<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. ____________)*
Starwood Hotels & Resorts Trust
Starwood Hotels & Resorts Worldwide, Inc.
(Name of Issuer)
Shares of Beneficial Interest, Par Value $0.01 Per Share
Shares of Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
855905 20 4
(CUSIP Number)
Gordon K. Eng, Esq.
19191 South Vermont Avenue, Suite 420
Torrance, California 90502
(310) 207-1477
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 15, 1998
(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
*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 of 18
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SCHEDULE 13D
CUSIP No. 855905 20 4 Page 2 of 18 Pages
- - --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Sheikh Abdulaziz bin Ibrahim Al Ibrahim
- - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
/ /
- - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Saudi Arabia
- - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
--------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
3,717,603
OWNED BY
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
3,717,603
WITH
- - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,717,603
- - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
- - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- - --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
CUSIP No. 855905 20 4 Page 3 of 18 Pages
- - --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Aspen Enterprises International Holdings, Ltd.
- - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
/ /
- - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
--------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
3,088,372
OWNED BY
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
3,088,372
WITH
- - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,088,372
- - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.0%
- - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- - --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D
CUSIP No. 855905 20 4 Page 4 of 18 Pages
- - --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Polestar Limited
- - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
/ /
- - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
--------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
539,535
OWNED BY
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
539,535
WITH
- - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
539,535
- - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
- - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- - --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
SCHEDULE 13D
CUSIP No. 855905 20 4 Page 5 of 18 Pages
- - --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Moonbeam Enterprises International, Ltd.
- - --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- - --------------------------------------------------------------------------------
3 SEC USE ONLY
- - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- - --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
/ /
- - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- - --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
--------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
89,696
OWNED BY
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
REPORTING
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
89,696
WITH
- - --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
89,696
- - --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
- - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- - --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
The titles of the classes of equity securities to which this statement
relates are the Shares of Beneficial Interest, par value $.01 per share (the
"Trust Shares"), of Starwood Hotels & Resorts Trust (formerly, Starwood Lodging
Trust), a Maryland real estate investment trust ("Starwood Trust"), and the
shares of Common Stock, par value $.01 per share (the "Corporation Shares"), of
Starwood Hotels & Resorts Worldwide, Inc. (formerly, Starwood Lodging
Corporation), a Maryland corporation ("Starwood Corporation" and, together with
Starwood Trust, "Starwood"). Pursuant to a pairing agreement between Starwood
Trust and Starwood Corporation, each stockholder of Starwood owns an equivalent
number of Trust Shares and Corporation Shares, and the Trust Shares and the
Corporation Shares may be held and traded only in units consisting of one Trust
Share and one Corporation Share (the "Paired Shares"). The principal executive
offices of Starwood Trust are located at 2231 E. Camelback Road, Suite 410,
Phoenix, Arizona 85016, and the principal executive offices of Starwood
Corporation are located at 2231 E. Camelback Road, Suite 400, Phoenix, Arizona
85016.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by (1) His Excellency the Sheikh
Abdulaziz bin Ibrahim Al Ibrahim ("HES"), (2) Aspen Enterprises International
Holdings, Ltd. ("AEIH"), (3) Polestar Limited ("PL") and (4) Moonbeam
Enterprises International, Ltd. ("MEIL" and, together with HES, AEIH and PL,
the "Reporting Persons").
HES. HES is the Principal of Al-Anwae, Establishment, which principally
engages in the investment management business, and his business address is
Al-Anwae, Establishment, Olaya Main Street, P.O. Box 1955, Riyadh 11441, Saudi
Arabia. During the last five years, he has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he 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 violations
with respect to such laws. He is a citizen of Saudi Arabia. For purposes of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), HES is deemed
to control AEIH, PL and MEIL.
AEIH. AEIH, a Cayman Islands corporation, is the sole shareholder
of Aspen Enterprises International, Inc. ("AEI"), a Colorado corporation.
AEI is the general partner of Savanah Limited Partnership ("SLP"), a District
of Columbia limited partnership. Colorado Mountain Investments, Inc.
("CMI"), a Colorado corporation, is a subsidiary of AEI.
SLP is a party to the Purchase and Sale Agreement and Joint Escrow
Instructions between SLP and Starwood, dated December 30, 1997 (the "Aspen
Purchase Agreement"), pursuant to which SLP sold to Starwood the Aspen Luxury
Collection Hotel and certain related
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land and improvements, located in Aspen, Colorado (the "Aspen Property"). The
purchase price for the Aspen Property consisted of cash and Paired Shares. Upon
the closing of the sale of the Aspen Property on January 15, 1998, SLP assigned
all of the Paired Shares received by it as consideration for sale of the Aspen
Property to AEI and CMI in partial satisfaction of certain indebtedness of SLP
to these corporations. Concurrently, CMI assigned the Paired Shares it received
from SLP to its parent AEI, and AEI thereupon distributed all of its Paired
Shares to its parent, AEIH. As a result of these transactions, the Paired Shares
issued initially to SLP were transferred directly into the name of AEIH. Each of
AEIH, AEI, CMI and SLP is deemed, for purposes of the Exchange Act, to be
controlled by HES.
The address of the principal offices of AEIH is c/o Caledonian Bank
& Trust Limited, Caledonian House, Grand Floor, Mary Street, Georgetown, Grand
Cayman, Cayman Islands, British West Indies. AEIH is an investment holding
company that held an indirect interest in the Aspen Property.
PL. PL, a Cayman Islands corporation, is the sole shareholder of
Remington Ventures, Inc. ("RV") and Remington Ventures II, Inc. ("RVII"),
each of which is a Texas corporation. RV and RVII are the general partners
of New Remington Partners ("NRP"), a Texas general partnership.
NRP is a party to the Purchase and Sale Agreement and Joint Escrow
Instructions between NRP and Starwood, dated December 30, 1997 (the "Houston
Purchase Agreement"), pursuant to which NRP sold to Starwood the Houston Luxury
Collection Hotel and certain related land and improvements, located in Houston,
Texas (the "Houston Property"). The purchase price for the Houston Property
consisted of cash and Paired Shares. Upon the closing of the sale of the Houston
Property on January 15, 1998, NRP assigned all of the Paired Shares received by
it as consideration for sale of the Houston Property to RV and RVII in partial
satisfaction of certain indebtedness of NRP to these corporations. RV and RVII
thereupon distributed all of their Paired Shares to their parent, PL. As a
result of these transactions, the Paired Shares issued initially to NRP were
transferred directly into the name of PL. Each of PL, RV, RVII and NRP is
deemed, for purposes of the Exchange Act, to be controlled by HES.
The address of the principal offices of PL is c/o Caledonian Bank &
Trust Limited, Caledonian House, Grand Floor, Mary Street, Georgetown, Grand
Cayman, Cayman Islands, British West Indies. PL is an investment holding company
that held an indirect interest in the Houston Property.
MEIL. MEIL, a Cayman Islands corporation, is the sole shareholder
of each of N.Y. Overnight, Inc. ("NYO"), a New York corporation, N.Y.
Overnight II, Inc. ("NYOII"), a New York corporation, D.C. Overnight, Inc.
("DCO"), a District of Columbia corporation, and D.C. Overnight II, Inc.
("DCOII"), a District of Columbia corporation. NYO is the general partner of
N.Y. Overnight Partners, L.P. ("NYOP"), a New York limited partnership. DCO
is the general partner of D.C. Overnight Partners, L.P. ("DCOP"), a District
of Columbia limited partnership.
NYOP is a party to the Purchase and Sale Agreement and Joint Escrow
Instructions between NYOP and Starwood, dated December 30, 1997 (the "New York
Purchase Agreement"), pursuant to which NYOP sold to Starwood its leasehold
interest in the New York
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Luxury Collection Hotel and certain related land and improvements, located in
New York, New York (the "New York Property"). The purchase price for the New
York Property consisted of cash and Paired Shares. Upon the closing of the sale
of the New York Property on January 15, 1998, NYOP assigned all of the Paired
Shares received by it as consideration for sale of the New York Property to NYO
and NYOII in partial satisfaction of certain indebtedness of NYOP to these
corporations. NYO and NYOII thereupon distributed all of their Paired Shares to
their parent, MEIL. As a result of these transactions, the Paired Shares issued
initially to NYOP were transferred directly into the name of MEIL. Each of MEIL,
NYO, NYOII and NYOP is deemed, for purposes of the Exchange Act, to be
controlled by HES.
DCOP is a party to the Purchase and Sale Agreement and Joint Escrow
Instructions between DCOP and Starwood, dated December 30, 1997 (the "Washington
Purchase Agreement" and, together with the Aspen Purchase Agreement, the Houston
Purchase Agreement and the New York Purchase Agreement, the "Hotel Purchase
Agreements"), pursuant to which DCOP sold to Starwood the Washington Luxury
Collection Hotel and certain related land and improvements, located in
Washington, District of Columbia (the "Washington Property"). The purchase price
for the Washington Property consisted of cash and Paired Shares. Upon the
closing of the sale of the Washington Property on January 15, 1998, DCOP
assigned all of the Paired Shares received by it as consideration for sale of
the Washington Property to DCO and DCOII in partial satisfaction of certain
indebtedness of DCOP to these corporations. DCO and DCOII thereupon distributed
all of their Paired Shares to their parent, MEIL. As a result of these
transactions, the Paired Shares issued initially to DCOP were transferred
directly into the name of MEIL. Each of MEIL, DCO, DCOII and DCOP is deemed, for
purposes of the Exchange Act, to be controlled by HES. The address of the
principal offices of MEIL is c/o Caledonian Bank & Trust Limited, Caledonian
House, Grand Floor, Mary Street, Georgetown, Grand Cayman, Cayman Islands,
British West Indies. MEIL is an investment holding company that held an indirect
interest in the New York Property and the Washington Property.
The sole officer of each of AEIH, PL and MEIL is Caledonian Bank &
Trust Limited ("CBTL"), a Cayman Islands corporation, which serves as the
Secretary with respect to each of AEIH, PL and MEIL. CBTL is a bank and trust
company and its business address is Caledonian House, Grand Floor, Mary Street,
Georgetown, Grand Cayman, Cayman Islands, British West Indies.
The sole director of each of AEIH, PL and MEIL is His Excellency the
Sheikh Abdulaziz bin Ibrahim Al Ibrahim (defined as "HES" above). HES is the
Principal of Al-Anwae, Establishment, which principally engages in the
investment management business, and his business address is Al-Anwae,
Establishment, Olaya Main Street, P.O. Box 1955, Riyadh 11441, Saudi Arabia.
He is a citizen of Saudi Arabia.
The address of the principal offices of each of AEI, CMI, RV, RVII,
NYO, NYOII, DCO, DCOII, SLP, NRP, NYOP and DCOP is 1925 Century Park East, Suite
1900, Los Angeles, California 90067. The principal business of SLP, NRP, NYOP
and DCOP was the ownership of the Aspen Property, the Houston Property, the New
York Property and the
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Washington Property, respectively. The principal business of AEI, CMI, RV, RVII,
NYO, NYOII, DCO and DCOII is the management of various investments of HES in the
United States.
Mansor A.S. Dalaan ("Dalaan") is the sole director and the President,
Secretary and Chief Financial Officer of each of AEI, CMI, RV and RVII. Tarek
Ayoubi ("Ayoubi") is the sole director and the President of each of NYO, NYOII,
DCO and DCOII, and Dalaan is the Secretary and Chief Financial Officer of each
such corporation. The principal occupation of each of Dalaan and Ayoubi is an
executive with such corporations and related entities controlled by HES. The
business address of Dalaan and Ayoubi is 1925 Century Park East, Suite 1900, Los
Angeles, California 90067. Dalaan and Ayoubi are citizens of the United States.
None of AEIH, PL, MEIL, AEI, CMI, RV, RVII, NYO, NYOII, DCO, DCOII,
SLP, NRP, NYOP, DCOP or the officers and directors of any of them has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he/she/it 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 violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The aggregate of 3,717,603 Paired Shares that are the subject of this
Statement were issued by Starwood as partial consideration for Starwood's
purchase of the following assets: (1) the Aspen Property from SLP: 3,088,372
Paired Shares valued at $165,999,995; (2) the Houston Property from NRP: 539,535
Paired Shares valued at $29,000,006; (3) the New York Property from NYOP: 57,405
Paired Shares valued at $3,200,329; and (4) the Washington Property from DCOP:
32,291 Paired Shares valued at $1,800,223. The above values of the Paired Shares
were determined based upon dollar amounts ascribed in the Hotel Purchase
Agreements, and do not necessarily reflect the fair market value of the Paired
Shares.
The right of SLP to receive the 3,088,372 Paired Shares issued in
respect of the Aspen Property was assigned to AEI and CMI in partial
satisfaction of certain indebtedness of SLP to these corporations. CMI thereupon
assigned its Paired Shares to its parent, AEI, and AEI distributed all of its
Paired Shares to its parent AEIH. The right of NRP to receive the 539,535 Paired
Shares issued in respect of the Houston Property was assigned to RV and RVII in
partial satisfaction of certain indebtedness of NRP to these corporations. Each
of RV and RVII thereupon distributed its Paired Shares to its parent, PL. The
right of NYOP to receive the 57,405 Paired Shares issued in respect of the New
York Property was assigned to NYO and NYOII in partial satisfaction of certain
indebtedness of NYOP to these corporations. Each of NYO and NYOII thereupon
distributed its Paired Shares to its parent, MEIL. The right of DCOP to receive
the 32,291 Paired Shares issued in respect of the Washington Property was
assigned to DCO and DCOII in partial satisfaction of certain indebtedness of
DCOP to these corporations. Each of DCO and DCOII thereupon distributed its
Paired Shares to its parent, MEIL.
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ITEM 4. PURPOSE OF TRANSACTION
The Paired Shares were acquired as partial consideration for the sale
to Starwood on January 15, 1998 of (1) the Aspen Property pursuant to the Aspen
Purchase Agreement, (2) the Houston Property pursuant to the Houston Purchase
Agreement, (3) the New York Property pursuant to the New York Purchase Agreement
and (4) the Washington Property pursuant to the Washington Purchase Agreement.
The Paired Shares were issued pursuant to the terms of Stock Agreements, dated
January 15, 1998, among Starwood and each of SLP, NRP, NYOP and DCOP (the "Stock
Agreements"). The transferability of the Paired Shares and certain other matters
concerning the Paired Shares are governed by the Stock Agreements and by
Registration Rights Agreements, dated January 15, 1998, among Starwood and each
of SLP, NRP, NYOP and DCOP (the "Registration Rights Agreements"). The
respective rights of each of SLP, NRP, NYOP and DCOP under the Stock Agreements
and the Registration Rights Agreements were assigned to AEIH, PL, MEIL and MEIL,
respectively, on January 15, 1998.
Pursuant to the Registration Rights Agreements, Starwood is required to
file and use its best efforts to cause the Securities and Exchange Commission
(the "Commission") to declare effective a registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), enabling the Reporting Persons to resell the Paired Shares
into the public market. In the event that the Registration Statement is not
declared effective on or before seven business days after the "Required
Effectiveness Date" (as specified in the respective Stock Agreements), or the
market price of the Paired Shares around such time of effectiveness is less than
the amounts specified in the respective Stock Agreements, Starwood will be
obligated to make certain payments to the holders of the Paired Shares. If the
effectiveness of the Registration Statement is delayed for 60 days beyond the
Required Effectiveness Date, the holders of the Paired Shares would have the
right to require Starwood to repurchase such shares under conditions specified
in the respective Stock Agreements. If any Reporting Person (or group of
Reporting Persons) seeks to sell into the open market more than 100,000 Paired
Shares (subject to adjustment), the Stock Agreements provide Starwood with a
right to purchase or place with a purchaser to be designated by Starwood such
shares at a price based on market prices of the Paired Shares at such time.
Starwood is required to keep the Registration Statement effective through
January 14, 1999 (or earlier if all Paired Shares have been disposed of by the
Reporting Persons and certain transferees).
The Reporting Persons are holding the Paired Shares for investment
purposes. Any Reporting Person may at any time dispose of some or all of the
Paired Shares for which it holds power to dispose (or to direct the disposition)
in private negotiated transactions, in open market sales pursuant to the
Registration Statement, to Starwood pursuant to the arrangements described
above, pursuant to Rule 144 under the Securities Act, or otherwise. Such sales
may be made directly or indirectly through brokers or dealers or agents, at
prevailing market prices, at negotiated prices, or otherwise.
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Except as described above, none of the Reporting Persons nor, to the
best knowledge of any of the Reporting Persons, any person named in Item 2 who
is not a Reporting Person, has any plan or proposal that relates to or would
result in:
(a) the acquisition by any person of additional securities of
Starwood, or the disposition of securities of Starwood;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Starwood or any
of its subsidiaries;
(c) a sale or transfer of a material amount of assets of
Starwood or any of its subsidiaries;
(d) any change in the present Board of Directors or
management of Starwood;
(e) any material change in the present capitalization or
dividend policy of Starwood;
(f) any other material change in Starwood's business or
corporate structure;
(g) changes in Starwood's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of Starwood by any person;
(h) causing a class of securities of Starwood to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system
of a registered national securities association;
(i) a class of equity securities of Starwood becoming eligible
for termination of registration pursuant to Section
12(g)(4) of the Exchange Act; or
(j) any action similar to any of those enumerated in
(a)-(i) above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a), (b) As of January 26, 1998, HES beneficially owned 3,717,603
Paired Shares, representing approximately 7.2% of the outstanding Paired Shares
and he has shared power to vote or to dispose with respect to such Paired
Shares.
As of January 26, 1998, AEIH beneficially owned 3,088,372 Paired
Shares, representing approximately 6.0% of the outstanding Paired Shares and it
has shared power to vote or to dispose with respect to such Paired Shares.
As of January 26, 1998, PL beneficially owned 539,535 Paired Shares,
representing approximately 1.1% of the outstanding Paired Shares and it has
shared power to vote or to dispose with respect to such Paired Shares.
As of January 26, 1998, MEIL beneficially owned 89,696 Paired Shares,
representing approximately 0.2% of the outstanding Paired Shares and it has
shared power to vote or to dispose with respect to such Paired Shares.
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HES shares power to vote and dispose of the Paired Shares with each of
AEIH, PL and MEIL and each of AEIH, PL and MEIL shares power to vote and to
dispose of their respective Paired Shares with HES.
None of the persons listed in Item 2 other than the Reporting Persons,
to the best knowledge of the Reporting Persons, beneficially owns any Paired
Shares.
(c) None of the Reporting Persons and, to the best knowledge of the
Reporting Persons, none of the persons listed in Item 2 except as set forth in
this statement, has been party to any transaction in Paired Shares during the
sixty-day period ending on January 26, 1998.
(d) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any of Paired
Shares that may be deemed to be beneficially owned by the Reporting Persons.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Transfer Restrictions. Pursuant to the Stock Agreements, if a Reporting
Person (or a group of Reporting Persons) elects to make an open market sale of
more than 100,000 Paired Shares (subject to adjustment in specified
circumstances), such Reporting Person(s) must first give Starwood notice and
Starwood will have until the second business day following such notice to
irrevocably offer to purchase or place (with a purchaser to be designated by
Starwood) all such Paired Shared at a price equal to the average closing price
of the Paired Shares on the New York Stock Exchange on the first and second
business day following the giving of such notice by the Reporting Person(s). If
Starwood does not make such an offer, it shall have no further rights with
respect to such Paired Shares if the Reporting Person(s) commences on "Orderly
Market Disposition" (as defined in the respective Stock Agreements) thereof
within five business days after delivery of its notice to Starwood.
Registration Rights. Pursuant to the Registration Rights Agreements,
Starwood is required to file the Registration Statement and use its best efforts
to cause the Commission to declare it effective no later than the applicable
"Required Effectiveness Date" (as specified in the respective Stock Agreements)
and to keep the Registration Statement effective through January 14, 1999 (or
earlier if all Paired Shares have been disposed of by the Reporting Persons and
certain transferees). If the Registration Statement is not declared effective on
or before seven days after the applicable "Required Effectiveness Date,"
Starwood is required to pay to each Reporting Person an interest factor equal to
the product of LIBOR plus 2% per annum multiplied by the market value of the
Paired Shares held by such Reporting Person, for each day until the Registration
Statement is declared effective. If such effectiveness has not occurred by the
60th day following the Required Effectiveness Date, the Reporting Persons would
have the right to require Starwood to repurchase the Paired Shares (see "Put
Right" below).
12
<PAGE> 13
Finder's Fees. No broker, finder, agent or similar intermediary acted
on behalf of any Reporting Person or, to the best knowledge of any of the
Reporting Persons, on behalf of any person listed in Item 2 above who is not a
Reporting Person, in connection with the transactions contemplated by the Hotel
Purchase Agreements or the Stock Agreements; and there are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
therewith based upon any agreement with any of the Reporting Persons or, to the
best knowledge of any of the Reporting Persons, with any person listed in Item 2
above who is not a Reporting Person.
Put Right. Pursuant to the Stock Agreements, each Reporting Persons has
the one-time right (the "Put Right") to require Starwood to purchase all Paired
Shares under specified conditions. The Put Right is exercisable if the
Registration Statement has not been declared effective by the Commission within
60 days after the Required Effectiveness Date. The Put Right expires on the
earlier to occur of (i) the date the Registration Statement is declared
effective or (ii) January 14, 1999. If the Put Right is exercised, Starwood
would be required to repurchase such Paired Shares on the third business day
after exercise for a price equal to the average closing price of the Paired
Shares on the New York Stock Exchange during the ten consecutive business days
immediately preceding the notice of such exercise.
Guarantees Against Loss. The Stock Agreements provide that on the date
the Reporting Persons are first able to sell their Paired Shared into the public
market pursuant to the Registration Statement (the "Settlement Date"), Starwood
shall pay to the Reporting Persons an amount per Paired Share equal to the
amount, if any, by which the Lock Price (as defined below) exceeds the average
closing price of the Paired Shares on the New York Stock Exchange for the ten
consecutive business days immediately preceding the Settlement Date. The Lock
Price for the Paired Shares issued with respect to the Aspen Property and the
Houston Property is $53.75. The Lock Price for the Paired Shares issued with
respect to the New York Property and the Washington Property is $55.74.
The summaries contained herein of certain provisions of the Hotel
Purchase Agreements, the Stock Agreements and the Registration Rights Agreements
are not intended to be complete and are qualified in their entirety by reference
to the exhibits listed in Item 7.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of December 30, 1997, among Savanah Limited
Partnership, Starwood Lodging Trust and Starwood Lodging
Corporation;
2. Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of December 30, 1997, among New Remington Partners,
Starwood Lodging Trust and Starwood Lodging Corporation;
3. Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of December 30, 1997, among N.Y. Overnight Partners,
L.P., Starwood Lodging Trust and Starwood Lodging Corporation;
13
<PAGE> 14
4. Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of December 30, 1997, among D.C. Overnight Partners,
L.P., Starwood Lodging Trust and Starwood Lodging Corporation;
5. Stock Agreement, dated as of January 15, 1998, among Savanah
Limited Partnership, Starwood Hotels & Resorts Trust and
Starwood Hotels & Resorts Worldwide, Inc.
6. Stock Agreement, dated as of January 15, 1998, among New
Remington Partners, Starwood Hotels & Resorts Trust and
Starwood Hotels & Resorts Worldwide, Inc.
7. Stock Agreement, dated as of January 15, 1998, among N.Y.
Overnight Partners, L.P., Starwood Hotels & Resorts Trust and
Starwood Hotels & Resorts Worldwide, Inc.
8. Stock Agreement, dated as of January 15, 1998, among D.C.
Overnight Partners, L.P., Starwood Hotels & Resorts Trust and
Starwood Hotels & Resorts Worldwide, Inc.
9. Registration Rights Agreement, dated as of January 15, 1998,
among Savanah Limited Partnership, Starwood Hotels & Resorts
Trust and Starwood Hotels & Resorts Worldwide, Inc.
10. Registration Rights Agreement, dated as of January 15, 1998,
among New Remington Partners, Starwood Hotels & Resorts Trust
and Starwood Hotels & Resorts Worldwide, Inc.
11. Registration Rights Agreement, dated as of January 15, 1998,
among N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts
Trust and Starwood Hotels & Resorts Worldwide, Inc.
12. Registration Rights Agreement, dated as of January 15, 1998,
among D.C. Overnight Partners, L.P., Starwood Hotels & Resorts
Trust and Starwood Hotels & Resorts Worldwide, Inc.
13. Power of Attorney from Sheikh Abdulaziz bin Ibrahim Al
Ibrahim; Aspen Enterprises International Holdings, Inc.;
Polestar Limited and Moonbeam Enterprises International, Ltd.
14
<PAGE> 15
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.
Date: January 26, 1998
Sheikh Abdulaziz bin Ibrahim Al Ibrahim
By: /s/ Tarek Ayoubi
---------------------------------------
Name: Tarek Ayoubi
Attorney-in-fact
15
<PAGE> 16
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.
Date: January 26, 1998
Aspen Enterprises International Holdings, Ltd.
By: /s/ Tarek Ayoubi
----------------------------------------
Name: Tarek Ayoubi
Attorney-in-fact
16
<PAGE> 17
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.
Date: January 26, 1998
Polestar Limited
By: /s/ Tarek Ayoubi
-----------------------------------
Name: Tarek Ayoubi
Attorney-in-fact
17
<PAGE> 18
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.
Date: January 26, 1998
Moonbeam Enterprises International, Ltd.
By: /s/ Tarek Ayoubi
-----------------------------------
Name: Tarek Anyoubi
Attorney-in-fact
18
<PAGE> 19
EXHIBIT INDEX
Exhibit No. Description
1. Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of December 30, 1997, among Savanah
Limited Partnership, Starwood Lodging Trust and Starwood
Lodging Corporation;
2. Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of December 30, 1997, among New
Remington Partners, Starwood Lodging Trust and Starwood
Lodging Corporation;
3. Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of December 30, 1997, among N.Y.
Overnight Partners, L.P., Starwood Lodging Trust and Starwood
Lodging Corporation;
4. Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of December 30, 1997, among D.C.
Overnight Partners, L.P., Starwood Lodging Trust and Starwood
Lodging Corporation;
5. Stock Agreement, dated as of January 15, 1998, among
Savanah Limited Partnership, Starwood Hotels & Resorts Trust
and Starwood Hotels & Resorts Worldwide, Inc.
6. Stock Agreement, dated as of January 15, 1998, among
New Remington Partners, Starwood Hotels & Resorts Trust and
Starwood Hotels & Resorts Worldwide, Inc.
7. Stock Agreement, dated as of January 15, 1998, among
N.Y. Overnight Partners, L.P., Starwood Hotels & Resorts Trust
and Starwood Hotels & Resorts Worldwide, Inc.
8. Stock Agreement, dated as of January 15, 1998, among
D.C. Overnight Partners, L.P., Starwood Hotels & Resorts Trust
and Starwood Hotels & Resorts Worldwide, Inc.
9. Registration Rights Agreement, dated as of January
15, 1998, among Savanah Limited Partnership, Starwood Hotels &
Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc.
10. Registration Rights Agreement, dated as of January
15, 1998, among New Remington Partners, Starwood Hotels &
Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc.
11. Registration Rights Agreement, dated as of January
15, 1998, among N.Y. Overnight Partners, L.P., Starwood Hotels
& Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc.
12. Registration Rights Agreement, dated as of January
15, 1998, among D.C. Overnight Partners, L.P., Starwood Hotels
& Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc.
13. Power of Attorney from Sheikh Abdulaziz bin Ibrahim
Al Ibrahim; Aspen Enterprises International Holdings, Ltd.;
Polestar Limited and Moonbeam Enterprises International, Ltd.
<PAGE> 1
Aspen Execution
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
By
And Between
SAVANAH LIMITED PARTNERSHIP,
a District of Columbia Limited Partnership,
As Seller
And
STARWOOD LODGING TRUST,
a Maryland Real Estate Investment Trust
And
STARWOOD LODGING CORPORATION,
a Maryland Corporation,
As Buyer.
