (ii) to inspect the physical condition of the Property (the
"Physical Inspection"), (iii) to enter the Property for the purpose of observing
the taking of any inventories and the counting of house cash, and (iv) to
schedule and perform interviews of Hotel employees, provided that all such
interviews shall be scheduled through Murray Dow of HEI who shall make all
reasonable efforts to accommodate the Partnerships' scheduling requests. The
Contributing Parties shall cause the Property Companies to direct the managers
of the Hotels to cooperate in such investigations by the Partnerships, and take
such steps as may be reasonably within the power of the Property Companies to
compel the managers so to cooperate, and the Partnerships shall use commercially
reasonable efforts to minimize disruption to the Hotel Business.
(b) Access - Contributing Parties. The Starwood Parties shall permit
the Contributing Parties and their authorized representatives at such time or
times as the Contributing Parties may reasonably request (and either before or
after Closing (i) upon reasonable prior notice, to inspect, review, or copy the
books and records, including, without limitation, any financial statements
(collectively, the "Starwood Records") of each of the Starwood Parties and/or
their respective agents' relating to the ownership, management and
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operation of the Starwood Parties or their hotels (the "Starwood Records
Review"), and (ii) to schedule and perform interviews of employees of the
Starwood Parties, their affiliates and managers, provided that all such
interviews shall be scheduled through Steve Goldman who shall make all
reasonable efforts to accommodate the Contributing Parties' scheduling requests.
12.3 Certain Definitions. For the purposes of Section 12.02:
(a) Records (of the Property Companies or the Starwood Parties, as
applicable) shall include, without limitation, all past and current, rent rolls,
paid bill files, depreciation schedules, canceled checks, payroll tax returns
and any additional records reasonably requested by the Partnerships or the
Contributing Parties, as the case may be (excluding bank statements) in the
possession of the Property Companies or the Starwood Parties, or their
respective agents; and
(b) Physical Inspection may include, without limitation, the roofs,
foundation, interiors, soil, landscaping, painting, pools, dumpster pads,
heating systems, electrical systems, plumbing, sewerage systems, water supply,
painting, appliances, carpeting, drapes, clubhouse, roads, parking areas and
inspection for evidence of termite infestation and/or environmental matters.
12.4 Deliveries. The Contributing Parties shall fully cooperate with the
Partnerships and the Partnerships' representatives in making the foregoing
review, audit and inspection, and shall upon request from the Partnerships
deliver to the Partnerships such information, reports or other records as may be
relevant to such review and within the possession of the Contributing Parties or
the Property Companies. The Starwood Parties shall fully cooperate with the
Contributing Parties and the Contributing Parties' representatives in making the
foregoing review, audit and inspection, and shall upon request from the
Partnerships deliver to the Partnerships such information, reports or other
records as may be relevant to such review and within the possession of the
Starwood Parties or the Property Companies.
12.5 Effect of Inspections, "As Is".
(a) Upon completion of the Closing, the Partnerships will be deemed
to have accepted the Property on an "As Is" basis, subject to the provisions of
Articles VII, XIV and XVI (as limited in accordance with Sections 12.05(b),
13.02(a) and 14.02(b) of this Agreement) and the terms and conditions of the
other Transaction Documents. The sole obligation of the Contributing Parties
with respect to the physical condition of the Property will be to contribute the
Property Company Interests and the Contributed Assets to the Partnerships with
the Property in substantially the same physical condition (excluding normal wear
and tear) as existed on the date of execution and delivery of this Agreement.
Subject to the provisions of Articles VII, XIV, and XVI (as limited in
accordance with Sections 12.05(b), 13.02(a) and 14.02(b) of this Agreement), the
Partnerships have agreed to accept possession of the Property Company Interests
and Contributed Assets on the Closing Date with the Property and Hotel Business
of each Hotel on an "As Is" basis. The Partnerships and Contributing Parties
agree that at Closing the Property will be "As Is," and, except as expressly set
forth in Section 7.01 hereof, such Closing transactions will be without
representation or warranty of any kind, express or implied (including, without
limitation, warranty of income potential, operating expenses, uses,
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merchantability or fitness for a particular purpose), and the Partnerships do
hereby disclaim and renounce any such representation or warranty other than as
expressly made pursuant to Section 7.01 (but subject to the limitations and
qualifications provided for in this Agreement). For purposes of this Agreement,
the term "As Is" means, as and where the Property presently exist as of the date
of execution and delivery of this Agreement, including, without limitation, all
faults, defects, claims, Liens, and other conditions of every kind or
description with respect to (a) the physical and environmental condition of the
Property and the Hotels (including defects seen and unseen and conditions
natural and artificial), (b) subject to Article III, the Property Companies'
title to the Real Property and the Hotels, (c) subject to Article III, the
Property Companies' title to the Tangible Personal Property, Intangible
Property, Proprietary Interests and Miscellaneous Interests, (d) all Legal
Requirements to which the Property is subject, (e) the financial operations of
the Hotels, demands, actions, or causes of action that relate in any way to the
Hotels or the ownership and operations thereof and, (f) all other matters
related in any way to the ownership and operation of the Property and the
Hotels, whether known or unknown, subject in each case to the obligations of the
Contributing Parties under Articles VII, XIV and XVI (as limited in accordance
with Sections 12.05(b), 13.02(a) and 14.02(b) of this Agreement) and the terms
of the other Transaction Documents.
(b) The right of inspection, review and audit referred to in Section
12.02(a) of this Agreement, and the exercise of such right by the Partnerships
shall not constitute a waiver by the Partnerships of the breach of any covenant,
representations or warranty of the Contributing Parties; provided, however, that
if the Starwood Parties have Knowledge of any such breach at the time of
Closing, and elect to complete the Closing in accordance with the terms hereof
notwithstanding such Knowledge, then the Starwood Parties shall irrevocably be
deemed to have waived any such breach of which the Starwood Parties had
Knowledge at Closing. Likewise, the review, investigation and analysis of the
Starwood Parties, the OP Units and the Paired Shares by the Contributing Parties
shall not constitute a waiver by the Contributing Parties of the breach of any
covenant, representation or warranty of the Starwood Parties; provided, however,
that if the Contributing Parties have Knowledge of any such breach at the time
of Closing, and elect to complete the Closing notwithstanding such Knowledge,
then the Contributing Parties shall irrevocably be deemed to have waived any
such breach of which the Contributing Parties had Knowledge at Closing. For
purposes of this Section 12.05(b) and Article XIII and XIV, Knowledge with
respect to a party shall include the present actual Knowledge of the individual
attorneys actively representing such party in connection with the transactions
contemplated hereby.
(c) [Reserved]
12.6 Delivery of Property Company Records. The Contributing Parties shall
cause the Property Company Records to remain with the Property Companies upon
the contribution of the Property Company Interests and Contributed Assets to the
Partnerships at Closing. The Partnerships agree for a period of five (5) years
subsequent to the Closing Date, upon request of the Contributing Parties, to
make available to the Contributing Parties all information and statements in the
Partnerships' possession (including, without limitation, the Property Company
Records) with regard to any period prior to the Closing Date which may be
reasonably required by the Contributing Parties in connection with the Property
Companies' control of the Property or the operation thereof.
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12.7 The Partnerships' Indemnification. The Partnerships agree to
indemnify, defend and hold the Contributing Parties harmless from and against
any claim, damage or expense, including reasonable attorneys' fees, incurred by
the Contributing Parties and arising from the Partnerships' entry upon the
Property for the performance of the Partnerships' due diligence reviews and such
indemnification shall survive the Closing or termination of this Agreement.
12.8 Date and Location Closing. The Closing of the transactions
contemplated by this Agreement (the "Closing") shall take place on January 31,
1997 at 10:00 a.m. at the offices of Kirkland & Ellis, 153 East 53rd Street, New
York, NY, or at such other time and place as the parties may mutually determine
(the "Closing Date"), provided that either party hereto may adjourn the Closing
for a period not to exceed thirty (30) days for the purpose of obtaining the
consents required pursuant to Section 8.01(h) (provided that such period shall
be sixty (60) days with respect to the consent required from Hilton Hotels
Corp.)
ARTICLE XIII
EARNEST MONEY, DEFAULT AND REMEDIES
13.1 Duties of Escrow Agent. The duties of Escrow Agent will be as
provided in the Escrow Agreement and shall include:
(a) Earnest Money Deposits. During the term of this Agreement,
Escrow Agent will hold, deposit, invest and deliver the Deposits in accordance
with the terms and provisions of this Agreement.
(b) Disputes. If this Agreement is terminated by the mutual written
agreement of the Contributing Parties and the Starwood Parties, or if Escrow
Agent is unable to determine at any time to whom any of the Deposit should be
delivered, or if a dispute develops between the Contributing Parties and the
Starwood Parties concerning to whom the Deposit should be delivered, then in any
such event, Escrow Agent will request joint written instructions from the
Contributing Parties and the Starwood Parties and will deliver the Deposit in
accordance with such joint written instructions. In the event that such written
instructions are not received by Escrow Agent within ten (10) days after Escrow
Agent has served a written request for instructions upon the Contributing
Parties and the Starwood Parties, Escrow Agent will have the right to pay the
Deposit into a court of competent jurisdiction and interplead the Contributing
Parties and the Starwood Parties in respect thereof, and thereafter Escrow Agent
will be discharged of any obligations in connection with this Agreement.
(c) Costs. If costs or expenses are incurred by Escrow Agent because
of litigation or a dispute between the Contributing Parties and the Starwood
Parties arising out of the holding of the Deposit in escrow, the Contributing
Parties and the Starwood Parties will each pay Escrow Agent one-half of such
reasonable and direct costs and expenses. Except for such costs and expenses, no
fee or charge will be due or payable to Escrow Agent for its services as escrow
holder other than its usual and customary investment fees, if any.
(d) Limited Duties. By joining in the Escrow Agreement, Escrow Agent
undertakes only to perform the duties and obligations imposed upon it under the
terms of the
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Escrow Agreement and expressly does not undertake to perform any of the other
covenants, terms and provisions incumbent upon the Contributing Parties and the
Starwood Parties hereunder.
(e) Liability. The Starwood Parties and the Contributing Parties
hereby agree and acknowledge that Escrow Agent assumes no liability in
connection herewith except for gross negligence or willful misconduct; that
Escrow Agent will never be responsible for the validity, correctness or
genuineness of any document or notice referred to under this Agreement; and that
Escrow Agent may seek advice from its own counsel and will be fully protected in
any action taken by it in good faith in accordance with the opinion of its
counsel.
13.2 Default.
(a) Contributing Parties Default. Notwithstanding any other
provision of this Agreement, if the Contributing Parties, or any one of them,
fail to perform any of their material obligations or agreements within fifteen
(15) days following written demand for such performance contained herein and if
the Starwood Parties are not then in default of any of their material
obligations and agreements contained herein, then as their sole and exclusive
remedy the Starwood Parties may elect to:
(i) terminate this Agreement by giving written notice of
termination and the reasons therefor to the Contributing Parties, in
which event neither the Contributing Parties nor the Starwood
Parties will have any further obligations or liabilities one to the
other hereunder (except for any indemnity of one party by the other
which expressly survives Closing or termination of this Agreement),
and the Contributing Parties and Escrow Agent will immediately
thereafter return the entire Deposit to SLT and the Contributing
Parties shall reimburse the Starwood Parties for all Pursuit Costs
actually incurred by the Starwood Parties in pursuing the
transactions contemplated hereby up to an amount not to exceed One
Million Dollars ($1,000,000);
(ii) waive such default and complete the Closing as
contemplated by this Agreement without any adjustment to or
reduction in the Contribution Amount as a result of such default
(except to the extent to the same affects the Net Working Capital
Adjustment pursuant to Section 4.01); or
(iii) waive all other actions, rights or claims for damages,
other than costs and expenses incurred in enforcing this Agreement
and bring an equitable action for specific performance of the terms
of this Agreement (i.e., to compel any Contributing Party to comply
with its covenants under this Agreement).
If the Starwood Parties shall elect to proceed pursuant to clause (iii) above
and shall successfully prosecute such action for specific performance, the
Contributing Parties shall reimburse the Starwood Parties for all fees, costs
and expenses incurred in prosecuting such action including, without limitation,
reasonable attorneys fees, but if the Contributing Parties shall prevail in any
such action, the Starwood Parties shall reimburse the Contributing Parties for
all fees, costs and expenses incurred in defending such action including,
without limitation, reasonable attorneys fees.
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(b) Starwood Parties' Default. If the Starwood Parties fail to close
the transaction contemplated hereby (except for permitted terminations set forth
herein) and the Contributing Parties are not then in default of any of their
material obligations or agreements contained herein, then the Contributing
Parties' sole option hereunder will be to terminate this Agreement, whereupon
Escrow Agent will pay the Deposit to the Contributing Parties as liquidated
damages, and the Starwood Parties will have no further obligations or
liabilities hereunder (except for any indemnity or liability specifically stated
to survive termination of this Agreement). The Contributing Parties' election to
receive the Deposit as liquidated damages is agreed to due to the difficulty,
inconvenience, and uncertainty of ascertaining actual damages for such breach by
the Starwood Parties and the Starwood Parties agree that the same is a
reasonable and fair estimate of such damages. The Starwood Parties waive and
release any right to (and covenant that they will not) sue the Contributing
Parties or the Property Companies or seek or claim a refund of all or any
portion of the Deposit on the grounds that it is unreasonable in amount and
exceeds the Contributing Parties' actual damages or that its retention by the
Contributing Parties constitutes a penalty.
(c) [Reserved]
ARTICLE XIV
INDEMNIFICATION
14.1 Survival. Subject to the provisions of Section 12.05(b) and Section
13.02, and to the completion of the Closing, all representations, warranties,
covenants and agreements set forth in the Transaction Documents or in any
certificate or other writing delivered in connection with the Transaction
Documents shall survive such Closing, and the consummation of the transactions
contemplated thereby notwithstanding any examination made for or on behalf of
the Starwood Parties or the Contributing Parties; provided that the Contributing
Parties' obligation to indemnify the Starwood Parties and the Starwood Parties'
obligation to indemnify the Contributing Parties in respect of breaches thereof
shall be subject to the limitations set forth below. The provisions of this
Article XIV shall apply only after Closing, and none of the Starwood Parties,
the Contributing Parties or the Property Companies shall have any liability or
obligation under the provisions of this Article XIV unless and until the Closing
occurs.
14.2 Indemnification by Contributing Parties.
(a) Subject to the provisions of Sections 12.05(b) and 13.02(a), and
the limitations set forth in Section 14.02(b) below, as the exclusive remedy of
the Starwood Parties under this Agreement after Closing, the Contributing
Parties hereby jointly and severally (except as otherwise provided in Section
7.01(b)(ii) above, with respect to the representations and warranties therein
made severally by the Contributing Parties and as to which the indemnification
obligations created hereby shall also be several), agree to indemnify each of
the Starwood Parties (who for purposes of this Article XIV, shall include each
of their respective Affiliates, officers, directors, partners, employees,
agents, representatives, successors and permitted assigns) and hold each of them
harmless against and pay on behalf of or reimburse such Starwood Parties in
respect of any liability (including, without limitation, interest, penalties,
reasonable attorneys
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fees and expenses, court costs and amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, "Losses") which any such
Starwood Party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of the breach of any
covenant, representation or warranty made by the Contributing Parties under this
Agreement (a "Breach").
(b) The indemnification provided for in Section 14.02(a) above is
subject to the following limitations:
(i) Each Contributing Party will be liable to the Starwood
Parties under Section 14.02(a) with respect to a Breach
only (a) if Starwood Parties had no Knowledge of such
Breach on or before the Closing Date; and (b) the
Starwood Parties give the Contributing Party written
notice of such claim under Section 14.02(a):
(A) within the earlier of (i) six months after the
Closing Date or (ii) thirty (30) days following
completion of the final determination of Closing
Net Working Capital of any Property Company
pursuant to Section 4.01(d) for claims arising
from or relating to any Breach except a breach of
the representations and warranties of Contributing
Parties under Sections 7.01(b)(i), (b)(ii), (c),
(e), (n) or (x);
(B) within twelve (12) months after the Closing Date
for claims arising from or relating to any
breaches of the representations and warranties of
the Contributing Parties under Section 7.01(b)(i);
(C) within eighteen (18) months after the Closing Date
for claims arising from or relating to any
breaches of the representations and warranties of
the Contributing Parties under Section 7.01(e); or
(D) within 30 days following expiration of all
applicable statutes of limitations for claims
relating to any Breach under Section 7.01(c) and
at any time after the Closing Date for claims
arising from or relating to any breaches of the
representations and warranties of the Contributing
Parties under Sections 7.01 (b)(ii), (n) or (x).
(ii) The Contributing Parties will not be liable for any Loss
arising from any Breach unless and until the aggregate
amount of all such Losses relating to all such Breaches
exceeds $100,000 (the "Threshold"), in which case the
Contributing Parties, shall be liable for the amount of
all such Losses in excess of the Threshold; provided
that the aggregate liability of the Contributing Parties
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hereunder shall not exceed: (i) $500,000 in respect of
Losses relating to any single Hotel; and (ii) $2,750,000
(the "Cap Amount") in respect of all Losses for which
indemnification is sought by the Starwood Parties
pursuant hereto.
14.3 Indemnification by Starwood Parties.
(a) Subject to the provisions of Sections 12.05(b) and 13.02(a), and
the limitations set forth in Section 14.03(b) below, as the exclusive remedy of
the Contributing Parties under this Agreement after Closing, each Starwood Party
hereby severally agrees to indemnify each of the Contributing Parties (who for
purposes of this Article XIV, shall include each of their respective Affiliates,
officers, directors, partners, employees, agents, representatives, successors
and permitted assigns) and hold each of them harmless against and pay on behalf
of or reimburse such Contributing Parties in respect of any liability
(including, without limitation, interest, penalties, reasonable attorneys fees
and expenses, court costs and amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, "Losses") which any such
Contributing Party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of the breach of any
covenant, representation or warranty made by such Starwood Party under this
Agreement (a "Breach").
(b) The Indemnification provided for in Section 14.03(a) above is
subject to the following limitations;
(i) Each Starwood Party will be liable to the Contributing
Parties with respect to claims referred to in subsection
(a)(i) above only if (a) the Contributing Parties had no
Knowledge of such claim on or before the Closing Date
and (b); if the Contributing Parties give the applicable
Starwood Party written notice of such claim:
(A) within the earlier of (i) six months after the
Closing Date or (ii) thirty (30) days following
completion of the final determination of Closing
Net Working Capital of any Property Company
pursuant to Section 4.01(d) for claims arising
from or relating to breaches of the
representations and warranties set forth in
Sections 7.02 (e), (g), and (h), 7.03 (e), (g),
and (h) and 7.04 (e) (g) and (h);
(B) within twelve (12) months after the Closing Date
for claims arising from or relating to any
breaches of the representations and warranties set
forth in Section 7.03(f) or 7.04(f);
(C) at any time after the Closing Date for claims
arising from or relating to breaches of the
representations and warranties set forth in
Section 7.02(a) - (d), (f), or (i) - (j), 7.03 (a)
-(d), or (i) - (k) or 7.04 (a) - (d), or (i) -
(k).