Dated As Of: December 30, 1997
Relating to the
Aspen Luxury Collection Hotel
Aspen, Colorado
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS......................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................11
SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11
SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11
3.1 Purchase Price..................................................11
3.2 Payment.........................................................11
3.3 Investment of Escrowed Funds....................................12
3.4 Allocation of Purchase Price....................................12
3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12
SECTION 4 - ESCROW; CLOSING; COSTS..........................................13
4.1 Escrow..........................................................13
4.2 Seller's Deliveries to Escrow Holder............................13
4.2.1.1 Deed...................................................14
4.2.1.2 Assignment and Assumption of Tenant Leases.............14
4.2.1.3 General Assignment.....................................14
4.2.1.4 Assignment and Assumption of Management Agreement......14
4.2.1.5 Bill of Sale...........................................14
4.2.1.6 Stock Agreement........................................14
4.2.1.7 Liquor Licenses Management Agreement...................14
4.2.1.8 [Intentionally Omitted]................................14
4.2.1.9 [Intentionally Omitted]................................14
4.2.1.10 PUD Cooperation Agreement..............................14
4.2.1.11 [Intentionally Omitted]................................15
4.2.1.12 [Intentionally Omitted]................................15
4.2.1.13 Non-Foreign Person Certificate.........................15
4.2.1.14 Transfer Tax Forms.....................................15
4.2.1.15 Certified Rent Roll....................................15
4.2.1.16 Certified Operating Statement..........................15
4.2.1.17 Guest Ledger...........................................15
4.2.1.18 Closing Certificate....................................15
4.2.1.19 Schedule of Bookings...................................15
4.2.1.20 Title Requirements.....................................15
4.2.1.21 Payoff Letters.........................................16
4.2.1.22 Notices to Tenants.....................................16
4.2.1.23 Opinion of Seller's Counsel............................16
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<PAGE> 3
4.2.1.24 Other..................................................16
4.3 Buyer's Deliveries to Escrow Holder.............................16
4.3.1.1 The Cash Purchase Price................................16
4.3.1.2 Stock Certificates.....................................16
4.3.1.3 Assignment and Assumption of Management Agreement......16
4.3.1.4 Value Letter...........................................17
4.3.1.5 Opinion of Buyer's Counsel.............................17
4.3.1.6 Stock Agreement........................................17
4.3.1.7 [Intentionally Omitted]................................17
4.3.1.8 Liquor License Management Agreement....................17
4.3.1.9 PUD Cooperation Agreement..............................17
4.3.1.10 [Intentionally Omitted]................................17
4.3.1.11 [Intentionally Omitted]................................17
4.3.1.12 Closing Certificate....................................17
4.3.1.13 The Assignment and Assumption of Tenant Leases.........17
4.3.1.14 The General Assignment and Assumption Agreement........17
4.3.1.15 Transfer Tax Forms.....................................17
4.3.1.16 Other..................................................17
4.4 Seller's Deliveries to Buyer....................................17
4.4.1 Tenant Leases/Tenant Deposits..........................18
4.4.2 Service Contracts......................................18
4.4.3 Licenses and Permits...................................18
4.4.4 Records and Plans......................................18
4.5 Possession......................................................18
4.6 Evidence of Authorization.......................................18
4.7 Close of Escrow.................................................18
4.8 Costs of Escrow.................................................19
4.8.7 [Intentionally Omitted]................................20
4.9 Other Costs.....................................................20
4.10 Maintenance of Confidentiality by Escrow Holder.................20
SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20
5.1 General.........................................................20
5.2 General and Specific Prorations.................................21
5.3 Deposits........................................................23
5.4 Tenant Leases...................................................23
5.5 Service Contracts and Other Intangible Property.................23
5.6 Tax Refunds and Proceedings.....................................24
5.7 Guest Baggage...................................................24
5.8 Safe Deposit Boxes..............................................24
5.9 Advance Bookings................................................24
5.10 Special Purchase Price Adjustment...............................24
5.11 The PCL Litigation..............................................25
ii
<PAGE> 4
SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........25
6.1 Of the Trust....................................................25
6.1.1 Power and Authority....................................26
6.1.2 Authorization; Valid Obligation........................26
6.1.3 Capital Structure......................................26
6.1.4 SEC Documents and Other Reports........................26
6.1.5 Absence of Certain Changes or Events...................27
6.1.6 Actions and Proceedings................................27
6.1.7 REIT Status............................................28
6.1.8 Partnership Status.....................................28
6.1.9 Hart-Scott-Rodino Act..................................28
6.2 Of the Corporation..............................................28
6.2.1 Power and Authority....................................28
6.2.2 Authorization; Valid Obligation........................28
6.2.3 Capital Structure......................................28
6.2.4 SEC Documents and Other Reports........................29
6.2.5 Absence of Certain Changes or Events...................29
6.2.6 Actions and Proceedings................................29
6.2.8 Hart-Scott-Rodino......................................30
6.3 Of Seller.......................................................30
6.3.1 Regarding Seller's Authority...........................30
6.3.2 Tenant Leases..........................................31
6.3.3 Service Contracts......................................31
6.3.4 Claims.................................................31
6.3.5 Employees..............................................31
6.3.6 Compliance with Laws...................................31
6.3.7 Hazardous Materials....................................32
6.3.8 Records and Plans......................................32
6.3.9 Licenses and Permits...................................32
6.3.10 Management Agreements..................................32
6.3.11 Personal Property......................................32
6.3.12 Insurance..............................................32
6.3.13 Real Estate Taxes......................................32
6.3.14 [Intentionally Omitted]................................32
6.3.15 [Intentionally Omitted]................................33
6.3.16 [Intentionally Omitted]................................33
6.4 Buyer's Review of Records and Plans.............................33
6.4.1 Access to Records and Plans; Specific Disclosures......33
6.4.2 Limitation on Access to Records and Plans..............33
6.5 PURCHASE AS IS..................................................34
6.6 Limitation on Representations and Warranties of Seller..........36
6.7 Right to Supplement Disclosures.................................36
6.8 Basket..........................................................36
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<PAGE> 5
6.9 Survival........................................................36
6.10 [Intentionally Omitted].........................................37
SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............37
7.1 Buyer's Review of Title.........................................37
7.1.1 Failure to Satisfy Certain Closing Conditions;
Monetary Liens.........................................37
7.1.2 [Intentionally Omitted]................................38
7.2 Title Insurance Policy..........................................38
7.3 Title to Real Property..........................................38
SECTION 8 - INTERIM ACTIVITIES..............................................39
SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................39
9.1 Conditions Precedent to Buyer's Obligations.....................39
9.1.1 Seller's Deliveries....................................39
9.1.2 Title Policy...........................................39
9.1.3 Preference Under Related Agreement.....................39
9.1.4 [Intentionally Omitted]................................40
9.1.5 Seller Performance.....................................40
9.1.6 Representations and Warranties of Seller...............40
9.2 Conditions Precedent to Seller's Obligations....................40
9.2.1 Funds and Documents....................................40
9.2.2 Representations and Warranties of Buyer................40
9.2.3 No Material Changes....................................40
9.2.4 [Intentionally Omitted]................................40
9.2.5 Performance Under Related Agreement....................40
9.3 Failure of Condition............................................40
SECTION 10 - BROKER.........................................................41
SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................41
11.1 Buyer's Remedies in General.....................................41
11.2 MATERIAL INDUCEMENT.............................................42
SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................42
12.1 Insured Casualty................................................42
12.2 Uninsured Casualty..............................................43
SECTION 13 - CONDEMNATION...................................................43
SECTION 14 -EMPLOYEES.......................................................44
14.1 Hiring of Hotel Employees; WARN Act Compliance..................44
14.2 Collective Bargaining Agreements................................45
14.3 Continuation of Benefits........................................45
14.5 Indemnification.................................................47
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<PAGE> 6
14.6 Survival........................................................47
SECTION 15 - COOPERATION....................................................47
SECTION 16 - NOTICES........................................................48
16.1 Addresses.......................................................48
16.2 Receipt of Notices..............................................49
16.3 Refusal of Delivery.............................................50
16.4 Change of Address...............................................50
SECTION 17 - GENERAL PROVISIONS.............................................50
17.1 Amendment.......................................................50
17.2 Time of Essence.................................................50
17.3 Entire Agreement................................................50
17.4 No Waiver.......................................................50
17.5 Counterparts....................................................51
17.6 Costs and Attorneys' Fees.......................................51
17.7 Payments; Interests.............................................51
17.8 Transfer By Buyer...............................................51
17.9 Parties in Interest.............................................51
17.10 Applicable Law..................................................52
17.11 Incorporation of Recitals and Exhibits..........................52
17.12 Construction of Agreement.......................................52
17.13 Severability....................................................52
17.14 Announcements...................................................52
17.15 Submission of Agreement.........................................52
17.16 Further Assurances..............................................52
17.17 Cooperation.....................................................53
17.18 Moratorium on Re-Sale...........................................53
17.19 Confidentiality.................................................53
17.20 Interim Management Agreement....................................53
17.21 Starwood Lodging Trust..........................................54
v
<PAGE> 7
EXHIBITS
Exhibit A....................................................Legal Description
Exhibit B...............................................Memorandum of Contract
Exhibit 4.2.1.1...........................................................Deed
Exhibit 4.2.1.2.....................Assignment and Assumption of Tenant Leases
Exhibit 4.2.1.3....................General Assignment and Assumption Agreement
Exhibit 4.2.1.4..............Assignment and Assumption of Management Agreement
Exhibit 4.2.1.5A................Bill of Sale for Capitalized Tangible Property
Exhibit 4.2.1.5B...................Bill of Sale for Expensed Tangible Property
Exhibit 4.2.1.6................................................Stock Agreement
Exhibit 4.2.1.7............................Liquor License Management Agreement
Exhibit 4.2.1.10.....................................PUD Cooperation Agreement
Exhibit 4.2.1.13................................Non-Foreign Person Certificate
Exhibit 17.20.....................................Interim Management Agreement
SCHEDULES
Schedule 1.1.1......................................Approved Service Contracts
Schedule 1.1.2...........................................Employment Agreements
Schedule 1.1.3................................................Equipment Leases
Schedule 1.1.4...............................................Excluded Property
Schedule 1.1.5.........................................[Intentionally Omitted]
Schedule 1.1.6.................................................Hotel Employees
Schedule 1.1.7.......................................Schedule of Tenant Leases
Schedule 1.1.8.................. Seller's Due Diligence and Seller's Knowledge
Schedule 1.1.9.....................................Specific Disclosure Matters
Schedule 6.3.2............................Material Defaults Under Tenant Lease
Schedule 6.3.3..............Material Defaults Under Approved Service Contracts
Schedule 6.3.4.................................................Material Claims
Schedule 6.3.5...................Material Defaults Under Employment Agreements
Schedule 6.3.6.............................................Material Violations
Schedule 6.3.7...............................Material Environmental Conditions
Schedule 6.3.9............................................Licenses and Permits
Schedule 6.3.12.............................................Seller's Insurance
Schedule 6.3.13...........................................Pending Tax Protests
Schedule 7.3............................................Permitted Encumbrances
Schedule 14.2.................................Collective Bargaining Agreements
vi
<PAGE> 8
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is entered into as of the 30th day of December, 1997, by and
between SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited partnership
("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust
(the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the
"Corporation"; the Trust and the Corporation being referred to herein
collectively as, "Buyer").
A. Seller owns that certain parcel of land described in Exhibit A attached
hereto and made a part hereof, which is improved with a hotel building and
certain related improvements, all as more particularly set forth in this
Agreement.
B. Seller desires to sell, and Buyer desires to purchase, the above
described land and hotel together with the related improvements upon the terms
and subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Buyer and Seller agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms
"Accounts Receivable" shall mean, collectively, all Cash Equivalent
Receivables, all Invoiced Receivables and all Other Accounts Receivable.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Anthem" shall have the meaning set forth in Section 14.3.1(ii).
"Approved Service Contracts" shall mean the Service Contracts
identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other
Service Contracts cancelable upon thirty (30) or fewer days notice without
penalty, which Service Contracts Buyer shall assume as of the Closing pursuant
to the General Assignment and Assumption Agreement.
<PAGE> 9
"Aspen Subdivision" shall mean the land subject to that certain
First Amended Plat of Aspen Mountain Subdivision and Planned Unit Development
Agreement between the City of Aspen, Colorado and John M. Roberts, Jr., recorded
October 3, 1988, in Book 574 at Page 792 of the Real Property records of Pitkin
County, Colorado.
"Assignment and Assumption of Management Agreement" shall have the
meaning set forth in Section 4.2.1.4.
"Assignment and Assumption of Tenant Leases" shall have the meaning
set forth in Section 4.2.1.2.
"Bill of Sale" shall have the meaning set forth in Section 4.2.1.5.
"Business Day" shall mean any day other than Saturday or Sunday on
which the New York Stock Exchange is open for business.
"Booking" shall mean a contract or reservation for the use of guest
rooms, banquet facilities, meeting rooms, and/or conference facilities at the
Hotel.
"Buyer's Counsel" shall mean the law firm of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq.
"Buyer Default" shall have the meaning set forth in Section 3.5.1.
"Cash Equivalent Receivables" shall mean all Guest Ledger
Receivables which are in the form of drafts or checks written on any bank or
other financial institution, certified checks, money orders, amounts owed to
Seller from credit card, debit card, travel and entertainment card or traveler's
check companies, and are in such other forms which are considered to be cash
equivalents under generally acceptable accounting principles, whether or not
such Guest Ledger Receivables have been presented or billed to any such bank,
financial institution or other company as of the Closing Date.
"Cash Purchase Price" shall mean (a) Nine Million Dollars
($9,000,000.00) plus (b) the Overage Cash Payment, if any, as adjusted pursuant
to Section 3.2.2.
"Closing" or "Close of Escrow" shall have the meaning set forth in
Section 4.7.2.
"Closing Agent" shall have the meaning set forth in Section 4.8.10.
"Closing Date" shall mean the day on which the Closing occurs
hereunder.
"Closing Payment" shall have the meaning set forth in Section 3.2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
2
<PAGE> 10
"Collective Bargaining Agreements" shall have the meaning set forth
in Section 14.2.
"Conveyance Documents" shall mean the Deed, the Assignment and
Assumption of Management Agreement, the Assignment and Assumption of Tenant
Leases, the Bill of Sale and the General Assignment and Assumption Agreement.
"Deed" shall have the meaning set forth in Section 4.2.1.1.
"Deposit" shall mean an amount equal to $10,000,000.00 held in
accordance with the provisions of Section 3 hereof together with all interest
accrued thereon.
"Employer Corporation" shall mean Luxury Holdings, Inc. (formerly
known as TQM Inc.).
"Employment Agreements" shall mean the Collective Bargaining
Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA),
affecting Hotel Employees, including pension, profit sharing, employee benefit
and similar plans, if any, and agreements with regard to any Hotel Employee each
of which are identified on or expressly described in the materials identified on
Schedule 1.1.2 annexed hereto and made a part hereof.
"Environmental Condition" shall mean any condition with respect to
soil, surface waters, groundwater, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding the
Real Property, which results in any damage, loss, cost, expense, claim, demand,
order or liability to or against Seller or Buyer by any third party (including,
without limitation, any government entity) as a result of a violation of any
applicable Environmental Laws.
"Environmental Laws" shall mean all presently applicable statutes,
regulations, rules, ordinances, codes, licenses, permits and orders of any and
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof, and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous
state laws and regulations.
"Equipment Leases" shall mean all leases of equipment, vehicles,
furniture or other personal property leased by, or on behalf of, Seller and
located at, or used in the operation of the Real Property, together with any and
all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto.
3
<PAGE> 11
"Equity Purchase Price" shall mean the number of Paired Shares with
a value as determined pursuant to the Stock Agreement equal to $152,637,000.00
to be delivered in accordance with the applicable provisions of the Stock
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"Escrow" shall mean an escrow opened with the Escrow Holder for the
purchase and sale of the Property in accordance with the provisions of this
Agreement.
"Escrow Holder" shall mean the Title Company unless otherwise agreed
in writing by Buyer and Seller.
"Escrow Instructions" shall have the meaning set forth in Section
4.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Property" shall mean all Seller's right, title and
interest in and to: (a) those claims of Seller attributable to the period prior
to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a
part hereof, or which Seller is entitled to assert under the express provisions
of Section 5; (b) all insurance proceeds under Seller's Insurance and workers'
compensation policies, including return premiums and dividends thereon and all
claims thereunder in each case to the extent attributable to acts or occurrences
prior to the Closing Date; (c) all accounts owned or maintained by Seller, or
Manager on Seller's behalf, in connection with the Hotel, including all
operating and reserve accounts; (d) any books, records, files or papers
specifically described in Section 6.3.2 as excluded from the Property
Information; and (e) up to five (5) of the items of art work selected by Seller
subject to Buyer's reasonable approval, provided, however, Seller shall replace
each such item of art work prior to the Closing Date with a similar item of art
work subject to Buyer's reasonable agreement that such art work is consistent
with the quality, character and decor of the Hotel.
"Excluded Parties" shall have the meaning set forth in Section 17.18
"Execution Date" shall mean the date hereof.
"General Assignment and Assumption Agreement" shall have the meaning
set forth in Section 4.2.1.3.
"Guest Ledger Receivables" shall mean amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms at
the Hotel or group, conference or banquet customers of Seller at the Hotel.
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder,
as the same has been amended from time to time.
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"Hotel" shall mean the hotel located on the Land and commonly known
as the Aspen Luxury Collection Hotel.
"Hotel Employees" shall mean all full-time, part-time or temporary
employees of Seller and/or the Employer Corporation (but not employees of
Manager or any of its affiliates) who are employed by Seller and/or the Employer
Corporation exclusively at or in connection with the Hotel as of the Closing
Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof.
"Improvements" shall mean Seller's right, title and interest in and
to the hotel building and other improvements now or hereafter located on the
Land.
"Insured Casualty Notice" shall have the meaning set forth in
Section 12.1.1.
"Intangible Property" shall mean all of Seller's right, title and
interest in and to the following, in each case excluding any Excluded Property:
(i) Licenses and Permits; (ii) trademark rights, and other intangible property,
rights, titles, interests, privileges and appurtenances related to or used in
connection with the Hotel or its operations; (iii) warranties and guaranties of
architects, engineers, contractors, subcontractors, suppliers or materialmen
involved in the repair, construction, maintenance, design, reconstruction or
operation of the Hotel, or any equipment or systems constituting a part of the
Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and
(vii) computer programs, software and documentation thereof (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 variable descriptions, flow charts and
other related materials used in connection therewith; and (viii) any goodwill
associated with the operation of the Hotel.
"Interim Management Agreement" shall have the meaning set forth in
Section 17.20 hereto.
"Invoiced Receivables" shall mean all Guest Ledger Receivables other
than Cash Equivalent Receivables whether or not such Guest Ledger Receivables
have been invoiced by Seller as of the Closing Date.
"Land" shall mean Seller's right, title and interest in and to the
land described on Exhibit A annexed hereto and made a part hereof.
"Licenses and Permits" shall mean all licenses, permits,
registrations, certificates, authorizations and governmental approvals other
than the Liquor License obtained in connection with the design, construction,
rehabilitation, use and/or operation of the Hotel.
"LIBOR Rate" shall mean the average of interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to publish such a compilation of interbank offered
rates, or if The Wall Street Journal ceases to be published, then
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Buyer shall propose a substitute method of determining the interest rate
generally known as the three-month LIBOR rate, which method, absent manifest
error, shall be binding on Seller and Buyer.
"Liquor License" shall mean all licenses, permits, registrations,
certificates, authorizations and governmental approvals with respect to service
of alcoholic beverages at the Hotel.
"Liquor License Management Agreement" shall have the meaning set
forth in Section 4.2.1.8.
"Lock Price" shall have the meaning set forth in the Stock
Agreement.
"Losses" shall mean any and all losses, liabilities, obligations,
damages, claim or expense, including without limitation, reasonable attorneys'
and accountants' fees and disbursements related thereto.
"Manager" means Sheraton Operating Corporation, a wholly-owned
subsidiary of ITT Sheraton Corporation.
"Management Agreement" shall mean that certain Management Agreement
entered into as of August 13, 1997 between Seller and Manager.
"Market Price" shall have the meaning set forth in the Stock
Agreement.
"Material" shall mean $5,000 for any single occurrence and $15,000
in the aggregate for any group of occurrences whether or not related.
"Material Casualty" shall mean a casualty or casualties that, in the
aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel;
or (ii) will take twelve (12) months or longer from the date of the casualty to
fully remediate.
"Material Taking" shall mean an exercise by an applicable
governmental authority of the power of condemnation or eminent domain that
results in: (a) the taking of more than twenty percent (20%) of the Real
Property; (b) a material reduction or restriction in access to the Property; or
(c) the inability to operate the Hotel in substantially the same manner (without
material additional expense) as it was operated prior to such taking.
"Memorandum of Contract" shall mean a memorandum of this Agreement
in the form attached as Exhibit B hereto.
"Monetary Lien" shall mean any monetary lien affecting the Real
Property of an ascertainable amount, other than any lien for taxes or
assessments which are not yet due and payable.
"Non-Foreign Person Certificate" shall have the meaning set forth in
Section 4.2.1.13.
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"Other Accounts Receivable" shall mean any and all rents, additional
rent, deposits, and other sums and charges owing to Seller that are in any way
attributable to the operation of the business at the Hotel, including, without
limitation, all rents and/or license fees due from Tenants under Tenant Leases,
and including any such amounts which are past due, but excluding Guest Ledger
Receivables.
"Overage Cash Payment" shall mean the portion of the Equity Purchase
Price which is payable in cash at Closing as provided in Section 3.2.2.1, if
any.
"Ownership Limitation" shall mean 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.
"Paired Shares" shall mean one 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 the Pairing Agreement, which
shares shall be transferable as provided in the Stock Agreement and the Pairing
Agreement.
"Pairing Agreement" shall mean 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 beneficial interests of the
Trust and shares of the Corporation.
"PCL Litigation" shall have the meaning set forth in Section 5.10.
"Permitted Encumbrances" shall have the meaning set forth in Section
7.3.
"Person" shall mean any natural person, partnership, corporation,
association, limited liability company, trust or any other legal entity.
"Personal Property" shall mean collectively the Tangible Personal
Property and the Intangible Property.
"Preliminary Title Report" shall have the meaning set forth in
Section 7.1.
"Property" shall mean collectively the Real Property, the Personal
Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the
Excluded Property.
"Property Information" shall have the meaning set forth in Section
6.4.2.
"Proration Time" shall mean 12:01 a.m. Mountain Time on the Closing
Date.
"PUD Cooperation Agreement" shall have the meaning set forth in
Section 4.2.1.10.
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"Purchase Price" shall mean the sum of the Cash Purchase Price and
the Equity Purchase Price.
"Real Property" shall mean the Land and the Improvements, together
with Seller's right, title and interest in and to all rights of way, easements,
water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon
substances, or any portion thereof, relating to the Land, and Seller's right,
title and interest in and to all streets, alleys, strips and gores abutting the
Land, if any.
"Records and Plans" shall mean, all financial records showing the
income and expenses of the Hotel for the prior three (3) calendar years and for
the current year to date, certificates of occupancy, records of the Hotel's
operations (including utility bills), building plans, specifications and
drawings, lists of Personal Property, surveys, tax bills for the Real Property
for the last three (3) years and for the current year to date, copies of the
Service Contracts, Licenses and Permits and other documents related to the use,
maintenance, repair, management, construction and/or operation of the Hotel, in
each case, to the extent located on-site at the Hotel, or to Seller's Knowledge,
otherwise under the control of Seller.
"Related Agreement" shall have the meaning set forth in Section
9.1.3.
"Schedule of Advance Bookings" means the Schedule of Advance
Bookings delivered pursuant to Section 4.2.1.19.
"Schedule of Tenant Leases" means the Schedule of Tenant Leases set
forth in Schedule 1.1.7 annexed hereto and made a part hereof.
"Scheduled Closing Date" shall mean January 15, 1998, as such date
may be extended in accordance with the provisions of Section 7.1 - time being of
the essence.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall have the meaning set forth in Section 6.1.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Default" shall have the meaning set forth in Section 11.1.
"Seller's Closing Certificate" shall have the meaning set forth in
Section 4.2.1.18.
"Seller's Counsel" shall mean Morrison & Foerster LLP acting through
Thomas R. Fileti, Esq.
"Seller's Due Diligence" shall mean the information gathering and
review process described on Schedule 1.1.8.
"Seller's Insurance" shall have the meaning set forth in Section
6.3.12.
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"Seller's Knowledge" shall mean with respect to any representation
or warranty so qualified, the knowledge of the person(s) identified on Schedule
1.1.8 annexed hereto and made a part hereof, on the date on or as of which such
representation or warranty is made, following the completion by such person(s)
of Seller's Due Diligence, but without any other duty to investigate or inquire
and without attribution to any such identified person(s) of facts and matters
otherwise within the personal knowledge of any other officers, employees, or
agents of Seller or any third parties (including, but not limited to, the
Manager or any previous manager of the Hotel), but not within the actual current
knowledge of such named person(s). It is understood that none of the individuals
identified on Schedule 1.1.8 shall have any personal liability for any of
Seller's representations, warranties and other obligations under this Agreement.
"Service Contracts" shall mean any and all service contracts,
landscaping contracts, maintenance agreements, open purchase orders and other
contracts for the provision of services, materials or supplies to or for the
benefit of the Property, except for the Management Agreement, together with any
and all amendments thereto.
"Specific Disclosure Matters" shall mean certain disclosures and
information provided or disclosed by Seller to Buyer described on Schedule 1.1.9
annexed hereto and made a part hereof.
"Starwood Disclosure" shall mean collectively, the Form S-3 filed by
the Corporation and the Trust with the SEC on November 12, 1997, and the Form
S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as
the same may be amended by any filing with the SEC made by the Trust or the
Corporation as amended to date and from time to time thereafter.
"Starwood Operating Partnership" shall mean SLC Operating Limited
Partnership, a Delaware limited partnership.
"Starwood Realty Partnership" shall mean SLT Realty Limited
Partnership, a Delaware limited partnership.
"State" shall mean the state in which the Hotel is located.
"Stock Agreement" shall have the meaning set forth in Section
4.2.1.6.
"Survey" shall mean an as-built ALTA survey of the Real Property
certified to the Title Company meeting all State land survey requirements.
"Tangible Personal Property" shall mean, in each case to the extent
owned by Seller and excluding any and all of the Excluded Property: (i) all
Records and Plans; (ii) all "Inventories", as such term is defined in the
Uniform System of Accounts; (iii) all depreciable personal property; and (iv)
all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery,
equipment, licensed software and personal computer based security systems, if
any, specialized hotel equipment and other tangible personal property, used in
connection with the ownership, operation or maintenance of the Property,
including, without limitation, all china,
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glassware, silverware, linens, towels, curtains, uniforms, engineering,
maintenance, and housekeeping supplies, draperies, materials and carpeting, used
or intended for use, but not for sale, in connection with the operation of the
Hotel, all equipment used in the operation of the kitchen, dining rooms,
lounges, bars, laundry, dry cleaners, lobby, reservation desk and all
merchandise, food and beverages held for sale in connection with the operation
of the Hotel, which are on hand on the Closing Date; provided, however, that to
the extent that any applicable law prohibits the transfer of alcoholic beverages
from Seller to Buyer, such beverages shall not be considered a part of the
Tangible Personal Property.
"Tenant" shall mean a tenant, licensee or concessionaire occupying
space at any portion of the Property pursuant to a Tenant Lease.
"Tenant Lease" shall mean a lease, concession agreement or license
agreement entered into by or on behalf of Seller with a third party for the use
of any part of the Real Property, including those leases, concession agreements
and license agreements shown on the Schedule of Tenant Leases, together with any
amendments thereto but excluding Bookings.
"Tenant Security Deposits" shall mean all security deposits or other
security of Tenants under the Tenant Leases, plus accrued interest, if any,
payable thereon.
"Termination Charges" shall have the meaning set forth in Section
14.1.
"Termination Notice" shall have the meaning set forth in Section
3.5.1.
"Threshold Amount" shall mean One Million Dollars ($1,000,000).
"Title Company" shall mean Chicago Title Insurance Company.
"Title Policy" shall have the meaning set forth in Section 7.2.
"Transfer Restriction Period" shall have the meaning set forth in
Section 17.18.
"Uninsured Casualty Notice" shall have the meaning set forth in
Section 12.2.1.
"Uninsured Estimate to Repair" shall have the meaning set forth in
Section 12.2.1.
"Uniform System of Accounts" shall mean the Uniform System of
Accounts for Hotels, prepared by The Hotel Association of New York City, Inc.,
in effect as of the date hereof.
"Utility Deposits" shall mean Seller's right, title and interest in
and to all deposits delivered by Seller to utilities, governmental agencies,
suppliers or others pursuant to an Approved Service Contract or otherwise in
connection with the Real Property.
"Value Letter" shall have the meaning set forth in Section 4.3.1.4.
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"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act and the Regulations promulgated thereunder, as the same has
been amended.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
PURCHASE AND SALE OF PROPERTY
On the terms and subject to the conditions of this Agreement, Seller
agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property
from Seller all as hereinafter provided. Notwithstanding any other provision of
this Agreement, there shall be excluded from the Property being conveyed
hereunder the Excluded Property.
SECTION 3
PURCHASE PRICE; PAYMENT;
BUYER'S DEFAULT; LIQUIDATED DAMAGES
3.1 Purchase Price. The purchase price for the Property shall be the
Purchase Price.
3.2 Payment. The Purchase Price shall be paid as follows:
3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow
Holder, in cash or other immediately available funds, the Deposit, to be held by
Escrow Holder strictly in accordance with the provisions of this Agreement. If
the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit
as a credit against the Purchase Price.
3.2.2 At least one (1) day prior to the Scheduled Closing Date
(unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder
an amount (the "Closing Payment") payable in the form specified in Sections
3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the
Deposit. The Closing Payment shall be paid as follows:
3.2.2.1 The Equity Purchase Price shall be delivered in Paired
Shares without adjustment for the pro-rations hereunder, which shares shall be
delivered in accordance with and subject to and transferable in accordance with
the provisions of the Stock Agreement and the Pairing Agreement. If any portion
of the Equity Purchase Price cannot be paid in Paired Shares on account of the
Ownership Limitation, a cash payment in an amount equal to the
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product of (a) the number of Paired Shares which are not delivered hereunder or
under the Stock Agreement because of the Ownership Limitation and (b) the Lock
Price (the "Overage Cash Payment") shall be paid in cash or other immediately
available funds.
3.2.2.2 The balance of the Closing Payment shall be paid in
cash or other immediately available funds adjusted for the pro-rations provided
for expressly in this Agreement.
3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest
any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills
or other securities having maturities of thirty (30) days or less and
constituting direct obligations of, or fully guaranteed by, the United States of
America (and provided, further, that such direct obligations or guarantees, as
the case may be, are entitled to the full faith and credit of the United States
of America) or such other investments as Buyer may direct and Seller may
approve, until Escrow Holder is required to deliver or use such funds or any
interest earned thereon in accordance with the provisions of this Agreement. All
interest accruing on the Deposit shall be paid to the party ultimately entitled
to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer
or Escrow Holder.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets and property that comprise the Property as proposed by Seller
prior to Closing subject to the reasonable approval of Buyer, and such
allocation shall be used by Seller and Buyer in connection with the preparation
of their respective income tax, sales tax, transfer tax, and any other
applicable tax returns. Seller and Buyer shall not, nor shall they permit their
respective Affiliates to, take a federal or state income tax position with any
taxing or other public authorities in any jurisdiction which is materially
inconsistent with the allocation so agreed upon by the parties.
3.5 Default by Buyer Prior to Closing; Liquidated Damages.
3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER
BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS
TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"),
THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO
BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND
ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED
DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER
DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER
LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF
ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION
HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT.
NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO
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OBTAIN SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION
7.1.1.
3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION
3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE
AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR,
SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A
REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE
SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND
THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE COMPENSATION TO
SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR.
INITIALS:
-------------------------- -------------------------
Seller Buyer
SECTION 4
ESCROW; CLOSING; COSTS
4.1 Escrow. The purchase and sale of the Property shall be consummated
through the Escrow. Immediately upon the execution of this Agreement, the
parties shall deposit a copy of this Agreement with Escrow Holder. This
Agreement, together with any general provisions agreed to in writing by Buyer
and Seller for the benefit of Escrow Holder, shall constitute the escrow
instructions for the transfer of the Property (the "Escrow Instructions"). In
the event of any conflict between this Agreement and such general provisions,
this Agreement shall control unless otherwise expressly agreed in writing by
Buyer, Seller and Escrow Holder. If any requirements relating to the duties or
obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow
Holder requires additional instructions, the parties shall make such deletions,
substitutions and additions to the Escrow Instructions as Buyer's Counsel and
Seller's Counsel shall mutually approve and which do not substantially alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow Holder and shall be binding upon the party whose counsel gave such
instructions to Escrow Holder.
4.2 Seller's Deliveries to Escrow Holder.
4.2.1 Prior to the Scheduled Closing Date (subject to extension
pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following
documents duly executed and, where applicable, acknowledged by Seller, each of
which shall be undated and the delivery of each of which shall be a condition
precedent to the obligation of Buyer to close hereunder.