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(ii) No Starwood Party shall be liable for any Loss arising
from any breach of any covenant, representation or
warranty contained in this Agreement or any Schedule or
Exhibit hereto unless and until the aggregate amount of
all such Losses relating to all such breaches by all of
the Starwood Parties exceeds the Threshold, in which
case the applicable Starwood Party, shall be liable for
the amount of all such Losses in excess of the
Threshold; subject to a maximum aggregate collective
liability among the Starwood Parties for all such Losses
in the amount of the Cap Amount.
14.4 Procedures.
(a) If a party hereto seeks indemnification under this Article XIV
such party (the "Indemnified Party") shall give written notice to the other
party (the "Indemnifying Party") of the facts and circumstances giving rise to
the claim. In that regard, if any suit, action, claim, liability or obligations
shall be brought or asserted by any third party which, if adversely determined,
would entitle the Indemnified Party to indemnity pursuant to this Article XIV,
the Indemnified Party shall promptly notify the Indemnifying Party of the same
in writing, specifying in detail the basis of such claim and the facts
pertaining thereto and the Indemnifying Party, if it so elects, shall assume and
control the defense thereof (and shall consult with the Indemnified Party with
respect thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all necessary expenses; provided that
the Indemnifying Party shall not have the right to assume control of such
defense if the claim which the Indemnifying Party seeks to assume control (1)
seeks non-monetary relief; or (2) involves criminal or quasi-criminal
allegations. In the event that the Indemnified Party retains control of the
defense of such claim, the Indemnified Party shall use good faith efforts,
consistent with prudent business judgment, to defend such claim. If the
Indemnifying Party is permitted to assume and control the defense and elects to
do so, the Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnifying Party in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party unless (A) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (B) the Indemnifying Party has been advised by
counsel that a reasonable likelihood exists of a conflict of interest between
the Indemnifying Party and the Indemnified Party and such counsel advises the
Indemnifying Party of the general nature of such conflict, (C) the Indemnifying
Party has failed to assume the defense and employ counsel, or (D) the
Indemnified Party has reasonably determined that an adverse outcome could have a
material adverse effect on its business, reputation or could reasonably be
expected to have a materially adverse precedential effect; in which case the
fees and expenses of the Indemnified Party's counsel shall be paid by the
Indemnifying Party. The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without the written consent
of the Indemnifying Party, however, if there shall be a final judgment for the
plaintiff in any such action, the Indemnifying Party agrees to indemnify and
hold harmless the Indemnified Party from and against any loss or liability by
reason of such judgment.
(b) In the event any Indemnified Party which is an individual, or
any senior officer (including, without limitation, any president or
vice-president) of any other Indemnified Party or any general partner or member
thereof, has actual knowledge of any valid claim or
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defense (and not merely any facts or circumstances which may give rise to such
claim or defense) against a third party who is a party to the applicable claim
in connection with any Loss as to which such Indemnified Party seeks
indemnification pursuant to this Article XIV and such Indemnified Party without
good reason fails to notify the Indemnifying Party of such claim or defense or
without good reason fails to assert such claim or defense on its own behalf,
then the Indemnified Party shall not be entitled to receive indemnification from
the Indemnifying Party to the extent of the Loss which is proven by the
Indemnifying Party to have been occasioned by such failure to notify or such
failure to assert such claim or defense. The determination of whether a party
had "good reason" for failure to notify or failure to assert any claim or
defense shall be made by the Arbitrator pursuant to subsection (i) below.
(c) In the event any Indemnified Party is insured pursuant to an
unexpired insurance policy against any occurrence giving rise to any Loss as to
which such Indemnified Party seeks indemnification pursuant to this Article XIV
(including, without limitation, pursuant to any insurance policy maintained by
any Property Company before or after Closing), the Indemnified Party shall
promptly give notice of such insurance coverage to the Indemnifying Party and
the Indemnifying Party shall, in its reasonable discretion, elect either (i) to
require the Indemnified Party to make a claim pursuant to such insurance policy
for such Loss and the Indemnifying Party's obligation to indemnify the
Indemnified Party shall thereafter be reduced by the amount of insurance
proceeds received by the Indemnified Party as a result of such claim or (ii) to
indemnify the Indemnified Party without requiring a claim to be made by the
Indemnified Party on such insurance policy. In the event the Indemnifying Party
elects to require the Indemnified Party to make a claim on such insurance policy
pursuant to clause (i) above, the Indemnifying Party shall pay any increase in
insurance premiums resulting directly and proximately from such claim by the
Indemnified Party on such insurance policy; provided that if any such increase
in such insurance premium is caused by one or more claims on such insurance
policy as a result of Losses which are not subject to indemnification pursuant
to this Article XIV, then the Indemnifying Party shall be obligated to pay such
increase in insurance premiums only to the extent such increase is attributable
to claims made by the Indemnified Party pursuant to clause (i) above. The
determination of the amount of such increase in insurance premiums attributable
to any claim made pursuant to clause (i) above shall be made by the mutual
agreement of the Parties acting in good faith, and in the event the Parties are
unable to so agree shall be made by the Arbitrator pursuant to subsection (i)
below. The Indemnified Party shall provide to the Indemnifying Party such
documentation relating to such increase in insurance premium as shall be
necessary to establish the amount of such increase and shall otherwise cooperate
with the Indemnifying Party in establishing the amount of such increase
attributable to the claim made pursuant to clause (i) above.
(d) In the event that the Starwood Parties are entitled to any
indemnification hereunder from the Contributing Parties, within 15 days after a
final determination of the amount of such indemnification pursuant to the terms
of this Article XIV (the "Indemnification Amounts"), the Contributing Parties
shall make an election to pay (and shall pay) such Indemnification Amount either
(i) by payment of immediately available funds to the Starwood Parties or (ii) by
delivering or causing the Partnerships to cancel on their respective books and
records an equal number of SLT OP Units and SLC OP Units held by the
Contributing Parties having a current market value (based upon the Paired Share
price as of the date of the final determination of such Indemnification Amount)
equal to the Indemnification Amount, and to the
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extent such delivery or cancellation of SLT OP Units and SLC OP Units is
insufficient to pay such Indemnification Amount, immediately available funds for
the remaining balance of such Indemnification Amount. In the event that the
Contributing Parties are entitled to any indemnification hereunder from the
Starwood Parties, within 15 days after a final determination of the amount of
such indemnification pursuant to the terms of this Article XIV, the Starwood
Parties shall satisfy such obligation by payment of immediately available funds
to the Contributing Parties.
(e) Any dispute, controversy, or claim arising under or relating to
this Article XIV ("Dispute") shall be resolved by final and binding arbitration
administered by the American Arbitration Association ("AAA") under its
Commercial Arbitration Rules, subject to the following:
(i) Either party may demand that any Dispute be submitted to
binding arbitration. The demand for arbitration shall be in writing,
shall be served on the other party in the manner prescribed herein
for the giving of notices, and shall set forth a short statement of
the factual basis for the claim, specifying the matter or matters to
be arbitrated.
(ii) The arbitration shall be conducted by an arbitrator
appointed by the AAA (the "Arbitrator") who shall conduct such
evidentiary or other hearings as such arbitrator deems necessary or
appropriate and thereafter shall make a final determination as soon
as practicable. Any arbitration pursuant hereto shall be conducted
by the Arbitrator as the parties may mutually agree or, if the
parties do not so agree, under the guidance of the Federal Rules of
Civil Procedure and the Federal Rules of Evidence, but the
Arbitrator shall not be required to comply strictly with such Rules
in conducting any such arbitration. All such arbitration proceedings
shall take place in New York, New York.
(iii) Except as provided herein:
(A) each party shall bear its own "Costs and Fees,"
which are defined as all reasonable pre-award expenses of the
arbitration, including travel expenses, out-of-pocket expenses
(including but not limited to, copying and telephone) witness
fees, and reasonable attorney's fees and expenses;
(B) the fees and expenses of the Arbitrator and all
other costs and expenses incurred in connection with the
arbitration ("Arbitration Expenses") shall be borne equally by
the parties; and
(C) notwithstanding the foregoing, the Arbitrator shall
be empowered to require any one or more of the parties to bear
all or any portion of such Costs and Fees and/or the fees and
expenses of the Arbitrator in the event that the Arbitrator
determines such party has acted unreasonably or in bad faith.
(iv) The Arbitrator shall have the authority to award damages,
including costs but shall not have the authority to award punitive
damages, to impose sanctions for
53
<PAGE>
abuse or frustration of the arbitration process, or to compel
specific performance. The decision of the Arbitrator and any award
pursuant thereto shall be in writing and counterpart copies thereof
shall be delivered to each party. The decision and award of the
Arbitrator shall be binding on all parties. In rendering such
decision and award, the Arbitrator shall not add to, subtract from
or otherwise modify the provisions of this Article XIV. Either party
to the arbitration may seek to have judgment upon the award rendered
by the Arbitrator entered in any court having jurisdiction thereof.
(v) Each party agrees that it will not file any suit, motion,
petition or otherwise commence any legal action or proceeding for
any matter which is required to be submitted to arbitration as
contemplated herein except in connection with the enforcement of an
award rendered by the Arbitrator and except to seek non-monetary
equitable relief including, with limitation, the issuance of an
injunction or temporary restraining order pending a final
determination by the Arbitrator. Upon the entry of any order
dismissing or staying any action or proceeding filed contrary to the
preceding sentence, the party which filed such action or proceeding
shall promptly pay to the other party the reasonable attorney's
fees, costs and expenses incurred by such other party prior to the
entry of such order.
(vi) All aspects of the arbitration shall be considered
confidential and shall not be disseminated by any party with the
exception of the ability and opportunity to prosecute its claim or
assert its defense to any such claim. The Arbitrator shall be
required to issue prescriptive orders as may be required to enforce
and maintain this covenant of confidentiality during the course of
the arbitration and after the conclusion of same so that the result
and the underlying data, information, materials and other evidence
are forever withheld from public dissemination with the exception of
its subpoena by a court of competence jurisdiction in an unrelated
proceeding brought by a third party.
(f) Nothing in this Article XIV shall limit or restrict any party's
right to maintain or recover on any action based upon fraud.
ARTICLE XV
FURTHER ASSURANCES
15.1 Further Assurances. The Contributing Parties, the Property Companies
and the Starwood Parties, at or after Closing, and without further
consideration, shall execute, acknowledge and deliver to the other such other
documents and instruments, and take such other actions, as either shall
reasonably request or as may be necessary more effectively to transfer to the
Partnerships the Property in accordance with this Agreement.
54
<PAGE>
ARTICLE XVI
PRE-CLOSING OPERATIONS
16.1 Contributing Party's Conduct of Business. Except as required by
applicable Legal Requirements, until the Closing or earlier termination of this
Agreement, each Contributing Party shall with respect to the Property Company in
which it owns Property Company Interests:
(a) operate or cause HEI as manager, to operate the Property in
accordance with the terms of the Management Agreements applicable thereto
diligently and only in the ordinary course of business consistent with
past practices so as to preserve its business and goodwill intact, and
reserve for the Partnerships the goodwill and relationships of the
Property Companies with their suppliers, tenants, and others having
relations with them and so as to: (i) maintain the Property in material
compliance with all Legal Requirements; (ii) maintain all insurance
presently maintained thereon in full force and effect, and (iii) comply in
all material respects with any License Agreement applicable to each Hotel;
(b) not sell, transfer, pledge or convey any Property Company
Interest (except for distributions to the holders of equity interests in a
Contributing Party), or permit the Property Company or HEI, except in the
ordinary course of business, to sell, assign, or convey any right, title,
or interest whatever in or to the Property or any part thereof, or any
Inventory or create or permit to exist any Lien thereon without promptly
discharging the same (other than in the ordinary course of business) or
with respect to Permitted Encumbrances;
(c) promptly inform the Partnerships in writing of any variances
from the representations and warranties contained in Section 7.01;
(d) use reasonable efforts to cooperate with the Partnerships in
order to attempt to obtain all third party and governmental approvals and
consents necessary or desirable to consummate the transactions
contemplated hereby and to cause the other conditions to the parties
obligations hereunder to be satisfied; and
(e) maintain its books, accounts and records in accordance with GAAP
consistently applied.
16.2 On-Site Representative. After the date of execution and delivery of
this Agreement, the Partnerships shall be entitled to have their representatives
on-site at the Hotels to participate in and receive all information pertaining
to the operation and management of each Hotel Business, and the parties shall
reasonably cooperate in such efforts.
55
<PAGE>
ARTICLE XVII
NOTICES
17.1 Procedure for Notice. All notices, demands, consents, approvals and
other communications which are required or desired to be given hereunder shall
be in writing and shall be sent by Federal Express or other similar courier,
with a simultaneous copy by facsimile transmission, to the recipient as set
forth below or at such other address as such parties shall have last designated
by notice to the other:
If to the Contributing Parties:
c/o HEI Hotels LLC
55 Greens Farms Road
Westport Corporate Office Park
Westport, CT 06880
Fax No. 203/454-7678
c/o Prudential Real Estate Investors
8 Campus Drive
Parsippany, NJ 07054
Attention: Gary L. Kauffman (Fax: 201/683-1790)
Joseph D. Margolis, Esq. (Fax: 201/683-1788)
James P. Walker, Esq. (Fax: 201/683-1788)
with copies to:
O'Melveny & Myers LLP
153 East 53rd Street
New York, New York 10022
Attention: Robert S. Insolia, Esq. (Fax No. 212/326-2061)
William N. Cooney, Esq. (Fax No. 213/669-6407)
Willkie, Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Bruce M. Montgomerie, Esq.
Fax No. 212/821-8927
56
<PAGE>
If to the Starwood Parties:
SLT Operating Limited Partnership
c/o Starwood Lodging Trust
2231 East Camelback Road, Suite 410
Phoenix, AZ 85016
Telephone: (602) 852-3900
Telecopy: (602) 852-0984
Attention: Steven R. Goldman
SLC Operating Limited Partnership
c/o Starwood Lodging Corporation
2231 East Camelback Road, Suite 400
Phoenix, AZ 85016
Telephone: (602) 852-3900
Telecopy: (602) 852-0984
Attention: Nir Margalit, Esq.
Starwood Lodging Trust
2231 East Camelback Road, Suite 410
Phoenix, AZ 85016
Telephone: (602) 852-3900
Telecopy: (602) 852-0984
Attention: Steven R. Goldman
Starwood Lodging Corporation
2231 East Camelback Road, Suite 400
Phoenix, AZ 85016
Telephone: (602) 852-3900
Telecopy: (602) 852-0984
Attention: Nir Margalit, Esq.
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000
Telecopy: (312) 861-2200
Attention: Stephen G. Tomlinson, Esq.
Sidley & Austin
555 West Fifth Street
Los Angeles, CA 90013
Telephone: 213/896-6000
Telecopy: 213/896-6600
Attention: Sherwin L. Samuels, Esq.
57
<PAGE>
Notices signed by the parties' respective attorneys shall be deemed sufficient
within the meaning of this Section without the signatures of the parties
themselves. Notices, demands, consents, approvals, and other communications
shall be deemed given one (1) day after delivery to such courier. During the
existence of a strike, notice and other communications may be given by personal
service and such notices and communications shall be effective when delivered.
ARTICLE XVIII
ADDITIONAL COVENANTS
18.1 Board Representation.
(a) Not later than fifteen (15) days after the Closing Date, the
Trust shall: (i) take all necessary action, if any, to increase the number
of trustees of the Trust by two, and (ii), subject to the Nevada Gaming
Approvals, nominate and support for election to the board of trustees of
the Trust Gary M. Mendell and Roger S. Pratt.
(b) For so long as PRISA II shall maintain the Minimum Share
Ownership, PRISA II shall continue to be entitled to designate, subject to
the Nevada Gaming Approvals, one representative to be nominated for
election to the board of trustees of the Trust, and the Trust shall cause
the board of trustees of the Trust to so nominate such designee, and to
support such nomination along with the other nominees of management and
the board of directors, for election to the board of trustees of the Trust
at any annual or special meeting of the shareholders of the Trust called
for the purpose of electing trustees. Roger Pratt is the individual so
designated by PRISA II as of the date of this Agreement. If the
representative designated by PRISA II shall be elected to the board of
trustees of the Trust, such right of PRISA II shall be suspended until
such representative is up for re-election or the seat occupied thereby
otherwise becomes vacant. Upon the death, disability, retirement, removal
(with or without cause) or resignation of any such trustee designated by
PRISA II, PRISA II shall have the right to designate a replacement for
such individual to fill such capacity and serve as a trustee of the Trust
for the remainder of the departing trustee's term, and the trustees of the
Trust shall appoint such replacement individual to the board of trustees
of the Trust to fill such vacancy. If PRISA II shall at any time fail to
maintain the Minimum Share Ownership, then the rights granted to PRISA II
by this Section 18.01 shall immediately terminate and the party designated
by PRISA II, if then a Trustee of the Trust, shall promptly resign such
trusteeship.
(c) The election and removal of trustees of the Trust shall at all
times remain subject to the terms and conditions of the Trust's
Constituent Documents. The provisions of this Section 18.01 shall survive
Closing.
18.2 Obligation of the Contributing Parties As to Closing Conditions. The
Contributing Parties shall use commercially reasonable efforts to satisfy or
cause to be satisfied all closing conditions pursuant to Sections 8.01 and 8.02
which are within the reasonable control of the Contributing Parties, including,
without limitation, attempting to obtain the consent, authorization or approval
of any Person required in connection with the transactions
58
<PAGE>
contemplated in this Agreement. Such consents or approvals with respect to
licenses and with respect to the License Agreements shall be subject to the
specific provisions of Section 8.01(g) and Section 8.01(h), respectively.
18.3 Obligation of The Starwood Parties As to Closing Conditions. The
Starwood Parties shall use commercially reasonable efforts to satisfy or cause
to be satisfied all Closing conditions pursuant to Sections 8.01 and 8.02 which
are within the reasonable control of the Starwood Parties, including, without
limitation, obtaining the consent, authorization or approval of any Person
required in connection with the transactions contemplated in this Agreement.
ARTICLE XIX
[RESERVED]
ARTICLE XX
MISCELLANEOUS
20.1 Modifications and Waivers. This Agreement may not be changed or
terminated orally. No waiver of any party of any breach hereunder shall be
deemed a waiver of any other or subsequent breach.
20.2 Governing Law. This Agreement shall be construed, interpreted and
applied in accordance with the internal laws of the State of New York without
giving effect to doctrines relating to conflicts of laws.
20.3 Captions etc. The titles of the Articles, Sections or subsections of
this Agreement are nor convenience only and shall not be considered or referred
to in resolving questions of interpretation or construction.