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4.2.1.1 Deed. A deed with respect to the Real Property in the
form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to
transfer all of Seller's right, title and interest in and to the Real Property,
subject only to the matters of record as of the Closing Date, from Seller to
Buyer (the "Deed");
4.2.1.2 Assignment and Assumption of Tenant Leases. An
Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2
annexed hereto and made a part hereof pursuant to which Seller shall assign the
Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations
thereunder (the "Assignment and Assumption of Tenant Leases");
4.2.1.3 General Assignment. A General Assignment and
Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a
part thereof pursuant to which Seller shall assign to Buyer all of Seller's
right, title and interest in and to all of the Intangible Property and Buyer
shall assume all obligations thereunder (the "General Assignment and Assumption
Agreement");
4.2.1.4 Assignment and Assumption of Management Agreement. An
Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4
annexed hereto and made a part hereof pursuant to which Seller shall assign to
Buyer the Management Agreement and Buyer shall assume the obligations of Seller
thereunder, provided, however, the obligation to deliver the Assignment and
Assumption of Management Agreement shall be irrevocably waived, if prior to the
Close of Escrow, the Management Agreement shall have been terminated and the
Interim Management Agreement shall have become effective in accordance with
Section 17.20;
4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of
Exhibit 4.2.1.5A and B annexed hereto and made a part hereof conveying to Buyer
or designees of Buyer all of Seller's right, title and interest in and to the
Tangible Personal Property (the "Bill of Sale");
4.2.1.6 Stock Agreement. The Stock Agreement in the form of
Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement");
4.2.1.7 Liquor License Management Agreement. The Liquor
License Management Agreement in the form of Exhibit 4.2.1.7 annexed hereto and
made a part hereof (the "Liquor License Management Agreement").
4.2.1.8 [Intentionally Omitted]
4.2.1.9 [Intentionally Omitted]
4.2.1.10 PUD Cooperation Agreement. A PUD Cooperation
Agreement in the form of Exhibit 4.2.1.10 annexed hereto and made a part hereof
pursuant to which Buyer and Seller shall further allocate the respective rights
and obligations of the owners
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of Lot 1, 3, 5 and 6, including without limitation the obligation to maintain
the Ice Rink on Lot 6 in the Aspen Subdivision (the "PUD Cooperation
Agreement");
4.2.1.11 [Intentionally Omitted]
4.2.1.12 [Intentionally Omitted]
4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person
Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part
hereof (the "Non-Foreign Person Certificate");
4.2.1.14 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Seller in order to effect the Closing;
4.2.1.15 Certified Rent Roll. A copy of the rent roll for the
Property dated as of the Closing Date and certified by Seller to be (a) a true,
correct and complete copy of the rent roll for the Property provided to Seller
by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.16 Certified Operating Statement. An operating statement
for the Property dated as of a date no more than thirty (30) days prior to the
Closing Date and certified by Seller to be (a) a true, correct and complete copy
of the operating statement for the Property provided to Seller by Manager for
the period of Manager's employment at the Property; and (b) to Seller's
Knowledge, to be, true, correct and complete;
4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of
the Proration Time showing all Guest Ledger Receivables and certified by Seller
(a) to be a true, correct and complete copy of the guest ledger provided to
Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and
complete;
4.2.1.18 Closing Certificate. A certification by Seller to
Seller's Knowledge that the representations and warranties set forth in Section
6.3 are true, correct and complete as of the Closing Date, except to the extent
that any such representation or warranty is expressly made only as of the
Execution Date subject to Seller's right to make revisions pursuant to Section
6.7 to such representations and warranties ("Seller's Closing Certificate");
4.2.1.19 Schedule of Bookings. A schedule of all Bookings
relating to periods after the Proration Time, certified by Seller (a) to be a
true, correct and complete copy of the schedule of Bookings provided to Seller
by Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.20 Title Requirements. Any and all certificates,
affidavits and other instruments and documents which the Title Company shall
reasonably require to permit it to issue the Title Policy in the condition
required herein; provided, however, that (a) Seller is given written notice by
Title Company of the requirement of any such certificates, affidavits or
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other instruments and documents within a reasonably sufficient time in advance
of the Scheduled Closing Date and (b) such incidental documents do not create
any liability to Seller that is inconsistent with the liability retained by
Seller under the terms of this Agreement;
4.2.1.21 Payoff Letters. A pay-off letter from the holder of
any mortgage or deed of trust presently encumbering the Real Property indicating
all sums required to satisfy the debt secured by and permit the discharge of
record the lien of such mortgage or deed of trust;
4.2.1.22 Notices to Tenants. Notices to Tenants of the
assignment to Buyer of the Tenant Leases in form and substance satisfactory to
Seller and Buyer;
4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's
Counsel in a form to be agreed upon by the parties; and
4.2.1.24 Other. Any other incidental documents, not otherwise
expressly provided for herein, reasonably required by Escrow Holder to
consummate the purchase and sale of the Property; provided, however, that (a)
Seller is given written notice by Escrow Holder of the requirement of any such
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date (subject to extension in accordance with the provisions
of Section 7.1); and (b) such incidental documents do not create any liability
to Seller that is inconsistent with the liability retained by Seller under the
terms of the this Agreement.
4.3 Buyer's Deliveries to Escrow Holder.
4.3.1 Prior to the Scheduled Closing Date (subject to extension in
accordance with the provisions of Section 7.1), and subject further to the
provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall
deliver to Escrow Holder the following items and documents, which documents
shall be duly executed and, where applicable, acknowledged by Buyer or its
designee, as applicable, and undated, and the delivery of each of which shall be
a condition precedent to the obligation of Seller to close hereunder:
4.3.1.1 The Cash Purchase Price. The Cash Purchase Price;
4.3.1.2 Stock Certificates. Paired Shares in the amount
required to be delivered at the Closing in accordance with the provisions of
this Agreement and in accordance with and subject to the provisions of the Stock
Agreement;
4.3.1.3 Assignment and Assumption of Management Agreement. A
counterpart of the Assignment and Assumption of Management Agreement, provided,
however, the obligation to deliver the Assignment and Assumption of Management
Agreement shall be irrevocably waived, if prior to the Close of Escrow, the
Management Agreement shall have been terminated and the Interim Management
Agreement shall have become effective in accordance with Section 17.20;
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4.3.1.4 Value Letter. A letter (the "Value Letter") to be
obtained by Buyer at Buyer's expense with respect to the reasonableness of the
allocation of the purchase price among the transactions being entered into as of
the date hereof between Buyer and Seller and/or Seller's Affiliates issued by
Bear Stearns;
4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's
counsel in a form to be agreed upon by the parties;
4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement;
4.3.1.7 [Intentionally Omitted]
4.3.1.8 Liquor License Management Agreement. A counterpart of
the Liquor License Management Agreement;
4.3.1.9 PUD Cooperation Agreement. A counterpart of the PUD
Cooperation Agreement;
4.3.1.10 [Intentionally Omitted].
4.3.1.11 [Intentionally Omitted]
4.3.1.12 Closing Certificate. A certification by Buyer that
the representations and warranties set forth in Section 6.1 and Section 6.2 are
true, correct and complete as of the Closing Date;
4.3.1.13 The Assignment and Assumption of Tenant Leases. A
counterpart of the Assignment and Assumption of Tenant Leases;
4.3.1.14 The General Assignment and Assumption Agreement. A
counterpart of the General Assignment and Assumption Agreement;
4.3.1.15 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Buyer in order to effect the closing; and
4.3.1.16 Other. Any other incidental documents, not otherwise
expressly provided for herein, required by Escrow Holder to consummate the
purchase and sale of the Property; provided, however, that (a) Buyer is given
written notice by Escrow Holder of the requirement of such incidental documents
within a reasonably sufficient time in advance of the Scheduled Closing Date;
and (b) Buyer shall not be required to incur any liability, in connection with
the delivery of such incidental documents inconsistent with the provisions of
this Agreement.
4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow,
Seller shall deliver to Buyer or cause to be available to Buyer on-site at the
Hotel, the following documents,
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to the extent the same have not already been delivered and to the extent in the
possession or control of Seller:
4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or
if not available, the best available copies), and the originals of Tenant
Security Deposits which are evidenced by letters of credit or escrow agreements,
if any, and if necessary to enable Buyer to realize or draw upon same, consents
of the applicable Tenants and/or financial institutions or replacement letters
of credit or escrow agreements in favor of Buyer;
4.4.2 Service Contracts. The originals, or, if not available, the
best available copies, of the Approved Service Contracts;
4.4.3 Licenses and Permits. The originals, or, if not available, the
best available copies of the Licenses and Permits; and
4.4.4 Records and Plans. The originals, or, if not available, the
best available copies of the Records and Plans.
4.5 Possession. Seller shall deliver the keys and possession of the
Property to Buyer at the Close of Escrow free and clear of all leases, tenancies
and occupancies, except for the Management Agreement, the Bookings, the rights
of guests in guest rooms, banquet facilities, conference rooms and meeting
rooms, the rights of Tenants under the Tenant Leases (including their assignees,
subtenants or licensees), and the other Permitted Encumbrances.
4.6 Evidence of Authorization. At the Close of Escrow, each party shall
deliver to the other party evidence in form and content reasonably satisfactory
to the other party and the Title Company that (a) the party is duly organized
and validly existing under the laws of the state of its organization and has the
power and authority to enter into this Agreement, (b) this Agreement and all
documents delivered pursuant hereto have been duly executed and delivered by the
party, and (c) the performance by the party of its obligations under this
Agreement have been duly authorized by all necessary corporate, partnership or
other action.
4.7 Close of Escrow.
4.7.1 The Escrow shall close on or before the Scheduled Closing
Date.
4.7.2 Provided that Escrow Holder has not received from either party
written notice of the failure of any condition precedent specified in Section 9
to the obligations of such party (or any previous such notice has been
withdrawn), then when the parties have each deposited into the Escrow the
documents and funds required by this Agreement and the Title Company is
unconditionally prepared to issue the Title Policy at the Close of Escrow,
Escrow Holder shall perform the following actions (collectively, "Close of
Escrow" or "Closing"):
4.7.2.1 Prepare a closing statement for the transaction for
approval by Seller and Buyer prior to the Close of Escrow;
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4.7.2.2 Insert the Closing Date as the date of any undated
document to be delivered through Escrow;
4.7.2.3 Cause the Deed and the PUD Cooperation Agreement to be
recorded in the land records of the state and county where the Real Property is
located;
4.7.2.4 Deliver to Buyer the documents deposited into the
Escrow for delivery to Buyer at the Close of Escrow;
4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to
be received by Seller from Buyer through the Escrow at the Close of Escrow less
(i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and
(ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances
on the Real Property or other matters pursuant to the written instruction of
Seller, and (b) the documents deposited into the Escrow for delivery to Seller
at the Close of Escrow; and
4.7.2.6 Cause the Title Policy to be issued by the Title
Company and delivered to Buyer.
4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows:
4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of
Escrow Holder;
4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of
providing the Survey required to be delivered in accordance with the provisions
of Section 7.1; provided, however, Buyer shall be responsible for the full cost
of the Survey in the event the Closing does not occur hereunder other than on
account of default of Seller;
4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer
taxes and recording fees payable in connection with the conveyance of each
portion of the Real Property and/or the recording of the Deed and any other
documents or instruments recorded pursuant to this Agreement;
4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or
other personal property taxes, levies, fees and charges payable as a result of
the transfer of the Personal Property to Buyer and the consummation of the
transactions contemplated hereby. Buyer shall be the reporting person for such
purposes and shall prepare the necessary sales tax reports based upon the
allocations set forth in Section 3.4. The parties acknowledge that additional
sales tax may be assessed as a result of the transfer of the Personal Property
to Buyer and the consummation of the transactions contemplated hereby after the
Closing and that Buyer and Seller shall continue to each be responsible for
one-half of any such additional taxes. The provisions of Section 4.8.3 and
Section 4.8.4 shall survive the Closing;
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4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of
obtaining the coverage under the Title Policy, except that the cost of any
special endorsements shall be paid exclusively by Buyer;
4.8.6 At Closing or thereafter Buyer shall pay for the cost of the
Value Letter;
4.8.7 [Intentionally Omitted]
4.8.8 If the Close of Escrow fails to occur other than as a result
of a default hereunder by either party, including, without limitation, as a
result of a failure of a condition precedent set forth in Section 9, the fees of
the Escrow Holder and Title Company (including, without limitation, cancellation
fees) shall be borne equally between Buyer and Seller; and
4.8.9 If the Close of Escrow fails to occur as a result of a default
hereunder by either party, the fees of the Escrow Holder and Title Company
(including, without limitation, cancellation fees) shall be borne by the
defaulting party.
4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation
Code, the Title Company shall be designated the "Closing Agent" hereunder and
shall be solely responsible for complying with the Tax Reform Act of 1986 with
regard to the reporting of all settlement information to the Internal Revenue
Service.
4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and
Section 15.1.6, each party shall pay all of its own legal, accounting and
consulting fees and other costs and expenses incurred in connection with this
Agreement.
4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall
maintain in strict confidence and not disclose to anyone the existence of the
Escrow, the identity of the parties thereto, the amount of the Purchase Price,
the existence or provisions of this Agreement or any other information
concerning the Escrow or the transactions contemplated hereby, without the prior
written consent of Buyer and Seller.
SECTION 5
PRORATIONS AND ASSUMPTION OF OBLIGATIONS
5.1 General. All income, receivables, expenses (whether payable or
prepaid) and payables of the Property shall be apportioned equitably between the
parties as of the Proration Time in accordance with the provisions of this
Section 5 (all prorations are to be based upon the number of days in a 365 day
year). The obligation to make apportionments under Sections 5.1 and 5.2 shall,
unless otherwise expressly provided in this Section 5, survive the Close of
Escrow for a period of sixty (60) days at which time such apportionment shall be
final unless disputed during such period.
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5.2 General and Specific Prorations. Without limitation, the following
items shall be apportioned:
5.2.1 At the Closing, Buyer shall assume all of the accounts payable
relating to goods and services ordered or obtained in the ordinary course of
operation of the business of the Hotel (including without limitation, payments
under the Service Contracts and Equipment Leases) prior to the Proration Time.
Seller shall be obligated to credit Buyer at the Close of Escrow with an amount
mutually agreed upon by Buyer and Seller at the Closing, reflecting the parties'
good faith estimate of such accounts payable as of the Proration Time (which
estimate shall deduct any discounts then available in the ordinary course of
business for the prompt payment of such accounts payable), plus a further credit
for any late fees then payable with respect to any identified accounts payable.
Buyer shall be responsible for paying when due all accounts payable arising from
the operation of the Property on or after the Proration Time, and Seller shall
have no further liability for such payables or charges. As of the date which is
sixty (60) days following the Closing Date, Buyer and Seller shall calculate the
amount of all accounts payable relating to goods and services ordered or
obtained in the ordinary course of operation of the business of the Hotel
(including without limitation, payments under the Service Contracts and
Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for
any payments made on account of any such accounts payable which were not
reflected in the Parties' estimate of such amount credited to Buyer at Closing
and which have been paid by Buyer or for which Buyer is obligated to pay in
accordance with the provisions hereof, and if the amount of such credit exceeds
the amounts so paid or for which Buyer is so obligated, Buyer shall pay such
excess amount to Seller;
5.2.2 At the Closing, Seller shall assign to Buyer all of the
Accounts Receivable, for which Seller shall receive a credit at the Close of
Escrow in an amount equal to (a) the full, aggregate outstanding balance of the
Cash Equivalent Receivables (without discount except for service charges due to
charge card companies) plus (b) the full aggregate outstanding balance of the
Invoiced Receivables and Other Accounts Receivable as of the Proration Time,
provided, Buyer shall at its option accept or reject any Invoiced Receivables
and Other Accounts Receivable over ninety (90) days and Seller shall not receive
a credit for any Invoiced Receivables and Other Accounts Receivable over ninety
(90) days rejected by Buyer; provided, that Buyer shall at its own expense use
reasonable efforts to collect any such rejected Invoiced Receivables and Other
Accounts Receivable on behalf of Seller for a period of sixty (60) days after
the Closing Date and thereafter Seller shall have the right to collect same for
its own account; provided, further, as of the date which is sixty (60) days
following the Closing Date, Buyer and Seller shall make any adjustments required
to reflect the collectibility of any Invoiced Receivables and Other Accounts
Receivable (it being agreed that (a) any accounts receivable not listed on the
schedule of accounts receivable of the Property as of the date which is sixty
(60) days following the Closing Date shall be deemed paid as of such date and
(b) except as provided in (a), any accounts receivable which are more than
ninety (90) days past due as of the date which is sixty (60) days following the
Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer
shall make a corresponding payment to the other as required to accurately
reflect the collectibility of such Invoiced Receivables and Other Accounts
Receivable and any accounts receivable deemed uncollectable as of such date in
accordance with the terms
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herof shall be the property of Seller and Seller shall be permitted (at its
expense and for its own account) to collect the same;
5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall
each receive credit for one-half (1/2) of all Guest Ledger Receivables
attributable to the room night during which the Proration Time occurs. Seller
shall receive the income from all restaurant and bar facilities located at the
Property through the Proration Time and Buyer shall receive such income
thereafter;
5.2.4 At the Closing, Seller shall deliver to Buyer all of the
merchandise owned by Seller and held for retail sale at the Hotel, for which
Seller shall receive a credit at the Close of Escrow in an amount equal to
Seller's cost for such merchandise;
5.2.5 All sales, use and occupancy taxes arising from the operation
of the Property shall be prorated as of the Proration Time;
5.2.6 Fees for transferable annual permits, licenses, and/or
inspection fees, if any, for periods during which the Proration Time occurs
shall be prorated as of the Proration Time;
5.2.7 Utility charges with respect to the Property levied against
Seller or the Property and the value of fuel stored on the Property shall be
prorated at Seller's cost therefor as of the Proration Time. Seller shall notify
all utilities, governmental agencies, suppliers and others providing services to
the Property of the prospective change in ownership and operation of the
Property, and Seller shall use its reasonable efforts to cause all utilities
furnished to the Property, including, but not limited to, electricity, gas,
water and sewer, along with any fuel storage tanks to be read the day prior to
the Proration Time;
5.2.8 Permitted administrative charges, if any, on Tenant Security
Deposits shall be prorated;
5.2.9 Buyer shall receive a credit for advance payments and/or
deposits, if any, under Bookings to the extent the Bookings relate to a period
after the Proration Time;
5.2.10 Vending machine monies will be removed by Seller as of the
Proration Time for the benefit of Seller;
5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or
Seller shall receive a credit therefore) all petty cash funds and cash in the
Property's house banks at 100% of face value at the Proration Time;
5.2.12 Wages, salaries and payroll taxes and other payroll
deductions for all Hotel Employees shall be apportioned as of the Proration Time
(i.e., the night shift shall be prorated 50/50 for the night preceding the
Closing Date). Buyer shall assume all accrued vacation benefits and sick leave
benefits due to such Hotel Employees which relate to any period prior to the
Proration Time and shall receive a credit for the full amount of all such
accrued
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benefits reasonably expected to be paid after the Closing Date; provided, that
as of the date which is sixty (60) days following the Closing, Buyer and Seller
shall adjust the amount of the credit if required to take into account the
benefits actually required to be paid by Buyer or then reasonably expected to be
paid following the Closing Date by Buyer. Buyer shall also assume all
obligations of Seller and the Employer Corporation, under the Employment
Agreements and/or the Management Agreement to pay all such wages, salaries, and
compensation set forth above accruing subsequent to Proration Time; provided,
however, that other than as set forth in Section 14.1 hereof, no provision
contained in this Agreement shall be construed to prevent the Buyer from
terminating or amending in any manner such Employment Agreements and Management
Agreements subsequent to the Proration Time. The obligation to pay bonuses, if
any, following the Closing shall be allocated as of the Proration Time and
adjusted between Buyer and Seller; and
5.2.13 Real and personal property taxes, assessments and special
district levies shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current available tax bills, Seller
being charged through the day prior to the Closing Date and Buyer with the
Closing Date and thereafter.
5.3 Deposits. All rights to utility, assessment, and other cash deposits
(including, without limitation, any Utility Deposits) held by others for
Seller's account, and all certificates of deposit or other forms of cash
collateral held by or otherwise pledged to others for Seller's account to secure
obligations of Seller under Service Contracts, Equipment Leases or other
obligations assumed by Buyer, shall be assigned or transferred to Buyer at the
Close of Escrow; provided, that if any of such deposits are not transferable,
Seller shall retain all rights with respect thereto and there shall be no debit
made to Buyer on account thereof.
5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and
Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller
under the Tenant Leases as of the Proration Time, including, without limitation,
tenant improvement obligations of landlord thereunder and obligations with
respect to Tenant Security Deposits (to the extent received by Buyer or credited
to Buyer hereunder).
5.5 Service Contracts and Other Intangible Property. At the Close of
Escrow, Seller shall assign to Buyer pursuant to the terms of the General
Assignment and Assumption Agreement, all right, title and interest of Seller in
and to the Approved Service Contracts and other Intangible Property, and Buyer
shall assume all of the obligations of Seller under the Approved Service
Contracts arising from and after the Close of Escrow. Buyer shall protect, hold
harmless, indemnify and defend Seller and its directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons from any Losses attributable to the period beginning on and after the
Closing Date with respect to the Approved Service Contracts. Seller shall be
responsible for all obligations thereunder attributable to the period prior to
the Closing Date with respect to Approved Service Contracts (except to the
extent that Buyer shall have received a credit hereunder with respect to any
such obligations). The provisions of this Section 5.5 shall survive the Close of
Escrow.
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5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to
commence or continue any proceeding to determine the assessed value of the
Property, the real or personal property taxes payable with respect to the
Property or any action to contest water charges, sewer charges, sales tax or use
tax for the relevant taxable period during which the Proration Time occurs and
to settle or compromise any claim thereof, and any refunds or proceeds resulting
from such proceedings along with the costs (including reasonable legal and
accounting fees) incurred by Buyer in obtaining the same, shall be prorated as
of the Proration Time. In prosecuting any such action, Buyer shall utilize the
services of Marvin Poer & Co. Seller shall retain the right to continue,
commence, prosecute, settle or compromise any proceedings relating exclusively
to any relevant taxable period or periods prior to the period during which the
Proration Time shall occur. Buyer and Seller agree to cooperate with each other
and to execute any and all documents reasonably requested in furtherance of the
foregoing. The provisions of Section 5.6 shall survive the Closing.
5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and
hold harmless Seller against all Losses with respect to all baggage of departed
guests or guests who are still registered at the Hotel on the Closing Date which
has been checked with the Hotel. As of the Close of Escrow, Seller shall assign
to Buyer all claims and causes of action against the Manager with respect to any
Losses with respect to such baggage. Seller agrees to submit to Seller's
Insurance any claims for Losses with respect to such baggage which arose from
acts or omissions prior to the Closing Date to the extent coverage is available
under said insurance and provide Buyer with the proceeds therefrom provided
Buyer is not in default under this Section 5.7. The provisions of this Section
5.7 shall survive the Closing.
5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify
and hold harmless Seller against all Losses with respect to the contents of any
safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller
shall assign to Buyer all claims and causes of action against the Manager with
respect to any Losses relating to said safety deposit boxes. Seller agrees to
submit to Seller's insurance any claims for Losses which arose from acts or
omissions prior to the Closing Date to the extent coverage is available under
said insurance and provide Buyer with the proceeds therefrom provided Buyer is
not in default under this Section 5.8. The provisions of this Section 5.8 shall
survive the Closing.
5.9 Advance Bookings. Buyer shall assume and honor for its account all
Bookings relating to dates after the Proration Time set forth on the Schedule of
Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to
Section 4.2.1.9.
5.10 Special Purchase Price Adjustment. In the event that the Closing Date
is extended beyond January 30, 1998 for any reason other than on account of a
default by Buyer hereunder, Buyer shall receive a credit at Closing against the
Cash Purchase Price in an amount equal to interest on the Purchase Price
calculated at the LIBOR Rate plus 2% per annum for the period from January 30,
1998 through the earlier of (a) the Closing Date and (b) sixty (60) days after
January 30, 1998. Nothing in this Section 5.10 shall create a waiver of any
other remedy of Buyer for a Seller default permitted under the provisions of
this Agreement.
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5.11 The PCL Litigation. Seller or its designee shall prosecute, in its
own name and at its expense, diligently, and without delay, the lawsuit brought
by it against PCL Construction Services, Inc. et al, in the District Court of,
and for Pitkin County, Colorado as Index #96 CV/6982 (the "PCL Litigation").
Buyer shall have the right to participate, at its sole cost and expense, in the
prosecution and defense of the PCL Litigation. Seller shall have the right to
settle the PCL Litigation provided in Seller's good faith judgment such
settlement is fair and reasonable under the circumstances and Buyer is provided
notice of such settlement prior to the entry into same. Seller shall keep Buyer
informed on a regular basis with respect to the PCL Litigation and shall
promptly provide Buyer with a copy of all papers filed or received by Seller in
connection therewith, together with a copy of all correspondence related to the
PCL Litigation and/or the proposed settlement thereof other than any
attorney-client privileged documents unless such privilege has been waived. Any
proceeds resulting from a settlement or a judgment in the PCL Litigation and the
return of the escrow account at Citibank Private Bank #558415, if released to
Seller pursuant to such judgment or settlement, as the case may be, shall be
applied as follows: (a) up to $2,200,000.00 shall be paid to Buyer; and (b) any
proceeds in excess of $2,200,000.00 shall be split equally between Buyer and
Seller. Seller shall be solely liable for any adverse judgment in the PCL
Litigation. Any such judgment may be paid from the PCL escrow account referred
to above to the extent of funds available therein. Buyer shall have no rights
with respect to the conduct or disposition of the PCL Litigation or the claims
asserted by Seller therein or any right to control the disposition of the PCL
escrow account, except as specifically set forth in this Agreement. Subject to
the express provisions of this Agreement, Seller shall retain all rights and
responsibilities with respect to the conduct of the PCL Litigation and the
pursuit of all claims against PCL. Seller may elect in its sole and absolute
discretion to seek arbitration or other dispute resolution with respect to the
PCL Litigation. Buyer hereby agrees and acknowledges that Buyer is purchasing
the Hotel with full knowledge of the claims alleged in the PCL Litigation and
after conducting such investigation thereof as Buyer deems necessary and
sufficient. Buyer further agrees and acknowledges the sums, if any, payable to
Buyer in accordance with this Section 5.10 are the sole amounts payable by
Seller to Buyer on account of or in connection with the claims alleged in the
PCL Litigation. Without limiting Seller's rights under Section 15, Buyer agrees
to provide such cooperation to Seller, its Affiliates and their representatives
as Seller may reasonably request in connection with the PCL Litigation,
including, without limitation, Seller's efforts to settle the same, and in
connection with any discovery related thereto, provided such cooperation shall
be at no material cost or expense to Buyer.
SECTION 6
REPRESENTATIONS AND WARRANTIES;
CONDITION OF PROPERTY
6.1 Of the Trust. As an inducement to Seller to enter into this Agreement,
the Trust hereby represents, warrants and covenants to Seller as follows:
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6.1.1 Power and Authority. The Trust is a real estate investment
trust duly organized and validly existing under the laws of the State of
Maryland. The Trust has the power and authority to carry on its present
business, to enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the Trust,
nor the performance by the Trust of the Trust's obligations hereunder will
violate or constitute an event of default under any material terms or material
provisions of any agreement, document, instrument, judgment, order or decree to
which the Trust is a party or by which the Trust is bound and/or violate any
applicable law, rule or regulation, the violation of which would have a Material
effect upon the principal benefits intended to be provided by this Agreement.
6.1.2 Authorization; Valid Obligation. All proceedings required to
be taken by or on behalf of the Trust to authorize the Trust to make, deliver
and carry out the terms of this Agreement will be duly taken prior to the
Closing Date. No consent to the execution, delivery and performance of this
Agreement will be required from any partner, board of directors, shareholder,
creditor, investor, judicial or administrative body, governmental authority or
other person, other than any such consent which already has been (or prior to
the Closing will have been unconditionally given. The individuals executing this
Agreement and the documents referenced herein on behalf of the Trust have the
legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement is a valid and binding obligation of Trust,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
6.1.3 Capital Structure. The authorized and outstanding capital
stock and units of the Trust and its operating partnership are as set forth in
the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase
Price at the Closing in accordance with this Agreement will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights and will be paired with each other in the same ratio as all
other shares are paired with each other pursuant to the Pairing Agreement.
6.1.4 SEC Documents and Other Reports. The Trust has filed all
required documents with the SEC since January 1, 1996 (such documents together
with the Starwood Disclosure being referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of applicable law, and, at the respective times
they were filed, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Trust included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Regulation S-X of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Trust and its consolidated subsidiaries as of the respective
dates thereof and the
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consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Trust has not, since December 31, 1996, made any
change in the accounting practices or policies applied in the preparation of
their financial statements. Prior to the Closing Date, the Trust will file all
required documents with the SEC, which documents will comply in all material
respects with the requirements of the applicable law, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.1.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Trust and its
subsidiaries taken as a whole, or (b) there has not been any split, combination
or reclassification of any of the capital stock or units of the Trust or its
operating partnership or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of, or in substitution for shares of
such capital stock.
6.1.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Trust or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Trust or any of its
subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole. Except as set forth in the SEC Documents,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the knowledge of the Trust,
threatened against or involving the Trust or any of its subsidiaries or any of
their directors, officers or employees, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, have had,
or would reasonably be expected to have, a material adverse change in or effect
on the financial condition, properties, business, results of operations or
prospects of the Trust and its subsidiaries taken as a whole. As of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of
their subsidiaries or any of their officers, directors or employees, as such, or
any of their properties, assets or business relating to the transactions
contemplated by this Agreement.
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6.1.7 REIT Status. The Trust is currently a "real estate investment
trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust
is and at all times during the testing period described in Code Section
897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section
897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal
Revenue Service nor any other taxing entity or authority has made any assertion
that the Trust does not qualify as a REIT for income tax purposes, nor has there
been any challenge to the REIT status of the Trust. From time to time upon
request by the Seller or its assigns after the Closing Date, the Trust agrees to
inform Seller or such assigns whether to its knowledge it complies with the
representation and warranties set forth in this Section 6.1.7.
6.1.8 Partnership Status. Starwood Realty Partnership is classified
and taxable as a partnership for U.S. federal income tax purposes.
6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino
Act are not applicable to the transactions contemplated hereby and neither the
Trust nor Seller is required to make any filings or submissions or obtain any
approvals thereunder in connection herewith.