20.4 Rules of Construction. This Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted. If any words or phrases in this Agreement
shall have been stricken out or otherwise eliminated, whether or not any other
words or phrases have been added, this Agreement shall be construed as if the
words or phrases so stricken out or otherwise eliminated were never included in
this Agreement and no implication or inference shall be drawn from the fact that
such words or phrases were so stricken out or otherwise eliminated. All terms
and words used in this Agreement, regardless of the number or gender in which
they are used, shall be deemed to include any other number and any other gender
as the context may require.
20.5 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and to their respective heirs, executors,
administrators and successors and assigns, it being the intention of the parties
not to confer any benefits hereunder upon any other persons, firms, corporations
or other entities.
59
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20.6 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, which are incorporated in and form a part of this Agreement, contains
all of the terms agreed upon between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.
20.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which shall constitute but one
and the same instrument.
20.8 Starwood Lodging Trust. The name "Starwood Lodging Trust" is a
designation of Starwood Lodging Trust and its Trustees (as Trustees but not
personally) under a Declaration of Trust dated August 25, 1969, as amended and
restated as of June 6, 1988 and as further amended subsequent thereto, which
states that all persons dealing with Starwood Lodging Trust shall look solely to
the assets of Starwood Lodging Trust for enforcement of any claims against
Starwood Lodging Trust, and the trustees, officials, agents and security holders
of Starwood Lodging Trust assume no personal liability for obligations entered
into on behalf of Starwood Lodging Trust, and their respective individual assets
shall not be subject to the claims of any person relating to such obligations.
20.9 Confidentiality and Exclusivity.
(a) Each party acknowledges that the information, observations and
data relating to the business of the other parties hereto of a proprietary
and/or confidential nature which the such party possess or which any such party
has obtained or will obtain during the course of the transactions provided for
herein are the property of such other parties ("Confidential Information"). Each
party agrees that it or he shall not, directly or indirectly, use for its or his
own purposes or disclose to any third party any of such Confidential Information
without the prior written consent of the other parties, unless and to the extent
that the aforementioned matters (a) become generally known to and available for
use by the hotel and hospitality industry other than as a result of any party's
acts or omissions to act; (b) are rightfully received by a party from a party
who was not subject to any obligations of confidentiality; or (c) to the extent
a party is required by order of a court of competent jurisdiction (by subpoena
or similar process) to disclose or discuss any Confidential Information
(provided that in such case, such party shall promptly inform the other parties
of such event, shall cooperate with the such other parties in attempting to
obtain a protective order or to otherwise restrict such disclosure and shall
only disclose Confidential Information to the minimum extent necessary to comply
with any such court order). Notwithstanding the foregoing, after the Closing,
the Starwood Parties may use for their own purposes or disclose to any third
party any Confidential Information relating solely to the business of the
Property Companies acquired pursuant hereto without the prior written consent of
the other parties hereto.
(b) During the period from the date of execution of this Agreement
to the earliest of (i) the date of termination of this Agreement, (ii) the
Closing Date, or (iii) February 15, 1997, neither the Contributing Parties nor
any Property Company will, directly or indirectly, without the prior written
consent of the Starwood Parties: (i) submit, solicit, initiate, encourage, or
pursue any proposal or offer from any Person or enter into any agreement or
accept any offer relating to any (a) reorganization, liquidation, dissolution or
recapitalization of any Property Company, (b) merger or consolidation involving
the Property Companies, (c) purchase or sale
60
<PAGE>
of any assets owned by, or equity ownership interests in, any Property Company,
or (d) any similar transaction or business combination involving the Property
Companies or substantially all of the assets of any of them (each of the
foregoing actions described in clauses (a) - (d), a "Restricted Transaction"; or
(ii) furnish any information with respect to, assist or participate in or
facilitate in any manner any Restricted Transaction. The Contributing Parties
each agree to notify the Starwood Parties immediately if any Person makes any
written proposal or offer with respect to a Restricted Transaction to any of
them or to any Property Company.
(c) The parties hereto agree that they may each suffer irreparable
harm from a breach by any other party of any of the covenants or agreements
contained herein. In the event of an alleged or threatened breach by any party
of any of the provisions of this Section 20.09, the other parties or their
successors or assigns may, in addition to all other rights and remedies existing
in their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof. Each party agrees that the covenants made
in Section 20.09 shall be construed as an agreement independent of any other
provision of this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
20.10 Several Liability. The liability of SLT, SLC, SLT Financing, the
Corporation and the Trust under this Agreement shall be several only and not
joint.
20.11 Press Releases. Except as may otherwise be required by law or
mutually agreed by the Parties, the timing and content of all press releases and
other public announcements and all announcements to the Contributing Parties'
and Property Companies customers, suppliers or licensors relating to the
transactions contemplated by the Transaction Documents shall be determined
jointly by the Starwood Parties and the Contributing Parties.
20.12 Expiration. The offer made in this Agreement by the Starwood Parties
execute the transactions contemplated hereby shall expire, if not sooner
accepted by the Contributing Parties by execution and delivery of this
Agreement, at 5:00 P.M. E.S.T. on January 16, 1997 and shall be of no force or
effect thereafter.
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SLT:
SLT REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: STARWOOD LODGING TRUST, a
Maryland real estate investment trust, General
Partner
By: /S/ STEVEN R. GOLDMAN
---------------------------------------
Name: Steven R. Goldman
Its: Senior Vice President
SLT Financing:
SLT FINANCING PARTNERSHIP, a Delaware
general partnership
By: SLT REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: STARWOOD LODGING TRUST, a
Maryland real estate investment trust,
General Partner
By: /S/ STEVEN R. GOLDMAN
---------------------------------------
Name: Steven R. Goldman
Its: Senior Vice President
<PAGE>
SLC:
SLT OPERATING LIMITED PARTNERSHIP,
a Delaware limited partnership
By: STARWOOD LODGING corporation, a
Maryland corporation, Managing General
Partner
By: /S/ ERIC A. DANZIGER
---------------------------------------
Name: Eric A. Danziger
Its: President
Trust:
STARWOOD LODGING TRUST, a Maryland
real estate investment trust
By: /S/ STEVEN R. GOLDMAN
-----------------------------------------
Name: Steven R. Goldman
Its: Senior Vice President
Corporation:
STARWOOD LODGING CORPORATION, a
Maryland corporation
By: /S/ ERIC A. DANZIGER
-----------------------------------------
Name: Eric A. Danziger
Its: President
<PAGE>
THE PROPERTY COMPANIES
PRUDENTIAL HEI JOINT VENTURE
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: ATLANTA HOTEL ASSOCIATES, LP
By: HOSPITALITY EQUITY INVESTORS, INC.
Its Majority General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------
Gary M. Mendell
President
<PAGE>
VIRGINIA HOTEL ASSOCIATES, L.P.
By: PRUWEST NORFOLK, L.L.C., Its Partner
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Partner
By: /S/ GARY L. KAUFFMAN
-----------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT NORFOLK ASSOCIATES LIMITED PARTNERSHIP
By: WESTPORT HOSPITALITY, INC.
Its General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
President
EDISON HOTEL ASSOCIATES, L.P.
By: PRUWEST EDISON, L.L.C., Its Partner
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT RARITAN, L.L.C., Its Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
<PAGE>
BW HOTEL REALTY, L.P.
By: PRUWEST BALTIMORE, L.L.C., Its Partner
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT BWI, L.L.C., Its Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
NOVI HOTEL ASSOCIATES, L.P.
By: PRUWEST NOVI, L.L.C., Its Partner
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT NOVI, L.L.C., Its Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
<PAGE>
PARK RIDGE HOTEL ASSOCIATES, L.P.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Partner
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT PARK RIDGE, L.P., Its Partner
By: WESTPORT PARK RIDGE, L.L.C., Its General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------
Gary M. Mendell
Managing Member
By: WESTPORT PARK RIDGE, L.L.C., Its Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
LONG BEACH HOTEL ASSOCIATES, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT LONG BEACH, L.L.C., Its Member
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
<PAGE>
CHARLESTON HOTEL ASSOCIATES, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT CHARLESTON, L.L.C., Its Member
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
SANTA ROSA HOTEL ASSOCIATES, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT SANTA ROSA, L.L.C., Its Member
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
<PAGE>
CRYSTAL CITY HOTEL ASSOCIATES, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
By: WESTPORT CRYSTAL CITY, L.L.C., Its Member
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
THE CONTRIBUTING PARTIES
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
ATLANTA HOTEL ASSOCIATES, LP
By: HOSPITALITY EQUITY INVESTORS, INC.
Its Majority General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
President
<PAGE>
PRUWEST NORFOLK, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
PRUWEST EDISON, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
PRUWEST BALTIMORE, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
PRUWEST NOVI, L.L.C.
By: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
on behalf of PRUDENTIAL PROPERTY INVESTMENT
SEPARATE ACCOUNT II, Its Member
By: /S/ GARY L. KAUFFMAN
-----------------------------------------------
Gary L. Kauffman
Vice President
<PAGE>
WESTPORT NORFOLK ASSOCIATES LIMITED PARTNERSHIP
By: WESTPORT HOSPITALITY, INC.
Its General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
President
WESTPORT RARITAN, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT BWI, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT NOVI, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT PARK RIDGE, L.P.
By: WESTPORT PARK RIDGE, L.L.C., Its General Partner
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
<PAGE>
WESTPORT PARK RIDGE, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT LONG BEACH, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT CHARLESTON, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT SANTA ROSA, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT CRYSTAL CITY, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
WESTPORT HOSPITALITY, INC.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
President
<PAGE>
WESTPORT HOLDINGS, L.L.C.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
Managing Member
By: /S/ MURRAY L. DOW, II
-----------------------------------------------
Murray L. Dow, II
Managing Member
By: /S/ ORNA L. SHULMAN
-----------------------------------------------
Orna L. Shulman
Managing Member
HOSPITALITY EQUITY INVESTORS, INC.
By: /S/ GARY M. MENDELL
-----------------------------------------------
Gary M. Mendell
President
THE GARY MENDELL FAMILY TRUST
By: /S/ ELEANOR MENDELL
-----------------------------------------------
Eleanor Mendell
Trustee
ZAPCO INTEREST HOLDINGS LIMITED PARTNERSHIP
By: ZAPCO VERMONT AVENUE, INC.
Its General Partner
By: /S/ ORNA L. SHULMAN
-----------------------------------------
Orna L. Shulman
Vice President
<PAGE>
LOUDOUN INTERTECH DEVELOPMENT CORPORATION
By: /S/ ORNA L. SHULMAN
-----------------------------------------------
Orna L. Shulman
Vice President
/S/ GARY M. MENDELL
- -----------------------------------------------
Gary M. Mendell
/S/ STEVE MENDELL
- -----------------------------------------------
Steve Mendell
/S/ MURRAY L. DOW, II
- -----------------------------------------------
Murray L. Dow, II
/S/ JUDITH K. RUSHMORE
- -----------------------------------------------
Judith K. Rushmore
/S/ ELLEN-JO MENDELL
- -----------------------------------------------
Ellen-Jo Mendell
/S/ ORNA L. SHULMAN
- -----------------------------------------------
Orna L. Shulman
/S/ FELIX J. CACCIATO, JR.
- -----------------------------------------------
Felix J. Cacciato, Jr.
/S/ ARTHUR C. GREEN
- -----------------------------------------------
Arthur C. Green
/S/ MARK J. ROSINSKY
- -----------------------------------------------
Mark J. Rosinsky
/S/ RANDI L. ROSINSKY
- -----------------------------------------------
Randi L. Rosinsky
<PAGE>
/S/ JOHN DAILY
- -----------------------------------------------
John Daily
/S/ MICHAEL D. HALL
- -----------------------------------------------
Michael D. Hall
/S/ HARVEY MOORE
- -----------------------------------------------
Harvey Moore
/S/ TRACEY DRISCOLL
- -----------------------------------------------
Tracey Driscoll
/S/ TOM CLEARWATER
- -----------------------------------------------
Tom Clearwater
SLT REALTY LIMITED PARTNERSHIP
STARWOOD LODGING TRUST
PURCHASE MONEY
PROMISSORY NOTE
$97,500,000.00 New York, New York
February 14, 1997
WHEREAS, pursuant to that certain Contribution Agreement dated as of
January 15, 1997 (the "Realty Contribution Agreement"), by and among SLT Realty
Limited Partnership, a Delaware limited partnership ("Realty Partnership"),
Starwood Lodging Trust, a Maryland real estate investment trust ("Trust" and
together with Realty Partnership, "Makers"), Starwood Lodging Corporation, SLC
Operating Limited Partnership, The Prudential Insurance Company of America, on
behalf of Prudential Property Investment Separate Account II ("Payee"), the
other Contributing Parties (as defined therein) and the Property Companies (as
defined therein), Makers are purchasing interests in the Property Companies;
WHEREAS, as partial payment of the Purchase Price (as defined in the
Realty Contribution Agreement) for the Property Companies, Makers (and their
affiliates) have requested that Payee accept this Note and Payee has agreed to
accept this Note as such partial payment; and
WHEREAS, unless otherwise indicated, capitalized terms shall have
the meanings set forth in Section 7 hereof.
NOW, THEREFORE, Makers, jointly and severally, agree as follows:
FOR VALUE RECEIVED, each Maker, jointly and severally,
unconditionally promises to pay to the order of Payee in the manner and at the
place hereinafter provided, the principal amount of NINETY SEVEN MILLION FIVE
HUNDRED THOUSAND DOLLARS ($97,500,000.00) on the Maturity Date, subject to the
obligation of Makers to prepay a portion of this Note on or prior to February
20, 1997 pursuant to Section 1(b) hereof.
Makers also promise to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at a fixed rate per annum equal
to 7.00%; provided that any principal amount not paid when due and, to the
extent permitted by applicable law, any interest not paid when due, in each case
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (both before as well as after judgment), shall bear interest
payable upon demand at a rate that is 6.00%
1
<PAGE>
per annum in excess of the rate of interest otherwise payable under this Note.
Interest on this Note shall be payable upon any prepayment of this Note (to the
extent accrued on the amount being prepaid) and on the Maturity Date. All
computations of interest shall be made by Payee on the basis of a 360 - day
year, for the actual number of days elapsed in the relevant period (including
the first day but excluding the last day of such period). In no event shall the
interest rate payable on this Note exceed the maximum rate of interest permitted
to be charged under applicable law.
1. Payments.
(a) All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds,
payable in accordance with the wire instructions set forth in Schedule I hereto,
or at such other place as Payee may direct in writing. Whenever any payment on
this Note is stated to be due on a day that is not a Business Day, such payment
shall instead be made on the next Business Day, and such extension of time shall
be included in the computation of interest payable on this Note. Each payment
made hereunder shall be credited first to interest then due and the remainder of
such payment shall be credited to principal, and interest shall thereupon cease
to accrue upon the principal so credited. Each of Payee and any subsequent
holder of this Note agrees, by its acceptance hereof, that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make a notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Makers
hereunder with respect to payments of principal or interest on this Note.
(b) Makers shall prepay $25,500,000.00 of the principal amount of
this Note together with interest accrued thereon on or prior to February 20,
1997.
(c) Makers may elect to extend the Maturity Date from April 15, 1997
to May 14, 1997 by giving written notice of such extension to Payee on or prior
to 5:00 p.m. (New York City time) on April 11, 1997 (with time being of the
essence).
2. Prepayments. Makers shall have the right at any time and from time to
time to prepay the principal of this Note in whole or in part, without premium
or penalty, upon at least 2 days' notice; provided that each such prepayment
shall be in a minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount (subject to Section 1(b) hereof). Any prepayment hereunder
shall be accompanied by interest on the principal amount of the Note being
prepaid to the date of prepayment.
3. Covenants. Each Maker, jointly and severally, covenants and agrees that
until this Note is paid in full it will:
2
<PAGE>
(a) promptly provide to Payee all financial and operational
information with respect to such Maker as Payee may reasonably request;
(b) promptly after the occurrence of an Event of Default or an
event, act or condition that, with notice or lapse of time or both, would
constitute an Event of Default, provide Payee with a certificate of the
chief executive officer or chief financial officer of such Maker
specifying the nature thereof and such Maker's proposed response thereto;
(c) maintain a net worth equal to $275,000,000 plus seventy five
percent (75%) of any equity issued by Makers after the date hereof; and
(d) not merge or consolidate with any other Person, or sell, lease
or otherwise dispose of all or any substantial part of its property or
assets to any other Person outside the ordinary course of business.
4. Representations and Warranties. Each Maker, jointly and severally,
hereby represents and warrants to Payee that:
(a) Realty Partnership is a duly organized and validly existing
partnership in good standing under the laws of the State of Delaware and
has the partnership power and authority to own and operate its properties,
to transact the business in which it is now engaged and to execute and
deliver this Note;
(b) Trust is a duly organized and validly existing real estate
investment trust in good standing under the laws of the State of Maryland
and has the power and authority to own and operate its properties, to
transact the business in which it is now engaged and to execute and
deliver this Note;
(c) this Note constitutes the duly authorized, legally valid and
binding obligation of such Maker, enforceable against such Maker in
accordance with its terms;
(d) all consents and grants of approval required to have been
granted by any Person in connection with the execution, delivery and
performance of this Note have been granted;
(e) the execution, delivery and performance by such Maker of this
Note do not (i) violate any law, governmental rule or regulation, court
order or agreement to which it is subject or by which its properties are
bound or the agreement of limited partnership, as amended, or any other
organizational documents of such Maker or (ii) result in the creation of
any lien or other encumbrance with respect to the property of such Maker;
3
<PAGE>
(f) there is no action, suit, proceeding or governmental
investigation pending or, to the knowledge of such Maker, threatened
against such Maker or any of its subsidiaries or any of their respective
assets which, if adversely determined, would have a material adverse
effect on the business, operations, properties, assets, condition
(financial or otherwise) or prospects of such Maker and its subsidiaries,
taken as a whole, or the ability of such Maker to comply with its
obligations hereunder; and
(g) the representations and warranties of Realty Partnership
contained in Section 7.02 of the Realty Contribution Agreement and of
Trust contained in Section 7.04 of the Realty Contribution Agreement (in
each case, which, by this reference, are incorporated herein in their
entirety) are and will be true, correct and complete on and as of the date
hereof to the same extent as though made on and as of the date hereof,
except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and
complete on and as of such earlier date.
5. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) failure of Makers to pay any principal, interest or other amount
due under this Note when due, whether at stated maturity, by required
prepayment (including without limitation as required under Section 1(b)
hereof), declaration, acceleration, demand or otherwise; or
(b) failure of any Maker to pay, or the default in the payment of,
amounts due under or in respect of any promissory note, indenture or other
agreement or instrument relating to any indebtedness for borrowed money of
$1,000,000 or more owing by such Maker, to which it is a party or by which
such Maker or any of its property is bound beyond any applicable grace
period; or the occurrence of any other event or circumstance and notice or
lapse of time or both which permits acceleration of such indebtedness; or
(c) failure of any Maker to perform or observe in all material
respects any other term, covenant or agreement to be performed or observed
by it pursuant to this Note; or
(d) any representation or warranty made by any Maker to Payee in
connection with this Note shall prove to have been false in any material
respect when made (including, without limitation, the representations and
warranties contained in Sections 7.02 and 7.04 of the Realty Contribution
Agreement and incorporated by reference herein in accordance with Section
4(f)); or
4
<PAGE>
(e) any order, judgment or decree shall be entered against any Maker
decreeing the dissolution or split-up of such Maker; or
(f) suspension of the usual business activities of any Maker or the
complete liquidation, or liquidation of a substantial portion, of any
Maker's business; or
(g) (i) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of any Maker or any of its
respective affiliates in an involuntary case under Title 11 of the United
States Code entitled "Bankruptcy" (as now and hereinafter in effect, or
any successor thereto, the "Bankruptcy Code") or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary
case shall be commenced against any Maker or any of its respective
affiliates under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over any Maker or any of its respective affiliates or over
all or a substantial part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian
of any Maker or any of its respective affiliates for all or a substantial
part of its property shall have occurred; or a warrant of attachment,
execution or similar process shall have been issued against any
substantial part of the property of any Maker or any of its respective
affiliates, and, in the case of any event described in this clause (ii),
such event shall have continued for 30 days unless dismissed, bonded or
discharged; or
(h) an order for relief shall be entered with respect to any Maker
or any of its respective affiliates or any Maker or any of its respective
affiliates shall commence a voluntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or
a substantial part of its property; or any Maker or any of its respective
affiliates shall make an assignment for the benefit of creditors; or any
Maker or any of its respective affiliates shall be unable or fail, or
shall admit in writing its inability, to pay its debts as such debts
become due; or the partners of any Maker or any of its respective
affiliates (or any committee thereof) shall adopt any resolution or
otherwise authorize action to approve any of the foregoing; or
5
<PAGE>
(i) any Maker shall challenge, or institute any proceedings to
challenge, the validity, binding effect or enforceability of this Note or
any endorsement of this Note or any other obligation to Payee.
6. Remedies. Upon the occurrence of any Event of Default specified in
Section 5(g) or 5(h) above, the principal amount of this Note together with
accrued interest thereon shall become immediately due and payable, without
presentment, demand, notice, protest or other requirements of any kind (all of
which are hereby expressly waived by Makers). Upon the occurrence and during the
continuance of any other Event of Default Payee may, by written notice to
Makers, declare the principal amount of this Note together with accrued interest
thereon to be due and payable, and the principal amount of this Note together
with such interest shall thereupon immediately become due and payable without
presentment, further notice, protest or other requirements of any kind (all of
which are hereby expressly waived by Makers).
7. Definitions. The following terms used in this Note shall have the
following meanings (and any of such terms may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference):
"Business Day" means any day other than a Saturday, Sunday or legal
holiday under the laws of the State of New York or any other day on which
banking institutions located in such state are authorized or required by
law or other governmental action to close.
"Event of Default" means any of the events set forth in Section 5.
"Maturity Date" means April 15, 1997, unless Makers notify Payee of
Makers' election to extend the Maturity Date in accordance with Section
1(b) hereof, in which case "Maturity Date" shall mean May 14, 1997.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, bank, trust or other enterprise, whether or not
a legal entity, or any government or political subdivision or any agency,
department or instrumentality thereof.
8. Miscellaneous.
(a) All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, telefacsimile or cable
communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered
as follows: if to Makers, at its address specified opposite its signature below;
and if to Payee, at c/o Prudential Real Estate Investors, 8 Campus Drive
Parsippany, NJ 07054, Attention: Gary L. Kauffman (Fax 201-683-1790), James P.
Walker, Esq. (Fax 201-683-1788), with copies to:
6
<PAGE>
O'Melveny & Myers LLP, 153 East 53rd Street, New York, New York 10022;
Attention: Robert S. Insolia, Esq. (Fax 212-326-2061), or in each case at such
other address as shall be designated in writing from time to time by Payee or
Makers. All such notices and communications shall be effective when received by
the other party.
(b) Makers agree to indemnify Payee against any losses, claims,
damages and liabilities and related expenses, including counsel fees and
expenses, incurred by Payee arising out of or in connection with or as a result
of the loan evidenced by this Note. In particular, Makers promise to pay all
costs and expenses, including reasonable attorneys' fees, incurred in connection
with the collection and enforcement of this Note. Makers agree to pay all
reasonable out-of-pocket expenses of Payee incurred in connection with the
enforcement and administration of this Note, the documents and instruments
referred to herein and any amendments, waivers or consents relating hereto or
thereto including, without limitation, the reasonable fees and expenses of
outside counsel for Payee. In addition, Makers agree to pay, and to save Payee
harmless from all liability for, any stamp or other documentary taxes which may
be payable in connection with Makers' execution or delivery of this Note.
(c) No failure or delay on the part of Payee or any other holder of
this Note to exercise any right, power or privilege under this Note and no
course of dealing between Makers and Payee shall impair such right, power or
privilege or operate as a waiver of any default or an acquiescence therein, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies expressly provided in this
Note are cumulative to, and not exclusive of, any rights or remedies that Payee
would otherwise have. No notice to or demand on Maker in any case shall entitle
Makers to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of Payee to any other or
further action in any circumstances without notice or demand.
(d) Makers and any endorser of this Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without notice, and
hereby waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
(e) If any provision in or obligation under this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(f) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF MAKERS AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS
7
<PAGE>
OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
(g) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY MAKER ARISING OUT
OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS NOTE EACH MAKER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. Each Maker
hereby agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to such Maker at its address set forth below its
signature hereto, such service being hereby acknowledged by Maker to be
sufficient for personal jurisdiction in any action against such Maker in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Payee to bring proceedings against
such Maker in the courts of any other jurisdiction.
(h) EACH MAKER AND, BY THEIR ACCEPTANCE OF THIS NOTE, PAYEE AND ANY
SUBSEQUENT HOLDER OF THIS NOTE, HEREBY IRREVOCABLY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS NOTE AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each Maker and, by their acceptance of this Note, Payee and any subsequent
holder of this Note, each (i) acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this relationship, and that each will continue
to rely on this waiver in their related future dealings and (ii) further
warrants and represents that each has reviewed this waiver with its legal
counsel and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF
THIS NOTE. In the event of litigation, this provision may be filed as a written
consent to a trial by the court.
8
<PAGE>
(i) Makers agree that each Maker shall be jointly and severally
liable for each and every obligation set forth in this Note.
(j) Each Maker hereby waives the benefit of any statute or rule of
law or judicial decision which would otherwise require that the provisions of
this Note be construed or interpreted most strongly against the party
responsible for the drafting thereof.
(k) Realty Partnership is a partnership and the agreement herein
contained shall remain in full force and effect notwithstanding any changes in
the individuals composing such partnership, and the terms "Realty Partnership"
and "Maker," as used herein, shall include any alternate or successor
partnerships, but any predecessor partnerships and their respective partners
shall not thereby be released from any liability. Payee may renew or extend any
of the liabilities of any of the partners of the partnership and may make
additional advances or extensions of credit to any of them or release or fail to
set off any deposit account or credit of any of them or grant other indulgences
to any of them, all from time to time, before or after the maturity hereof, with
or without further notice to or assent from any of the other partners or other
parties liable with respect hereto.
(l) Makers agree and acknowledge that time is of the essence in this
Note.
(m) The name "Starwood Lodging Trust" is a designation of Starwood
Lodging Trust and its trustees (as trustees but not personally) under a
Declaration of Trust dated August 25, 1969, as amended and restated as of June
6, 1988 and as further amended subsequent thereto, which states that all persons
dealing with Starwood Lodging Trust shall look solely to the assets of Starwood
Lodging Trust for enforcement of any claims against Starwood Lodging Trust, and
the trustees, officials, agents and security holders of Starwood Lodging Trust
assume no personal liability for obligations entered into on behalf of Starwood
Lodging Trust, and their respective individual assets shall not be subject to
the claims of any person relating to such obligations.
[Remainder of Page Intentionally Left Blank]
9
<PAGE>
IN WITNESS WHEREOF, each Maker has caused this Note to be executed
and delivered by its duly authorized general partner, as of the day and year and
at the place first above written.
SLT REALTY LIMITED PARTNERSHIP
By: STARWOOD LODGING TRUST,
Its General Partner
By: /S/ STEVEN R. GOLDMAN
---------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
STARWOOD LODGING TRUST
By: /S/ STEVEN R. GOLDMAN
---------------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
Notice address for Makers:
Starwood Lodging Trust
2231 East Camelback Road, Suite 410
Phoenix, AZ 85016
Telephone: (602) 852-3900
Telecopy: (602) 852-0984
Attention: Steven R. Goldman
Attention: Nir Margalit, Esq.
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000
Telecopy: (312) 861-2200
Attention: Stephen G. Tomlinson, Esq.
S-1
<PAGE>
TRANSACTIONS ON PROMISSORY NOTE
Amount of Amount of Outstanding
Amount of Principal Interest Principal
Loan Made Paid Paid Balance Notation
Date This Date This Date This Date This Date Made By
- ---- --------- --------- --------- --------- -------
<PAGE>
SCHEDULE I
WIRE INSTRUCTIONS
Wire instructions for Payee:
State Street Bank & Trust Company
Boston, MA
ABA#: 011-000-028
Reference#: 99B PR2 "REIT DEAL"
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of
February 14, 1997 among Starwood Lodging Trust, a real estate investment trust
organized under the laws of the State of Maryland (the "Trust"), Starwood
Lodging Corporation, a Maryland corporation (the "Corporation") and the persons
and entities whose names appear under the heading "Holders" on the signature
pages hereto (the "Holders") and, with respect to Section 11 of this Agreement,
Realty Partnership and Operating Partnership (as such terms are defined below).
Unless otherwise indicated, capitalized terms used herein are used herein as
defined in Section 1.1.
RECITALS
WHEREAS, pursuant to a Contribution Agreement dated as of January
15, 1997 (the "Unit Contribution Agreement") among the Trust, the Corporation,
the entities listed on Schedule A-1 hereto (the "Unit Holders") and certain
other parties (i) on the date hereof the Unit Holders are making capital
contributions to SLT Realty Limited Partnership, a Delaware limited partnership
(the "Realty Partnership"), in return for the issuance by the Realty Partnership
to the Unit Holders of Units (as defined in the Limited Partnership Agreement of
the Realty Partnership) of the Realty Partnership (such Units issued by the
Realty Partnership to the Unit Holders on the date hereof being hereinafter
called the "Realty Units") and (ii) on the date hereof the Unit Holders are
making capital contributions to SLC Operating Limited Partnership, a Delaware
limited partnership (the "Operating Partnership"), in return for the issuance by
the Operating Partnership to the Unit Holders of Units (as defined in the
Limited Partnership Agreement of the Operating Partnership) of the Operating
Partnership (such Units issued by the Operating Partnership to the Unit Holders
on the date hereof being hereinafter called the "Operating Units");
WHEREAS, pursuant to a Contribution Agreement dated as of January
15, 1997 (the "Class A Contribution Agreement") among the Corporation, Operating
Partnership, the entities listed on Schedule A-2 hereto (the "Class A Holders")
and certain other parties, on the date hereof the Class A Holders are making
capital contributions to the Corporation and the Operating Partnership, in
return for the issuance of Class A Units (as that term is defined in the Class A
Contribution Agreement); and
WHEREAS, pursuant to the Unit Contribution Agreement and the Class A
Contribution Agreement, the parties hereto desire to set forth the rights of the
Holders and the obligations of the Trust and the Corporation to cause the
registration of the Registrable Securities pursuant to the Securities Act;
<PAGE>
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions and Usage.
1.1. Definitions. As used in this Agreement:
Beneficially Owning. "Beneficially Owning" means owning Trust Shares
directly, indirectly or constructively by a Person through the application of
Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, or
Section 544 of the Code, as modified by Section 856(h) of the Code.
Business Day. "Business Day" means any day other than Saturday,
Sunday and any day on which commercial banks are not open to do business in New
York, New York.
Class A Contribution Agreement. "Class A Contribution Agreement"
shall have the meaning set forth in the recitals.
Class A Exchange Rights Agreement. "Class A Exchange Rights
Agreement" shall refer to the agreement dated the date hereof among the
Corporation, the Operating Partnership and certain other parties.
Class A Holders. "Class A Holders" shall have the meaning set forth
in the recitals.
Class A Units. "Class A Units" shall have the meaning set forth in
the recitals.
Code. "Code" shall mean the Internal Revenue Code of
1986, and the rules and regulations promulgated thereunder, as
amended from time to time.
Commission. "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
Continuously Effective. "Continuously Effective", with respect to a
specified registration statement, shall mean that such registration statement
shall not cease to be effective and available for Transfers of Registrable
Securities thereunder for longer than either (i) any ten (10) consecutive
Business Days, or (ii) an aggregate of fifteen (15) Business Days during the
period specified in the relevant provision of this Agreement.
Corporation Shares. "Corporation Shares" shall mean the shares of
common stock, par value $.01 per share, of the Corporation.
<PAGE>
Demand Registration. "Demand Registration" shall have the meaning
set forth in Section 2.1.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934 and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Exchange Rights Agreements. "Exchange Rights Agreements" shall mean:
(i) the Units Exchange Rights Agreement and (ii) the Class A Exchange Rights
Agreement.
Holders. "Holders" shall have the meaning set forth in the recitals.
Issuance Percentages. "Issuance Percentage", when used with respect
to the Trust, shall mean 95% and, when used with respect to the Corporation,
shall mean 5%; provided that the Trust and the Corporation may from time to time
change the Issuance Percentages based on their joint determination of the
relative values of the Trust Shares and Corporation Shares.
Lockup Period. "Lockup Period" shall have the meaning set forth in
Section 2.5.
Majority Selling Holders. "Majority Selling Holders" means those
Selling Holders whose Registrable Securities included in such registration
represent a majority of the Registrable Securities of all Selling Holders
included therein.
Operating Partnership. "Operating Partnership" shall have the
meaning set forth in the recitals.
Operating Units. "Operating Units" shall have the meaning set forth
in the recitals.
Ownership Limit. "Ownership Limit" when used with respect to Trust
Shares, has the meaning set forth in the Declaration of Trust of the Trust and,
when used with respect to the Corporation Shares, has the meaning set forth in
the Restated Articles of Incorporation of the Corporation, in each case as
amended from time to time.
Paired Shares. "Paired Shares" shall mean the Trust Shares and
shares of Corporation Stock which are "paired" pursuant to the Pairing Agreement
dated June 25, 1980 between the Trust and the Corporation, as it may be amended
from time to time.
Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock
<PAGE>
company, limited liability company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
Piggyback Registration. "Piggyback Registration" shall have the
meaning set forth in Section 3.
PRISA. "PRISA" shall refer to Prudential Property Investment
Separate Account II, which is a Holder.
Realty Partnership. "Realty Partnership" shall have the meaning set
forth in the recitals.
Realty Units. "Realty Units" shall have the meaning set forth in the
recitals.
Register, Registered and Registration. "Register", "registered", and
"registration" shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering by the Commission of effectiveness of such
registration statement or document.
Registrable Securities. "Registrable Securities" shall mean: (i) the
Paired Shares issued upon exchange of Realty Units and Operating Units pursuant
to the Units Exchange Rights Agreement, (ii) the Paired Shares issued upon
exchange of the Class A Units of the Operating Partnership pursuant to the Class
A Exchange Rights Agreement; (iii) any Paired Shares or other securities issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange by the Trust and the Corporation generally for, or in replacement
by the Trust and the Corporation generally of, such Paired Shares; and (iv) any
securities issued in exchange for Paired Shares in any merger or reorganization
of the Trust and the Corporation; provided, however, that Registrable Securities
shall not include any securities which have theretofore been registered and sold
pursuant to the Securities Act or which have been sold to the public pursuant to
Rule 144 or any similar rule promulgated by the Commission pursuant to the
Securities Act, and, provided further, the Trust and the Corporation shall have
no obligation under Sections 2 and 3 to register any Registrable Securities if
the Trust and the Corporation shall deliver to the Holders of such Registrable
Securities an opinion of counsel to the effect that the proposed sale or
disposition of all of the Registrable Securities for which registration was
requested does not require registration under the Securities Act for a sale or
disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities.
<PAGE>
Registrable Securities then outstanding. "Registrable Securities
then outstanding" shall mean, with respect to a specified determination date,
the Registrable Securities owned by all Holders on such date and the Registrable
Securities which are issuable upon exchange of Realty Units, Operating Units and
Class A Units owned by all Holders on such date.
Registration Expenses. "Registration Expenses" shall have the
meaning set forth in Section 6.1.
REIT Requirements. "REIT Requirements" shall mean the requirements
for the Trust to (i) qualify as a real estate investment trust ("REIT") under
the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations promulgated thereunder, (ii) avoid any federal income or excise
tax liability, (iii) retain its status as grandfathered pursuant to Section
136(c)(3) of the Deficit Reduction Act of 1984 and (iv) retain the benefits of
that certain private letter ruling issued by the Internal Revenue Service to the
Trust dated as of January 4, 1980.
Required Holders. "Required Holders" shall have the meaning set
forth in Section 2.1.
Securities Act. "Securities Act" shall mean the Securities Act of
1933 and the rules and regulations of the Commission thereunder, all as the same
may be in effect at the time.
Selling Holders. "Selling Holders" shall mean, with respect to a
specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shelf Registration. "Shelf Registration" shall have
the meaning set forth in Section 2.2.
Tender Registration. "Tender Registration" shall have the meaning
set forth in Section 2.3.
Transfer. "Transfer" shall mean and include the act of selling,
giving, transferring, creating a trust (voting or otherwise), assigning or
otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer as
security shall constitute a "Transfer".
<PAGE>
Trust Shares. "Trust Shares" shall mean the shares of beneficial
interest, $.01 par value, of the Trust.
Underwriters' Representative. "Underwriters' Representative" shall
mean the managing underwriter, or, in the case of a co-managed underwriting, the
managing underwriter designated as the Underwriters' Representative by the co-
managers.
Units. "Units" shall mean Realty Units, Operating Units and Class A
Units.
Unit Contribution Agreement. "Unit Contribution Agreement" shall
have the meaning set forth in the recitals.
Units Exchange Rights Agreement. "Units Exchange Rights Agreement"
shall refer to the agreement dated the date hereof among the Trust, the
Corporation, the Realty Partnership, the Operating Partnership and certain other
parties.
Unit Holders. "Unit Holders" shall have the meaning set forth in the
recitals.
Violation. "Violation" shall have the meaning set forth in Section
7.1.