6.2 Of the Corporation. As an inducement to Seller to enter into this
Agreement, the Corporation hereby represents, warrants and covenants to Seller
as follows:
6.2.1 Power and Authority. The Corporation is a corporation duly
organized and validly existing under the laws of the State of Maryland. The
Corporation has the power and authority to carry on its present business, to
enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the
Corporation nor the performance by the Corporation of the Corporation's
obligations hereunder will violate or constitute an event of default under any
material terms or material provisions of any agreement, document, instrument,
judgment, order or decree to which the Corporation is a party or by which the
Corporation is bound and/or violate any applicable law, rule or regulation, the
violation of which would have a Material effect upon the principal benefits
intended to be provided by this Agreement.
6.2.2 Authorization; Valid Obligation. All proceedings required to
be taken by, or on behalf of the Corporation, to authorize the Corporation to
make, deliver and carry out the terms of this Agreement will be duly taken prior
to the Closing Date. No consent to the execution, delivery and performance of
this Agreement will be required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, governmental
authority or other person, other than any such consent which already has been
(or prior to the Closing will have been) unconditionally given. The individuals
executing this Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement is a valid and
binding obligation of Corporation, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
6.2.3 Capital Structure. The authorized and outstanding capital
stock and units of the Corporation and its operating partnership are as set
forth in the Starwood Disclosure. All
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<PAGE> 36
Paired Shares to be issued as the Equity Purchase Price at the Closing in
accordance with this Agreement will, when so issued, be duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights and will be
paired with each other in the same ratio as all other shares are paired with
each other pursuant to the Pairing Agreement.
6.2.4 SEC Documents and Other Reports. The Corporation has filed all
required SEC Documents since January 1, 1996. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
applicable law, and, at the respective times they were filed, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including, in each case,
any notes thereto) of the Corporation included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Corporation and
its consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Corporation has not, since December 31, 1996, made
any change in the accounting practices or policies applied in the preparation of
their financial statements. Prior to the Closing Date, the Corporation will file
all required documents with the SEC, which documents will comply in all material
respects with the requirements of the applicable law, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.2.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole, or (b) there has not been any split,
combination or reclassification of any of the capital stock or units of the
Corporation or its respective operating partnerships or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of such capital stock.
6.2.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Corporation or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Corporation or any
of its subsidiaries, as such, or any of its or their properties, assets or
business
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that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the
Corporation and its subsidiaries taken as a whole. Except as set forth in the
SEC Documents, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the knowledge of the
Corporation, threatened against or involving the Corporation or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole. As of the date hereof, there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of their subsidiaries or any of
their officers, directors or employees, as such, or any of their properties,
assets or business relating to the transactions contemplated by this Agreement.
6.2.7 Starwood Operating Partnership is classified and taxable as a
partnership for U.S. Federal Income Tax purposes.
6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act
are not applicable to the transactions contemplated hereby and neither the
Corporation nor Seller is required to make any filings or submissions to obtain
any approvals thereunder in connection herewith.
6.3 Of Seller. As an inducement to Buyer to enter into this Agreement,
Seller, represents, warrants and covenants to Buyer as follows:
6.3.1 Regarding Seller's Authority.
6.3.1.1 Seller is a limited partnership in dissolution under
the laws of the District of Columbia. Seller has the power and authority to
enter into this Agreement and the Conveyance Documents and, to sell the Property
on the terms set forth in this Agreement. The execution and delivery hereof and
the performance by Seller of its obligations hereunder, will not violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which
Seller is a party or by which Seller is bound and/or violate any applicable law,
rule or regulation, the violation of which would have a Material effect upon the
principal benefits intended to be provided by this Agreement.
6.3.1.2 The individuals executing this Agreement and the
documents referenced herein on behalf of Seller have the legal power, right and
actual authority to bind Seller to the terms and conditions hereof. This
Agreement is a valid and binding obligation of Seller, enforceable in accordance
with its terms, except as the same may be affected by bankruptcy, insolvency,
moratorium or similar laws, or by legal or equitable principles relating to or
limiting the rights of contracting parties generally.
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6.3.2 Tenant Leases. There are no leases, licenses or concessions
for space which will affect the Real Property or any portion thereof following
the Close of Escrow other than as set forth on the Schedule of Tenant Leases.
Seller has delivered to Buyer a true, correct and complete copy of each lease
and agreement listed on the Schedule of Lease. Seller has not received written
notice of any sublease and/or assignment of any Tenant Lease except as set forth
on Schedule 6.3.2. No outstanding written notice of any Material default has
been delivered by Seller or received by Seller with respect to any Tenant Lease,
except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof.
To Seller's knowledge, all rent under the leases listed on the Schedule of
Leases is being paid currently. All Material brokerage, leasing and other
commissions due in connection with the Tenant Leases have been paid by Seller
other than those payable with respect to the renewal or extension of such Tenant
Leases or expansion of the leased premises thereunder after the Closing Date,
each of which are payable under agreements described on Schedule 6.3.2.
6.3.3 Service Contracts. There are no Service Contracts which will
affect the Property after the Closing Date except for the Approved Service
Contracts. No outstanding written notice of any Material default has been
delivered by Seller or received by Seller with respect to any Approved Service
Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part
hereof.
6.3.4 Claims. There are no pending litigation or condemnation
proceedings with respect to Seller or the Property which would result in an
adverse effect on the ability of Buyer to operate the Property after the
Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part
hereof. There is no pending litigation or to Seller's knowledge, other claims of
Seller with respect to the Property attributable to the period prior to the date
hereof which may result in a material judgment in favor of Seller except as
disclosed on Schedule 6.3.4.
6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a
true and complete list of all Hotel Employees as of the Execution Date together
with their positions, salaries or hourly wages, as applicable, and years of
service. Except for or pursuant to the Employment Agreements, the Collective
Bargaining Agreements, the Management Agreement and the agreements related to
the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto,
neither Seller nor the Employer Corporation has relating to the Property (i) at
any time maintained, contributed to or participated in, (ii) or had at any time
obligation to maintain, contribute to, or participate in, or (iii) any liability
or contingent liability, direct or indirect, with respect to: any employment
agreement, oral or written retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan, vacation pay
plan, severance plan, bonus plan, stock compensation plan or any other type or
form of employee-related (or independent contractor-related) arrangement,
program, policy, plan or agreement. Except as set forth on Schedule 6.3.5, to
Seller's knowledge there is no Material default under any of the Employment
Agreements.
6.3.6 Compliance with Laws. During the past twelve (12) months,
Seller has not received any written notice from any party, including, without
limitation, from any municipal, state, federal or other governmental authority,
of a Material violation of any zoning,
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building, fire, water, use, health, or other similar statute, ordinance, or code
bearing on the construction, operation or use of the Property or any part
thereof (other than as to matters previously cured), except as disclosed on
Schedule 6.3.6 annexed hereto and made a part hereof and except for violations
of Environmental Laws, which are addressed in Section 6.3.7 below.
6.3.7 Hazardous Materials. Seller has not received any written
notice from any municipal, state, federal or other governmental authority or
from any other person during the last three (3) years of (a) any Material
violation of applicable Environmental Laws or (b) any Environmental Condition
requiring Material remediation under applicable Environmental Laws, in either
case only to the extent relating to Environmental Conditions at or on the Real
Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part
hereof;
6.3.8 Records and Plans. Seller will have delivered to Buyer on the
Closing Date true and correct copies of the Records and Plans.
6.3.9 Licenses and Permits. Seller has delivered to Buyer true and
correct copies of the Liquor License and all other Material Licenses and Permits
and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto
and made a part hereof.
6.3.10 Management Agreements. There are no hotel management or
property management agreements, which will be binding upon Buyer after the
Closing Date, other than the Management Agreement, a true and complete copy of
which will be delivered to Buyer on the Closing Date. Seller has not sent or
received any notice of default or notice of termination under or with respect to
the Management Agreement.
6.3.11 Personal Property. Seller owns the Tangible Personal Property
(other than the Tangible Personal Property that is subject to the Equipment
Leases) free and clear of any liens and/or encumbrances other than the Permitted
Encumbrances.
6.3.12 Insurance. The Seller in respect of the Real Property is
insured under those policies of casualty and general liability insurance
("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of
which is in full force and effect as of the date hereof and will remain in full
force and effect through the Closing Date. Seller has received no notices of any
Material default or demands to cure from any applicable insurer in respect of
Seller's Insurance.
6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13
annexed hereto and made a part hereof, Seller has not commenced any proceedings
which are pending for the reduction of the assessed valuation of the Real
Property or any portion thereof, and other than the Permitted Encumbrances, to
Seller's Knowledge, there are no special assessments affecting the Property.
Nothing in this Section 6.3.13 or any other provision of this Agreement shall be
construed to limit Seller's rights to initiate or prosecute after the Close of
Escrow additional proceedings for property tax refunds for taxes relating to any
relevant taxable period or periods prior to the taxable period during which the
Proration Time occurs.
6.3.14 [Intentionally Omitted]
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6.3.15 [Intentionally Omitted]
6.3.16 [Intentionally Omitted]
6.4 Buyer's Review of Records and Plans.
6.4.1 Access to Records and Plans; Specific Disclosures. Buyer
acknowledges that prior to the Closing Date, Buyer has been provided with such
access to the Records and Plans and such other information relating to the Hotel
as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware
of and given an opportunity to inquire into the Specific Disclosure Matters
described herein; (b) has been given access to the Property and the opportunity
to conduct such inquiries and analyses as Buyer has deemed necessary or
appropriate in order to evaluate the physical condition of the Property and any
and all other matters concerning the current and future use, feasibility, or
value, or any other matter or circumstance relevant to Buyer concerning the
Property or its marketability; and (c) the Records and Plans and the other books
and records of Seller with respect to the Hotel may not be complete.
6.4.2 Limitation on Access to Records and Plans. Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges and agrees that
the Records and Plans or other information made available to or delivered to
Buyer prior to, or at the Closing, shall not include any information which is
privileged, confidential or proprietary to Seller or any of its constituent
partners or affiliates, including without limitation, (i) Seller's internal
financial analyses, any appraisals undertaken for Seller or other parties,
income tax returns, financial statements, corporate or partnership governance
records, investment advisory records, and other records concerning Seller's
professional relationships, any Hotel Employee personnel files (prior to the
Closing), or any other internal, proprietary, or confidential information,
files, or records of Seller, (ii) the work papers, memoranda, analysis,
correspondence, and similar materials prepared by or for Seller in connection
with the negotiation and documentation of the transaction contemplated hereby or
any other offer to purchase the Property received by Seller, and (iii) any
documents or communications subject to the attorney/client privilege or attorney
work product privilege. Buyer expressly agrees that its review of the Records
and Plans, and any and all other information of any type or nature, whether oral
or written, provided to Buyer by or on behalf of Seller and relating to the
Property (collectively, the "Property Information") is for informational
purposes only, and neither Seller nor any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller
has verified either the accuracy of the Property Information, or the adequacy of
any method used to compile the Property Information or the qualifications of any
person preparing the Property Information except that, in delivering or making
available a copy of any document or papers to Buyer, Seller has delivered or
made available copies of the originals of such documents or papers in Seller's
possession or included in the Records and Plans. Except as expressly set forth
in this Section 6, neither Seller nor any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller
is making or giving any representation or warranty about, or assuming any
responsibility for, the accuracy or completeness of the Property Information.
Reliance by Buyer upon any Property Information shall not create or give rise to
any liability of or against Seller or any agent, advisor, officer, attorney,
representative or other person acting or
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purporting to act on behalf of Seller. Subject to Seller's express
representations and warranties set forth herein, the consummation of the Closing
shall constitute Buyer's unconditional approval of all aspects of the Property
and Buyer's unconditional acknowledgment that Buyer has had the opportunity to
request from Seller and review such documents and materials relating of the
Property as Buyer deems appropriate. All copies of such documents delivered to
Buyer shall be returned to Seller if the Closing fails to occur for any reason.
6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER
THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE
PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON
SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS
CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING
WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS
AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY
EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO:
(A) THE VALUE OF THE PROPERTY;
(B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND
USES WHICH BUYER MAY CONDUCT THEREON;
(D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY;
(E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE
PROPERTY;
(F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING
WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY
OR BODY;
(H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY;
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(I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR
THE AMERICANS WITH DISABILITIES ACT;
(J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY;
(K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND
PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE
PROPERTY;
(L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR
SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY
HAVE BEEN OR MAY BE PROVIDED TO BUYER;
(M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE
APPLICABLE ZONING OR BUILDING REQUIREMENTS;
(N) DEFICIENCY OF ANY UNDER SHORING;
(O) DEFICIENCY OF ANY DRAINAGE;
(P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON
OR NEAR AN EARTHQUAKE FAULT LINE;
(Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENTS AFFECTING THE PROPERTY;
(R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY
(INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY
FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE
SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE
LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN;
(S) [Intentionally Omitted]
(T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR
(U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE
MANAGEMENT AGREEMENT ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR
REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT
AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN,
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CONDITION, QUALITY, WORKMANSHIP OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY,
(4) REPRESENTATIONS OR WARRANTIES THAT THE TANGIBLE PERSONAL PROPERTY IS IN
COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES RULES, REGULATIONS,
SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5) WARRANTIES AGAINST PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F) WARRANTIES AS TO THE VALIDITY,
ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM.
6.6 Limitation on Representations and Warranties of Seller. In no event
shall Buyer be entitled to seek recovery against Seller for an alleged breach of
any representation or warranty by Seller if the information, transaction, or
occurrence alleged to give rise to such breach was disclosed to, made available
to or discovered by Buyer, whether in the course of its review of the Records
and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with
respect to same being as set forth in Section 6.7 below). Without limiting the
foregoing, each of the representations and warranties by Seller set forth herein
shall be deemed to be qualified in their entirety by the Specific Disclosure
Matters in addition to any other qualifications of such representations and
warranties.
6.7 Right to Supplement Disclosures. At any time prior to the Closing,
Seller may add additional disclosures to the Specific Disclosure Matters and the
Schedules referenced in this Section 6, and may make appropriate revisions
thereto, provided, however, that any such revisions do not in the aggregate
disclose any matter or matters which would reasonably be expected to have an
impact upon the value of the Property in excess of the amount of the Deposit;
and provided, further, that the receipt of any notice of termination under the
Management Agreement shall not be deemed to create any diminution in value to
the Property. In the event that Buyer or Seller discovers any matter or matters
which would be expected to exceed the Threshold Amount, then, in such event, the
provisions of Section 7.1.1 shall apply.
6.8 Basket. In no event will Seller be liable to Buyer for any breach of a
representation or warranty hereunder unless and to the extent the Loss actually
and directly incurred by Buyer as results of such breach together with the Loss
actually and directly incurred by Buyer as results of any other breach(s) in the
aggregate exceed the Threshold Amount, provided, that in no event shall Seller
have any liability to Buyer for any consequential damages arising from a breach
by Seller of any representation or warranty unless such breach results from the
intentional concealment by Seller.
6.9 Survival. The Trust, the Corporation and Seller each hereby covenants
and agrees with the other that the representations and warranties of the Trust,
the Corporation and Seller (as the case may be) set forth in Sections 6.1.1
through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and
Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without
limitation as to duration. The remaining warranties and representations set
forth in Section 6 shall survive the Close of Escrow until the date which is one
(1) year following the Closing Date, at which time such representations and
warranties shall expire unless prior to such time Buyer or Seller, as the case
may be, have duly commenced an action in a court of competent jurisdiction,
alleging a breach of such representation or warranty. Notwithstanding anything
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herein to the contrary, in no event shall either Buyer or Seller have any right
to make a claim after the Closing with respect to any representation or
warranty, the breach of which such party shall have discovered prior to the
Closing, unless such party shall have notified the other party of such breach
prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit
the right of Seller to any remedy otherwise available under Federal or other
applicable securities law.
6.10 [Intentionally Omitted]
SECTION 7
TITLE TO THE REAL PROPERTY:
EXTENSION OF THE CLOSING
7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer
and Buyer's Counsel a current preliminary title commitment for title insurance
issued by the Title Company showing the condition of title to the Real Property
(the "Preliminary Title Report") together with a copy of all documents
evidencing or creating the exceptions to title referenced therein.
7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.
On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be
insured over or removed as matters of record all Monetary Liens affecting the
Property as of the date hereof; and (ii) to remove or to bond over any Monetary
Lien arising after the issuance of the Preliminary Title Report which (a) was
created by or with the consent of Seller, or (b) is in an amount less than or
equal to the Deposit. In the event that any Monetary Lien not reflected on the
Preliminary Title Report exceeds the Deposit and was not created by or with the
consent of Seller or any other title defect or other matters arise which
requires Seller to supplement its disclosure pursuant to Section 6.7 and which
in the aggregate may create a diminution in value to the Property in excess of
the Deposit: (i) the Deposit shall be refunded by Escrow Holder to Buyer on
February 28, 1998 if the Closing does not occur by such date in accordance with
the provisions hereof; (ii) the Scheduled Closing Date shall be extended and
Seller shall use all reasonable efforts, to remove or bond over or otherwise
cause the Title Company to omit such Monetary Lien as an exception from coverage
under the Title Policy and/or remove or cure as applicable such other defect or
condition; and (iii) Buyer shall be permitted to record the Memorandum of
Contract in the real property records of the state and county in which the Real
Property is located. In the event that the Scheduled Closing Date is so extended
and Seller is able to remove or cure such Monetary Lien, remove or cure as
applicable the title defect or other condition, the Close of Escrow shall occur
as soon as practicable following such removal or cure with time being of the
essence as to the performance of both Buyer's and Seller's obligations
hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN
ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION TO CLOSE IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT
BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE
AGAINST THE TRUST. IN
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CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS
SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT
TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT
AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH
AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE
MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH
THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION 7.1.1 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE
ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE
DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT
THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE
TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that
a Monetary Lien cannot be removed or cured or a title defect or other condition
cannot be removed or cured as required hereunder to close within five (5) years
of the date of this Agreement, this Agreement shall terminate and the parties
hereto shall have no further obligations.
7.1.2 [Intentionally Omitted].
7.2. Title Insurance Policy. Buyer's title to the Real Property shall be
insured at Closing by an ALTA extended coverage owner's policy or policies of
title insurance in the amount of the Purchase Price (the "Title Policy") issued
by the Title Company, insuring title to the Real Property vested in Buyer,
subject only to the Permitted Encumbrances, together with such customary
endorsements or affirmative insurance as may be reasonably requested by Buyer
and purchased at Buyer's sole cost and expense.
7.3 Title to Real Property. At the Close of Escrow, title to the Real
Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only
to the matters of title respecting the Property shown on Schedule 7.3 annexed
hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional
easements, covenants, conditions, restrictions or other matters entered into
with the prior written consent of Buyer which consent shall not be unreasonably
withheld, delayed or conditioned (collectively, the "Permitted Encumbrances");
Buyer agrees to rely exclusively on the Title Policy for protection against any
title defects except as set forth in Section 7.1.2. Buyer shall have no claim
following the Closing against Seller on account of the Permitted Encumbrances.
Buyer's agreement under this Section 7.1 shall survive the execution, delivery,
and recordation of the Deed.
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SECTION 8
INTERIM ACTIVITIES
During the period from the Execution Date through the Close of Escrow,
Seller shall (subject to the provisions of the Interim Management Agreement if
entered into in accordance with the provisions of this Agreement) cause the
Property to be continued to be operated in ordinary course as a hotel consistent
with current operating practices during the period since Manager has been
manager of the Hotel. Buyer shall have the right to enter onto and inspect the
Property, from and after the date hereof, through the Closing Date to inspect
the Property and otherwise perform its due diligence provided such inspections
are performed upon prior notice to Seller and so as not to interfere with the
operation of the Property or to disclose the pendency of the transaction
contemplated hereby. All fees and expenses of any kind relating to the
inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to
keep the Property free from any liens arising out of or in connection with
Buyer's or its agents entry or the Property. Buyer shall at its sole cost and
expense, clean up and repair the Property as reasonably necessary after Buyer's
or its agents entry thereon. Buyer shall hold harmless, indemnify and defend
Seller from all Losses relating to any action by Buyer, its Affiliates and/or
agents at or on the Property prior to Closing. Any of Buyer's agents shall be
bound by the provisions of Section 17.19.
SECTION 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and
the obligation of Buyer to purchase the Property is subject to the satisfaction,
not later than the Scheduled Closing Date, (subject to extensions as provided in
Section 7.1) of the following conditions:
9.1.1 Seller's Deliveries. Seller shall have delivered the items
described in Section 4.2 and shall be prepared to deliver the items described in
Section 4.4;
9.1.2 Title Policy. The Title Company shall be unconditionally
prepared (subject only to payment of all necessary title insurance premiums and
other charges) to issue to Buyer the Title Policy insuring Buyer's title to the
Real Property subject only to the Permitted Encumbrances;
9.1.3 Performance Under Related Agreement. All conditions precedent
to the closing of the transactions contemplated by that certain Purchase and
Sale Agreement and Joint Escrow Instructions (the "Related Agreement") dated as
of the date hereof by and between Buyer and New Remington Partners shall have
been satisfied or waived and the Seller and Escrow Holder thereunder shall be
ready, willing and able to perform thereunder, and there shall be no default of
Seller under such agreement.
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9.1.4 [Intentionally Omitted]
9.1.5 Seller Performance. Seller shall have performed in all
material respects all of the obligations of Seller under this Agreement, to the
extent required to be performed at or prior to the Close of Escrow.
9.1.6 Representations and Warranties of Seller. The Seller's
representations and warranties set forth in Section 6.3 shall be true, correct
and complete, as of the Close of Escrow subject to modification thereof to the
extent permitted under Section 6.7 and subject further to the applicable
provisions of Section 7.1.1.
The conditions set forth in this Section 9.1 are solely for the benefit of
Buyer and may be waived only by Buyer. Buyer shall at all times have the right
to waive any such condition. Any such waiver or waivers shall be in writing and
shall be delivered to Seller and Escrow Holder.
9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and
Seller's obligation with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Scheduled Closing
Date, of the following conditions:
9.2.1 Funds and Documents. Buyer shall have delivered to Escrow
Holder, prior to the Closing Date, for disbursement as directed by Seller, the
Paired Shares and all cash or other immediately available funds due from Buyer
in accordance with Section 4 of this Agreement and the documents described in
Section 4.3;
9.2.2 Representations and Warranties of Buyer. The Trust's
representations and warranties set forth in Section 6.1 and the Corporation's
representations and warranties set forth in Section 6.2 shall be true, correct
and complete, as of the Close of Escrow;
9.2.3 No Material Changes. There shall have been no casualty or
condemnation for which Buyer has elected to terminate this Agreement pursuant to
Section 12 or Section 13 of this Agreement;
9.2.4 [Intentionally Omitted]
9.2.5 Performance Under Related Agreement. All conditions precedent
to the closing of the transactions contemplated by the Related Agreement shall
have been satisfied or waived and the Buyer and Escrow Holder thereunder shall
be ready willing and able to perform thereunder and there shall be no default of
Buyer under such agreement.
The conditions set forth in this Section 9.2 are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any such condition. Any such waiver or waivers shall be in
writing and shall be delivered to Buyer and Escrow Holder.
9.3 Failure of Condition. Except as otherwise provided in this Agreement,
if the Escrow fails to close on the Outside Closing Date for any reason
whatsoever, including, without limitation, a failure of a condition precedent
set forth in this Section 9, either Buyer or Seller, if
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not then in default under this Agreement, may terminate the Escrow and this
Agreement upon notice to the other; and, thereupon:
9.3.1 This Agreement and the Escrow shall terminate;
9.3.2 The costs of the Escrow through the Scheduled Closing Date
shall be governed by Section 4.8.
9.3.3 All monies paid into the Escrow and all documents deposited in
the Escrow shall be returned to the party paying or depositing the same together
with interest earned thereon; and
9.3.4 Each party shall be released from all obligations under this
Agreement except for the obligations that are expressly stated to survive the
termination of this Agreement.
SECTION 10
BROKER
Buyer and Seller each represent and warrant to the other that it has not
dealt with any broker, finder or other middleman in connection with this
Agreement, or the transactions contemplated hereby and that no broker, finder,
middleman or other person has claimed, or has the right to claim a commission,
finder's fee or other brokerage fee in connection with this Agreement or the
transactions contemplated hereby. Each party shall indemnify, protect, defend
and hold the other party harmless from and against any costs, claims or expenses
(including actual attorneys' fees and expenses), arising out of the breach by
the indemnifying party of any of its representations, warranties or agreements
contained in this Section 10. The representations and obligations under this
Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does
not occur, the termination of this Agreement.
SECTION 11
REMEDIES FOR SELLER'S DEFAULT
11.1 Buyer's Remedies in General. If Buyer shall discover prior to the
Close of Escrow any default in any of Seller's obligations under this Agreement
(a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a
reasonable period of time (not in excess of thirty (30) days) unless extended by
Buyer in its sole discretion in which to cure such default, in which case the
Scheduled Closing Date shall be extended during the continuation of such cure
period. If there shall be any Seller Default discovered by Buyer prior to the
Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole
right and remedy other than with respect to a breach of a representation and
warranty which shall be subject to the provisions of Section 6.7, shall be to
compel specific performance of this Agreement; provided, however, that Buyer
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shall only be entitled to compel specific performance of this Agreement if, as
of the time of Seller's default, Buyer shall (a) not be in default hereunder,
(b) shall be ready, willing and able to perform its obligations hereunder, and
(c) shall have waived all contingencies to closing other than those relating to
Seller's default.
11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE
LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER
FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL
INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION.
SECTION 12
DAMAGE TO OR DESTRUCTION OF THE PROPERTY
12.1 Insured Casualty.
12.1.1 If, prior to the Close of Escrow, the Property is damaged or
destroyed, whether by fire or other insured casualty, Seller shall promptly
notify Buyer of such damage or destruction and of the good-faith estimate of a
reputable licensed contractor selected by Seller and reasonably approved by
Buyer of the cost to repair the damage and Seller's good-faith belief that such
casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty
Notice indicates that such casualty is a Material Casualty, Buyer may elect to
be released from its obligations hereunder (including its obligation to purchase
the Property) by delivering to Seller written notice of Buyer's intent to do so
within ten (10) days after the date Buyer receives the Insured Casualty Notice.
In such event, the Deposit together with all interest accrued thereon shall be
promptly returned to Buyer.
12.1.2 If the casualty is insured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate
this Agreement in accordance with this Section 12.1, then the Escrow and this
Agreement shall remain in full force and effect, the Closing shall occur on or
before the Outside Closing Date, and Seller shall assign to Buyer, as a
condition precedent to the Close of Escrow, all of Seller's right, title and
interest in and to any of the casualty insurance proceeds or claims therefor
with respect to such damage or destruction, together with any and all rental
loss or business interruption insurance of Seller, if any, payable with respect
to the Property for any period after the Proration Time and any and all claims
against other persons for such damage or destruction. Additionally, if the
Escrow and this Agreement remain in full force and effect, Seller shall pay to
Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an
amount equal to the deductible under the casualty insurance. Within twelve (12)
months following the Close of Escrow, Buyer shall upon thirty (30) days written
notice by Seller, present reasonably satisfactory evidence to Seller that Buyer
applied the proceeds of such insurance to the Property. If Buyer fails to
present such evidence or such evidence is not reasonably satisfactory to Seller,
Buyer shall promptly, but in any event within thirty (30) days of demand
therefor from Seller, pay to Seller the proceeds of the casualty
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insurance assigned by Seller to Buyer as provided herein, together with an
amount equal to the deductible under such insurance for which Buyer received a
credit to the Purchase Price.
12.2 Uninsured Casualty.
12.2.1 If, prior to the Close of Escrow, all or any portion of the
property is damaged or destroyed by an uninsured casualty (including, without
limitation, a casualty as to which coverage has been disclaimed by Seller's
insurers), Seller shall promptly notify Buyer of such damage or destruction and
of the Seller's reasonable estimate of the cost to Seller to repair the same of
a reputable licensed contractor selected by Seller and reasonably approved by
Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that
such casualty is uninsured (the "Uninsured Casualty Notice").
12.2.2 If such Uninsured Estimate to Repair indicates the occurrence
of a Material Casualty, either Seller or Buyer may elect to terminate this
Agreement by giving to the other party written notice of its intent to do so
within ten (10) days after the Seller delivers the Uninsured Casualty Notice to
Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the
Deposit together with interest accrued thereon shall be promptly returned to
Buyer.
12.2.3 If the casualty is uninsured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not
elected to terminate this Agreement in accordance with Section 12.2.2, then the
Escrow and this Agreement shall remain in full force and effect, the Closing
shall occur on or before the Outside Closing Date, and Buyer shall be entitled
to a reduction in the Purchase Price in an amount equal to the Uninsured
Estimate to Repair.
12.2.4 If and to the extent that the Purchase Price is adjusted
pursuant to this Section 12.2 as a result of a disclaimer of coverage by
Seller's insurers, Buyer shall not be entitled to insurance proceeds due under
Seller's policies, or to be assigned any claim under or with respect to Seller's
policies, and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom, it being the intent of this Section 12 that there be
no double recovery by, or double compensation of, Buyer for the casualty.
SECTION 13
CONDEMNATION
If, prior to the Close of Escrow, a Material Taking has occurred or is
pending, Seller shall immediately notify Buyer of such fact. In such event,
Buyer may elect upon written notice to Seller given not later than fifteen (15)
days after receipt of Seller's notice to terminate this Agreement. If Buyer does
not exercise option which Buyer may have pursuant to this Section 13 to
terminate this Agreement, or if any such taking is not a Material Taking, then
neither party shall have the right to terminate this Agreement, but Seller shall
assign and turn over, and Buyer shall be entitled to receive and keep, all
awards for the taking of any of the Real Property by
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eminent domain which accrue to Seller (other than those relating to loss of use
prior to the Closing), and the parties shall proceed to the Close of Escrow
pursuant to the terms hereof, without modification of the terms of this
Agreement and without any reduction in the Purchase Price.
SECTION 14
EMPLOYEES
14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make
an offer of employment to all existing Hotel Employees as of the Close of
Escrow, on terms and conditions generally comparable to their existing terms and
conditions of employment (to the extent such terms and conditions have been
disclosed by Seller and/or its agents to Buyer) and to make all reasonable
efforts to retain such employees for a reasonable period of time. Without
limiting the foregoing, Buyer shall offer to maintain without loss of employment
(as defined in the WARN Act) the employment at the Property (other than upon
good cause for termination) of such number of Hotel Employees and on such terms
and conditions as shall not result in, and only to the extent necessary to
prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i)
shall also cause each of the health and medical benefit plans maintained for
Hotel Employees to waive any preexisting condition in connection with employment
at the Property that was not excluded under the applicable program as of the
Closing Date, (ii) shall also cause each of such benefit plans to take into
account any deductibles or coinsurance amounts incurred by each Hotel Employee
for the year in which the Closing Date occurs, and (iii) shall also cause each
of the health and medical benefit plans to deem each Hotel Employee to be
eligible for participation in such plan as of the Close of Escrow. In the event
that Buyer fails to comply with any of the foregoing covenants, Buyer agrees
that Buyer shall be solely responsible for the payment of any and all costs,
charges, penalties, compensation, severance pay, benefits and liabilities,
arising under the WARN Act, and any other applicable law, rule or regulation on
account thereof, and Buyer agrees to indemnify, defend and hold Seller and the
Employer Corporation and their directors, officers, agents, affiliates,
principals, partners, shareholders representatives and controlling persons
harmless from and against any and all claims, causes of action, judgments,
damages, penalties and liabilities asserted under the WARN Act or any other
applicable law, rule or regulation, whether against Buyer or Seller, the
Employer Corporation or any other such indemnified party and whether based on
employment of any of the Hotel Employees prior to or following the Closing,
arising from Buyer's failure to comply with the foregoing covenants
(collectively, "Termination Charges"). Following the Closing, if Buyer desires
to terminate the employment of any Hotel Employees other than for cause, Buyer
shall be solely responsible for complying with all applicable provisions of the
WARN Act and all other applicable laws, rules and regulations with respect to
such termination, including without limitation, the payment of all costs and
termination payments owing under the WARN Act and all other applicable laws,
rules and regulations to any of such employees. Buyer shall assume all
obligations under the Employment Agreement for the Director of Finance
attributable to the
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period from and after the Closing Date (it being agreed that the Directors of
Finance may resign thereunder at any time without penalty).
14.2 Collective Bargaining Agreements. Without limiting the provisions of
Section 14.1, immediately upon the Close of Escrow, without the necessity of
further action by Buyer, Buyer shall assume each collective bargaining agreement
or other labor union contracts identified on Schedule 14.2 (the "Collective
Bargaining Agreements"). Buyer further agrees to indemnify Seller and the
Employer Corporation and their directors, officers, employees, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons for any and all liability to the bargaining agents or Hotel Employees,
resulting from the failure of Buyer to comply with the terms and conditions of
any of the Collective Bargaining Agreements with respect to periods beginning
after the Close of Escrow.
14.3 Continuation of Benefits.
14.3.1 (i) Except as provided in Section 14.3.2 , on and after the
Closing Date, Seller (or any insurer at Seller's cost) shall continue to process
and pay (or cause applicable insurers and third party administrators, including
ITT Sheraton, to process and pay) in an expeditious manner and with respect to
all covered Hotel Employees (and, to the extent applicable, their covered
spouses, dependents and beneficiaries) all claims under the Employment
Agreements that provide health and medical, or other welfare, benefits submitted
for covered expenses with respect to occurrences commencing on or prior to the
Closing Date, including, but not limited to: (A) covered hospital benefits for
any confinements; (B) covered life and survivor income benefits, if any, for
deaths which occur on or prior to the Closing Date; (C) workers' compensation
benefits for disabilities resulting from a work-related accident which occurred
on or prior to the Closing Date; (D) all covered benefits that are being, or
that may be, paid to, or with respect to, any of such individuals who are on
short or long term disability, or medical, personal or other leaves of absence
as of the Closing Date; (E) covered benefits under any "spending account," or
similar arrangement, under any "cafeteria plan" (as defined under Section 125 of
the Internal Code) with respect to salary reduction elections made prior to the
Closing Date; and (F) covered benefits under all other such Employment
Agreements which accrue on or before the Closing Date; but, only in each
instance, to the extent that Buyer shall not have received a credit against the
Purchase Price on account of such item.
(ii) In order to effectuate the provisions of Section 14.3.1(i), hereof,
Seller shall cause to be deposited with Anthem Health and Life Insurance Company
("Anthem") the full amount required by Anthem to cover the payment of benefits
accrued but unpaid as of the Closing Date with respect to employees located at
the Aspen facility and their dependents. Seller shall cause to be paid all
premiums due to be paid under such Employment Agreements for all periods ending
on or prior to the Closing Date.
14.3.2 Buyer (or any plan maintained by Buyer) will provide
continued health and medical coverage as required under Section 4980B of the
Code, Part 6 of Title I of ERISA or any other applicable federal, state or local
law or ordinance to all current and former Hotel Employees (and their spouses,
dependents and beneficiaries) with respect to whom a "qualifying
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event" (as such term is defined under Sections 4980B(f)(3) of the Code or 603 of
ERISA) or other triggering event described under the applicable federal, state
or local laws or ordinances occurred on or before the Closing Date.
14.3.3 Buyer shall maintain supplies of claims forms necessary for
Hotel Employees to make claims under Employment Agreements that provide health,
medical or other welfare benefits with respect to occurrences commencing on or
prior to the Closing Date, and shall furnish such forms to the Hotel Employees
when needed and otherwise assist the Hotel Employees in presenting such claims.
14.4 Buyer and Seller intend by this Agreement to comply with Section 4204
of ERISA, so as to prevent Seller from incurring at the Closing Date a complete
or partial withdrawal in respect of any employee benefit plans, if any, in which
the Hotel Employees currently participate that are "multiemployer plans," as
defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer
on the Schedule of Employment Agreements), determined as if Buyer is the "buyer"
referred to in such Section 4204. Accordingly, with respect to such
multiemployer plans, Buyer agrees as follows:
(A) For the first plan year of each such multiemployer plan
commencing after the Close of Escrow, and for each of the succeeding four plan
years for each such plan, Buyer shall assume the obligation to contribute to
each such plan with respect to operations conducted with business assets
acquired from Seller for substantially the same number of contribution base
units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an
obligation to contribute to such plan.
(B) Prior to each such multiemployer plan's first plan year
beginning after the Close of Escrow, Buyer shall apply to such plan for a
variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be
obtained or an amount be held in escrow as provided in said Section. In the
event any such plan determines that the request does not qualify for a variance
on it, Buyer shall obtain any required bond or establish any required escrow
within thirty (30) days after the date on which it receives notice of the plan's
decision, and shall maintain such bond or escrow until the earliest of: (i) the
date a variance is obtained from the plan; (ii) the date a variance or exemption
is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day
of the fifth (5th) plan year commencing after the Close of Escrow; which bond or
escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make
a contribution to such plan when due, at any time during the first (1st) five
(5) plan years of such plan beginning after the Closing Date. In order to comply
with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete
withdrawal or a partial withdrawal from any multiemployer plan with respect to
which Buyer has assumed an obligation to contribute pursuant to this Agreement
and such withdrawal or partial withdrawal occurs during the five (5) plan years
commencing with the first (1st) plan year beginning after the date of the Close
of Escrow, Seller shall be secondarily liable for any withdrawal liability it
would have had to such multiemployer plan on the date of the Close of Escrow
under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance
notice of its anticipated failure to pay any withdrawal
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liability and to furnish Seller promptly with a copy of any notice of withdrawal
liability it may receive with respect to such plans.
14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor")
agrees to indemnify, defend, protect and hold the other and, the Employer
Corporation in the case of Seller, and their directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons (as applicable, the "Indemnitee") harmless from and against any and all
claims, damages, liabilities, losses, and expenses, (including attorneys' fees
and costs) paid, suffered or incurred by the Indemnitee, arising out of or
related to Indemnitor's failure to comply with any of the covenants,
obligations, or duties contained in Section 14.
14.6 Survival. The provisions of this Section 14 shall survive the Close
of Escrow.
SECTION 15
COOPERATION
15.1 Seller has advised Buyer that it may be necessary after the Close of
Escrow for Seller (or its representatives) to audit the Records and Plans with
respect to the period prior to the Closing Date. In addition, Seller may require
access to the such Books and Records in connection with any litigation by or
against Seller and its Affiliates with respect to the Property, any tax audit,
examination or challenge or similar proceeding, or any calculation of sums
payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the
Records and Plans with respect to the period prior to the Closing Date at the
Property for a period of seven (7) years after the Close of Escrow or such
additional period as may reasonably be requested by Seller; (ii) grants Seller,
its Affiliates and their respective representatives access to the such Records
and Plans and the Property after the Close of Escrow, at reasonable times and
upon reasonable prior notice, for such purposes; (iii) subject to the rights of
guests in guest rooms, tenants under tenant leases, grants Seller, its
Affiliates, and their respective representatives access to the Property after
the Close of Escrow for the purpose of conducting such inspections and/or
testing (including destructive testing) of the Property as may be necessary or
advisable in connection with any litigation and other proceedings to which
Seller is a party (provided that Seller shall give Buyer prior notice of the
scope of such inspections and testing) which shall be scheduled for such periods
as shall be reasonably agreeable to the parties;
15.1.1 All inspections fees, appraisal fees, engineering fees and
other expenses of any kind relating to the inspection of the Property by Seller
or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate.
15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property
for the purpose of conducting inspections and/or tests, Seller or Seller's
Affiliate shall provide Buyer with certificates of insurance from Seller's
agents from an insurance carrier and for such risks and policy limits as Seller
shall reasonably approve.
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15.1.3 Seller agrees to keep the Property free from any liens
arising out of or in connection with such testing and inspection.
15.1.4 Seller, shall, at its sole cost and expense, clean up and
repair the Property as reasonably necessary, after Seller's or Seller's agents,
entry thereon.
15.1.5 Seller shall hold harmless, indemnify and defend Buyer for
all losses relating to any action by Seller, its Affiliates and/or agents at or
on the Property after the Closing; [and]
15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and
their respective representatives in connection with any such litigation or
proceedings with respect to the Property, any such tax audit, examination or
challenge or similar proceeding, or any such calculation of sums payable under
Section 5, said cooperation to be at no material cost or expense to Buyer; and
15.2 Seller shall cooperate with Buyer in connection with the assignment
of all transferable Licenses and Permits to Buyer and the application for and
procurement of replacements of any non-transferable Licenses and Permits.
SECTION 16
NOTICES
16.1 Addresses. Whenever any notice, demand or request is required or
permitted hereunder, such notice, demand or request shall be made in writing and
shall be (a) sent via a nationally recognized overnight courier service fully
prepaid, (b) deposited in the United States by mail, registered or certified,
return receipt requested, postage prepaid, or (c) sent via telefacsimile,
provided that the original of such notice, demand or request shall also be sent
via one of the methods described in (a) and (b) above, in each case to the
addressees (and individuals) set forth below:
As to Seller:
Savanah Limited Partnership
c/o Al Anwa USA Incorporated
1925 Century Park East
Suite 1900
Los Angeles, CA 90067
Attn: General Counsel
Telefacsimile: (310) 229-2939
With a copy to Seller's Additional Addressees:
Gordon Eng, Esq.
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19191 S. Vermont Avenue
Suite 420
Torrance, CA 90502
Telefacsimile: (310) 207-1006
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
As to Buyer:
Starwood Lodging Corporation
Starwood Lodging Trust
2231 E. Camelback Road
Suite 400
Phoenix, AZ 85016
Attn: Steven R. Goldman
Telefacsimile: (602) 852-0115
With a copy to Buyer's Additional Addressee:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
As to Escrow Holder:
Chicago Title Insurance Company
700 South Flower Street, Suite 900
Los Angeles, CA 90017
Attn: Maggie Watson
Telefacsimile: (213) 488-4388
16.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Buyer and its Additional Addressee in the manner aforesaid shall be
deemed sufficiently given to and received by Buyer for all purposes hereunder,
and any notice, demand or request that shall be delivered to Seller and its
Additional Addresses in the manner aforesaid shall be deemed sufficiently given
to and received by Seller for all purposes hereunder (i) the next business day
following the day such notice, demand or request is delivered by a nationally
recognized
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overnight courier service fully prepaid, to such party and its Additional
Addressee, (ii) if sent via registered or certified mail, at the time of receipt
by such party and its Additional Addressee, or (iii) if sent via telefacsimile,
as of the date and time stated upon confirmation reports generated by the
sending party's telefacsimile machine confirming the delivery of such notice,
demand or request to such party and its Additional Addressee.
16.3 Refusal of Delivery. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this Section 16 refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
16.4 Change of Address. Each party shall have the right from time to time
to designate by written notice to the other parties hereto such other person or
persons and such other place or places as said party may desire written notices
to be delivered or sent in accordance herewith.
SECTION 17
GENERAL PROVISIONS
17.1 Amendment. Except as provided in Section 4.1, no provision of this
Agreement or of any documents or instrument entered into, given or made pursuant
to this Agreement may be amended, changed, waived, discharged or terminated
except by an instrument in writing, signed by the party against whom enforcement
of the amendment, change, waiver, discharge or termination is sought.
17.2 Time of Essence. All times provided for in this Agreement for the
performance of any act will be strictly construed, time being of the essence.
17.3 Entire Agreement. This Agreement and other documents delivered at
Closing, set forth the entire agreement and understanding of the parties in
respect of the transactions contemplated by this Agreement, and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof. No representation, promise, inducement or statement of
intention has been made by Seller or Buyer which is not embodied in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance delivered pursuant to this Agreement,
and neither Buyer nor Seller shall be bound by or liable for any alleged
representations, promise, inducement or statement of intention not therein so
set forth.
17.4 No Waiver. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder shall constitute a waiver of any party's right to demand
strict compliance with the terms of this Agreement.
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17.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby (including, without limitation, the enforcement of
any obligation to indemnify, defend or hold harmless provided for herein or
therein), or because of an alleged dispute, default, or misrepresentation in
connection with any of the provisions of this Agreement or of such document or
instrument, or if Escrow Holder commences any action with respect to the
Escrow(s), the successful or prevailing party shall be entitled to recover
actual attorneys' fees, charges and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
17.7 Payments; Interests. Except as otherwise provided herein, payment of
all amounts required by the terms of this Agreement shall be made in the United
States and in immediately available funds of the United States of America which,
at the time of payment, is accepted for the payment of all public and private
obligations and debts. Unless the parties otherwise agree, payments shall be
made through the Escrow Holder. If any payment due under this Agreement is not
paid when due, it shall thereafter bear interest at a variable rate equal to the
rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
17.8 Transfer By Buyer. Buyer shall not have the right to assign this
Agreement, but shall be permitted to designate an Affiliate or Affiliates to
take title to the Property. In the event that Buyer elects to so designate any
Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall
upon close of Escrow be released of all obligations hereunder other than
pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and
Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or
Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such
Affiliate of Affiliates shall represent and warrant to Seller that such entities
are duly organized and validly existing and otherwise as to the matters covered
in Section 6.1.1 and Section 6.1.2 as applicable.
17.9 Parties in Interest. Subject to Section 17.8, the rights and
obligations of the parties hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and the legal representatives of their respective estates. Nothing in this
Agreement is intended to confer any right or remedy under this Agreement on any
person other than the parties to this Agreement and their respective successors
and permitted
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assigns, or to relieve or discharge the obligation or liability of any person to
any party to this Agreement or to give any person any right of subrogation or
action over or against any party to this Agreement.
17.10 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state in which the Real Property
is located without giving effect to the conflict-of-law rules and principles of
that state.
17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement.
17.12 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Seller" shall include the respective permitted successors
and assigns of Seller, and the term "Buyer" shall include the permitted
successors and assigns of Buyer, if any.
17.13 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
17.14 Announcements. Seller and Buyer shall consult with each other and
provide each other one (1) Business Day prior notice with regard to all press
releases and other announcements issued at or prior to the Close of Escrow and
during the one year period thereafter concerning the existence of this Agreement
or the sale of the Property and, except as permitted under Section 17.19,
neither Seller nor Buyer shall issue any such press release or other such
publicity prior to the Close of Escrow without the prior written consent of the
other party, which consent may be withheld in such other party's sole and
absolute discretion. Buyer will not issue any public announcement with respect
to Seller (other than to describe the transaction contemplated hereby to the
extent permitted hereunder) without the prior written consent of Seller which
may be withheld in its sole and absolute discretion. The agreements of the
parties in this Section 17.14 shall survive the Close of Escrow or any
termination of this Agreement.
17.15 Submission of Agreement. The submission of this Agreement to Buyer
or its broker, agent or attorney for review or signature does not constitute an
offer to sell the Property to Buyer or the granting of an option or other rights
with respect to the Property to Buyer. No agreement with respect to the purchase
and sale of the Property shall exist, and this writing shall have no binding
force or effect, until this Agreement shall have been executed and delivered by
Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow
Holder.
17.16 Further Assurances. Buyer and Seller agree to execute such
instructions to the Escrow Holder and such other instruments and take such
further actions either before or after the
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Close of Escrow as may be reasonably necessary to carry out the provisions of
this Agreement provided that no material additional cost or liability shall be
created thereby.
17.17 Cooperation. Buyer and Seller shall cooperate with the other to
carry out the purpose of this Agreement (provided, such cooperation shall not
require either party to expend any sum not otherwise required pursuant to the
other provisions of this Agreement). This Section 17.17 shall survive the Close
of Escrow.
17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will not
sell the Property to any third-party for a period (the "Transfer Restriction
Period") commencing upon the Closing of Escrow and expiring upon the later of
(a) five (5) years following the Close of Escrow and (b) settlement of or the
final non-appealable judgment is issued in connection with the existing
litigation between Seller and the Ritz Carlton Hotel Company, LLC and their
respective affiliates, provided, however, the foregoing prohibition shall not
apply to a sale of all or substantially all of the assets of Buyer, the merger
of Buyer into another entity or the transfer of the Property to a subsidiary
and/or Affiliate of Buyer but shall be binding upon the party succeeding to all
or substantially all of the assets of Buyer, the surviving entity in such
merger, or such subsidiary or Affiliate. The provisions of this Section 17.18
shall be specifically enforceable. Buyer hereby waives any requirement for
Seller to post a bond in order to seek or obtain any temporary restraining order
or other injunctive relief pursuant to this Section 17.18. The parties
acknowledge and agree that the provisions of this Section 17.18 form a material
part of the consideration to Seller for entering into this Agreement. The
parties agree that these provisions are reasonable in light of Seller's ongoing
litigation with Ritz Carlton Hotel Company and its affiliates.
17.19 Confidentiality. Buyer shall hold as confidential all information
concerning the transaction contemplated by this Agreement, Seller and the
Property disclosed in connection with this transaction and Buyer shall not,
prior to the Close of Escrow, release any such information relating to the
transaction, Seller or the Property to any governmental agencies or third
parties without Seller's prior written consent except as may be required by law
and in such case subject to the provisions of Section 17.14. Seller hereby gives
its consent to Buyer's disclosure of information relating to the transaction
contemplated hereby to Buyer's Counsel and other consultants, in each instance
to the extent reasonably necessary to verify information given to Buyer by
Seller or otherwise to carry out the purposes of this Agreement and provided in
each instance, such consultants agree in writing to be bound by the
confidentiality provisions of this Section 17.19. If the Close of Escrow shall
fail to occur for any reason, neither party shall issue any press release,
publicity or other public announcement of the subject matter of this Agreement,
or to make any other disclosure concerning the subject matter of this Agreement
(except as may be required by law and in such case subject to the provisions of
Section 17.14.), without the prior written consent of the other party, which
consent may be withheld in such other party's sole and absolute discretion. The
agreements of the parties in this Section 17.19 shall survive any termination of
this Agreement.
17.20 Interim Management Agreement. Seller shall provide Manager with a
notice of termination of the Management Agreement on January 2, 1998 or as soon
thereafter as Seller
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shall have obtained any required lender consent thereto. Seller shall, on or
prior to January 2, 1998, seek any required lender consent and use all
reasonable commercial efforts to obtain same as promptly as possible. Buyer and
Seller shall enter into a management agreement with respect to the Property in
the form attached as Exhibit 17.20 hereto (the "Interim Management Agreement")
which shall be effective (and the Interim Management Agreement shall be dated as
of such effective date) on the earlier of (a) thirty days from the date of the
delivery to Manager of such termination notice and (b) the effective date of a
written waiver of Manager of the notice of termination required under the
Management Agreement. Buyer shall advance any fee payable to Manager under the
Management Agreement on account of the termination thereof up to $122,481.00.
Buyer shall be deemed to have waived delivery of all items under Sections
4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement
is terminated in accordance with the provisions of this Section 17.20 prior to
the Closing Date.
17.21 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 Trust's 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.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the day and year first above written.
"Seller"
SAVANAH LIMITED PARTNERSHIP,
a District of Columbia limited partnership
By: ASPEN ENTERPRISES INTERNATIONAL, INC.,
a Colorado corporation, its General Partner
By: /s/ Mansor Dalaan
--------------------------
Name: Mansor Dalaan
Title: President
"Buyer"
STARWOOD LODGING TRUST,
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
--------------------------
Name: Steven R. Goldman
Title: Senior Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /s/ Michael C. Mueller
--------------------------
Name: Michael C.Mueller
Title: Vice President
"Escrow Agent"
CHICAGO TITLE INSURANCE COMPANY,
a Missouri corporation
By: /s/ Maggie G. Watsu*
--------------------------
Name: Maggie G. Watsu
Title: Authorized Signatory
* Subject to receiving mutual
instructions in the event
Paragraph 3.5 become operative.
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<PAGE> 1
Houston Execution
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
By
And Between
NEW REMINGTON PARTNERS,
a Texas General Partnership,
As Seller
And
STARWOOD LODGING TRUST,
a Maryland Real Estate Investment Trust
And
STARWOOD LODGING CORPORATION,
a Maryland Corporation,
As Buyer.
Dated As Of: December 30, 1997
Relating to the Houston Luxury Collection Hotel,
Houston, Texas
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS......................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................10
SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11
SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11
3.1 Purchase Price..................................................11
3.2 Payment.........................................................11
3.3 Investment of Escrowed Funds....................................11
3.4 Allocation of Purchase Price....................................12
3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12
SECTION 4 - ESCROW; CLOSING; COSTS..........................................13
4.1 Escrow..........................................................13
4.2 Seller's Deliveries to Escrow Holder............................13
4.2.1.1 Deed...................................................13
4.2.1.2 Assignment and Assumption of Tenant Leases.............13
4.2.1.3 General Assignment.....................................14
4.2.1.4 Assignment and Assumption of Management Agreement......14
4.2.1.5 Bill of Sale...........................................14
4.2.1.6 Stock Agreement........................................14
4.2.1.7 Liquor Licenses Management Agreement...................14
4.2.1.8 [Intentionally Omitted]................................14
4.2.1.9 [Intentionally Omitted]................................14
4.2.1.10 [Intentionally Omitted]................................14
4.2.1.8 Houston Master Lease...................................14
4.2.1.12 Houston Right of First Offer Agreement.................14
4.2.1.13 Non-Foreign Person Certificate.........................15
4.2.1.14 Transfer Tax Forms.....................................15
4.2.1.15 Certified Rent Roll....................................15
4.2.1.16 Certified Operating Statement..........................15
4.2.1.17 Guest Ledger...........................................15
4.2.1.18 Closing Certificate....................................15
4.2.1.19 Schedule of Bookings...................................15
4.2.1.20 Title Requirements.....................................15
4.2.1.21 Payoff Letters.........................................15
4.2.1.22 Notices to Tenants.....................................16
4.2.1.23 Opinion of Seller's Counsel............................16
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4.2.1.24 Other..................................................16
4.3 Buyer's Deliveries to Escrow Holder.............................16
4.3.1.1 The Cash Purchase Price................................16
4.3.1.2 Stock Certificates.....................................16
4.3.1.3 Assignment and Assumption of Management Agreement......16
4.3.1.4 Value Letter...........................................16
4.3.1.5 Opinion of Buyer's Counsel.............................17
4.3.1.6 Stock Agreement........................................17
4.3.1.7 [Intentionally Omitted]................................17
4.3.1.8 Assignment and Assumption of Liquor-Related
Agreements.............................................17
4.3.1.9 [Intentionally Omitted]................................17
4.3.1.10 Houston Master Lease..................................17
4.3.1.11 Houston Right of First Offer...........................17
4.3.1.12 Closing Certificate....................................17
4.3.1.13 The Assignment and Assumption of Tenant Leases.........17
4.3.1.14 The General Assignment and Assumption Agreement........17
4.3.1.15 Transfer Tax Forms.....................................17
4.3.1.16 Other..................................................17
4.4 Seller's Deliveries to Buyer....................................17
4.4.1 Tenant Leases/Tenant Deposits..........................17
4.4.2 Service Contracts......................................18
4.4.3 Licenses and Permits...................................18
4.4.4 Records and Plans......................................18
4.5 Possession......................................................18
4.6 Evidence of Authorization.......................................18
4.7 Close of Escrow.................................................18
4.8 Costs of Escrow.................................................19
4.9 Other Costs.....................................................20
4.10 Maintenance of Confidentiality by Escrow Holder.................20
SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20
5.1 General.........................................................20
5.2 General and Specific Prorations.................................20
5.3 Deposits........................................................23
5.4 Tenant Leases...................................................23
5.5 Service Contracts and Other Intangible Property.................23
5.6 Tax Refunds and Proceedings.....................................23
5.7 Guest Baggage...................................................24
5.8 Safe Deposit Boxes..............................................24
5.9 Advance Bookings................................................24
5.10 Special Purchase Price Adjustment...............................24
SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24
6.1 Of the Trust....................................................24
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6.1.1 Power and Authority....................................24
6.1.2 Authorization; Valid Obligation........................25
6.1.3 Capital Structure......................................25
6.1.4 SEC Documents and Other Reports........................25
6.1.5 Absence of Certain Changes or Events...................26
6.1.6 Actions and Proceedings................................26
6.1.7 REIT Status............................................27
6.1.8 Partnership Status.....................................27
6.1.9 Hart-Scott-Rodino Act..................................27
6.2 Of the Corporation..............................................27
6.2.1 Power and Authority....................................27
6.2.2 Authorization; Valid Obligation........................27
6.2.3 Capital Structure......................................27
6.2.4 SEC Documents and Other Reports........................28
6.2.5 Absence of Certain Changes or Events...................28
6.2.6 Actions and Proceedings................................28
6.2.8 Hart-Scott-Rodino......................................29
6.3 Of Seller.......................................................29
6.3.1 Regarding Seller's Authority...........................29
6.3.2 Tenant Leases..........................................30
6.3.3 Service Contracts......................................30
6.3.4 Claims.................................................30
6.3.5 Employees..............................................30
6.3.6 Compliance with Laws...................................30
6.3.7 Hazardous Materials....................................31
6.3.8 Records and Plans......................................31
6.3.9 Licenses and Permits...................................31
6.3.10 Management Agreements..................................31
6.3.11 Personal Property......................................31
6.3.12 Insurance..............................................31
6.3.13 Real Estate Taxes......................................31
6.3.14 Liquor Related Agreements..............................32
6.4 Buyer's Review of Records and Plans.............................32
6.4.1 Access to Records and Plans; Specific Disclosures......32
6.4.2 Limitation on Access to Records and Plans..............32
6.5 PURCHASE AS IS..................................................33
6.6 Limitation on Representations and Warranties of Seller..........35
6.7 Right to Supplement Disclosures.................................35
6.8 Basket..........................................................35
6.9 Survival........................................................36
SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............36
7.1 Buyer's Review of Title.........................................36
7.1.1 Failure to Satisfy Certain Closing Conditions;
Monetary Liens.........................................36
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7.1.2 [Intentionally Omitted].........................................37
7.2 Title Insurance Policy..........................................37
7.3 Title to Real Property..........................................37
SECTION 8 - INTERIM ACTIVITIES..............................................38
SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38
9.1 Conditions Precedent to Buyer's Obligations.....................38
9.1.1 Seller's Deliveries....................................38
9.1.2 Title Policy...........................................38
9.1.3 Performance Under Related Agreement....................38
9.1.4 [Intentionally Omitted]................................39
9.1.5 Seller Performance.....................................39
9.1.6 Representations and Warranties of Seller...............39
9.2 Conditions Precedent to Seller's Obligations....................39
9.2.1 Funds and Documents....................................39
9.2.2 Representations and Warranties of Buyer................39
9.2.3 No Material Changes....................................39
9.2.4 [Intentionally Omitted]................................39
9.2.5 Performance Under Related Agreement....................39
9.3 Failure of Condition............................................39
SECTION 10 - BROKER.........................................................40
SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................40
11.1 Buyer's Remedies in General.....................................40
11.2 MATERIAL INDUCEMENT.............................................41
SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41
12.1 Insured Casualty................................................41
12.2 Uninsured Casualty..............................................42
SECTION 13 - CONDEMNATION...................................................42
SECTION 14 -EMPLOYEES.......................................................43
14.1 Hiring of Hotel Employees; WARN Act Compliance..................43
14.2 Collective Bargaining Agreements................................44
14.3 Continuation of Benefits........................................44
14.5 Indemnification.................................................46
14.6 Survival........................................................46
SECTION 15 - COOPERATION....................................................46
SECTION 16 - NOTICES........................................................47
16.1 Addresses.......................................................47
16.2 Receipt of Notices..............................................48
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16.3 Refusal of Delivery.............................................49
16.4 Change of Address...............................................49
SECTION 17 - GENERAL PROVISIONS.............................................49
17.1 Amendment.......................................................49
17.2 Time of Essence.................................................49
17.3 Entire Agreement................................................49
17.4 No Waiver.......................................................49
17.5 Counterparts....................................................49
17.6 Costs and Attorneys' Fees.......................................50
17.7 Payments; Interests.............................................50
17.8 Transfer By Buyer...............................................50
17.9 Parties in Interest.............................................50
17.10 Applicable Law..................................................51
17.11 Incorporation of Recitals and Exhibits..........................51
17.12 Construction of Agreement.......................................51
17.13 Severability....................................................51
17.14 Announcements...................................................51
17.15 Submission of Agreement.........................................51
17.16 Further Assurances..............................................51
17.17 Cooperation.....................................................52
17.18 Moratorium on Re-Sale...........................................52
17.19 Confidentiality.................................................52
17.20 Interim Management Agreement....................................53
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EXHIBITS
- - --------
Exhibit A .....................................................Legal Description
Exhibit B ................................................Memorandum of Contract
Exhibit 4.2.1.1 ............................................................Deed
Exhibit 4.2.1.2 ......................Assignment and Assumption of Tenant Leases
Exhibit 4.2.1.3 .....................General Assignment and Assumption Agreement
Exhibit 4.2.1.4 ...............Assignment and Assumption of Management Agreement
Exhibit 4.2.1.5A .................Bill of Sale for Capitalized Tangible Property
Exhibit 4.2.1.5B ....................Bill of Sale for Expensed Tangible Property
Exhibit 4.2.1.6 .................................................Stock Agreement
Exhibit 4.2.1.7 ..........Assignment and Assumption of Liquor-Related Agreements
Exhibit 4.2.1.11 ...................................................Master Lease
Exhibit 4.2.1.12 .................................Right of First Offer Agreement
Exhibit 4.2.1.13 .................................Non-Foreign Person Certificate
Exhibit 17.20 ......................................Interim Management Agreement
SCHEDULES
- - ---------
Schedule 1.1.1 .......................................Approved Service Contracts
Schedule 1.1.2 ............................................Employment Agreements
Schedule 1.1.3 .................................................Equipment Leases
Schedule 1.1.4 ................................................Excluded Property
Schedule 1.1.5 ..........................................[Intentionally Omitted]
Schedule 1.1.6 ..................................................Hotel Employees
Schedule 1.1.7 ........................................Schedule of Tenant Leases
Schedule 1.1.8 ................... Seller's Due Diligence and Seller's Knowledge
Schedule 1.1.9 ......................................Specific Disclosure Matters
Schedule 3.4 .......................................Allocation of Purchase Price
Schedule 4.2.1.11 .......................................Houston Adjacent Assets
Schedule 6.3.2 .............................Material Defaults Under Tenant Lease
Schedule 6.3.3 ...............Material Defaults Under Approved Service Contracts
Schedule 6.3.4 ..................................................Material Claims
Schedule 6.3.5 ....................Material Defaults Under Employment Agreements
Schedule 6.3.6 ..............................................Material Violations
Schedule 6.3.7 ................................Material Environmental Conditions
Schedule 6.3.9 .............................................Licenses and Permits
Schedule 6.3.12 ..............................................Seller's Insurance
Schedule 6.3.13 ............................................Pending Tax Protests
Schedule 7.3 .............................................Permitted Encumbrances
Schedule 14.2 ..................................Collective Bargaining Agreements
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PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is entered into as of the 30th day of December, 1997, by and
between NEW REMINGTON PARTNERS, a Texas general partnership ("Seller"), and
STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust (the "Trust"),
and STARWOOD LODGING CORPORATION, a Maryland corporation (the "Corporation"; the
Trust and the Corporation being referred to herein collectively as, "Buyer").