1.2. Usage.
(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which are
held of record in the name of a nominee, trustee, custodian, or other agent, but
shall exclude Paired Shares held by a Holder in a fiduciary capacity for
customers of such Person.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
<PAGE>
(v) The definitions set forth herein are equally applicable both to
the singular and plural forms and the feminine, masculine and neuter forms of
the terms defined.
(vi) The term "including" and correlative terms shall be deemed to
be followed by "without limitation" whether or not followed by such words or
words of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as
a whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 12.
Section 2. Demand, Shelf and Tender Registrations.
2.1. Subject to Section 2.7, from and after expiration of the
applicable Lockup Period, if the holders of at least 25% of the Registrable
Securities (the "Required Holders") shall make a written request to the Trust
and the Corporation to effect any registration (a "Demand Registration") with
respect to all or any portion of the Registrable Securities, then the Trust and
the Corporation shall (i) promptly give written notice of the proposed
registration to all other Holders of Registrable Securities and (ii) as soon as
practicable cause there to be filed with the Commission a registration statement
under the Securities Act and (subject to Section 2.10) the Trust and the
Corporation shall include therein all or any portion of the Registrable
Securities requested by the Required Holders, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Trust and the Corporation
within ten (10) Business Days after written notice from the Trust and the
Corporation is given above; provided, however, that no request may be made
pursuant to this Section 2.1 if within 90 days prior to the date of such request
a Demand Registration statement pursuant to this Section 2.1 shall have been
declared effective by the Commission. Any request made pursuant to this Section
2.1 shall be addressed to the attention of the Secretary of each of the Trust
and the Corporation, and shall specify the number of Registrable Securities to
be registered, the intended methods of disposition thereof and that the request
is for a Demand Registration pursuant to this Section 2.1.
2.2. Subject to Section 2.7, from and after the expiration of the
applicable Lockup Period, if the Required Holders shall make a written request
to the Trust and the Corporation to effect a registration on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (a "Shelf
Registration") with respect to all or any portion of the
<PAGE>
Registrable Securities, then the Trust and the Corporation shall (i) promptly
give written notice of the proposed registration to all other Holders of
Registrable Securities and (ii) as soon as practicable cause there to be filed
with the Commission such Shelf Registration. The Trust and the Corporation shall
include therein all or any portion of the Registrable Securities requested by
the Required Holders, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Trust and the Corporation within ten (10)
Business Days after written notice from the Trust and the Corporation is given
above; provided, however, that no request may be made pursuant to this Section
2.2 if within ninety (90) days prior to the date of such request a Shelf
Registration statement pursuant to this Section 2.2 shall have been declared
effective by the Commission. Any request made pursuant to this Section 2.2 shall
be addressed to the attention of the Secretary of each of the Trust and the
Corporation, and shall specify the number of Registrable Securities to be
registered, the possible intended methods of disposition thereof and that the
request is for a Shelf Registration pursuant to this Section 2.2.
2.3. If (i) there is a Paired Share Tender Reduction (as defined in
Section 6 of the Exchange Rights Agreements) and (ii) the tendering Holder of
Delayed Payment Units (as defined in Section 6 of the Exchange Rights
Agreements) shall make a written request to the Trust and the Corporation, then
the Trust and the Corporation shall cause there to be filed with the Commission
a registration statement under the Securities Act (a "Tender Registration"), and
the Trust and the Corporation shall register and sell pursuant thereto a number
of Paired Shares (such Paired Shares being considered to be "Registrable
Securities" for purposes of this Agreement) equal to the number of Unissued
Paired Shares (as defined in Section 6 of the Exchange Rights Agreements) that
such Holder(s) shall request in such written request. The Trust and the
Corporation shall pay the net proceeds of such sale (after underwriting
discounts and commissions) to the tendering holder of the Delayed Payment Units
(as defined in Section 6 of the Exchange Rights Agreements) pursuant to the
Exchange Rights Agreements. Any request made pursuant to this Section 2.3 shall
be addressed to the attention of the Secretary of each of the Trust and the
Corporation, and shall specify the number of Reduced Paired Shares to be
registered, the intended methods of disposition thereof and that the request is
for a Tender Registration pursuant to this Section 2.3.
2.4. In lieu of the registration rights set forth in Sections 2.1
and 2.2 above, the Trust and the Corporation shall, prior to the expiration of
the Lockup Period, file a registration statement under Rule 415 under the
Securities Act relating to the
<PAGE>
issuance to Holders of Paired Shares upon redemption or exchange of their Units
(including the Paired Shares issued to PRISA upon the conversion of Units
immediately following the closing of the transactions contemplated by the Unit
Contribution Agreement, as set forth in and contemplated by the penultimate
sentence of Section 8.02(j) of the Unit Contribution Agreement) (the "HEI/PRISA
Registration Statement"). The Trust and the Corporation shall use reasonable
efforts to cause the HEI/PRISA Registration Statement to be declared effective
by the Commission for all Paired Shares covered thereby. The Corporation and the
Trust agree to use their reasonable efforts to keep the HEI/PRISA Registration
Statement Continuously Effective until the date on which all the Registrable
Securities under the HEI/PRISA Registration Statement have been disposed of in a
manner described in such registration statement. In the event that the Trust and
the Corporation are unable to cause the HEI/PRISA Registration Statement to be
declared effective by the Commission or are unable to keep such Registration
Statement effective for such period, then the rights of the Holders set forth in
Sections 2.1 and 2.2 above shall be restored.
2.5. (i) The Trust and the Corporation shall be entitled to postpone
for up to 90 days the filing of any registration statement otherwise required to
be prepared and filed pursuant to this Section 2, if the Trust and the
Corporation shall furnish to the Selling Holders a certificate signed by the
Secretary of each of the Trust and the Corporation stating that the Board of
Trustees of the Trust and the Board of Directors of the Corporation has in good
faith determined that such registration and the Transfer of Registrable
Securities contemplated thereby would interfere with, or require premature
disclosure of, any material financing, acquisition, disposition, reorganization
or other transaction involving the Realty Partnership, the Operating
Partnership, the Trust or the Corporation or any of their respective
subsidiaries and the Trust or the Corporation, as the case may be, promptly
gives the Holders requesting such registration notice of such determination. If
a disclosure of such transactions occurs prior to the end of the 90-day period,
such postponement shall terminate on such earlier day. Such Holder or Holders
hereby acknowledge that any notice given by the Trust or the Corporation
pursuant to this Section 2.5(i) shall constitute material non-public information
and that the United States securities laws prohibit any Person who has material
non-public information about a company from purchasing or selling securities of
such company or from communicating such information to any other Person under
circumstances in which it is reasonably foreseeable that such Person is likely
to purchase or sell such securities.
(ii) The Trust and the Corporation shall not be obligated to file
any Demand Registration statement or any Tender
<PAGE>
Registration statement pursuant to this Section 2 if, within twenty (20) days
after their receipt of the written request of the requesting Holders, the Trust
and the Corporation notify such Holders that, prior to their receipt of such
request, they had a plan or intention promptly to register equity securities
under the Securities Act. The Trust and the Corporation shall not be obligated
to file any Demand Registration statement or any Tender Registration statement
pursuant to the preceding sentence, only if the Trust and the Corporation are
actively employing in good faith all reasonable efforts to cause such
registration statements to become effective. Holders of Registrable Securities
shall have rights to participate in any such registration on the terms provided
in Section 3 hereof.
(iii) Notwithstanding anything to the contrary contained in this
Agreement, (x) with respect to Holders other than PRISA, such Holders shall have
no right to cause the Trust and the Corporation to effect a registration
pursuant to Section 2 or 3 prior to the first anniversary of the date of this
Agreement without the consent of the Trust and the Corporation, and (y) with
respect to PRISA, PRISA shall have no right to cause the Trust and the
Corporation to effect a registration pursuant to Section 2 or 3 prior to the
date 6 months after the date of this Agreement without the consent of the Trust
and the Corporation (the applicable period being referred to herein as the
"Lockup Period"). No Holder shall be entitled to participate in any Piggyback
Registration pursuant to which securities registered thereunder are to be
offered or sold prior to expiration of the Lockup Period.
2.6. Following receipt of a request for a Demand Registration, a
Shelf Registration or a Tender Registration, the Trust and the Corporation
shall:
(i) File the registration statement with the Commission as promptly
as practicable, and shall use their respective reasonable efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use their respective reasonable efforts to keep the relevant
registration statement Continuously Effective (x) if a Demand Registration or a
Tender Registration, for up to sixty (60) days or until such earlier date as of
which all the Registrable Securities under the Demand Registration statement or
Tender Registration statement shall have been disposed of in the manner
described in the registration statement and (y) if a Shelf Registration, until
such date as of which all the Registrable
<PAGE>
Securities under the Shelf Registration statement have been disposed of in a
manner described in the registration statement. Notwithstanding the foregoing,
if for any reason the effectiveness of a registration pursuant to this Section 2
is suspended or, in the case of a Demand Registration or a Tender Registration,
postponed as permitted by Section 2.5(i), the relevant foregoing period shall be
extended by the aggregate number of days of such suspension or postponement.
2.7. Notwithstanding anything in this Agreement to the contrary, (a)
in no event will the Trust or the Corporation be obligated to effect more than a
total of four Demand Registrations, (b) in no event will the Trust or the
Corporation be obligated to effect any Demand Registration for less than the
number of Paired Shares to be issued upon exchange of at least 10% of all Units
issued pursuant to the Unit Contribution Agreement and Class A Contribution
Agreement, (c) in no event will the Trust or the Corporation be obligated to
effect any Shelf Registration unless the Holder(s) of Registrable Securities
requesting registration propose to dispose of Paired Shares with a market value
of at least $5,000,000 (based upon the closing trading price of the Paired
Shares on the date of such request), (d) in no event will the Trust or the
Corporation be obligated to effect a Demand Registration or a Tender
Registration if the Registrable Securities proposed to be registered therein
shall be covered by a Shelf Registration statement, (e) no registration shall be
effected under this Agreement and no Transfer of Registrable Securities may be
effected if as a result thereof the Trust would not satisfy the REIT
Requirements in any respect or if such registration or Transfer would result in
any Person Beneficially Owning Paired Shares in excess of the Ownership Limit
and (f) the Trust and the Corporation will not be obligated to effect a Shelf
Registration or Demand Registration if the effect of such a registration is that
more than 50% of the Paired Shares issuable to PRISA pursuant to the Exchange
Rights Agreements will have been sold in the first six-month period following
the Lockup Period applicable to PRISA. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective, or (ii) if after such
registration statement has become effective, the related offer, sale or
distribution of Registrable Securities thereunder is prohibited by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the Selling
Holders and such prohibition is not thereafter eliminated. If the Trust and the
Corporation shall have complied with their respective obligations under this
Agreement, a right to demand a registration pursuant to this Section 2 shall be
deemed to have been satisfied (A) if a Demand Registration or a Tender
Registration, upon the earlier of (x) the date as of which all of the
Registrable Securities
<PAGE>
included therein shall have been disposed of pursuant to the Registration
Statement, and (y) the date as of which such Demand Registration shall have been
Continuously Effective for a period of 60 days, and (B) if a Shelf Registration,
upon the effective date of such Shelf Registration, provided no stop order or
similar order, or proceedings for such an order, is thereafter entered or
initiated.
2.8. A registration pursuant to this Section 2 shall be on such
appropriate registration form of the Commission as shall be selected by the
Trust and the Corporation and shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods of disposition
specified in the request pursuant to Sections 2.1, 2.2 or 2.3, respectively.
2.9. If any Demand Registration or Shelf Registration pursuant to
Section 2 involves an underwritten offering (whether on a "firm commitment",
"best efforts" or "all reasonable efforts" basis or otherwise), the Majority
Selling Holders shall select the underwriter or underwriters and manager or
managers to administer such underwritten offering; provided, however, that each
Person so selected shall be acceptable to the Trust and the Corporation.
2.10. Whenever the Trust and the Corporation shall effect a
registration pursuant to this Section 2 in connection with an underwritten
offering by one or more Selling Holders of Registrable Securities: (i) if such
Selling Holders have requested the inclusion therein of more than one class of
Registrable Securities and the Underwriters' Representative advises the Selling
Holders that, in its opinion, the inclusion of more than one class of
Registrable Securities would adversely affect such offering, the Majority
Selling Holders shall decide which class of Registrable Securities shall be
included therein in such offering and the related registration and the other
class shall be excluded and (ii) if the Underwriters' Representative advises the
Selling Holders that, in its opinion, the amount of securities requested to be
included in such offering (whether by Selling Holders or others, including the
Trust and the Corporation) exceeds the amount which can be sold in such offering
within a price range acceptable to the Majority Selling Holders, securities
shall be included in such offering and the related registration, to the extent
of the amount which can be sold within such price range in the following order
of priority: first, the Registrable Securities requested to be included in such
registration pursuant to this Section 2, pro rata based on the estimated gross
proceeds from the sale thereof; and second all other securities requested to be
included in such registration.
<PAGE>
Section 3. Piggyback Registration.
3.1. If at any time the Trust and the Corporation propose to
register securities (either for itself or for another holder of the securities
of the Trust, and the Corporation pursuant to registration rights granted by the
Trust and the Corporation to such holder pursuant to a registration rights or
similar agreement) under the Securities Act in connection with the public
offering solely for cash on Form S-1, S-2, S-3, or S- 11 (or any replacement or
successor forms), the Trust and the Corporation shall promptly give the Holders
written notice of such registration. Upon the written request of each Holder
given as promptly as practicable but in any event within twenty (20) days
following the date of such notice, the Trust and the Corporation shall cause to
be included in such registration statement and use their respective reasonable
efforts to be registered under the Securities Act all the Registrable Securities
that each such Holder shall have requested to be registered; provided, however,
that such right of inclusion shall not apply to any registration statement
covering an offering of debt securities or convertible debt securities (any such
registration in which Holders participate pursuant to this Section 3.1 being
referred to as a "Piggyback Registration"). The Trust and the Corporation shall
have the absolute right to delay, withdraw or cease to prepare or file any
registration statement for any offering referred to in this Section 3 without
any obligation or liability to any Holder, it being understood that any
Registrable Securities previously included in any such withdrawn Registration
Statement shall not cease to be Registrable Securities by reason of such
inclusion or withdrawal. Any Holder of Registrable Securities who has requested
inclusion of such securities in a Piggyback Registration may withdraw therefrom
by written notice to the Trust, the Corporation and the underwriter and the
other Selling Holders, provided such withdrawal is made prior to the effective
date of the relevant registration statement.
3.2. If the Underwriters' Representative shall advise the Trust and
the Corporation that, in its opinion, the amount or type of Registrable
Securities requested to be included in a Piggyback Registration would adversely
affect such offering, or the timing thereof, then the Trust and the Corporation
will include in such registration, to the extent of the amount and class which
the Trust and the Corporation are so advised can be sold without such adverse
effect in such offering: first, all securities, if any, requested to be included
in a registration statement pursuant to the exercise of demand registration
rights granted by the Trust and the Corporation; second, all securities proposed
to be sold by the Trust and the Corporation for their own accounts; and third,
the Registrable Securities requested to be included in such registration by
Holders pursuant to this
<PAGE>
Section 3 and all other securities requested to be included in such registration
pursuant to the exercise of piggyback rights granted pursuant to registration
rights agreements with Starwood Capital Group, L.P., a Delaware limited
partnership, and Philadelphia HSR Limited Partnership, a Massachusetts limited
partnership, and other entities pro rata based on the estimated gross proceeds
from the sale thereof.
Section 4. Registration Procedures. Whenever required under Section
2 or Section 3 to effect the registration of any Registrable Securities, the
Trust and the Corporation shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use their respective reasonable
efforts to cause such registration statement to become effective; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Trust and the Corporation shall furnish
to one firm of counsel for the Selling Holders, copies of all such documents in
the form substantially as proposed to be filed with the Commission and provide
reasonable opportunity to comment.
4.2. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act and rules thereunder with respect to the
disposition of all securities covered by such registration statement. If the
registration is for an underwritten offering, the Trust and the Corporation
shall amend the registration statement or supplement the prospectus whenever
required by the terms of the underwriting agreement entered into pursuant to
Section 4.5. If the registration statement is for a Shelf Registration, the
Trust and the Corporation shall amend the registration statement or supplement
the prospectus so that it will remain current and in compliance with the
requirements of the Securities Act for the period specified in Section 2.6(ii),
and if during such period any event or development occurs as a result of which
the registration statement or prospectus contains a misstatement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, the Trust or the
Corporation shall promptly notify each Selling Holder, amend the registration
statement or supplement the prospectus so that each will thereafter comply with
the Securities Act and furnish to each Selling Holder of Registrable Securities
such amended or supplemented prospectus, which each such Holder shall thereafter
use in the Transfer of Registrable Securities covered by such registration
statement. Pending any such amendment or supplement described in this
<PAGE>
Section 4.2, each such Holder shall cease making offers or Transfers of
Registrable Shares pursuant to the prior prospectus. In the event that any
Registrable Securities included in a registration statement subject to, or
required by, this Agreement remain unsold at the end of the period during which
the Trust and the Corporation are obligated to use their respective reasonable
efforts to maintain the effectiveness of such registration statement, the Trust
and the Corporation may file a post-effective amendment to the registration
statement for the purpose of removing such Registrable Securities from
registered status.
4.3. Furnish to each Selling Holder of Registrable Securities,
without charge, such numbers of copies of the registration statement, any
pre-effective or post-effective amendment thereto, the prospectus, including
each preliminary prospectus and any amendments or supplements thereto, in each
case in conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as any such Selling Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by such Selling Holder.
4.4. Use their respective reasonable efforts (i) to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such states where an exemption from registration
is not available and as shall be reasonably requested by the Underwriters'
Representative and (ii) to obtain the withdrawal of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of the offer and transfer of
any of the Registrable Securities in any state, at the earliest possible moment;
provided, however, that neither the Trust nor the Corporation shall be required
in connection therewith or as a condition thereto to qualify to do business or
to consent to general service of process in any state.
4.5. In the event of any underwritten offering, use their respective
reasonable efforts to enter into and perform their respective obligations under
an underwriting agreement (including indemnification and contribution
obligations of underwriters), in usual and customary form, with the managing
underwriter or underwriters of such offering. The Trust and the Corporation
shall also cooperate with the Majority Selling Holders, and the Underwriters'
Representative for such offering in the marketing of the Registerable
Securities, including making available the officers, accountants, counsel,
premises, books and records of the Trust and the Corporation for such purpose;
provided, however, that neither the Trust nor the Corporation shall be required
to incur any material out-of-pocket expense pursuant to this sentence and;
provided, further, that the
<PAGE>
officers of the Trust and the Corporation will not be required to participate in
more than one "roadshow" in any twelve month period.
4.6. Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission in connection therewith and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
4.7. Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide any Selling Holder, any underwriter participating
in such offering and the representatives of such Selling Holder and Underwriter
the reasonable opportunity to discuss the business affairs of the Trust and the
Corporation with their principal executives and independent public accountants
who have certified the audited financial statements included in such
registration statement, in each case all as necessary to enable them to exercise
their due diligence responsibility under the Securities Act; provided, however,
that information that the Trust or the Corporation determine to be confidential
and which the Trust or the Corporation advise such Person in writing, is
confidential shall not be disclosed unless such Person signs a confidentiality
agreement reasonably satisfactory to the Trust and the Corporation or the
related Selling Holder of Registrable Securities agrees to be responsible for
such Person's breach of confidentiality on terms reasonably satisfactory to the
Trust and the Corporation.
4.8. Use their respective reasonable efforts to obtain a so-called
"comfort letter" from the independent public accountants of the Trust and the
Corporation, and legal opinions of counsel to the Trust and the Corporation
addressed to the Selling Holders, in customary form and covering such matters of
the type customarily covered by such letters, and in a form that shall be
reasonably satisfactory to the Majority Selling Holders. Delivery of any such
opinion or comfort letter shall be subject to the recipient furnishing such
written representations or acknowledgments as are customarily provided by
selling shareholders who receive such comfort letters or opinions.
4.9. Use their respective reasonable efforts to cause the
Registrable Securities covered by such registration statement (i) if the Paired
Shares are then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or included for a
reasonable period of time after the offering, and (ii) to be registered with or
approved by such other United States or state governmental
<PAGE>
agencies or authorities as may be necessary by virtue of the business and
operations of the Trust and the Corporation to enable the Selling Holders of
Registrable Securities to consummate the disposition of such Registrable
Securities.
4.10. Take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities included in
each such registration.
Section 5. Holders' Obligations. It shall be a condition precedent
to the obligations of the Trust and the Corporation to take any action pursuant
to this Agreement with respect to the Registrable Securities of any Selling
Holder of Registrable Securities that such Selling Holder shall:
5.1. Furnish to the Trust and the Corporation such information
regarding such Selling Holder, the number of the Registrable Securities owned by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Selling Holder's Registrable
Securities, and to cooperate fully with the Trust and the Corporation in
preparing such registration.
5.2. Except as set forth in Sections 2.10 and 3.1, agree to sell
their Registrable Securities to the underwriters at the same price and on
substantially the same terms and conditions as the Trust and the Corporation or
the other Persons on whose behalf the registration statement was being filed
have agreed to sell their securities, and to execute the underwriting agreement
agreed to by the Majority Selling Holders (in the case of a registration under
Section 2) or the Trust and the Corporation and the Majority Selling Holders (in
the case of a registration under Section 3).
Section 6. Expenses of Registration. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1. With respect to each Demand Registration, Shelf Registration
and Tender Registration, each of the Trust and the Corporation shall bear and
pay all expenses incurred in connection with any registration, filing, or
qualification of Registrable Securities with respect to such Registration for
each Selling Holder, including all registration, filing and National Association
of Securities Dealers, Inc. fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, the reasonable fees and disbursements of counsel for the Trust and the
Corporation, and of the independent public accountants for the Trust and the
Corporation, including the expenses of "cold comfort" letters required by or
incident to such performance and
<PAGE>
compliance (the "Registration Expenses"), but excluding underwriting discounts
and commissions relating to Registrable Securities (which shall be paid on a pro
rata basis by the Selling Holders) and all fees and expenses of counsel for the
Selling Holders; provided, however, that the Trust and the Corporation shall not
be required to pay for any expenses of any registration proceeding begun
pursuant to Section 2 if the registration is subsequently withdrawn as a result
of the failure of the Selling Holders to satisfy their obligations under this
Agreement (in which case the Selling Holders that fail to satisfy their
obligations under this Agreement shall bear such expenses), unless, in the case
of a Demand Registration or a Shelf Registration, Holders whose Registrable
Securities constitute a majority of the Registrable Securities then outstanding
agree that such withdrawn registration shall have constituted one of the Demand
or Shelf Registrations available to them under Section 2 hereof. The Trust and
the Corporation each agree between themselves that they shall bear and pay
Registration Expenses in an amount equal to their respective Issuance Percentage
of such Registration Expenses and that they shall reimburse each other to the
extent necessary to cause each of them to so bear and pay such respective
amounts.
6.2. The Trust and the Corporation shall bear and pay all
Registration Expenses incurred in connection with any Piggyback Registrations
pursuant to Section 3, but excluding underwriting discounts and commissions
relating to Registrable Securities (which shall be paid on a pro rata basis by
the Selling Holders) and all fees and expenses of counsel for the Selling
Holders.
Section 7. Indemnification; Contribution. If any Registrable
Securities are included in a registration statement under this Agreement:
7.1. To the extent permitted by applicable law, each of the Trust
and the Corporation, severally and not jointly, shall indemnify and hold
harmless each Selling Holder, each Person, if any, who controls such Selling
Holder within the meaning of the Securities Act, and each officer, director,
partner and employee of such Selling Holder and such controlling Person, against
any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorneys' fees and disbursements and reasonable
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
<PAGE>
(i) Any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto; or
(ii) The omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Trust or the Corporation (which consent shall not be unreasonably withheld), nor
shall the Trust or the Corporation be liable in any such case for any such loss,
claim, damage, liability or expense to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished to the Trust or the Corporation by the indemnified party
in writing expressly for use in connection with such registration; and provided,
further, that the indemnity agreement contained in this Section 7 shall not
apply to the extent that any such loss is based on or arises out of an untrue
statement or alleged untrue statement of a material fact, or an omission or
alleged omission to state a material fact, contained in or omitted from any
preliminary prospectus if the final prospectus shall correct such untrue
statement or alleged untrue statement, or such omission or alleged omission, and
a copy of the final prospectus has not been sent or given to such person at or
prior to the confirmation of sale to such person if an underwriter or Selling
Holder was under an obligation to deliver such final prospectus and failed to do
so.
7.2. To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Trust, the Corporation, each of the
Trustees of the Trust, each of the directors of the Corporation, each of the
officers of the Trust or the Corporation who shall have signed the registration
statement, each Person, if any, who controls the Trust or the Corporation within
the meaning of the Securities Act, any other Selling Holder, any controlling
Person of any such other Selling Holder and each officer, director, partner, and
employee of such other Selling Holder and such controlling Person, against any
and all losses, claims, damages, liabilities and expenses (joint and several),
including reasonable attorneys' fees and disbursements and reasonable expenses
of investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing
Persons may otherwise become subject under the Securities Act, the Exchange Act
or other federal or state laws, but only insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any Violation,
in each case to the extent that
<PAGE>
such Violation arises out of or is based upon information furnished by such
Selling Holder in writing expressly for use in connection with such
registration; provided, however, that (x) the indemnification required by this
Section 7.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is effected without the
consent of the relevant Selling Holder (which consent shall not be unreasonably
withheld) and (y) in no event shall the amount of any indemnity under this
Section 7.2 exceed the gross proceeds from the applicable offering received by
such Selling Holder.
7.3. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 7, such indemnified party shall deliver to
the indemnifying party a written notice thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and disbursements and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time following the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7 to the extent of such prejudice but shall
not relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than pursuant to this Section 7. Any fees and
expenses incurred by the indemnified party (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within thirty
(30) days of written notice thereof to the indemnifying party (regardless of
whether it is ultimately determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party shall have the right to
employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded
<PAGE>
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels).
7.4. If the indemnification required by this Section 7 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 7:
(i) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7.1 and Section 7.2,
any legal or other fees or expenses
<PAGE>
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
7.5. If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 7 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
7.6. The obligations of the Trust, the Corporation and the Selling
Holders of Registrable Securities under this Section 7 shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this Agreement, and otherwise.
Section 8. Holdback. (a) Each Holder, if so requested by the
Underwriters' Representative in connection with an offering of any securities
covered by a registration statement filed by Trust and the Corporation, whether
or not Holder's securities are included therein, shall not effect any public
sale or distribution of Paired Shares or any securities convertible into or
exchangeable or exercisable for Paired Shares, including a sale pursuant to Rule
144 under the Securities Act (except as part of such underwritten registration),
during the 15-day period prior to, and during the 90-day period beginning on,
the date such registration statement is declared effective under the Securities
Act by the Commission. In order to enforce the foregoing covenant, the Trust and
the Corporation shall be entitled to impose stop-transfer instructions with
respect to the Registrable Securities of each Holder until the end of such
period. Holders of Registrable Securities shall have the right to participate in
any such registration on the terms provided in Section 3 hereof.
(b) Each of the Trust and the Corporation agrees not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
15-day period prior to and during the 90-day period beginning on the effective
date of any underwritten Demand Registration (except pursuant to (i)
<PAGE>
registrations on Form S-8 or any successor form, (ii) registrations on Form S-4
or any successor form and (iii) registrations of securities in connection with a
dividend reinvestment plan on form(s) applicable to such securities) unless the
underwriters managing the registered public offering otherwise agree.
Section 9. Amendment, Modification and Waivers; Further Assurances.
(i) This Agreement may be amended with the consent of the Trust and
the Corporation and the Trust and the Corporation may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Trust and the Corporation shall have obtained the written consent of
the Required Holders to such amendment, action or omission to act and no consent
or agreement of any Holder shall be required for such amendment, action or
omission to act.
(ii) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
Section 10. Assignment; Benefit. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of the parties hereto other than the Corporation and the
Trust, shall also be for the benefit of and enforceable by any subsequent holder
of any Registrable Securities, subject to all the provisions herein, including
those respecting the minimum numbers or percentages of shares of Registrable
Securities required in order to be entitled to certain rights, or take certain
actions, contained herein.
<PAGE>
Section 11. Condition Precedent to Paired Share Election and
Combined Election under the Exchange Rights Agreement. The (i) Trust and the
Corporation, individually and as the general partners of the Realty Partnership
and the Operating Partnership, respectively and (ii) the Realty Partnership and
the Operating Partnership, acknowledge and agree that, notwithstanding anything
in the Exchange Rights Agreement to the contrary, the rights of the Trust or the
Corporation under the Exchange Rights Agreement to issue Paired Shares pursuant
to a Paired Share Election or Combined Election (each as defined in the Exchange
Rights Agreement) shall be conditioned upon the Paired Shares issued in exchange
for tendered Units having been registered pursuant to a registration statement
that has been declared effective by the Commission under the Securities Act. In
the event that such registration statement has not been declared effective by
the Commission as of the date of issuance of the Paired Shares pursuant to such
Paired Share or Combined Election, the tender date shall be extended until the
date on which such registration statement has been so declared effective;
provided that, if such registration statement has not been declared effective
within sixty (60) days following the delivery of the Letter of Transmittal (as
defined in the Exchange Rights Agreement), such Letter of Transmittal may be
withdrawn in the sole discretion of the tendering Holder of Units.
Section 12. Miscellaneous.
12.1. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York, without giving regard to the conflict of laws principles
thereof.
12.2. Notices. All notices and requests given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next Business Day delivery to the relevant
address specified in the Unit Contribution Agreement or Class A Contribution
Agreement, as the case may be. Except as otherwise provided in this Agreement,
the date of each such notice and request shall be deemed to be, and the date on
which each such notice and request shall be deemed given shall be: at the time
delivered, if personally delivered or mailed; when receipt is acknowledged, if
sent by facsimile; and the next Business Day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next Business Day
delivery.
<PAGE>
12.3. Entire Agreement; Integration. This Agreement supersedes all
prior agreements between or among any of the parties hereto with respect to the
subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter.
12.4. Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
12.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
12.6. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
12.7. Termination. This Agreement may be terminated at any time by a
written instrument signed by the Trust, the Corporation and the unanimous
consent of the Holders. Unless sooner terminated in accordance with the
preceding sentence, this Agreement (other than Section 7 hereof) shall terminate
in its entirety on such date as there shall be (a) no Registrable Securities
outstanding, and (b) no securities outstanding which are convertible or
exchangeable into Registrable Securities; provided that any Paired Shares
previously subject to this Agreement shall not be Registrable Securities
following the sale of any such shares in an offering registered pursuant to this
Agreement.
12.8. Starwood Lodging Trust. The parties hereto understand and
agree that the name "Starwood Lodging Trust" is a designation of the Trust and
its Trustees (as Trustees but not personally) under the Declaration of Trust,
and all persons dealing with the Trust shall look solely to the Trust's assets
for the enforcement of any claims against the Trust, and that the Trustees,
officers, agents and security holders of the Trust assume no personal liability
for obligations entered into on behalf of the Trust, and their respective
individual assets shall not be subject to the claims of any person relating to
such obligations.
12.9. Other Registration Rights. Without the prior written consent
of the Required Holders (which consent shall not be unreasonably withheld), the
Trust and the Corporation will not
<PAGE>
in the future grant directly or indirectly to any Persons the right to request
the Trust and the Corporation to register any equity securities of the Trust and
the Corporation, or any securities convertible or exchangeable into or
exercisable for such securities if such grant conflicts with the rights of
priority granted to the Holders pursuant to Section 2.10.
12.10. Submission to Jurisdiction. Each of the parties hereto and
each of the Holders irrevocably submits and consents to the jurisdiction of the
United States District Court for the Southern District of New York in connection
with any action or proceeding arising out of or relating to this Agreement, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
12.11. Specific Performance. Each of the parties acknowledges and
agrees that in the event of any breach of this Agreement, the non-breaching
party or parties would be irreparably harmed and could not be made whole by
monetary damages. The parties hereby agree that in addition to any other remedy
to which they may be entitled at law or in equity, they shall be entitled to
compel specific performance of this Agreement in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction for such action.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
STARWOOD LODGING TRUST,
a Maryland real estate investment
trust
By: /S/ STEVEN R. GOLDMAN
-------------------------------------
Name: Steven R. Goldman
Title: Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /S/ NIR MARGALIT
-------------------------------------
Name: Nir Margalit
Title: Vice President
HOLDERS:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, on behalf of PRUDENTIAL
PROPERTY INVESTMENT SEPARATE ACCOUNT II
By: /S/ GARY L. KAUFFMAN
-------------------------------------
Gary L. Kauffman
Vice President
THE GARY MENDELL FAMILY TRUST
By: /S/ ELEANOR MENDELL
-------------------------------------
Eleanor Mendell
Trustee
<PAGE>
/S/ GARY M. MENDELL
-------------------------------------
Gary M. Mendell
/S/ STEVE M. MENDELL
-------------------------------------
Steve Mendell
/S/ ELLEN-JO MENDELL
-------------------------------------
Ellen-Jo Mendell
/S/ FELIX J. CACCIATO, JR.
-------------------------------------
Felix J. Cacciato, Jr.
/S/ JUDITH K. RUSHMORE
-------------------------------------
Judith K. Rushmore
/S/ MURRAY L. DOW, II
-------------------------------------
Murray L. Dow, II
/S/ ORNA L. SHULMAN
-------------------------------------
Orna L. Shulman
/S/ ARTHUR C. GREEN
-------------------------------------
Arthur C. Green
/S/ MARK J. ROSINSKY
-------------------------------------
Mark J. Rosinsky
/S/ RANDI L. ROSINSKY
-------------------------------------
Randi L. Rosinsky
<PAGE>
/S/ JOHN DAILY
-------------------------------------
John Daily
/S/ MICHAEL D. HALL
-------------------------------------
Michael D. Hall
/S/ HARVEY MOORE
-------------------------------------
Harvey Moore
/S/ TRACEY DRISCOLL
-------------------------------------
Tracey Driscoll
/S/ TOM CLEARWATER
-------------------------------------
Tom Clearwater
ZAPCO COMMUNICATIONS, INC.
By: /S/ ORNA L. SHULMAN
-------------------------------------
Orna L. Shulman
Vice President
ZAPCO INTEREST HOLDINGS LIMITED
PARTNERSHIP
By: Zapco Vermont Avenue, Inc.
its General Partner
By: /S/ ORNA L. SHULMAN
-------------------------------
Orna L. Shulman
Vice President
<PAGE>
LOUDOUN INTERTECH DEVELOPMENT CORPORATION
By: /S/ ORNA L. SHULMAN
-------------------------------------
Orna L. Shulman
Vice President
WESTPORT HOSPITALITY, INC.
By: /S/ GARY M. MENDELL
-------------------------------------
Name: Gary M. Mendell
Title: President
OPERATING PARTNERSHIP AND REALTY PARTNERSHIPS (for
the purposes of acknowledging their obligations
under Section 11 of this Agreement):
SLT REALTY LIMITED PARTNERSHIP,
By: STARWOOD LODGING TRUST,
general partner
By: /S/ STEVEN R. GOLDMAN
-------------------------------------
Name: Steven R. Goldman
Title: Vice President
SLC OPERATING LIMITED PARTNERSHIP
By: STARWOOD LODGING CORPORATION,
general partner
By: /S/ NIR MARGALIT
-------------------------------------
Name: Nir Margalit
Title: Vice President
<PAGE>
SCHEDULE A-1
TO
REGISTRATION RIGHTS AGREEMENT
Unit Holders
Prudential Property Investment Separate Account II
The Gary Mendell Family Trust
Zapco Interest Holdings L.P.
Loudoun Intertech Development Corporation
Gary M. Mendell
Steve Mendell
Murray L. Dow, II
Judith K. Rushmore
Ellen-Jo Mendell
Orna L. Shulman
Felix J. Cacciato, Jr.
Arthur C. Green
Mark J. Rosinsky
Randi L. Rosinsy
John Daily
Michael D. Hall
Harvey Moore
Tracey Driscoll
Tom Clearwater
Zapco Communications, Inc.
Westport Hospitality, Inc.
<PAGE>
SCHEDULE A-2
TO
REGISTRATION RIGHTS AGREEMENT
Class A Holders
Westport Hospitality, Inc.
Judith Rushmore
Murray Dow
Steve Mendell
Gary Mendell
UNITS EXCHANGE RIGHTS AGREEMENT
This Units Exchange Rights Agreement (this "Agreement") is made as
of February 14, 1997 among Starwood Lodging Trust, a real estate investment
trust organized under the laws of the State of Maryland (the "Trust"), Starwood
Lodging Corporation, a Maryland corporation (the "Corporation"), SLT Realty
Limited Partnership, a Delaware limited partnership (the "Realty Partnership"),
SLC Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), and each of the limited partners of the Realty
Partnership and the Operating Partnership listed on the signature pages hereto
(the "Starwood Partners"). Unless otherwise indicated, capitalized terms used
herein are used herein as defined in Section 11.