A. Seller owns that certain parcel of land described in Exhibit A attached
hereto and made a part hereof, which is improved with a hotel building and
certain related improvements, all as more particularly set forth in this
Agreement.
B. Seller desires to sell, and Buyer desires to purchase, the above
described land and hotel together with the related improvements upon the terms
and subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Buyer and Seller agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms
"Accounts Receivable" shall mean, collectively, all Cash Equivalent
Receivables, all Invoiced Receivables and all Other Accounts Receivable.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Approved Service Contracts" shall mean the Service Contracts
identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other
Service Contracts cancelable upon thirty (30) or fewer days notice without
penalty, which Service Contracts Buyer shall assume as of the Closing pursuant
to the General Assignment and Assumption Agreement.
"Assignment and Assumption of Management Agreement" shall have the
meaning set forth in Section 4.2.1.4.
<PAGE> 9
"Assignment and Assumption of Tenant Leases" shall have the meaning
set forth in Section 4.2.1.2.
"Assignment and Assumption of Liquor-Related Agreements" shall have
the meaning set forth in Section 4.2.1.7.
"Bill of Sale" shall have the meaning set forth in Section 4.2.1.5.
"Business Day" shall mean any day other than Saturday or Sunday on
which the New York Stock Exchange is open for business.
"Booking" shall mean a contract or reservation for the use of guest
rooms, banquet facilities, meeting rooms, and/or conference facilities at the
Hotel.
"Buyer's Counsel" shall mean the law firm of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq.
"Buyer Default" shall have the meaning set forth in Section 3.5.1.
"Cash Equivalent Receivables" shall mean all Guest Ledger
Receivables which are in the form of drafts or checks written on any bank or
other financial institution, certified checks, money orders, amounts owed to
Seller from credit card, debit card, travel and entertainment card or traveler's
check companies, and are in such other forms which are considered to be cash
equivalents under generally acceptable accounting principles, whether or not
such Guest Ledger Receivables have been presented or billed to any such bank,
financial institution or other company as of the Closing Date.
"Cash Purchase Price" shall mean (a) Twenty-One Million Dollars
($21,000,000.00) plus (b) the Overage Cash Payment, if any, as adjusted pursuant
to Section 3.2.2.
"Closing" or "Close of Escrow" shall have the meaning set forth in
Section 4.7.2.
"Closing Agent" shall have the meaning set forth in Section 4.8.10.
"Closing Date" shall mean the day on which the Closing occurs
hereunder.
"Closing Payment" shall have the meaning set forth in Section 3.2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Collective Bargaining Agreements" shall have the meaning set forth
in Section 14.2.
"Conveyance Documents" shall mean the Deed, the Assignment and
Assumption of Management Agreement, the Assignment and Assumption of Tenant
Leases, the Bill of Sale,
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<PAGE> 10
the General Assignment and Assumption Agreement and the Assignment and
Assumption of Liquor-Related Agreements.
"Deed" shall have the meaning set forth in Section 4.2.1.1.
"Deposit" shall mean an amount equal to $2,857,143.00, held in
accordance with the provisions of Section 3 hereof together with all interest
accrued thereon.
"Employer Corporation" shall mean Luxury Holdings, Inc. (formerly
known as TQM Inc.).
"Employment Agreements" shall mean the Collective Bargaining
Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA),
affecting Hotel Employees, including pension, profit sharing, employee benefit
and similar plans, if any, and agreements with regard to any Hotel Employee each
of which are identified on or expressly described in the materials identified on
Schedule 1.1.2 annexed hereto and made a part hereof.
"Environmental Condition" shall mean any condition with respect to
soil, surface waters, groundwater, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding the
Real Property, which results in any damage, loss, cost, expense, claim, demand,
order or liability to or against Seller or Buyer by any third party (including,
without limitation, any government entity) as a result of a violation of any
applicable Environmental Laws.
"Environmental Laws" shall mean all presently applicable statutes,
regulations, rules, ordinances, codes, licenses, permits and orders of any and
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof, and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous
state laws and regulations.
"Equipment Leases" shall mean all leases of equipment, vehicles,
furniture or other personal property leased by, or on behalf of, Seller and
located at, or used in the operation of the Real Property, together with any and
all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto.
"Equity Purchase Price" shall mean the number of Paired Shares with
a value as determined pursuant to the Stock Agreement equal to $26,665,500.00 to
be delivered in accordance with the applicable provisions of the Stock
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
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<PAGE> 11
"Escrow" shall mean an escrow opened with the Escrow Holder for the
purchase and sale of the Property in accordance with the provisions of this
Agreement.
"Escrow Holder" shall mean the Title Company unless otherwise agreed
in writing by Buyer and Seller.
"Escrow Instructions" shall have the meaning set forth in Section
4.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Property" shall mean all Seller's right, title and
interest in and to: (a) those claims of Seller attributable to the period prior
to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a
part hereof, or which Seller is entitled to assert under the express provisions
of Section 5; (b) all insurance proceeds under Seller's Insurance and workers'
compensation policies, including return premiums and dividends thereon and all
claims thereunder in each case to the extent attributable to acts or occurrences
prior to the Closing Date; (c) all accounts owned or maintained by Seller, or
Manager on Seller's behalf, in connection with the Hotel, including all
operating and reserve accounts; and (d) any books, records, files or papers
specifically described in Section 6.3.2 as excluded from the Property
Information.
"Excluded Parties" shall have the meaning set forth in Section
17.18.
"Execution Date" shall mean the date hereof.
"General Assignment and Assumption Agreement" shall have the meaning
set forth in Section 4.2.1.3.
"Guest Ledger Receivables" shall mean amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms at
the Hotel or group, conference or banquet customers of Seller at the Hotel.
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder,
as the same has been amended from time to time.
"Hotel" shall mean the hotel located on the Land and commonly known
as Houston Luxury Collection Hotel.
"Hotel Employees" shall mean all full-time, part-time or temporary
employees of Seller and/or the Employer Corporation (but not employees of
Manager or any of its affiliates) who are employed by Seller and/or the Employer
Corporation exclusively at or in connection with the Hotel as of the Closing
Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof.
"Houston Adjacent Assets" shall have the meaning set forth in
Section 4.2.1.11.
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<PAGE> 12
"Houston Right of First Offer Agreement" shall have the meaning set
forth in Section 4.2.1.12.
"Improvements" shall mean Seller's right, title and interest in and
to the hotel building and other improvements now or hereafter located on the
Land.
"Insured Casualty Notice" shall have the meaning set forth in
Section 12.1.1.
"Intangible Property" shall mean all of Seller's right, title and
interest in and to the following, in each case excluding any Excluded Property:
(i) Licenses and Permits; (ii) trademark rights, and other intangible property,
rights, titles, interests, privileges and appurtenances related to or used in
connection with the Hotel or its operations; (iii) warranties and guaranties of
architects, engineers, contractors, subcontractors, suppliers or materialmen
involved in the repair, construction, maintenance, design, reconstruction or
operation of the Hotel, or any equipment or systems constituting a part of the
Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and
(vii) computer programs, software and documentation thereof (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 variable descriptions, flow charts and
other related materials used in connection therewith; and (viii) any goodwill
associated with the operation of the Hotel.
"Interim Management Agreement" shall have the meaning set forth in
Section 17.20 hereto.
"Invoiced Receivables" shall mean all Guest Ledger Receivables other
than Cash Equivalent Receivables whether or not such Guest Ledger Receivables
have been invoiced by Seller as of the Closing Date.
"Land" shall mean Seller's right, title and interest in and to the
land described on Exhibit A annexed hereto and made a part hereof.
"LIBOR rate" shall mean the average of interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to be published, then Buyer shall propose a
substitute method of determining the interest rate generally known as the
three-month LIBOR rate, which method, absent manifest error, shall be binding on
Buyer and Seller.
"Licenses and Permits" shall mean all licenses, permits,
registrations, certificates, authorizations and governmental approvals other
than the Liquor License obtained in connection with the design, construction,
rehabilitation, use and/or operation of the Hotel.
"Liquor Agreements" shall have the meaning set forth in Section
6.3.14.
"Liquor Lease" shall have the meaning set forth in Section 6.3.17.
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<PAGE> 13
"Liquor License" shall mean all licenses, permits, registrations,
certificates, authorizations and governmental approvals with respect to service
of alcoholic beverages at the Hotel.
"Lock Price" shall have the meaning set forth in the Stock
Agreement.
"Losses" shall mean any and all losses, liabilities, obligations,
damages, claim or expense, including without limitation, reasonable attorneys'
and accountants' fees and disbursements related thereto.
"Manager" means Sheraton Operating Corporation, a wholly-owned
subsidiary of ITT Sheraton Corporation.
"Management Agreement" shall mean that certain Management Agreement
entered into as of August 13, 1997 between Seller and Manager.
"Market Price" shall have the meaning set forth in the Stock
Agreement.
"Master Lease" shall have the meaning set forth in Section 4.2.1.11.
"Material" shall mean $5,000 for any single occurrence and $15,000
in the aggregate for any group of occurrences whether or not related.
"Material Casualty" shall mean a casualty or casualties that, in the
aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel;
or (ii) will take twelve (12) months or longer from the date of the casualty to
fully remediate.
"Material Taking" shall mean an exercise by an applicable
governmental authority of the power of condemnation or eminent domain that
results in: (a) the taking of more than twenty percent (20%) of the Real
Property; (b) a material reduction or restriction in access to the Property; or
(c) the inability to operate the Hotel in substantially the same manner (without
material additional expense) as it was operated prior to such taking.
"Memorandum of Contract" shall mean a memorandum of this Agreement
in the form attached as Exhibit B hereto.
"Monetary Lien" shall mean any monetary lien affecting the Real
Property of an ascertainable amount, other than any lien for taxes or
assessments which are not yet due and payable.
"Non-Foreign Person Certificate" shall have the meaning set forth in
Section 4.2.1.13.
"Other Accounts Receivable" shall mean any and all rents, additional
rent, deposits, and other sums and charges owing to Seller that are in any way
attributable to the operation of the business at the Hotel, including, without
limitation, all rents and/or license fees
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<PAGE> 14
due from Tenants under Tenant Leases, and including any such amounts which are
past due, but excluding Guest Ledger Receivables.
"Overage Cash Payment" shall mean the portion of the Equity Purchase
Price which is payable in cash at Closing as provided in Section 3.2.2.1, if
any.
"Ownership Limitation" shall mean 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.
"Paired Shares" shall mean one 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 the Pairing Agreement, which
shares shall be transferable as provided in the Stock Agreement and the Pairing
Agreement.
"Pairing Agreement" shall mean 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 beneficial interests of the
Trust and shares of the Corporation.
"Permitted Encumbrances" shall have the meaning set forth in Section
7.3.
"Person" shall mean any natural person, partnership, corporation,
association, limited liability company, trust or any other legal entity.
"Personal Property" shall mean collectively the Tangible Personal
Property and the Intangible Property.
"Preliminary Title Report" shall have the meaning set forth in
Section 7.1.
"Property" shall mean collectively the Real Property, the Personal
Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the
Excluded Property.
"Property Information" shall have the meaning set forth in Section
6.4.2.
"Proration Time" shall mean 12:01 a.m. Mountain Time on the Closing
Date.
"Purchase Price" shall mean the sum of the Cash Purchase Price and
the Equity Purchase Price.
"Real Property" shall mean the Land and the Improvements, together
with Seller's right, title and interest in and to all rights of way, easements,
water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon
substances, or any portion thereof, relating to the Land, and Seller's right,
title and interest in and to all streets, alleys, strips and gores abutting the
Land, if any.
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<PAGE> 15
"Records and Plans" shall mean, all financial records showing the
income and expenses of the Hotel for the prior three (3) calendar years and for
the current year to date, certificates of occupancy, records of the Hotel's
operations (including utility bills), building plans, specifications and
drawings, lists of Personal Property, surveys, tax bills for the Real Property
for the last three (3) years and for the current year to date, copies of the
Service Contracts, Licenses and Permits and other documents related to the use,
maintenance, repair, management, construction and/or operation of the Hotel, in
each case, to the extent located on-site at the Hotel, or to Seller's Knowledge,
otherwise under the control of Seller.
"Related Agreement" shall have the meaning set forth in Section
9.1.3.
"Schedule of Advance Bookings" means the Schedule of Advance
Bookings delivered pursuant to Section 4.2.1.19.
"Schedule of Tenant Leases" means the Schedule of Tenant Leases set
forth in Schedule 1.1.7 annexed hereto and made a part hereof.
"Scheduled Closing Date" shall mean January 15, 1998, as such date
may be extended in accordance with the provisions of Section 7.1 time being of
the essence.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall have the meaning set forth in Section 6.1.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Default" shall have the meaning set forth in Section 11.1.
"Seller's Closing Certificate" shall have the meaning set forth in
Section 4.2.1.18.
"Seller's Counsel" shall mean Morrison & Foerster LLP acting through
Thomas R. Fileti, Esq.
"Seller's Due Diligence" shall mean the information gathering and
review process described on Schedule 1.1.8.
"Seller's Insurance" shall have the meaning set forth in Section
6.3.12.
"Seller's Knowledge" shall mean with respect to any representation
or warranty so qualified, the knowledge of the person(s) identified on Schedule
1.1.8 annexed hereto and made a part hereof, on the date on or as of which such
representation or warranty is made, following the completion by such person(s)
of Seller's Due Diligence, but without any other duty to investigate or inquire
and without attribution to any such identified person(s) of facts and matters
otherwise within the personal knowledge of any other officers, employees, or
agents of Seller or any third parties (including, but not limited to, the
Manager or any previous manager of the Hotel), but not within the actual current
knowledge of such named person(s). It is understood
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<PAGE> 16
that none of the individuals identified on Schedule 1.1.8 shall have any
personal liability for any of Seller's representations, warranties and other
obligations under this Agreement.
"Service Contracts" shall mean any and all service contracts,
landscaping contracts, maintenance agreements, open purchase orders and other
contracts for the provision of services, materials or supplies to or for the
benefit of the Property, except for the Management Agreement, together with any
and all amendments thereto.
"Specific Disclosure Matters" shall mean certain disclosures and
information provided or disclosed by Seller to Buyer described on Schedule 1.1.9
annexed hereto and made a part hereof.
"Starwood Disclosure" shall mean collectively, the Form S-3 filed by
the Corporation and the Trust with the SEC on November 12, 1997, and the Form
S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as
the same may be amended by any filing with the SEC made by the Trust or the
Corporation, as amended to date and from time to time thereafter.
"Starwood Operating Partnership" shall mean SLC Operating Limited
Partnership, a Delaware limited partnership.
"Starwood Realty Partnership" shall mean SLT Realty Limited
Partnership, a Delaware limited partnership.
"State" shall mean the state in which the Hotel is located.
"Stock Agreement" shall have the meaning set forth in Section
4.2.1.6.
"Survey" shall mean an as-built ALTA survey of the Real Property
certified to the Title Company meeting all State land survey requirements.
"Tangible Personal Property" shall mean, in each case to the extent
owned by Seller and excluding any and all of the Excluded Property: (i) all
Records and Plans; (ii) all "Inventories", as such term is defined in the
Uniform System of Accounts; (iii) all depreciable personal property; and (iv)
all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery,
equipment, licensed software and personal computer based security systems, if
any, specialized hotel equipment and other tangible personal property, used in
connection with the ownership, operation or maintenance of the Property,
including, without limitation, all china, glassware, silverware, linens, towels,
curtains, uniforms, engineering, maintenance, and housekeeping supplies,
draperies, materials and carpeting, used or intended for use, but not for sale,
in connection with the operation of the Hotel, all equipment used in the
operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners,
lobby, reservation desk and all merchandise, food and beverages held for sale in
connection with the operation of the Hotel, which are on hand on the Closing
Date; provided, however, that to the extent that any applicable law prohibits
the transfer of alcoholic beverages from Seller to Buyer, such beverages shall
not be considered a part of the Tangible Personal Property.
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<PAGE> 17
"Tenant" shall mean a tenant, licensee or concessionaire occupying
space at any portion of the Property pursuant to a Tenant Lease.
"Tenant Lease" shall mean a lease, concession agreement or license
agreement entered into by or on behalf of Seller with a third party for the use
of any part of the Real Property, including those leases, concession agreements
and license agreements shown on the Schedule of Tenant Leases, together with any
amendments thereto but excluding Bookings.
"Tenant Security Deposits" shall mean all security deposits or other
security of Tenants under the Tenant Leases, plus accrued interest, if any,
payable thereon.
"Termination Charges" shall have the meaning set forth in Section
14.1.
"Termination Notice" shall have the meaning set forth in Section
3.5.1.
"Threshold Amount" shall mean One Million Dollars ($1,000,000).
"Title Company" shall mean Chicago Title Insurance Company.
"Title Policy" shall have the meaning set forth in Section 7.2.
"Transfer Restriction Period" shall have the meaning set forth in
Section 17.18.
"Uninsured Casualty Notice" shall have the meaning set forth in
Section 12.2.1.
"Uninsured Estimate to Repair" shall have the meaning set forth in
Section 12.2.1.
"Uniform System of Accounts" shall mean the Uniform System of
Accounts for Hotels, prepared by The Hotel Association of New York City, Inc.,
in effect as of the date hereof.
"Utility Deposits" shall mean Seller's right, title and interest in
and to all deposits delivered by Seller to utilities, governmental agencies,
suppliers or others pursuant to an Approved Service Contract or otherwise in
connection with the Real Property.
"Value Letter" shall have the meaning set forth in Section 4.3.1.4.
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act and the Regulations promulgated thereunder, as the same has
been amended.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
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SECTION 2
PURCHASE AND SALE OF PROPERTY
On the terms and subject to the conditions of this Agreement, Seller
agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property
from Seller all as hereinafter provided. Notwithstanding any other provision of
this Agreement, there shall be excluded from the Property being conveyed
hereunder the Excluded Property.
SECTION 3
PURCHASE PRICE; PAYMENT;
BUYER'S DEFAULT; LIQUIDATED DAMAGES
3.1 Purchase Price. The purchase price for the Property shall be the
Purchase Price.
3.2 Payment. The Purchase Price shall be paid as follows:
3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow
Holder, in cash or other immediately available funds, the Deposit, to be held by
Escrow Holder strictly in accordance with the provisions of this Agreement. If
the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit
as a credit against the Purchase Price.
3.2.2 At least one (1) day prior to the Scheduled Closing Date
(unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder
an amount (the "Closing Payment") payable in the form specified in Sections
3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the
Deposit. The Closing Payment shall be paid as follows:
3.2.2.1 The Equity Purchase Price shall be delivered in Paired
Shares without adjustment for the pro-rations hereunder, which shares shall be
delivered in accordance with and subject to and transferable in accordance with
the provisions of the Stock Agreement and the Pairing Agreement. If any portion
of the Equity Purchase Price cannot be paid in Paired Shares on account of the
Ownership Limitation, a cash payment in an amount equal to the product of (a)
the number of Paired Shares which are not delivered hereunder or under the Stock
Agreement because of the Ownership Limitation and (b) the Lock Price (the
"Overage Cash Payment") shall be paid in cash or other immediately available
funds.
3.2.2.2 The balance of the Closing Payment shall be paid in
cash or other immediately available funds adjusted for the pro-rations provided
for expressly in this Agreement.
3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest
any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills
or other securities having maturities of thirty (30) days or less and
constituting direct obligations of, or fully guaranteed by, the United States of
America (and provided, further, that such direct obligations
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or guarantees, as the case may be, are entitled to the full faith and credit of
the United States of America) or such other investments as Buyer may direct and
Seller may approve, until Escrow Holder is required to deliver or use such funds
or any interest earned thereon in accordance with the provisions of this
Agreement. All interest accruing on the Deposit shall be paid to the party
ultimately entitled to the Deposit. All risk of loss on funds held in Escrow
shall be borne by Buyer or Escrow Holder.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets and property that comprise the Property as proposed by Seller
prior to Closing subject to the reasonable approval of Buyer, and such
allocation shall be used by Seller and Buyer in connection with the preparation
of their respective income tax, sales tax, transfer tax, and any other
applicable tax returns. Seller and Buyer shall not, nor shall they permit their
respective Affiliates to, take a federal or state income tax position with any
taxing or other public authorities in any jurisdiction which is materially
inconsistent with the allocation so agreed upon by the parties.
3.5 Default by Buyer Prior to Closing; Liquidated Damages.
3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER
BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS
TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"),
THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO
BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND
ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED
DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER
DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER
LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF
ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION
HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT.
NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN SPECIFIC
PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1.
3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION
3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE
AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR,
SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A
REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE
SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND
THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND
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REASONABLE COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF
ESCROW TO OCCUR.
INITIALS:
-------------------------- -------------------------
Seller Buyer
SECTION 4
ESCROW; CLOSING; COSTS
4.1 Escrow. The purchase and sale of the Property shall be consummated
through the Escrow. Immediately upon the execution of this Agreement, the
parties shall deposit a copy of this Agreement with Escrow Holder. This
Agreement, together with any general provisions agreed to in writing by Buyer
and Seller for the benefit of Escrow Holder, shall constitute the escrow
instructions for the transfer of the Property (the "Escrow Instructions"). In
the event of any conflict between this Agreement and such general provisions,
this Agreement shall control unless otherwise expressly agreed in writing by
Buyer, Seller and Escrow Holder. If any requirements relating to the duties or
obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow
Holder requires additional instructions, the parties shall make such deletions,
substitutions and additions to the Escrow Instructions as Buyer's Counsel and
Seller's Counsel shall mutually approve and which do not substantially alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow Holder and shall be binding upon the party whose counsel gave such
instructions to Escrow Holder.
4.2 Seller's Deliveries to Escrow Holder.
4.2.1 Prior to the Scheduled Closing Date (subject to extension
pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following
documents duly executed and, where applicable, acknowledged by Seller, each of
which shall be undated and the delivery of each of which shall be a condition
precedent to the obligation of Buyer to close hereunder.
4.2.1.1 Deed. A deed with respect to the Real Property in the
form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to
transfer all of Seller's right, title and interest in and to the Real Property,
subject only to matters of record as of the Closing Date, from Seller to Buyer
(the "Deed");
4.2.1.2 Assignment and Assumption of Tenant Leases. An
Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2
annexed hereto and made a part hereof pursuant to which Seller shall assign the
Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations
thereunder (the "Assignment and Assumption of Tenant Leases");
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4.2.1.3 General Assignment. A General Assignment and
Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a
part thereof pursuant to which Seller shall assign to Buyer all of Seller's
right, title and interest in and to all of the Intangible Property and Buyer
shall assume all obligations thereunder (the "General Assignment and Assumption
Agreement");
4.2.1.4 Assignment and Assumption of Management Agreement. An
Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4
annexed hereto and made a part hereof pursuant to which Seller shall assign to
Buyer the Management Agreement and Buyer shall assume the obligations of Seller
thereunder, provided, however, the obligation to deliver the Assignment and
Assumption of Management Agreement shall be irrevocably waived, if prior to the
Close of Escrow, the Management Agreement shall have been terminated and the
Interim Management Agreement shall have become effective in accordance with
Section 17.20.
4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of
Exhibit 4.2.1.5A and 4.2.1.5B annexed hereto and made a part hereof conveying to
Buyer or designees of Buyer all of Seller's right, title and interest in and to
the Tangible Personal Property (the "Bill of Sale");
4.2.1.6 Stock Agreement. The Stock Agreement in the form of
Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement");
4.2.1.7 Assignment and Assumption of Liquor-Related
Agreements. The Assignment and Assumption of Liquor-Related Agreements in the
form of Exhibit 4.2.1.7 annexed hereto and made a part hereof (the "Assignment
and Assumption of Liquor-Related Agreements");
4.2.1.8 [Intentionally Omitted]
4.2.1.9 [Intentionally Omitted]
4.2.1.10 [Intentionally Omitted]
4.2.1.11 Houston Master Lease. The Master Lease in the form of
Exhibit 4.2.1.11 annexed hereto and made a part hereof pursuant to which Seller
shall lease to Buyer on a triple net basis the land (the "Houston Adjacent
Assets") more particularly described on Schedule 4.2.1.11 (the "Master Lease");
4.2.1.12 Houston Right of First Offer Agreement. A Right of
First Offer Agreement in the form of Exhibit 4.2.1.12 annexed hereto pursuant to
which Seller shall grant Buyer a right of first offer with respect to the
Houston Adjacent Assets (the "Houston Right of First Offer Agreement");
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4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person
Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part
hereof (the "Non-Foreign Person Certificate");
4.2.1.14 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Seller in order to effect the Closing;
4.2.1.15 Certified Rent Roll. A copy of the rent roll for the
Property dated as of the Closing Date and certified by Seller to be (a) a true,
correct and complete copy of the rent roll for the Property provided to Seller
by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.16 Certified Operating Statement. An operating statement
for the Property dated as of a date no more than thirty (30) days prior to the
Closing Date and certified by Seller to be (a) a true, correct and complete copy
of the operating statement for the Property provided to Seller by Manager for
the period of Manager's employment at the Property; and (b) to Seller's
Knowledge, to be, true, correct and complete;
4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of
the Proration Time showing all Guest Ledger Receivables and certified by Seller
(a) to be a true, correct and complete copy of the guest ledger provided to
Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and
complete;
4.2.1.18 Closing Certificate. A certification by Seller to
Seller's Knowledge that the representations and warranties set forth in Section
6.3 are true, correct and complete as of the Closing Date, except to the extent
that any such representation or warranty is expressly made only as of the
Execution Date subject to Seller's right to make revisions pursuant to Section
6.7 to such representations and warranties ("Seller's Closing Certificate");
4.2.1.19 Schedule of Bookings. A schedule of all Bookings
relating to periods after the Proration Time, certified by Seller (a) to be a
true, correct and complete copy of the schedule of Bookings provided to Seller
by Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.20 Title Requirements. Any and all certificates,
affidavits and other instruments and documents which the Title Company shall
reasonably require to permit it to issue the Title Policy in the condition
required herein; provided, however, that, (a) Seller is given written notice by
Title Company of the requirement of any such certificates, affidavits or other
instruments and documents within a reasonably sufficient time in advance of the
Scheduled Closing Date and (b) such incidental documents do not create any
liability to Seller that is inconsistent with the liability retained by Seller
under the terms of this Agreement;
4.2.1.21 Payoff Letters. A pay-off letter from the holder of
any mortgage or deed of trust presently encumbering the Real Property indicating
all sums required
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to satisfy the debt secured by and permit the discharge of record the lien of
such mortgage or deed of trust;
4.2.1.22 Notices to Tenants. Notices to Tenants of the
assignment to Buyer of the Tenant Leases in form and substance satisfactory to
Seller and Buyer;
4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's
Counsel in a form to be agreed upon by the parties; and
4.2.1.24 Other. Any other incidental documents, not otherwise
expressly provided for herein, reasonably required by Escrow Holder to
consummate the purchase and sale of the Property; provided, however, that (a)
Seller is given written notice by Escrow Holder of the requirement of any such
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date (subject to extension in accordance with the provisions
of Section 7.1); and (b) such incidental documents do not create any liability
to Seller that is inconsistent with the liability retained by Seller under the
terms of the this Agreement.
4.3 Buyer's Deliveries to Escrow Holder.
4.3.1 Prior to the Scheduled Closing Date (subject to extension in
accordance with the provisions of Section 7.1), and subject further to the
provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall
deliver to Escrow Holder the following items and documents, which documents
shall be duly executed and, where applicable, acknowledged by Buyer or its
designee, as applicable, and undated, and the delivery of each of which shall be
a condition precedent to the obligation of Seller to close hereunder:
4.3.1.1 The Cash Purchase Price. The Cash Purchase Price;
4.3.1.2 Stock Certificates. Paired Shares in the amount
required to be delivered at the Closing in accordance with the provisions of
this Agreement and in accordance with and subject to the provisions of the Stock
Agreement;
4.3.1.3 Assignment and Assumption of Management Agreement. A
counterpart of the Assignment and Assumption of Management Agreement, provided,
however, the obligation to deliver the Assignment and Assumption of Management
Agreement shall be irrevocably waived, if prior to the Close of Escrow, the
Management Agreement shall have been terminated and the Interim Management
Agreement shall have become effective in accordance with Section 17.20.;
4.3.1.4 Value Letter. A letter (the "Value Letter") to be
obtained by Buyer at Buyer's expense with respect to the reasonableness of the
allocation of the purchase price among the transactions being entered into as of
the date hereof between Buyer and Seller and/or Seller's Affiliates issued by
Bear Stearns;
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4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's
counsel in a form to be agreed upon by the parties;
4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement;
4.3.1.7 [Intentionally Omitted]
4.3.1.8 Assignment and Assumption of Liquor-Related
Agreements. A counterpart of the Assignment and Assumption of Liquor-Related
Agreements;
4.3.1.9 [Intentionally Omitted]
4.3.1.10 Houston Master Lease. A counterpart of the Master
Lease;
4.3.1.11 Houston Right of First Offer. A counterpart of the
Houston Right of First Offer Agreement;
4.3.1.12 Closing Certificate. A certification by Buyer that
the representations and warranties set forth in Section 6.1 and Section 6.2 are
true, correct and complete as of the Closing Date;
4.3.1.13 The Assignment and Assumption of Tenant Leases. A
counterpart of the Assignment and Assumption of Tenant Leases;
4.3.1.14 The General Assignment and Assumption Agreement. A
counterpart of the General Assignment and Assumption Agreement;
4.3.1.15 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Buyer in order to effect the closing; and
4.3.1.16 Other. Any other incidental documents, not otherwise
expressly provided for herein, required by Escrow Holder to consummate the
purchase and sale of the Property; provided, however, that (a) Buyer is given
written notice by Escrow Holder of the requirement of such incidental documents
within a reasonably sufficient time in advance of the Scheduled Closing Date;
and (b) Buyer shall not be required to incur any liability, in connection with
the delivery of such incidental documents inconsistent with the provisions of
this Agreement.