WHEREAS, pursuant to a Contribution Agreement dated as of January
15, 1997 (the "Contribution Agreement") among the Trust, the Corporation,
Starwood Partners and other parties (i) on the date hereof the Starwood Partners
are making capital contributions to the Realty Partnership in return for the
issuance by the Realty Partnership to the Starwood Partners of Units (as defined
in the Limited Partnership Agreement of the Realty Partnership (the "Realty
Partnership Agreement")) of the Realty Partnership (such Units issued by the
Realty Partnership to the Starwood Partners on the date hereof, together with
any Units of the Realty Partnership issued to the Starwood Partners after the
date hereof, being hereinafter called the "Realty Units") and (ii) on the date
hereof the Starwood Partners are making capital contributions to the Operating
Partnership in return for the issuance by the Operating Partnership to the
Starwood Partners of Units (as defined in the Limited Partnership Agreement of
the Operating Partnership (the "Operating Partnership Agreement")) of the
Operating Partnership (such Units issued by the Operating Partnership to the
Starwood Partners on the date hereof, together with any Units of the Operating
Partnership issued to the Starwood Partners, being hereinafter called the
"Operating Units"); and
WHEREAS, pursuant to the Contribution Agreement the parties hereto
are entering into this Agreement to provide for the rights of the Starwood
Partners to tender Realty Units and Operating Units in exchange for either
Paired Shares (as defined herein), cash or a combination of Paired Shares and
cash, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
Section 1. Right to Tender Starwood Units. (a) Upon the terms and
subject to the conditions of this Agreement, each
<PAGE>
holder of Starwood Units (as defined below) shall have the right to tender to
the Trust outstanding Realty Units and the right to tender to the Corporation
outstanding Operating Units. Notwithstanding anything to the contrary contained
in this Agreement (i) no Realty Unit may be tendered to the Trust unless
simultaneously therewith the tendering holder also tenders to the Corporation an
Operating Unit and no Operating Unit may be tendered to the Corporation unless
simultaneously therewith the tendering holder also tenders to the Trust a Realty
Unit (a Realty Unit tendered for exchange and the Operating Unit simultaneously
tendered for exchange being hereinafter collectively referred to as a "Starwood
Unit") and (ii) any attempted tender of a Realty Unit or an Operating Unit which
is not accompanied by a simultaneous tender of an Operating Unit or Realty Unit,
respectively, shall be void and of no effect; it being understood that a
simultaneous tender of unequal numbers of Realty Units and Operating Units shall
be valid under this sentence to the extent of the lesser of the number of Realty
Units or Operating Units, as the case may be, included in such tender.
(b) Notwithstanding any other provision of this Agreement, no Paired
Shares or cash shall be issued or paid in respect of any tender of Starwood
Units (i) if, notwithstanding the provisions of Section 6 of this Agreement, the
right to tender Starwood Units and receive Paired Shares or cash would result in
the Trust not satisfying the REIT Requirements in any respect or would result in
any person or entity Beneficially Owning Trust Shares exceeding the Ownership
Limit, (ii) if, with respect to all Starwood Partners other than Prudential
Property Investment Separate Account II, the tender pursuant to Section 1(a) is
prior to the first anniversary of the date of this Agreement, (iii) prior to the
expiration or termination of the waiting period applicable to such exchange and
issuance, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as it may be amended from time to time, or (iv) prior to the receipt of
all governmental and regulatory approvals which are required to be obtained
prior to such tender and issuance or payment, including, without limitation, any
required approvals of the gaming authorities of the State of Nevada and of Clark
County, Nevada (the "Gaming Approvals"). Prior to the receipt of Gaming
Approvals, such holder shall, as a condition to any tender of Starwood Units
which would (if the Paired Share Option (as defined below) were to be elected in
respect of such tender) cause such holder to beneficially own, in the aggregate,
Paired Shares representing more than 4.9% of the then issued and outstanding
Paired Shares, give not less than 90 days' written notice to the Trust and the
Corporation (at the offices provided pursuant to Section 10) of its intent to
tender Starwood Units; provided, however, that the ownership by Prudential
Property Investment Separate Account II of Paired Shares as contemplated by the
penultimate sentence of Section 8.02(j) of the Contribution Agreement shall not
require any such written notice to the Trust and Corporation. In the event that
the ability to
<PAGE>
receive Paired Shares or cash would result in the Trust not satisfying the REIT
Requirements in any respect or would result in any person or entity Beneficially
Owning Trust Shares exceeding the Ownership Limit, and as a result thereof no
Paired Shares or cash may be issued or paid in respect of any tender of Starwood
Units pursuant to Section 1(b)(i) above, the parties hereto shall use their
respective best efforts to restructure the terms and provisions of this
Agreement (and, if necessary, the Partnership Agreements and the Registration
Rights Agreement (as defined in Section 6)), or to agree to terms and provisions
in addition to such terms and provisions, so as to provide to each such party
the same substantive rights (or substantive rights as close thereto as is
reasonably practicable) as those provided by this Agreement, the Partnership
Agreements and the Registration Rights Agreement.
(c) The rights to exchange Starwood Units pursuant to this Agreement
constitute a continuous offer and may not be withdrawn, amended or modified by
the Trust or the Corporation without the prior written consent of each holder of
outstanding Starwood Units adversely affected by such withdrawal, amendment or
modification; provided that any withdrawal, amendment or modification that does
not adversely affect any holder of outstanding Starwood Units may be effected
without the consent of such holder.
Section 2. Acceptance of Tender; Election of Method of Payment for
Tendered Starwood Units. (a) Upon the terms and subject to the conditions of
this Agreement, the Trust and the Corporation shall accept Starwood Units
validly tendered in proper form and meeting all of the requirements of this
Agreement. In order for Starwood Units to be validly tendered pursuant to this
Agreement, the registered holder thereof shall deliver to the Trust and the
Corporation, at the address provided pursuant to Section 10, (i) a completed and
duly executed Letter of Transmittal in the form attached hereto as Exhibit A
(the "Letter of Transmittal") and any other documents required by the Letter of
Transmittal and (ii) a calculation, to the best knowledge of such registered
holder after due inquiry (together with such supporting documentation as the
Trust may reasonably request), of the maximum number of Paired Shares that may
be issued to such registered holder without causing either (x) the Trust to not
satisfy the REIT Requirements in any respect or (y) any person or entity to
Beneficially Own Trust Shares exceeding the Ownership Limit. The Trust and the
Corporation shall make all determinations as to the validity and form of any
tender of Starwood Units in accordance with the provisions of this Agreement and
upon rejection of a tender shall give the tendering holder written notice of
such rejection, which shall include the reasons therefor.
(b) Unless otherwise determined by agreement of the Trust and the
Corporation, tenders of Starwood Units pursuant to this Agreement shall be
irrevocable and shall not be subject to
<PAGE>
withdrawal or modification; provided that if the Trust and the Corporation make
the Paired Share Election with respect to a tender, then within 5 days after
such Election the tendering holder may elect to revoke such tender so long as
(i) no public disclosure of such tender has been made prior to such revocation
and (ii) such tendering holder reimburses the Trust and the Corporation for all
reasonable costs and expenses incurred in connection with such tender.
(c) Within 15 days after the valid tender pursuant to this Agreement
of Starwood Units, the Trust and the Corporation shall make an election to pay
for such Starwood Units by delivering either (i) Paired Shares (the "Paired
Share Election"), (ii) cash (the "Cash Election") or (iii) a combination of
Paired Shares and cash (the "Combined Election"). Such election shall be made
pursuant to an agreement as to such election between the Trust and the
Corporation. If the Trust and the Corporation do not so agree within such 15-day
period, they shall be deemed to have made the Cash Election.
Section 3. Paired Share Election. (a) If with respect to any tender
of Starwood Units pursuant to this Agreement, the Trust and the Corporation make
the Paired Share Election, then, except as provided in Section 2(b), within
fifteen days after the expiration of the 5-day period referred to in Section
2(b), the Trust and the Corporation shall deliver to the tendering holder one
Paired Share for each Starwood Unit validly tendered pursuant to the provisions
of this Agreement.
(b) No fractional Paired Shares or scrip representing fractional
Paired Shares shall be issued upon exchange of Starwood Units pursuant to this
Agreement. If more than one Letter of Transmittal shall be delivered at one time
by the same holder, the number of full Paired Shares which shall be issuable
upon exchange of the Starwood Units tendered thereby shall be computed on the
basis of the aggregate number of Starwood Units so tendered. Instead of any
fractional Paired Shares which would otherwise be issuable upon exchange of any
Starwood Units, the Trust and the Corporation shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the Paired
Share Closing Price on the last Business Day preceding the date of exchange.
(c) If a holder exchanges Starwood Units pursuant to this Agreement,
the Trust and the Corporation shall pay any documentary, stamp or similar issue
or transfer tax due on any issue of Paired Shares upon such exchange. Such
holder, however, shall (i) pay to the Trust and the Corporation the amount of
any additional documentary, stamp or similar issue or transfer tax which is due
(or shall establish to the satisfaction of the Trust and the Corporation the
payment thereof) as a result of Paired Shares being issued in a name other than
the name of such holder and (ii) be responsible for all income or other taxes as
a result of such exchange.
<PAGE>
Section 4. Cash Election. (a) If with respect to any tender of
Starwood Units pursuant to this Agreement, the Trust and the Corporation make or
are deemed to have made the Cash Election, then within 20 days after such tender
the Trust and the Corporation shall pay to the tendering holder an aggregate
amount of cash (the "Aggregate Cash Payment") equal to the product of (i) the
number of Paired Shares which would have been delivered to such holder if the
Trust and the Corporation had made the Paired Share Election with respect to
such tender and (ii) the average Paired Share Closing Price for the ten trading
day period ending one day prior to the date of such tender.
(b) In connection with any Aggregate Cash Payment pursuant to
Section 4(a) or any cash payment pursuant to Section 5(a)(ii), the Trust shall
pay 95% of such Aggregate Cash Payment or such cash payment and the Corporation
shall pay 5% of such Aggregate Cash Payment or such cash payment (such
percentages being herein called the "Issuance Percentages"); provided that the
Trust and the Corporation may from time to time change the Issuance Percentages
based on their determination of the relative fair values of the Trust Shares and
the Corporation Shares.
Section 5. Combined Election. (a) If with respect to any tender of
Units pursuant to this Agreement, the Trust and the Corporation shall make the
Combined Election, then, except as provided in Section 2(b), within 15 days
after the expiration of the 5-day period referred to in Section 2(b), the Trust
and the Corporation shall (i) notify the tendering holder of the number of such
tendered Units which will be exchanged for cash (the "Cash Units") and the
number of such tendered Units which will be exchanged for Paired Shares (the
"Paired Share Units"), (ii) pay to the tendering holder, in respect of each Cash
Unit validly tendered pursuant to the provisions of this Agreement, an amount of
cash (with each of the Trust and the Corporation paying its then respective
Issuance Percentage of such amount of cash) equal to the average Paired Share
Closing Price for the ten trading day period ending one day prior to the date of
such tender and (iii) deliver to the tendering holder one Paired Share for each
Paired Share Unit validly tendered pursuant to the provisions of this Agreement.
(b) The provisions of Sections 3(b) and 3(c) of this Agreement shall
apply to the issuance of Paired Shares pursuant to Section 5(a).
Section 6. Registration Rights. If at any time after six (6) months
from the date of this Agreement, (a) a Starwood Partner validly tenders Starwood
Units pursuant to the provisions of this Agreement, (b) the Trust and the
Corporation make the Paired Share Election or the Combined Election with respect
to such tender, (c) as a result of the Ownership Limit such Starwood Partner
cannot receive the full number of Paired Shares otherwise issuable to such
Starwood Partner pursuant to such tender and such Election (without giving
effect to the Ownership Limit) (the
<PAGE>
event described in clauses (a), (b) and (c) being referred to as a "Paired Share
Tender Reduction"; the number of such Paired Shares which such Starwood Partner
cannot receive pursuant to such tender as a result of the Ownership Limit being
referred to as the "Unissued Paired Shares"; and the Starwood Units tendered in
respect of such Unissued Paired Shares being referred to as the "Delayed Payment
Units"), then subject to the other terms and conditions of this Agreement, such
Starwood Partner shall be entitled to receive the number of Paired Shares which
it can receive pursuant to such tender, such Election and the Ownership Limit
and then, pursuant to the terms of the Registration Rights Agreement, the Trust
and the Corporation shall cause there to be filed with the Securities and
Exchange Commission a registration statement and the Trust and the Corporation
shall register and sell pursuant thereto a number of Paired Shares equal to the
number of such Unissued Paired Shares requested by Starwood to be registered
pursuant to Section 2.3 of the Registration Rights Agreement. Within two
Business Days after the receipt by the Trust and the Corporation of the proceeds
of any sale (after underwriting discounts and commissions) of such Paired Shares
pursuant to such registration, the Trust and the Corporation shall pay such
proceeds to the tendering holder of the Delayed Payment Units, in full payment
for the tender of such Delayed Payment Units.
Section 7. Representations of Tendering Holder. Each tender of
Starwood Units shall constitute a representation and warranty by the tendering
holder of each of the representations and warranties set forth in the form of
Letter of Transmittal. Without limiting the generality of the foregoing, unless,
at the time of a tender for exchange of Starwood Units pursuant to this
Agreement, a registration statement relating to any Paired Shares to be
delivered upon such tender is effective under the Securities Act of 1933, as
amended (the "Securities Act"), such tender shall constitute a representation
and warranty by the tendering holder to the Trust and the Corporation that such
tendering holder (i) is an "accredited investor" within the meaning of Rule 501
under the Securities Act, (ii) has sufficient knowledge and experience in
financial and business matters and in investing in entities similar to the
Partnerships, the Trust and the Corporation so as to be able to evaluate the
risks and merits of its investment in the Partnerships, the Trust and the
Corporation and it is able financially to bear the risks thereof, (iii) has had
an opportunity to discuss the business, management and financial affairs of the
Trust, the Corporation and the Partnerships with the management of the Trust,
the Corporation and the Partnerships, and (iv) understands that the Paired
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act and such Paired Shares must be held indefinitely unless
a subsequent disposition thereof is registered under the Securities
<PAGE>
Act and applicable state securities laws or is exempt from such registration.
Section 8. Status of Tendering Holder. Until the holder of Starwood
Units tendered pursuant to this Agreement becomes a holder of record of the
Paired Shares issued in exchange therefor (in the case of a Paired Share
Election or a Combined Election) or until such holder has received cash in
exchange therefor (in the case of a Cash Election or a Combined Election), such
holder shall continue to hold and own such Starwood Units for all purposes of
the Realty Partnership Agreement and the Operating Partnership Agreement. In the
case of a Paired Share Election or a Combined Election, no such holder shall
have any rights as a shareholder of the Trust or a stockholder of the
Corporation in respect of such Paired Shares until such holder becomes a holder
of record of such Paired Shares.
Section 9. Reservation of Shares; Closing of Transfer Books. (a) The
Trust shall reserve and shall at all times have reserved out of its authorized
but unissued Trust Shares, solely for the purpose of effecting the exchange of
Realty Units pursuant to this Agreement and the Class A Units pursuant to the
Class A Exchange Rights Agreement, enough Trust Shares to permit the exchange of
the then outstanding Realty Units and, in the case of the Class A Exchange
Rights Agreement, Class A Units. The Corporation shall reserve and shall at all
times have reserved out of its authorized but unissued Corporation Shares,
solely for the purpose of effecting the exchange of Operating Units pursuant to
this Agreement, enough Corporation Shares to permit the exchange of the then
outstanding Operating Units. All Paired Shares which may be issued upon exchange
of Starwood Units shall be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof other
than income taxes resulting from such exchange.
(b) The Trust shall not close its transfer books so as to prevent
the timely issuance of Trust Shares pursuant to this Agreement and the Class A
Exchange Rights Agreement. The Corporation shall not close its transfer books so
as to prevent the timely issuance of Corporation Shares pursuant to this
Agreement.
Section 10. Notices. All notices, documents and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by overnight mail or when sent by facsimile
transmission, or four days after being mailed (by registered mail, return
receipt requested) to a party at the following address (or to such other address
as such party may have specified by notice given to the other parties pursuant
to this provision):
(a) If to the Trust or the Realty Partnership, to:
<PAGE>
Starwood Lodging Trust
2231 E. Camelback Road, Suite 410
Phoenix, AZ 85016
Attention: Chief Financial Officer
Telecopy No.: (602) 852-0984
Telephone No.: (602) 852-3900
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
Telecopy No.: (213) 896-6600
Telephone No.: (213) 896-6000
(b) If to the Corporation or the Operating Partnership, to:
Starwood Lodging Corporation
2231 E. Camelback Road, Suite 400
Phoenix, AZ 85016
Attention: General Counsel
Telecopy No.: (602) 852-0686
Telephone No.: (602) 852-3900
with a copy to:
Sidley & Austin
555 West 5th Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels
Telecopy No.: (213) 896-6600
Telephone No.: (213) 896-6000
(c) If to Prudential:
Prudential Real Estate Investors
8 Campus Drive
Parsippany, NJ 07054
Attention: Gary L. Kauffman
Telecopy No.: (201) 683-1790
Telephone No.: (201) 683-1612
Attention: Joseph D. Margolis, Esq.
James P. Walker, Esq.
Telecopy No.: (201) 683-1788
Telephone No.: (201) 683-1694 or 1690
<PAGE>
with a copy to:
O'Melveny & Myers LLP
153 East 53rd Street
New York, NY 10022
Attention: Robert S. Insolia, Esq.
Telecopy No.: (212) 326-2061
Telephone No.: (212) 326-2000
(d) If to any other Holder, to the address specified on
Schedule A hereto.
with a copy to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, NY 10022
Attention: Bruce M. Montgomerie, Esq.
Telecopy No.: (212) 821-8111
Telephone No.: (212) 821-8000
Section 11. Definitions. For purposes of this Agreement:
"Beneficially Owning" means owning Trust Shares directly, indirectly
or constructively by a person or entity through the application of Section
318(a) of the Code, as modified by Section 856(d)(5) of the Code, or
Section 544 of the Code, as modified by Section 856(h) of the Code. The
term "Beneficially Own" shall have a correlative meaning.
"Business Day" means any day other than Saturday, Sunday and any day
on which banks are not open to do business in New York, New York.
"Class A Exchange Rights Agreement" means the Exchange Rights
Agreement dated the date hereof among the Corporation, the Operating Partnership
and certain other parties.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations promulgated thereunder, as amended from time to time.
"Corporation Shares" means the shares of common stock, par value
$.01 per share, of the Corporation.
"Declaration of Trust" means the Declaration of Trust of the Trust
dated August 25, 1969, as amended and restated as of June 6, 1988, and as
further amended on February 1, 1995 and as amended from time to time after
the date of this Agreement.
"Disinterested Members" when used with respect to the Trust has the
meaning set forth in the Code of Regulations
<PAGE>
of the Trust and, when used with respect to the Corporation, has the
meaning set forth in the By-Laws of the Corporation, in each case as
amended from time to time.
"Ownership Limit" when used with respect to Trust Shares, has the
meaning set forth in the Declaration of Trust and, when used with respect
to the Corporation Shares, has the meaning set forth in the Restated
Articles, in each case as amended from time to time.
"Paired Share" means a Corporation Share and a Trust Share which are
paired pursuant to the Pairing Agreement.
"Paired Share Closing Price" shall mean, with respect to a
particular date, the last reported sales price regular way on such date
or, in case no such reported sale takes place on such date, the average of
the reported closing bid and asked prices regular way on such date, in
either case on the New York Stock Exchange, or if the Paired Shares are
not then listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Paired Shares are then listed or
admitted to trading or, if not then listed or admitted to trading on any
national securities exchange, the closing sale price on such date of the
Paired Shares or, in case no reported sale takes place on such date then,
the average of the closing bid and asked prices on such date, on NASDAQ or
any comparable system. If the Paired Shares are not then quoted on NASDAQ
or any comparable system, the Board of Trustees of the Trust and the Board
of Directors of the Corporation shall in good faith determine the Paired
Share Closing Price.
"Pairing Agreement" means the Pairing Agreement dated June 25, 1980
between the Trust and the Corporation, as it may be amended from time to
time.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date first written above between the Trust, the
Corporation and certain other parties.
"REIT Requirements" shall mean the requirements for the Trust to (i)
qualify as a REIT under the Code and the rules and regulations promulgated
thereunder, (ii) avoid any federal income or excise tax liability, (iii)
retain its status as grandfathered pursuant to Section 132(c)(3) of the
Deficit Reduction Act of 1984 and (iv) retain the benefits of that certain
private letter ruling issued by the Internal Revenue Service to the Trust
dated as of January 4, 1980.
"Restated Articles" means the Restated Articles of Incorporation of
the Corporation, as amended from time to time after the date of this
Agreement.
<PAGE>
"Trust Shares" means the shares of beneficial interest,
$.01 par value, of the Trust.
Section 12. Determinations and Interpretation. All agreements
between the Trust and the Corporation provided for in this Agreement shall be
made on behalf of the Trust and the Corporation by their respective
Disinterested Members, including, without limitation, any agreement between the
Trust and the Corporation as to the election of the Paired Share Election, the
Cash Election or the Combined Election with respect to a tender of Starwood
Units pursuant to Section 2(c), any agreement to permit the revocation,
withdrawal or modification of a tender of Starwood Units pursuant to Section
1(c) and any adjustment of the Issuance Percentages pursuant to Section 4(b).
All interpretations of the terms of this Agreement shall be resolved on behalf
of the Trust and the Corporation by their respective Disinterested Members.
Section 13. Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 14. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors or assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Corporation, the Trust, the
Realty Partnership and the Operating Partnership, shall also be for the benefit
of and enforceable by any subsequent holder of any Units.
Section 15. Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when the Trust, the
Corporation, the Realty Partnership, the Operating Partnership, and each of the
Starwood Partners shall have each executed a counterpart of this Agreement.
Section 16. Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 17. Exhibits. The Exhibits referred to in this Agreement
shall be construed with, and as an integral part
<PAGE>
of, this Agreement to the same extent as if the same had been set forth verbatim
herein.
Section 18. Entire Agreement; Amendments and Waivers. This
Agreement, including the Exhibits, contains the entire understanding of the
parties hereto with regard to the subject matter contained herein. In addition
to amendments and modifications permitted by Section 1(c), the parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement;
provided that any such amendment, modification or supplement shall be approved
by a majority of the Disinterested Members of each of the Trust and the
Corporation. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section 19. Governing Law. Except to the extent that Maryland law is
mandatorily applicable to the rights and obligations of the shareholders of the
Trust and the stockholders of the Corporation, this Agreement, and the
application or interpretation thereof, shall be governed exclusively by its
terms and by the internal laws of the State of New York, without regard to
principles of conflicts of laws as applied in the State of New York or any other
jurisdiction which, if applied, would result in the application of any laws
other than the internal laws of the State of New York.
Section 20. Starwood Lodging Trust. The parties hereto understand
and agree that the name "Starwood Lodging Trust" is a designation of the Trust
and its Trustees (as Trustees but not personally) under the Declaration of
Trust, and all persons dealing with the Trust shall look solely to the Trust's
assets for the enforcement of any claims against the Trust, and that the
Trustees, officers, agents and security holders of the Trust assume no personal
liability for obligations entered into on behalf of the Trust, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations.
Section 21. Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Southern District of New York in connection with any
action or proceeding arising out of or relating to this Agreement, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
<PAGE>
Section 22. Specific Performance. Each of the parties acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party or parties would be irreparably harmed and could not be made whole by
monetary damages. The parties hereby agree that in addition to any other remedy
to which they may be entitled at law or in equity, they shall be entitled to
compel specific performance of this Agreement in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction for such action.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto or by their duly authorized officers, all as of
the date first above written.
STARWOOD LODGING TRUST,
a Maryland real estate investment
trust
By: /S/ STEVEN R. GOLDMAN
--------------------------------------
Name: Steven R. Goldman
Title: Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /S/ NIR MARGALIT
--------------------------------------
Name: Nir Magalit
Title: Vice President
SLT REALTY LIMITED PARTNERSHIP,
By: STARWOOD LODGING TRUST,
general partner
By: /S/ STEVEN R. GOLDMAN
---------------------------------
Name: Steven R. Goldman
Title: Vice President
SLC OPERATING LIMITED PARTNERSHIP
By: STARWOOD LODGING CORPORATION,
general partner
By: /S/ NIR MARGALIT
---------------------------------
Name: Nir Margalit
Title: Vice President
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, on behalf of PRUDENTIAL
PROPERTY INVESTMENT SEPARATE
ACCOUNT II
By: /S/ GARY L. KAUFFMAN
------------------------------------
Gary L. Kauffman
Vice President
THE GARY MENDELL FAMILY TRUST
By: /S/ ELEANOR MENDELL
------------------------------------
Eleanor Mendell
Trustee
/S/ GARY M. MENDELL
--------------------------------------
Gary M. Mendell
/S/ STEVE MENDELL
--------------------------------------
Steve Mendell
/S/ ELLEN-JO MENDELL
--------------------------------------
Ellen-Jo Mendell
/S/ FELIX J. CACCIATO, JR.
--------------------------------------
Felix J. Cacciato, Jr.
/S/ JUDITH K. RUSHMORE
--------------------------------------
Judith K. Rushmore
/S/ MURRAY L. DO, II
--------------------------------------
Murray L. Dow, II
/S/ ORNA L. SHULMAN
--------------------------------------
Orna L. Shulman
<PAGE>
/S/ ARTHUR C. GREEN
--------------------------------------
Arthur C. Green
/S/ MARK J. ROSINSKY
--------------------------------------
Mark J. Rosinsky
/S/ RANDI L. ROSINSKY
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Randi L. Rosinsky
/S/ JOHN DAILY
--------------------------------------
John Daily
/S/ MICHEAL D. HALL
--------------------------------------
Michael D. Hall
/S/ HARVEY MOORE
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Harvey Moore
/S/ TRACEY DRISCOLL
--------------------------------------
Tracey Driscoll
/S/ TOM CLEARWATER
--------------------------------------
Tom Clearwater
ZAPCO HOLDINGS, INC.
By: /S/ ORNA L. SHULMAN
------------------------------------
Orna L. Shulman
Vice President
<PAGE>
ZAPCO HOLDINGS, INC. DEFERRED
COMPENSATION PLAN TRUST
By: /S/ NANCY S. HEINRICH
------------------------------------
Nancy S. Heinrich
Trustee
<PAGE>
SCHEDULE A TO
UNITS EXCHANGE RIGHTS AGREEMENT
NOTICE ADDRESS FOR HOLDERS
[To be provided at Closing]
<PAGE>
EXHIBIT A TO
UNITS EXCHANGE RIGHTS AGREEMENT
LETTER OF TRANSMITTAL
To Tender Units
Pursuant to the Units Exchange Rights Agreement
Dated as of February ___, 1997
TO: Starwood Lodging Trust
2231 E. Camelback Road, Suite 410
Phoenix, AZ 85016
Starwood Lodging Corporation
2231 E. Camelback Road, Suite 400
Phoenix, AZ 85016
Description of Units
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Names(s) and Address(es) Units Tendered (Attach
of Registered Owners additional list if
necessary)
Realty
Units:
Operating
Units:
_______________________________________
Total
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Starwood Lodging Trust (the
"Trust") the above-described Realty Units (as defined in the Units Exchange
Rights Agreement dated as of February ___, 1997 (the "Units Exchange Rights
Agreement")) and hereby tenders to Starwood Lodging Corporation (the
"Corporation") the above-described Operating Units (as defined in the Units
Exchange Rights Agreement) in accordance with the terms and conditions of the
Units Exchange Rights Agreement and this Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged. All terms used
herein but not defined herein are used as defined in the Units Exchange Rights
Agreement.
Subject to, and effective upon the issuance of Paired Shares and/or
the payment of cash, as the case may be, for the Starwood Units tendered hereby,
the undersigned hereby assigns and transfers (i) to the Trust all right, title
and interest in and to all the Realty Units that are being tendered hereby and
irrevocably constitutes and appoints the Trust (the "Realty Unit Agent"), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) transfer such Realty Units
on the books of the Realty Partnership and (b) receive all rights, privileges
and benefits, and any and all obligations and liabilities appertaining thereto
and otherwise exercise all rights of beneficial ownership of such Realty Units,
all in accordance with the terms of the Offer and (ii) to the Corporation all
right, title and interest in and to all the Operating Units that are being
tendered hereby and irrevocably constitutes and appoints the Corporation (the
"Operating Unit Agent" and, together with the Realty Unit Agent, the "Agents"),
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) transfer such Operating
Units on the books of the Operating Partnership and (b) receive all rights,
privileges and benefits, and any and all obligations and liabilities
appertaining thereto and otherwise exercise all rights of beneficial ownership
of such Operating Units, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants (i) to the Trust that
the undersigned has full power and authority to tender, sell, assign and
transfer the tendered Realty Units and that upon payment therefor, the Trust
will acquire unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim, (ii) to the Corporation that the undersigned has full power and
authority to tender, sell, assign and transfer the tendered Operating Units and
that upon payment therefor, the
<PAGE>
Corporation will acquire unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and the same will not be subject
to any adverse claim, (iii) to the Trust and the Corporation that the tender
complies with each and every provision of Section 1 of the Units Exchange Rights
Agreement, and (iv) attached hereto is a calculation, to the best knowledge of
the undersigned after due inquiry (together with such supporting documentation
as the Trust may reasonably request) of the maximum number of Paired Shares that
may be issued to the undersigned without causing either (x) the Trust to not
satisfy the REIT Requirements in any respect or (y) any person or entity to
Beneficially Own Trust Shares exceeding the Ownership Limit. The undersigned
will, upon request, execute any additional documents deemed by the Trust or the
Corporation to be reasonably necessary or desirable to complete the sale,
assignment and transfer of the tendered Starwood Units.
Unless a registration statement relating to any Paired Shares to be
delivered to the undersigned is effective under the Securities Act of 1933, as
amended (the "Securities Act"), the undersigned hereby represents and warrants
to the Trust and the Corporation that the undersigned (A) is an "accredited
investor" within the meaning of Rule 501 under the Securities Act, or (B) has
sufficient knowledge and experience in financial and business matters and in
investing in entities similar to the Partnerships, the Trust and the Corporation
so as to be able to evaluate the risks and merits of its investment in the
Partnerships, the Trust and the Corporation and it is able financially to bear
the risks thereof, and in either case, (i) has had an opportunity to discuss the
business, management and financial affairs of the Trust, the Corporation and the
Partnerships with the management of the Trust, the Corporation and the
Partnerships, and (ii) understands that any such Paired Shares have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities Act and
any such Paired Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or is exempt from such registration. If not sold pursuant to an effective
registration statement, any such Paired Shares will bear an appropriate legend
indicating that such Paired Shares have not been registered under the Securities
Act and resale of such Paired Shares is restricted under applicable securities
laws.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned.
<PAGE>
The undersigned understands that, except as provided in Section 2(b)
of the Units Exchange Rights Agreement, a tender of Starwood Units pursuant to
the Units Exchange Rights Agreement is irrevocable and constitutes a binding
agreement between the undersigned and the Trust and the Corporation upon the
terms and subject to the conditions of the Units Exchange Rights Agreement.
Unless otherwise indicated under "Special Delivery Instructions",
please mail any Paired Shares issuable upon exchange of the Starwood Units
tendered hereby (or, if the Cash Election or the Combined Election is made, the
cash payment payable pursuant thereto) to the address(es) of the registered
holder(s) appearing under "Description of Units." In the event that the Special
Delivery Instructions are completed, please issue the Paired Shares (or, if the
Cash Election or the Combined Election is made, the cash payment payable
pursuant thereto) in the name of the registered holder(s) and transmit the same
to the person or persons so indicated.
The Trust, the Corporation and the undersigned agree that they will
cooperate with each other and will make, execute, acknowledge, deliver, record
and file, or cause to be made, executed, acknowledged, delivered, recorded and
filed, at such times and places as the other may reasonably deem necessary, all
other and further documents and instruments, and will take all other and further
actions, as the other may reasonably request from time to time in order to
effectuate the purposes and provisions of the tender made pursuant to this
Letter of Transmittal.
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 and 5)
To be completed ONLY if Paired Shares or the cash payment are to be
sent to someone other than the undersigned or to the undersigned at an address
other than that above.
Mail certificate(s) for Paired Shares or cash payment to:
Name____________________________________________________________________________
(please print)
Address_________________________________________________________________________
________________________________________________________________________________
(include Zip Code)
________________________________________________________________________________
________________________________________________________________________________
(Tax Identification or Social Security Number)
SIGN HERE
Complete Substitute Form W-9 included
________________________________________________________________________________
________________________________________________________________________________
(Signature(s) of holder of Units)
(Must be signed by registered holder(s) as name(s) appear(s) on books and
records of the Partnership. If signature is by trustees, executors,
administrators, guardians, attorneys-in--fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth full
title and see instruction 4.
Dated___________________________________________________________________________
Name(s)_________________________________________________________________________
(please print)
Capacity
(Full Title)____________________________________________________________________
Address_________________________________________________________________________
(include Zip Code)
<PAGE>
Area Code and Tel. No.__________________________________________________________
Tax Identification or
Social Security No._____________________________________________________________
(Complete Substitute Form W-9)
Guarantee of Signature(s)
(See Instruction 1)
Authorized
Signature_______________________________________________________________________
Name of
Firm____________________________________________________________________________
Dated___________________________________________________________________________
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Units Exchange Rights Agreement
1. Guarantee of Signature. No signature guarantee on this Letter of
Transmittal is required unless the registered holder of the Starwood Units has
completed the box entitled "Special Delivery Instructions". In such case all
signatures on this Letter of Transmittal must be guaranteed by a member firm of
any registered national securities exchange in the United States or of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company (not a savings bank or a savings and loan association) having an
office, branch or agency in the United States.
2. Delivery of Letter of Transmittal. This Letter of Transmittal is
to be completed by the holder of Starwood Units. A properly completed and duly
executed Letter of Transmittal and any other documents required by this Letter
of Transmittal must be received by the Agents.
No alternative, conditional or contingent tenders will be accepted,
except as permitted pursuant to the Units Exchange Rights Agreement.
3. Inadequate Space. If the space provided herein is inadequate, the
Units tendered and/or other information required should be listed on a separate
schedule attached hereto.
4. Signatures on Letter of Transmittal. The signature must
correspond with the name as shown on the books and records of the Partnerships
without any change whatsoever.
<PAGE>
If any of the Starwood Units tendered hereby are owned of record by
two or more joint owners, all such owners must sign the Letter of Transmittal.
If any tendered Starwood Units are registered in different names, it
will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations.
If this Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, each person should so indicate
when signing, and proper evidence satisfactory to the Agents of their authority
so to act must be submitted.
5. Special Delivery Instructions. If a certificate for Paired Shares
or the cash payment is to be sent to someone other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
6. Waiver of Conditions. Each of the Trust and the Corporation
reserves the right to waive in its sole discretion any of the specified
conditions of the Offer in the case of the Starwood Units tendered; provided
that any such waiver shall not adversely affect any holder of outstanding
Starwood Units without the consent of such holder.
7. Back-up Withholding. Under the Federal income tax law, a person
surrendering Starwood Units must provide the Agents with his correct taxpayer
identification number ("TIN") on Substitute Form W-9 below unless an exemption
applies. If the correct TIN is not provided, a $50 penalty may be imposed by the
Internal Revenue Service and payments made in exchange for the surrendered
Starwood Units may be subject to back-up withholding of that rate provided by
the Federal income tax law (such rate being at the date of the Units Exchange
Rights Agreement, 31%).
The TIN that must be provided is that of the registered holder of
the Starwood Units. The TIN for an individual is his social security number.
8. Requests for Assistance or Additional Copies. Questions and
requests for assistance or additional copies of the Units Exchange Rights
Agreement and the Letter of Transmittal may be directed to the Agents at the
address set forth above.
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a holder whose tendered Starwood
Units are accepted for payment is required by law to provide the Agents (as
payers) with his correct taxpayer
<PAGE>
identification number on Substitute Form W-9 below. If such holder is an
individual, the taxpayer identification number is his social security number. If
the Agents are not provided with the correct taxpayer identification number, the
holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such holder with respect to Starwood
Units purchased pursuant to the Offer may be subject to back-up withholding.
If back-up withholding applies, the Agents are required to withhold,
at that rate provided by the Federal income tax law (such rate being at the date
of the Units Exchange Rights Agreement 31%), of any such payments made to the
holder of Starwood Units. Paired Shares otherwise deliverable hereunder may, at
the expense (and with all risk of loss for the account) of the undersigned, be
sold to pay such amounts. Back-up withholding is not an additional tax. Rather,
the tax liability of persons subject to back-up withholding will be reduced by
the amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained.
Purpose of Substitute Form W-9
To prevent back-up withholding on payments that are made to a holder
of Starwood Units purchased pursuant to the Offer, the holder is required to
notify the Agents of his correct taxpayer identification number by completing
the form below certifying that the taxpayer identification number provided on
Substitute Form W-9 is correct.
What Number to Give the Agent
The holder is required to give the Agents the social security number
or employer identification number of the record owner of the Starwood Units.
<PAGE>
PAYER'S NAME: Starwood Lodging Trust
Starwood Lodging Corporation
<TABLE>
<CAPTION>
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<S> <C> <C>
Substitute Part 1 - Please provide your TIN in the box at Social Security
Form W-9 right and certify by signing and dating below Number/Employer
Identification
Number
- ------------------------------------------------------------------------------------------------
Department of the Certification - Under the penalties of perjury,
Treasury/Internal (i) I certify that the information provided on this
Revenue Service form is true, correct and complete and (ii) I am
not subject to backup withholding because: (a) I
am exempt from backup Service withholding, or (b) I
have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
- ------------------------------------------------------------------------------------------------
Signature ________________________________________ Date ______________
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</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACK-UP WITHHOLDING
AT THAT RATE PROVIDED BY THE FEDERAL INCOME TAX LAW (SUCH RATE BEING AT
THE DATE OF THE UNITS EXCHANGE RIGHTS AGREEMENT 31%) OF ANY PAYMENTS MADE
TO YOU PURSUANT TO THE OFFER.