4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow,
Seller shall deliver to Buyer or cause to be available to Buyer on-site at the
Hotel, the following documents, to the extent the same have not already been
delivered and to the extent in the possession or control of Seller:
4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases
(or if not available, the best available copies), and the originals of Tenant
Security Deposits which are evidenced by letters of credit or escrow agreements,
if any, and if necessary to enable Buyer to
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realize or draw upon same, consents of the applicable Tenants and/or financial
institutions or replacement letters of credit or escrow agreements in favor of
Buyer;
4.4.2 Service Contracts. The originals, or, if not available, the
best available copies, of the Approved Service Contracts;
4.4.3 Licenses and Permits. The originals, or, if not available, the
best available copies of the Licenses and Permits; and
4.4.4 Records and Plans. The originals, or, if not available, the
best available copies of the Records and Plans.
4.5 Possession. Seller shall deliver the keys and possession of the
Property to Buyer at the Close of Escrow free and clear of all leases, tenancies
and occupancies, except for the Management Agreement, the Bookings, the rights
of guests in guest rooms, banquet facilities, conference rooms and meeting
rooms, the rights of Tenants under the Tenant Leases (including their assignees,
subtenants or licensees), and the other Permitted Encumbrances.
4.6 Evidence of Authorization. At the Close of Escrow, each party shall
deliver to the other party evidence in form and content reasonably satisfactory
to the other party and the Title Company that (a) the party is duly organized
and validly existing under the laws of the state of its organization and has the
power and authority to enter into this Agreement, (b) this Agreement and all
documents delivered pursuant hereto have been duly executed and delivered by the
party, and (c) the performance by the party of its obligations under this
Agreement have been duly authorized by all necessary corporate, partnership or
other action.
4.7 Close of Escrow.
4.7.1 The Escrow shall close on or before the Scheduled Closing
Date.
4.7.2 Provided that Escrow Holder has not received from either party
written notice of the failure of any condition precedent specified in Section 9
to the obligations of such party (or any previous such notice has been
withdrawn), then when the parties have each deposited into the Escrow the
documents and funds required by this Agreement and the Title Company is
unconditionally prepared to issue the Title Policy at the Close of Escrow,
Escrow Holder shall perform the following actions (collectively, "Close of
Escrow" or "Closing"):
4.7.2.1 Prepare a closing statement for the transaction for
approval by Seller and Buyer prior to the Close of Escrow;
4.7.2.2 Insert the Closing Date as the date of any undated
document to be delivered through Escrow;
4.7.2.3 Cause the Deed to be recorded in the land records of
the state and county where the Real Property is located;
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4.7.2.4 Deliver to Buyer the documents deposited into the
Escrow for delivery to Buyer at the Close of Escrow;
4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to
be received by Seller from Buyer through the Escrow at the Close of Escrow less
(i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and
(ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances
on the Real Property or other matters pursuant to the written instruction of
Seller, and (b) the documents deposited into the Escrow for delivery to Seller
at the Close of Escrow; and
4.7.2.6 Cause the Title Policy to be issued by the Title
Company and delivered to Buyer.
4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows:
4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of
Escrow Holder;
4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of
providing the Survey required to be delivered in accordance with the provisions
of Section 7.1; provided, however, Buyer shall be responsible for the full cost
of the Survey in the event the Closing does not occur hereunder other than on
account of default of Seller;
4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer
taxes and recording fees payable in connection with the conveyance of each
portion of the Real Property and/or the recording of the Deed and any other
documents or instruments recorded pursuant to this Agreement;
4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or
other personal property taxes, levies, fees and charges payable as a result of
the transfer of the Personal Property to Buyer and the consummation of the
transactions contemplated hereby. Buyer shall be the reporting person for such
purposes and shall prepare the necessary sales tax reports based upon the
allocations set forth in Section 3.4. The parties acknowledge that additional
sales tax may be assessed as a result of the transfer of the Personal Property
to Buyer and the consummation of the transactions contemplated hereby after the
Closing and that Buyer and Seller shall continue to each be responsible for
one-half of any such additional taxes. The provisions of Section 4.8.3 and
Section 4.8.4 shall survive the Closing;
4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of
obtaining the coverage under the Title Policy, except that the cost of any
special endorsements shall be paid exclusively by Buyer;
4.8.6 At Closing or thereafter Buyer shall pay for the cost of the
Value Letter;
4.8.7 [Intentionally Omitted]
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4.8.8 If the Close of Escrow fails to occur other than as a result
of a default hereunder by either party, including, without limitation, as a
result of a failure of a condition precedent set forth in Section 9, the fees of
the Escrow Holder and Title Company (including, without limitation, cancellation
fees) shall be borne equally between Buyer and Seller;
4.8.9 If the Close of Escrow fails to occur as a result of a default
hereunder by either party, the fees of the Escrow Holder and Title Company
(including, without limitation, cancellation fees) shall be borne by the
defaulting party; and
4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation
Code, the Title Company shall be designated the "Closing Agent" hereunder and
shall be solely responsible for complying with the Tax Reform Act of 1986 with
regard to the reporting of all settlement information to the Internal Revenue
Service.
4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and
Section 15.1.6, each party shall pay all of its own legal, accounting and
consulting fees and other costs and expenses incurred in connection with this
Agreement.
4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall
maintain in strict confidence and not disclose to anyone the existence of the
Escrow, the identity of the parties thereto, the amount of the Purchase Price,
the existence or provisions of this Agreement or any other information
concerning the Escrow or the transactions contemplated hereby, without the prior
written consent of Buyer and Seller.
SECTION 5
PRORATIONS AND ASSUMPTION OF OBLIGATIONS
5.1 General. All income, receivables, expenses (whether payable or
prepaid) and payables of the Property shall be apportioned equitably between the
parties as of the Proration Time in accordance with the provisions of this
Section 5 (all prorations are to be based upon the number of days in a 365 day
year). The obligation to make apportionments under Sections 5.1 and 5.2 shall,
unless otherwise expressly provided in this Section 5, survive the Close of
Escrow for a period of sixty (60) days at which time such apportionment shall be
final unless disputed during such period.
5.2 General and Specific Prorations. Without limitation, the following
items shall be apportioned:
5.2.1 At the Closing, Buyer shall assume all of the accounts payable
relating to goods and services ordered or obtained in the ordinary course of
operation of the business of the Hotel (including without limitation, payments
under the Service Contracts and Equipment Leases) prior to the Proration Time.
Seller shall be obligated to credit Buyer at the Close of Escrow with an amount
mutually agreed upon by Buyer and Seller at the Closing, reflecting the
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parties' good faith estimate of such accounts payable as of the Proration Time
(which estimate shall deduct any discounts then available in the ordinary course
of business for the prompt payment of such accounts payable), plus a further
credit for any late fees then payable with respect to any identified accounts
payable. Buyer shall be responsible for paying when due all accounts payable
arising from the operation of the Property on or after the Proration Time, and
Seller shall have no further liability for such payables or charges. As of the
date which is sixty (60) days following the Closing Date, Buyer and Seller shall
calculate the amount of all accounts payable relating to goods and services
ordered or obtained in the ordinary course of operation of the business of the
Hotel (including without limitation, payments under the Service Contracts and
Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for
any payments made on account of any such accounts payable which were not
reflected in the Parties' estimate of such amount credited to Buyer at Closing
and which have been paid by Buyer or for which Buyer is obligated to pay in
accordance with the provisions hereof, and if the amount of such credit exceeds
the amounts so paid or for which Buyer is so obligated, Buyer shall pay such
excess amount to Seller.
5.2.2 At the Closing, Seller shall assign to Buyer all of the
Accounts Receivable, for which Seller shall receive a credit at the Close of
Escrow in an amount equal to (a) the full, aggregate outstanding balance of the
Cash Equivalent Receivables (without discount except for service charges due to
charge card companies) plus (b) the full aggregate outstanding balance of the
Invoiced Receivables and Other Accounts Receivable as of the Proration Time,
provided, Buyer shall at its option accept or reject any Invoiced Receivables
and Other Accounts Receivable over ninety (90) days and Seller shall not receive
a credit for any Invoiced Receivables and Other Accounts Receivable over ninety
(90) days rejected by Buyer; provided, that Buyer shall at its own expense use
reasonable efforts to collect any such rejected Invoiced Receivables and Other
Accounts Receivable on behalf of Seller for a period of sixty (60) days after
the Closing Date and thereafter Seller shall have the right to collect same for
its own account; provided, further, as of the date which is sixty (60) days
following the Closing Date, Buyer and Seller shall make any adjustments required
to reflect the collectibility of any Invoiced Receivables and Other Accounts
Receivable (it being agreed that (a) any accounts receivable not listed on the
schedule of accounts receivable of the Property as of the date which is sixty
(60) days following the Closing Date shall be deemed paid as of such date and
(b) except as provided in (a), any accounts receivable which are more than
ninety (90) days past due as of the date which is sixty (60) days following the
Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer
shall make a corresponding payment to the other as required to accurately
reflect the collectibility of such Invoiced Receivables and Other Accounts
Receivable and any accounts receivable deemed uncollectable as of such date in
accordance with the terms hereof shall be the property of Seller and Seller
shall be permitted (at its expense and for its own account) to collect the same;
5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall
each receive credit for one-half (1/2) of all Guest Ledger Receivables
attributable to the room night during which the Proration Time occurs. Seller
shall receive the income from all restaurant and bar facilities located at the
Property through the Proration Time and Buyer shall receive such income
thereafter;
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5.2.4 [Intentionally Omitted]
5.2.5 All sales, use and occupancy taxes arising from the operation
of the Property shall be prorated as of the Proration Time;
5.2.6 Fees for transferable annual permits, licenses, and/or
inspection fees, if any, for periods during which the Proration Time occurs
shall be prorated as of the Proration Time;
5.2.7 Utility charges with respect to the Property levied against
Seller or the Property and the value of fuel stored on the Property shall be
prorated at Seller's cost therefor as of the Proration Time. Seller shall notify
all utilities, governmental agencies, suppliers and others providing services to
the Property of the prospective change in ownership and operation of the
Property, and Seller shall use its reasonable efforts to cause all utilities
furnished to the Property, including, but not limited to, electricity, gas,
water and sewer, along with any fuel storage tanks to be read the day prior to
the Proration Time;
5.2.8 Permitted administrative charges, if any, on Tenant Security
Deposits shall be prorated;
5.2.9 Buyer shall receive a credit for advance payments and/or
deposits, if any, under Bookings to the extent the Bookings relate to a period
after the Proration Time;
5.2.10 Vending machine monies will be removed by Seller as of the
Proration Time for the benefit of Seller;
5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or
Seller shall receive a credit therefore) all petty cash funds and cash in the
Property's house banks at 100% of face value at the Proration Time;
5.2.12 Wages, salaries and payroll taxes and other payroll
deductions for all Hotel Employees shall be apportioned as of the Proration Time
(i.e., the night shift shall be prorated 50/50 for the night preceding the
Closing Date). Buyer shall assume all accrued vacation benefits and sick leave
benefits due to such Hotel Employees which relate to any period prior to the
Proration Time and shall receive a credit for the full amount of all such
accrued benefits reasonably expected to be paid after the Closing Date;
provided, that as of the date which is sixty (60) days following the Closing,
Buyer and Seller shall adjust the amount of the credit if required to take into
account the benefits actually required to be paid by Buyer or then reasonably
expected to be paid following the Closing Date by Buyer. Buyer shall also assume
all obligations of Seller and the Employer Corporation, under the Employment
Agreements and/or the Management Agreement to pay all such wages, salaries, and
compensation set forth above accruing subsequent to Proration Time; provided,
however, that other than as set forth in Section 14.1 hereof, no provision
contained in this Agreement shall be construed to prevent the Buyer from
terminating or amending in any manner such Employment Agreements and Management
Agreements subsequent to the Proration Time. The obligation to pay bonuses, if
any, following the Closing shall be allocated as of the Proration Time and
adjusted between Buyer and Seller.
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5.2.13 Real and personal property taxes, assessments and special
district levies shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current available tax bills, Seller
being charged through the day prior to the Closing Date and Buyer with the
Closing Date and thereafter;
5.3 Deposits. All rights to utility, assessment, and other cash deposits
(including, without limitation, any Utility Deposits) held by others for
Seller's account, and all certificates of deposit or other forms of cash
collateral held by or otherwise pledged to others for Seller's account to secure
obligations of Seller under Service Contracts, Equipment Leases or other
obligations assumed by Buyer, shall be assigned or transferred to Buyer at the
Close of Escrow; provided, that if any of such deposits are not transferable,
Seller shall retain all rights with respect thereto and there shall be no debit
made to Buyer on account thereof.
5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and
Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller
under the Tenant Leases as of the Proration Time, including, without limitation,
tenant improvement obligations of landlord thereunder and obligations with
respect to Tenant Security Deposits (to the extent received by Buyer or credited
to Buyer hereunder).
5.5 Service Contracts and Other Intangible Property. At the Close of
Escrow, Seller shall assign to Buyer pursuant to the terms of the General
Assignment and Assumption Agreement, all right, title and interest of Seller in
and to the Approved Service Contracts and other Intangible Property, and Buyer
shall assume all of the obligations of Seller under the Approved Service
Contracts arising from and after the Close of Escrow. Buyer shall protect, hold
harmless, indemnify and defend Seller and its directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons from any Losses attributable to the period beginning on and after the
Closing Date with respect to the Approved Service Contracts. Seller shall be
responsible for all obligations thereunder attributable to the period prior to
the Closing Date with respect to Approved Service Contracts (except to the
extent that Buyer shall have received a credit hereunder with respect to any
such obligations). The provisions of this Section 5.5 shall survive the Close of
Escrow.
5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to
commence or continue any proceeding to determine the assessed value of the
Property, the real or personal property taxes payable with respect to the
Property or any action to contest water charges, sewer charges, sales tax or use
tax for the relevant taxable period during which the Proration Time occurs and
to settle or compromise any claim thereof, and any refunds or proceeds resulting
from such proceedings along with the costs (including reasonable legal and
accounting fees) incurred by Buyer in obtaining the same, shall be prorated as
of the Proration Time. In prosecuting any such action, Buyer shall utilize the
services of Marvin Poer & Co. and Gilbert Bernal. Seller shall retain the right
to continue, commence, prosecute, settle or compromise any proceedings relating
exclusively to any relevant taxable period or periods prior to the period during
which the Proration Time shall occur. Buyer and Seller agree to cooperate with
each other and to execute any and all documents reasonably requested in
furtherance of the foregoing. The provisions of Section 5.6 shall survive the
Closing.
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5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and
hold harmless Seller against all Losses with respect to all baggage of departed
guests or guests who are still registered at the Hotel on the Closing Date which
has been checked with the Hotel. As of the Close of Escrow, Seller shall assign
to Buyer all claims and causes of action against the Manager with respect to any
Losses with respect to such baggage. Seller agrees to submit to Seller's
Insurance any claims for Losses with respect to such baggage which arose from
acts or omissions prior to the Closing Date to the extent coverage is available
under said insurance and provide Buyer with the proceeds therefrom provided
Buyer is not in default under this Section 5.7. The provisions of this Section
5.7 shall survive the Closing.
5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify
and hold harmless Seller against all Losses with respect to the contents of any
safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller
shall assign to Buyer all claims and causes of action against the Manager with
respect to any Losses relating to said safety deposit boxes. Seller agrees to
submit to Seller's insurance any claims for Losses which arose from acts or
omissions prior to the Closing Date to the extent coverage is available under
said insurance and provide Buyer with the proceeds therefrom provided Buyer is
not in default under this Section 5.8. The provisions of this Section 5.8 shall
survive the Closing.
5.9 Advance Bookings. Buyer shall assume and honor for its account all
Bookings relating to dates after the Proration Time set forth on the Schedule of
Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to
Section 4.2.1.9.
5.10 Special Purchase Price Adjustment. In the event that the Closing Date
is extended beyond January 30, 1998 for any reason other than on account of a
default by Buyer hereunder, Buyer shall receive a credit at Closing against the
Cash Purchase Price in an amount equal to interest on the Purchase Price
calculated at the LIBOR Rate plus 2% per annum for the period from January 30,
1998 through the earlier of (a) the Closing Date and (b) sixty (60) days after
January 30, 1998. Nothing in this Section 5.10 shall create a waiver of any
other remedy of Buyer for a Seller default permitted under the provisions of
this Agreement.
SECTION 6
REPRESENTATIONS AND WARRANTIES;
CONDITION OF PROPERTY
6.1 Of the Trust. As an inducement to Seller to enter into this Agreement,
the Trust hereby represents, warrants and covenants to Seller as follows:
6.1.1 Power and Authority. The Trust is a real estate investment
trust duly organized and validly existing under the laws of the State of
Maryland. The Trust has the power and authority to carry on its present
business, to enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the
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Trust, nor the performance by the Trust of the Trust's obligations hereunder
will violate or constitute an event of default under any material terms or
material provisions of any agreement, document, instrument, judgment, order or
decree to which the Trust is a party or by which the Trust is bound and/or
violate any applicable law, rule or regulation the violation of which would have
a Material effect upon the principal benefits intended to be provided by this
Agreement.
6.1.2 Authorization; Valid Obligation. All proceedings required to
be taken by or on behalf of the Trust to authorize the Trust to make, deliver
and carry out the terms of this Agreement will be duly taken prior to the
Closing Date. No consent to the execution, delivery and performance of this
Agreement will be required from any partner, board of directors, shareholder,
creditor, investor, judicial or administrative body, governmental authority or
other person, other than any such consent which already has been (or prior to
the Closing will have been unconditionally given. The individuals executing this
Agreement and the documents referenced herein on behalf of the Trust have the
legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement is a valid and binding obligation of Trust,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
6.1.3 Capital Structure. The authorized and outstanding capital
stock and units of the Trust and its operating partnership are as set forth in
the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase
Price at the Closing in accordance with this Agreement will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights and will be paired with each other in the same ratio as all
other shares are paired with each other pursuant to the Pairing Agreement.
6.1.4 SEC Documents and Other Reports. The Trust has filed all
required documents with the SEC since January 1, 1996 (such documents together
with the Starwood Disclosure being referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of applicable law, and, at the respective times
they were filed, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Trust included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Regulation S-X of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Trust and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the SEC Documents or as
required by generally accepted accounting principles, the Trust has not, since
December 31,
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1996, made any change in the accounting practices or policies applied in the
preparation of their financial statements. Prior to the Closing Date, the Trust
will file all required documents with the SEC, which documents will comply in
all material respects with the requirements of the applicable law, and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.1.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Trust and its
subsidiaries taken as a whole, or (b) there has not been any split, combination
or reclassification of any of the capital stock or units of the Trust or its
operating partnership or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of, or in substitution for shares of
such capital stock.
6.1.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Trust or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Trust or any of its
subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole. Except as set forth in the SEC Documents,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the knowledge of the Trust,
threatened against or involving the Trust or any of its subsidiaries or any of
their directors, officers or employees, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, have had,
or would reasonably be expected to have, a material adverse change in or effect
on the financial condition, properties, business, results of operations or
prospects of the Trust and its subsidiaries taken as a whole. As of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of
their subsidiaries or any of their officers, directors or employees, as such, or
any of their properties, assets or business relating to the transactions
contemplated by this Agreement.
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6.1.7 REIT Status. The Trust is currently a "real estate investment
trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust
is and at all times during the testing period described in Code Section
897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section
897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal
Revenue Service nor any other taxing entity or authority has made any assertion
that the Trust does not qualify as a REIT for income tax purposes, nor has there
been any challenge to the REIT status of the Trust. From time to time upon
request by the Seller or its assigns after the Closing Date, the Trust agrees to
inform Seller or such assigns whether to its knowledge it complies with the
representation and warranties set forth in this Section 6.1.7.
6.1.8 Partnership Status. Starwood Realty Partnership is classified
and taxable as a partnership for U.S. federal income tax purposes.
6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino
Act are not applicable to the transactions contemplated hereby and neither the
Trust nor Seller is required to make any filings or submissions or obtain any
approvals thereunder in connection herewith.
6.2 Of the Corporation. As an inducement to Seller to enter into this
Agreement, the Corporation hereby represents, warrants and covenants to Seller
as follows:
6.2.1 Power and Authority. The Corporation is a corporation duly
organized and validly existing under the laws of the State of Maryland. The
Corporation has the power and authority to carry on its present business, to
enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the
Corporation nor the performance by the Corporation of the Corporation's
obligations hereunder will violate or constitute an event of default under any
material terms or material provisions of any agreement, document, instrument,
judgment, order or decree to which the Corporation is a party or by which the
Corporation is bound and/or violate any applicable law, rule or regulation the
violation of which would have a Material effect upon the principal benefits
intended to be provided by this Agreement.
6.2.2 Authorization; Valid Obligation. All proceedings required to
be taken by, or on behalf of the Corporation, to authorize the Corporation to
make, deliver and carry out the terms of this Agreement will be duly taken prior
to the Closing Date. No consent to the execution, delivery and performance of
this Agreement will be required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, governmental
authority or other person, other than any such consent which already has been
(or prior to the Closing will have been) unconditionally given. The individuals
executing this Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement is a valid and
binding obligation of Corporation, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
6.2.3 Capital Structure. The authorized and outstanding capital
stock and units of the Corporation and its operating partnership are as set
forth in the Starwood Disclosure. All
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Paired Shares to be issued as the Equity Purchase Price at the Closing in
accordance with this Agreement will, when so issued, be duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights and will be
paired with each other in the same ratio as all other shares are paired with
each other pursuant to the Pairing Agreement.
6.2.4 SEC Documents and Other Reports. The Corporation has filed all
required SEC Documents since January 1, 1996. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
applicable law, and, at the respective times they were filed, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including, in each case,
any notes thereto) of the Corporation included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Corporation and
its consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Corporation has not, since December 31, 1996, made
any change in the accounting practices or policies applied in the preparation of
their financial statements. Prior to the Closing Date, the Corporation will file
all required documents with the SEC, which documents will comply in all material
respects with the requirements of the applicable law, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.2.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole, or (b) there has not been any split,
combination or reclassification of any of the capital stock or units of the
Corporation or its respective operating partnerships or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of such capital stock.
6.2.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Corporation or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Corporation or any
of its subsidiaries, as such, or any of its or their properties, assets or
business
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that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the
Corporation and its subsidiaries taken as a whole. Except as set forth in the
SEC Documents, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the knowledge of the
Corporation, threatened against or involving the Corporation or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole. As of the date hereof, there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of their subsidiaries or any of
their officers, directors or employees, as such, or any of their properties,
assets or business relating to the transactions contemplated by this Agreement.
6.2.7 Starwood Operating Partnership is classified and taxable as a
partnership for U.S. Federal Income Tax purposes.
6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act
are not applicable to the transactions contemplated hereby and neither the
Corporation nor Seller is required to make any filings or submissions to obtain
any approvals thereunder in connection herewith.
6.3 Of Seller. As an inducement to Buyer to enter into this Agreement,
Seller, represents, warrants and covenants to Buyer as follows:
6.3.1 Regarding Seller's Authority.
6.3.1.1 Seller is a general partnership in dissolution under
the laws of the State of Texas. Seller has the power and authority to enter into
this Agreement and the Conveyance Documents and, to sell the Property on the
terms set forth in this Agreement. The execution and delivery hereof and the
performance by Seller of its obligations hereunder, will not violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which
Seller is a party or by which Seller is bound and/or violate any applicable law,
rule or regulation the violation of which would have a Material effect upon the
principal benefits intended to be provided by this Agreement.
6.3.1.2 The individuals executing this Agreement and the documents
referenced herein on behalf of Seller have the legal power, right and actual
authority to bind Seller to the terms and conditions hereof. This Agreement is a
valid and binding obligation of Seller, enforceable in accordance with its
terms, except as the same may be affected by bankruptcy, insolvency, moratorium
or similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
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6.3.2 Tenant Leases. There are no leases, licenses or concessions
for space which will affect the Real Property or any portion thereof following
the Close of Escrow other than as set forth on the Schedule of Tenant Leases.
Seller has delivered to Buyer a true, correct and complete copy of each lease
and agreement listed on the Schedule of Lease. Seller has not received written
notice of any sublease and/or assignment of any Tenant Lease except as set forth
on Schedule 6.3.2. No outstanding written notice of any Material default has
been delivered by Seller or received by Seller with respect to any Tenant Lease,
except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof.
To Seller's knowledge, all rent under the leases listed on the Schedule of
Leases is being paid currently. All Material brokerage, leasing and other
commissions due in connection with the Tenant Leases have been paid by Seller
other than those payable with respect to the renewal or extension of such Tenant
Leases or expansion of the leased premises thereunder after the Closing Date,
each of which are payable under agreements described on Schedule 6.3.2.
6.3.3 Service Contracts. There are no Service Contracts which will
affect the Property after the Closing Date except for the Approved Service
Contracts. No outstanding written notice of any Material default has been
delivered by Seller or received by Seller with respect to any Approved Service
Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part
hereof.
6.3.4 Claims. There are no pending litigation or condemnation
proceedings with respect to Seller or the Property which would result in an
adverse effect on the ability of Buyer to operate the Property after the
Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part
hereof. There is no pending litigation or to Seller's knowledge, other claims of
Seller with respect to the Property attributable to the period prior to the date
hereof which may result in a material judgment in favor of Seller except as
disclosed on Schedule 6.3.4.
6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a
true and complete list of all Hotel Employees as of the Execution Date together
with their positions, salaries or hourly wages, as applicable, and years of
service. Except for or pursuant to the Employment Agreements, the Collective
Bargaining Agreements, the Management Agreement and the agreements related to
the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto,
neither Seller nor the Employer Corporation has relating to the Property (i) at
any time maintained, contributed to or participated in, (ii) or had at any time
obligation to maintain, contribute to, or participate in, or (iii) any liability
or contingent liability, direct or indirect, with respect to: any employment
agreement, oral or written retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan, vacation pay
plan, severance plan, bonus plan, stock compensation plan or any other type or
form of employee-related (or independent contractor-related) arrangement,
program, policy, plan or agreement. Except as set forth on Schedule 6.3.5, to
Seller's knowledge there is no Material default under any of the Employment
Agreements.
6.3.6 Compliance with Laws. During the past twelve (12) months,
Seller has not received any written notice from any party, including, without
limitation, from any municipal, state, federal or other governmental authority,
of a Material violation of any zoning,
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building, fire, water, use, health, or other similar statute, ordinance, or code
bearing on the construction, operation or use of the Property or any part
thereof (other than as to matters previously cured), except as disclosed on
Schedule 6.3.6 annexed hereto and made a part hereof and except for violations
of Environmental Laws, which are addressed in Section 6.3.7 below.
6.3.7 Hazardous Materials. Seller has not received any written
notice from any municipal, state, federal or other governmental authority or
from any other person during the last three (3) years of (a) any Material
violation of applicable Environmental Laws or (b) any Environmental Condition
requiring Material remediation under applicable Environmental Laws, in either
case only to the extent relating to Environmental Conditions at or on the Real
Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part
hereof;
6.3.8 Records and Plans. Seller will have delivered to Buyer on the
Closing Date true and correct copies of the Records and Plans.
6.3.9 Licenses and Permits. Seller has delivered to Buyer true and
correct copies of the Liquor License and all other Material Licenses and Permits
and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto
and made a part hereof.
6.3.10 Management Agreements. There are no hotel management or
property management agreements, which will be binding upon Buyer after the
Closing Date, other than the Management Agreement, a true and complete copy of
which will be delivered to Buyer on the Closing Date. Seller has not sent or
received any notice of default or notice of termination under or with respect to
the Management Agreement.
6.3.11 Personal Property. Seller owns the Tangible Personal Property
(other than the Tangible Personal Property that is subject to the Equipment
Leases) free and clear of any liens and/or encumbrances other than the Permitted
Encumbrances.
6.3.12 Insurance. The Seller in respect of the Real Property is
insured under those policies of casualty and general liability insurance
("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of
which is in full force and effect as of the date hereof and will remain in full
force and effect through the Closing Date. Seller has received no notices of any
Material default or demands to cure from any applicable insurer in respect of
Seller's Insurance.
6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13
annexed hereto and made a part hereof, Seller has not commenced any proceedings
which are pending for the reduction of the assessed valuation of the Real
Property or any portion thereof, and other than the Permitted Encumbrances, to
Seller's Knowledge, there are no special assessments affecting the Property.
Nothing in this Section 6.3.13 or any other provision of this Agreement shall be
construed to limit Seller's rights to initiate or prosecute after the Close of
Escrow additional proceedings for property tax refunds for taxes relating to any
relevant taxable period or periods prior to the taxable period during which the
Proration Time occurs.
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6.3.14 Liquor-Related Agreements. Except for that certain Notice
dated December 1, 1977, from the Texas Comptroller of Public Accounts to Five
Star Beverage, Inc., to Seller's Knowledge, Seller has not received written
notice from the Texas Alcoholic Beverage Commission of any violation or
threatened violation of any applicable laws, rules or ordinance with respect to
(i) the agreements identified on Schedule 1 to the Assignment and Assumption of
Liquor-Related Agreements (collectively, the "Liquor Agreements"), (ii)
Five-Star Beverages, Inc. (the party thereto which holds the Liquor Licenses),
or (iii) the Liquor Licenses. To Seller's Knowledge, each of the Liquor
Agreements is in full force and effect, and Seller has received no written
notice of any default by Seller thereunder. The rent payable to Seller under the
"Liquor Lease" identified on Schedule 1 to the Assignment and Assumption of
Liquor-Related Agreements has not been modified from the amount stated therein.
6.4 Buyer's Review of Records and Plans.
6.4.1 Access to Records and Plans; Specific Disclosures. Buyer
acknowledges that prior to the Closing Date, Buyer has been provided with such
access to the Records and Plans and such other information relating to the Hotel
as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware
of and given an opportunity to inquire into the Specific Disclosure Matters
described herein; (b) has been given access to the Property and the opportunity
to conduct such inquiries and analyses as Buyer has deemed necessary or
appropriate in order to evaluate the physical condition of the Property and any
and all other matters concerning the current and future use, feasibility, or
value, or any other matter or circumstance relevant to Buyer concerning the
Property or its marketability; and (c) the Records and Plans and the other books
and records of Seller with respect to the Hotel may not be complete.
6.4.2 Limitation on Access to Records and Plans. Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges and agrees that
the Records and Plans or other information made available to or delivered to
Buyer prior to, or at the Closing, shall not include any information which is
privileged, confidential or proprietary to Seller or any of its constituent
partners or affiliates, including without limitation, (i) Seller's internal
financial analyses, any appraisals undertaken for Seller or other parties,
income tax returns, financial statements, corporate or partnership governance
records, investment advisory records, and other records concerning Seller's
professional relationships, any Hotel Employee personnel files (prior to the
Closing), or any other internal, proprietary, or confidential information,
files, or records of Seller, (ii) the work papers, memoranda, analysis,
correspondence, and similar materials prepared by or for Seller in connection
with the negotiation and documentation of the transaction contemplated hereby or
any other offer to purchase the Property received by Seller, and (iii) any
documents or communications subject to the attorney/client privilege or attorney
work product privilege. Buyer expressly agrees that its review of the Records
and Plans, and any and all other information of any type or nature, whether oral
or written, provided to Buyer by or on behalf of Seller and relating to the
Property (collectively, the "Property Information") is for informational
purposes only, and neither Seller nor any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller
has verified either the accuracy of the Property Information, or the adequacy of
any method used to compile the
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Property Information or the qualifications of any person preparing the Property
Information except that, in delivering or making available a copy of any
document or papers to Buyer, Seller has delivered or made available copies of
the originals of such documents or papers in Seller's possession or included in
the Records and Files. Except as expressly set forth in this Section 6, neither
Seller nor any agent, advisor, officer, attorney, representative or other person
acting or purporting to act on behalf of Seller is making or giving any
representation or warranty about, or assuming any responsibility for, the
accuracy or completeness of the Property Information. Reliance by Buyer upon any
Property Information shall not create or give rise to any liability of or
against Seller or any agent, advisor, officer, attorney, representative or other
person acting or purporting to act on behalf of Seller. Subject to Seller's
express representations and warranties set forth herein, the consummation of the
Closing shall constitute Buyer's unconditional approval of all aspects of the
Property and Buyer's unconditional acknowledgment that Buyer has had the
opportunity to request from Seller and review such documents and materials
relating of the Property as Buyer deems appropriate. All copies of such
documents delivered to Buyer shall be returned to Seller if the Closing fails to
occur for any reason.
6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER
THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE
PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON
SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS
CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING
WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS
AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY
EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO:
(A) THE VALUE OF THE PROPERTY;
(B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND
USES WHICH BUYER MAY CONDUCT THEREON;
(D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY;
(E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE
PROPERTY;
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(F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING
WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY
OR BODY;
(H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY;
(I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR
THE AMERICANS WITH DISABILITIES ACT;
(J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY;
(K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND
PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE
PROPERTY;
(L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR
SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY
HAVE BEEN OR MAY BE PROVIDED TO BUYER;
(M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE
APPLICABLE ZONING OR BUILDING REQUIREMENTS;
(N) DEFICIENCY OF ANY UNDER SHORING;
(O) DEFICIENCY OF ANY DRAINAGE;
(P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON
OR NEAR AN EARTHQUAKE FAULT LINE;
(Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENTS AFFECTING THE PROPERTY;
(R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY
(INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY
FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE
SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE
LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN;
(S) [INTENTIONALLY OMITTED]
(T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR
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(U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE
MANAGEMENT AGREEMENT, ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR
REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT
AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP
OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES
THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES,
ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO,
(5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (6)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM.
6.6 Limitation on Representations and Warranties of Seller. In no event
shall Buyer be entitled to seek recovery against Seller for an alleged breach of
any representation or warranty by Seller if the information, transaction, or
occurrence alleged to give rise to such breach was disclosed to, made available
to or discovered by Buyer, whether in the course of its review of the Records
and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with
respect to same being as set forth in Section 6.7 below). Without limiting the
foregoing, each of the representations and warranties by Seller set forth herein
shall be deemed to be qualified in their entirety by the Specific Disclosure
Matters in addition to any other qualifications of such representations and
warranties.
6.7 Right to Supplement Disclosures. At any time prior to the Closing,
Seller may add additional disclosures to the Specific Disclosure Matters and the
Schedules referenced in this Section 6, and may make appropriate revisions
thereto, provided, however, that any such revisions do not in the aggregate
disclose any matter or matters which would reasonably be expected to have an
impact upon the value of the Property in excess of the amount of the Deposit;
and provided, further, that the receipt of any notice of termination under the
Management Agreement shall not be deemed to create any diminution in value to
the Property. In the event that Buyer or Seller discovers any matter or matters
which would be expected to exceed the Threshold Amount, then, in such event, the
provisions of Section 7.1.1 shall apply.
6.8 Basket. In no event will Seller be liable to Buyer for any breach of a
representation or warranty hereunder unless and to the extent the Loss actually
and directly incurred by Buyer as results of such breach together with the Loss
actually and directly incurred by Buyer as results of any other breach(s) in the
aggregate exceed the Threshold Amount, provided, that in no event shall Seller
have any liability to Buyer for any consequential damages arising from a breach
by Seller of any representation or warranty unless such breach results from the
intentional concealment by Seller.
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6.9 Survival. The Trust, the Corporation and Seller each hereby covenants
and agrees with the other that the representations and warranties of the Trust,
the Corporation and Seller (as the case may be) set forth in Sections 6.1.1
through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and
Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without
limitation as to duration. The remaining warranties and representations set
forth in Section 6 shall survive the Close of Escrow until the date which is one
(1) year following the Closing Date, at which time such representations and
warranties shall expire unless prior to such time Buyer or Seller, as the case
may be, have duly commenced an action in a court of competent jurisdiction,
alleging a breach of such representation or warranty. Notwithstanding anything
herein to the contrary, in no event shall either Buyer or Seller have any right
to make a claim after the Closing with respect to any representation or
warranty, the breach of which such party shall have discovered prior to the
Closing, unless such party shall have notified the other party of such breach
prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit
the right of Seller to any remedy otherwise available under Federal or other
applicable securities law.
SECTION 7
TITLE TO THE REAL PROPERTY:
EXTENSION OF THE CLOSING
7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer
and Buyer's Counsel a current preliminary title commitment for title insurance
issued by the Title Company showing the condition of title to the Real Property
(the "Preliminary Title Report") together with a copy of all documents
evidencing or creating the exceptions to title referenced therein.
7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.
On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be
insured over or removed of record all Monetary Liens affecting the Property as
of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising
after the issuance of the Preliminary Title Report which (a) was created by or
with the consent of Seller, or (b) is in an amount less than or equal to the
Deposit. In the event that any Monetary Lien not reflected on the Preliminary
Title Report exceeds the Deposit and was not created by or with the consent of
Seller or any other title defect or other matters arise which requires Seller to
supplement its disclosure pursuant to Section 6.7 and which in the aggregate may
create a diminution in value to the Property in excess of the Deposit, (i) the
Deposit shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the
Closing does not occur by such date in accordance with the provisions hereof;
(ii) the Scheduled Closing Date shall be extended and Seller shall use all
reasonable efforts, to remove or bond over or otherwise cause the Title Company
to omit such Monetary Lien as an exception from coverage under the Title Policy
and/or remove or cure as applicable such other defect or condition as
applicable; and (iii) Buyer shall be permitted to record the Memorandum of
Contract in the real property records of the state and county in which the Real
Property is located. In the event that the Scheduled Closing Date is so extended
and Seller is able to remove or cure such Monetary Lien, remove or cure as
applicable the title defect or other condition the Close of
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Escrow shall occur as soon as practicable following such removal or cure with
time being of the essence as to the performance of both Buyer's and Seller's
obligations hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT
BE AN ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION TO
CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND CONSEQUENTLY
THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE SPECIFICALLY
ENFORCEABLE AGAINST THE TRUST. IN CONSIDERATION FOR THE REFUND TO BUYER OF THE
DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE
MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO
ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE PROVISIONS OF THIS
SECTION 7.1.1 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY
THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO
ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS
IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 17.20 AND IN LIGHT OF THE
RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE
EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER,
THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION 7.1.1 ARE
SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT PROVIDED IN THE
PRECEDING SENTENCE. In the event that a Monetary Lien cannot be removed or cured
or a title defect or other condition cannot be removed or cured as required
hereunder to close within five (5) years of the date of this Agreement, this
Agreement shall terminate and the parties hereto shall have no further
obligations.
7.1.2 [Intentionally Omitted]
7.2. Title Insurance Policy. Buyer's title to the Real Property shall be
insured at Closing by an ALTA extended coverage owner's policy or policies of
title insurance in the amount of the Purchase Price (the "Title Policy") issued
by the Title Company, insuring title to the Real Property vested in Buyer,
subject only to the Permitted Encumbrances, together with such customary
endorsements or affirmative insurance as may be reasonably requested by Buyer
and purchased at Buyer's sole cost and expense.
7.3 Title to Real Property. At the Close of Escrow, title to the Real
Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only
to the matters of title respecting the Property shown on Schedule 7.3 annexed
hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional
easements, covenants, conditions, restrictions or other matters entered into
with the prior written consent of Buyer which consent shall not be unreasonably
withheld, delayed or conditioned (collectively, the "Permitted Encumbrances");
Buyer agrees to rely exclusively on the Title Policy for protection against any
title defects except as set forth in Section 7.1.2. Buyer shall have no claim
following the Closing against Seller on account of the Permitted Encumbrances.
Buyer's agreement under this Section 7.1 shall survive the execution, delivery,
and recordation of the Deed.
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SECTION 8
INTERIM ACTIVITIES
During the period from the Execution Date through the Close of Escrow,
Seller shall (subject to the provisions of the Interim Management Agreement if
entered into in accordance with the provisions of this Agreement) cause the
Property to be continued to be operated in ordinary course as a hotel consistent
with current operating practices during the period since Manager has been
manager of the Hotel. Buyer shall have the right to enter onto and inspect the
Property, from and after the date hereof, through the Closing Date to inspect
the Property and otherwise perform its due diligence provided such inspections
are performed upon prior notice to Seller and so as not to interfere with the
operation of the Property or to disclose the pendency of the transaction
contemplated hereby. All fees and expenses of any kind relating to the
inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to
keep the Property free from any liens arising out of or in connection with
Buyer's or its agents entry or the Property. Buyer shall at its sole cost and
expense, clean up and repair the Property as reasonably necessary after Buyer's
or its agents entry thereon. Buyer shall hold harmless, indemnify and defend
Seller from all Losses relating to any action by Buyer, its Affiliates and/or
agents at or on the Property prior to Closing. Any of Buyer's agents shall be
bound by the provisions of Section 17.19.
SECTION 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and
the obligation of Buyer to purchase the Property is subject to the satisfaction,
not later than the Scheduled Closing Date, (subject to extensions as provided in
Section 7.1) of the following conditions:
9.1.1 Seller's Deliveries. Seller shall have delivered the items
described in Section 4.2 and shall be prepared to deliver the items described in
Section 4.4;
9.1.2 Title Policy. The Title Company shall be unconditionally
prepared (subject only to payment of all necessary title insurance premiums and
other charges) to issue to Buyer the Title Policy insuring Buyer's title to the
Real Property subject only to the Permitted Encumbrances;
9.1.3 Performance Under Related Agreement. All conditions precedent
to the closing of the transactions contemplated by that certain Purchase and
Sale Agreement and Joint Escrow Instructions (the "Related Agreement") dated as
of the date hereof by and between Buyer and Savanah Limited Partnership, a
District of Columbia limited Partnership, shall have been satisfied or waived
and the Seller and Escrow Holder thereunder shall be ready, willing and able to
perform thereunder, and there shall be no default of Seller under such
agreement.
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9.1.4 [Intentionally Omitted].
9.1.5 Seller Performance. Seller shall have performed in all
material respects all of the obligations of Seller under this Agreement, to the
extent required to be performed at or prior to the Close of Escrow.
9.1.6 Representations and Warranties of Seller. The Seller's
representations and warranties set forth in Section 6.3 shall be true, correct
and complete, as of the Close of Escrow subject to modification thereof to the
extent permitted under Section 6.7 and subject further to the applicable
provisions of Section 7.1.1.
The conditions set forth in this Section 9.1 are solely for the benefit of
Buyer and may be waived only by Buyer. Buyer shall at all times have the right
to waive any such condition. Any such waiver or waivers shall be in writing and
shall be delivered to Seller and Escrow Holder.
9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and
Seller's obligation with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Scheduled Closing
Date, of the following conditions:
9.2.1 Funds and Documents. Buyer shall have delivered to Escrow
Holder, prior to the Closing Date, for disbursement as directed by Seller, the
Paired Shares and all cash or other immediately available funds due from Buyer
in accordance with Section 4 of this Agreement and the documents described in
Section 4.3;
9.2.2 Representations and Warranties of Buyer. The Trust's
representations and warranties set forth in Section 6.1 and the Corporation's
representations and warranties set forth in Section 6.2 shall be true, correct
and complete, as of the Close of Escrow;
9.2.3 No Material Changes. There shall have been no casualty or
condemnation for which Buyer has elected to terminate this Agreement pursuant to
Section 12 or Section 13 of this Agreement;
9.2.4 [Intentionally Omitted]
9.2.5 Performance Under Related Agreement. All conditions precedent
to the closing of the transactions contemplated by the Related Agreement shall
have been satisfied or waived and the Buyer and Escrow Holder thereunder shall
be ready, willing and able to perform thereunder and there shall be no default
of Buyer under such agreement.
The conditions set forth in this Section 9.2 are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any such condition. Any such waiver or waivers shall be in
writing and shall be delivered to Buyer and Escrow Holder.
9.3 Failure of Condition. Except as otherwise provided in this Agreement,
if the Escrow fails to close on the Outside Closing Date for any reason
whatsoever, including, without limitation, a failure of a condition precedent
set forth in this Section 9, either Buyer or Seller, if
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not then in default under this Agreement, may terminate the Escrow and this
Agreement upon notice to the other; and, thereupon:
9.3.1 This Agreement and the Escrow shall terminate;
9.3.2 The costs of the Escrow through the Scheduled Closing Date
shall be governed by Section 4.8;
9.3.3 All monies paid into the Escrow and all documents deposited in
the Escrow shall be returned to the party paying or depositing the same together
with interest earned thereon; and
9.3.4 Each party shall be released from all obligations under this
Agreement except for the obligations that are expressly stated to survive the
termination of this Agreement.
SECTION 10
BROKER
Buyer and Seller each represent and warrant to the other that it has not
dealt with any broker, finder or other middleman in connection with this
Agreement, or the transactions contemplated hereby and that no broker, finder,
middleman or other person has claimed, or has the right to claim a commission,
finder's fee or other brokerage fee in connection with this Agreement or the
transactions contemplated hereby. Each party shall indemnify, protect, defend
and hold the other party harmless from and against any costs, claims or expenses
(including actual attorneys' fees and expenses), arising out of the breach by
the indemnifying party of any of its representations, warranties or agreements
contained in this Section 10. The representations and obligations under this
Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does
not occur, the termination of this Agreement.
SECTION 11
REMEDIES FOR SELLER'S DEFAULT
11.1 Buyer's Remedies in General. If Buyer shall discover prior to the
Close of Escrow any default in any of Seller's obligations under this Agreement
(a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a
reasonable period of time (not in excess of thirty (30) days) unless extended by
Buyer in its sole discretion in which to cure such default, in which case the
Scheduled Closing Date shall be extended during the continuation of such cure
period. If there shall be any Seller Default discovered by Buyer prior to the
Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole
right and remedy other than with respect to a breach of a representation and
warranty which shall be subject to the provisions of Section 6.7, shall be to
compel specific performance of this Agreement; provided, however, that Buyer
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shall only be entitled to compel specific performance of this Agreement if, as
of the time of Seller's default, Buyer shall (a) not be in default hereunder,
(b) shall be ready, willing and able to perform its obligations hereunder, and
(c) shall have waived all contingencies to closing other than those relating to
Seller's default.
11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE
LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER
FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL
INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION.
SECTION 12
DAMAGE TO OR DESTRUCTION OF THE PROPERTY
12.1 Insured Casualty.
12.1.1 If, prior to the Close of Escrow, the Property is damaged or
destroyed, whether by fire or other insured casualty, Seller shall promptly
notify Buyer of such damage or destruction and of the good-faith estimate of a
reputable licensed contractor selected by Seller and reasonably approved by
Buyer of the cost to repair the damage and Seller's good-faith belief that such
casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty
Notice indicates that such casualty is a Material Casualty, Buyer may elect to
be released from its obligations hereunder (including its obligation to purchase
the Property) by delivering to Seller written notice of Buyer's intent to do so
within ten (10) days after the date Buyer receives the Insured Casualty Notice.
In such event, the Deposit together with all interest accrued thereon shall be
promptly returned to Buyer.
12.1.2 If the casualty is insured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate
this Agreement in accordance with this Section 12.1, then the Escrow and this
Agreement shall remain in full force and effect, the Closing shall occur on or
before the Outside Closing Date, and Seller shall assign to Buyer, as a
condition precedent to the Close of Escrow, all of Seller's right, title and
interest in and to any of the casualty insurance proceeds or claims therefor
with respect to such damage or destruction, together with any and all rental
loss or business interruption insurance of Seller, if any, payable with respect
to the Property for any period after the Proration Time and any and all claims
against other persons for such damage or destruction. Additionally, if the
Escrow and this Agreement remain in full force and effect, Seller shall pay to
Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an
amount equal to the deductible under the casualty insurance. Within twelve (12)
months following the Close of Escrow, Buyer shall upon thirty (30) days written
notice by Seller, present reasonably satisfactory evidence to Seller that Buyer
applied the proceeds of such insurance to the Property. If Buyer fails to
present such evidence or such evidence is not reasonably satisfactory to Seller,
Buyer shall promptly, but in any event within thirty (30) days of demand
therefor from Seller, pay to Seller the proceeds of the casualty
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insurance assigned by Seller to Buyer as provided herein, together with an
amount equal to the deductible under such insurance for which Buyer received a
credit to the Purchase Price.
12.2 Uninsured Casualty.
12.2.1 If, prior to the Close of Escrow, all or any portion of the
property is damaged or destroyed by an uninsured casualty (including, without
limitation, a casualty as to which coverage has been disclaimed by Seller's
insurers), Seller shall promptly notify Buyer of such damage or destruction and
of the Seller's reasonable estimate of the cost to Seller to repair the same of
a reputable licensed contractor selected by Seller and reasonably approved by
Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that
such casualty is uninsured (the "Uninsured Casualty Notice").
12.2.2 If such Uninsured Estimate to Repair indicates the occurrence
of a Material Casualty, either Seller or Buyer may elect to terminate this
Agreement by giving to the other party written notice of its intent to do so
within ten (10) days after the Seller delivers the Uninsured Casualty Notice to
Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the
Deposit together with interest accrued thereon shall be promptly returned to
Buyer.
12.2.3 If the casualty is uninsured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not
elected to terminate this Agreement in accordance with Section 12.2.2, then the
Escrow and this Agreement shall remain in full force and effect, the Closing
shall occur on or before the Outside Closing Date, and Buyer shall be entitled
to a reduction in the Purchase Price in an amount equal to the Uninsured
Estimate to Repair.
12.2.4 If and to the extent that the Purchase Price is adjusted
pursuant to this Section 12.2 as a result of a disclaimer of coverage by
Seller's insurers, Buyer shall not be entitled to insurance proceeds due under
Seller's policies, or to be assigned any claim under or with respect to Seller's
policies, and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom, it being the intent of this Section 12 that there be
no double recovery by, or double compensation of, Buyer for the casualty.
SECTION 13
CONDEMNATION
If, prior to the Close of Escrow, a Material Taking has occurred or is
pending, Seller shall immediately notify Buyer of such fact. In such event,
Buyer may elect upon written notice to Seller given not later than fifteen (15)
days after receipt of Seller's notice to terminate this Agreement. If Buyer does
not exercise option which Buyer may have pursuant to this Section 13 to
terminate this Agreement, or if any such taking is not a Material Taking, then
neither party shall have the right to terminate this Agreement, but Seller shall
assign and turn over, and Buyer shall be entitled to receive and keep, all
awards for the taking of any of the Real Property by
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eminent domain which accrue to Seller (other than those relating to loss of use
prior to the Closing), and the parties shall proceed to the Close of Escrow
pursuant to the terms hereof, without modification of the terms of this
Agreement and without any reduction in the Purchase Price.
SECTION 14
EMPLOYEES
14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make
an offer of employment to all existing Hotel Employees as of the Close of
Escrow, on terms and conditions generally comparable to their existing terms and
conditions of employment (to the extent such terms and conditions have been
disclosed by Seller and/or its agents to Buyer) and to make all reasonable
efforts to retain such employees for a reasonable period of time. Without
limiting the foregoing, Buyer shall offer to maintain without loss of employment
(as defined in the WARN Act) the employment at the Property (other than upon
good cause for termination) of such number of Hotel Employees and on such terms
and conditions as shall not result in, and only to the extent necessary to
prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i)
shall also cause each of the health and medical benefit plans maintained for
Hotel Employees to waive any preexisting condition in connection with employment
at the Property that was not excluded under the applicable program as of the
Closing Date, (ii) shall also cause each of such benefit plans to take into
account any deductibles or coinsurance amounts incurred by each Hotel Employee
for the year in which the Closing Date occurs, and (iii) shall also cause each
of the health and medical benefit plans to deem each Hotel Employee to be
eligible for participation in such plan as of the Close of Escrow. In the event
that Buyer fails to comply with any of the foregoing covenants, Buyer agrees
that Buyer shall be solely responsible for the payment of any and all costs,
charges, penalties, compensation, severance pay, benefits and liabilities,
arising under the WARN Act, and any other applicable law, rule or regulation on
account thereof, and Buyer agrees to indemnify, defend and hold Seller and the
Employer Corporation and their directors, officers, agents, affiliates,
principals, partners, shareholders representatives and controlling persons
harmless from and against any and all claims, causes of action, judgments,
damages, penalties and liabilities asserted under the WARN Act or any other
applicable law, rule or regulation, whether against Buyer or Seller, the
Employer Corporation or any other such indemnified party and whether based on
employment of any of the Hotel Employees prior to or following the Closing,
arising from Buyer's failure to comply with the foregoing covenants
(collectively, "Termination Charges"). Following the Closing, if Buyer desires
to terminate the employment of any Hotel Employees other than for cause, Buyer
shall be solely responsible for complying with all applicable provisions of the
WARN Act and all other applicable laws, rules and regulations with respect to
such termination, including without limitation, the payment of all costs and
termination payments owing under the WARN Act and all other applicable laws,
rules and regulations to any of such employees. Buyer shall assume all
obligations under the Employment Agreement for the Director of Finance
attributable to the
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period from and after the Closing Date (it being agreed that the Director of
Finance may resign thereunder at any time without penalty).
14.2 Collective Bargaining Agreements. Without limiting the provisions of
Section 14.1, immediately upon the Close of Escrow, without the necessity of
further action by Buyer, Buyer shall assume each collective bargaining agreement
or other labor union contracts identified on Schedule 14.2 (the "Collective
Bargaining Agreements"). Buyer further agrees to indemnify Seller and the
Employer Corporation and their directors, officers, employees, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons for any and all liability to the bargaining agents or Hotel Employees,
resulting from the failure of Buyer to comply with the terms and conditions of
any of the Collective Bargaining Agreements with respect to periods beginning
after the Close of Escrow.
14.3 Continuation of Benefits.
14.3.1 Except as provided in Section 14.3.2 , on and after the
Closing Date, Seller (or any insurer at Seller's cost) shall continue to process
and pay (or cause applicable insurers and third party administrators, including
ITT Sheraton, to process and pay) in an expeditious manner and with respect to
all covered Hotel Employees (and, to the extent applicable, their covered
spouses, dependents and beneficiaries) all claims under the Employment
Agreements that provide health and medical, or other welfare, benefits submitted
for covered expenses with respect to occurrences commencing on or prior to the
Closing Date, including, but not limited to: (A) covered hospital benefits for
any confinements; (B) covered life and survivor income benefits, if any, for
deaths which occur on or prior to the Closing Date; (C) workers' compensation
benefits for disabilities resulting from a work-related accident which occurred
on or prior to the Closing Date; (D) all covered benefits that are being, or
that may be, paid to, or with respect to, any of such individuals who are on
short or long term disability, or medical, personal or other leaves of absence
as of the Closing Date; (E) covered benefits under any "spending account," or
similar arrangement, under any "cafeteria plan" (as defined under Section 125 of
the Internal Code) with respect to salary reduction elections made prior to the
Closing Date; and (F) covered benefits under all other such Employment
Agreements which accrue on or before the Closing Date; but, only in each
instance, to the extent that Buyer shall not have received a credit against the
Purchase Price on account of such item.
14.3.2 Buyer (or any plan maintained by Buyer) will provide
continued health and medical coverage as required under Section 4980B of the
Code, Part 6 of Title I of ERISA or any other applicable federal, state or local
law or ordinance to all current and former Hotel Employees (and their spouses,
dependents and beneficiaries) with respect to whom a "qualifying event" (as such
term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other
triggering event described under the applicable federal, state or local laws or
ordinances occurred on or before the Closing Date.
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14.3.3 Buyer shall maintain supplies of claims forms necessary for
Hotel Employees to make claims under Employment Agreements that provide health,
medical or other welfare benefits with respect to occurrences commencing on or
prior to the Closing Date, and shall furnish such forms to the Hotel Employees
when needed and otherwise assist the Hotel Employees in presenting such claims.
14.4 Buyer and Seller intend by this Agreement to comply with Section 4204
of ERISA, so as to prevent Seller from incurring at the Closing Date a complete
or partial withdrawal in respect of any employee benefit plans, if any, in which
the Hotel Employees currently participate that are "multiemployer plans," as
defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer
on the Schedule of Employment Agreements), determined as if Buyer is the "buyer"
referred to in such Section 4204. Accordingly, with respect to such
multiemployer plans, Buyer agrees as follows:
(A) For the first plan year of each such multiemployer plan
commencing after the Close of Escrow, and for each of the succeeding four plan
years for each such plan, Buyer shall assume the obligation to contribute to
each such plan with respect to operations conducted with business assets
acquired from Seller for substantially the same number of contribution base
units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an
obligation to contribute to such plan.
(B) Prior to each such multiemployer plan's first plan year
beginning after the Close of Escrow, Buyer, shall apply to such plan for a
variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be
obtained or an amount be held in escrow as provided in said Section. In the
event any such plan determines that the request does not qualify for a variance
on it, Buyer shall obtain any required bond or establish any required escrow
within thirty (30) days after the date on which it receives notice of the plan's
decision, and shall maintain such bond or escrow until the earliest of: (i) the
date a variance is obtained from the plan; (ii) the date a variance or exemption
is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day
of the fifth (5th) plan year commencing after the Close of Escrow; which bond or
escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make
a contribution to such plan when due, at any time during the first (1st) five
(5) plan years of such plan beginning after the Closing Date. In order to comply
with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete
withdrawal or a partial withdrawal from any multiemployer plan with respect to
which Buyer has assumed an obligation to contribute pursuant to this Agreement
and such withdrawal or partial withdrawal occurs during the five (5) plan years
commencing with the first (1st) plan year beginning after the date of the Close
of Escrow, Seller shall be secondarily liable for any withdrawal liability it
would have had to such multiemployer plan on the date of the Close of Escrow
under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance
notice of its anticipated failure to pay any withdrawal liability and to furnish
Seller promptly with a copy of any notice of withdrawal liability it may receive
with respect to such plans.
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14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor")
agrees to indemnify, defend, protect and hold the other and, the Employer
Corporation in the case of Seller, and their directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons (as applicable, the "Indemnitee") harmless from and against any and all
claims, damages, liabilities, losses, and expenses, (including attorneys' fees
and costs) paid, suffered or incurred by the Indemnitee, arising out of or
related to Indemnitor's failure to comply with any of the covenants,
obligations, or duties contained in Section 14.
14.6 Survival. The provisions of this Section 14 shall survive the Close
of Escrow.
SECTION 15
COOPERATION
15.1 Seller has advised Buyer that it may be necessary after the Close of
Escrow for Seller (or its representatives) to audit the Records and Plans with
respect to the period prior to the Closing Date. In addition, Seller may require
access to the such Books and Records in connection with any litigation by or
against Seller and its Affiliates with respect to the Property, any tax audit,
examination or challenge or similar proceeding, or any calculation of sums
payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the
Records and Plans with respect to the period prior to the Closing Date at the
Property for a period of seven (7) years after the Close of Escrow or such
additional period as may reasonably be requested by Seller; (ii) grants Seller,
its Affiliates and their respective representatives access to the such Records
and Plans and the Property after the Close of Escrow, at reasonable times and
upon reasonable prior notice, for such purposes; (iii) subject to the rights of
guests in guest rooms, tenants under tenant leases, grants Seller, its
Affiliates, and their respective representatives access to the Property after
the Close of Escrow for the purpose of conducting such inspections and/or
testing (including destructive testing) of the Property as may be necessary or
advisable in connection with any litigation and other proceedings to which
Seller is a party (provided that Seller shall give Buyer prior notice of the
scope of such inspections and testing) which shall be scheduled for such periods
as shall be reasonably agreeable to the parties;
15.1.1 All inspections fees, appraisal fees, engineering fees and
other expenses of any kind relating to the inspection of the Property by Seller
or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate.
15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property
for the purpose of conducting inspections and/or tests, Seller or Seller's
Affiliate shall provide Buyer with certificates of insurance from Seller's
agents from an insurance carrier and for such risks and policy limits as Seller
shall reasonably approve.
15.1.3 Seller agrees to keep the Property free from any liens
arising out of or in connection with such testing and inspection.
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<PAGE> 54
15.1.4 Seller, shall, at its sole cost and expense, clean up and
repair the Property as reasonably necessary, after Seller's or Seller's agents,
entry thereon.
15.1.5 Seller shall hold harmless, indemnify and defend Buyer for
all losses relating to any action by Seller, its Affiliates and/or agents at or
on the Property after the Closing.
15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and
their respective representatives in connection with any such litigation or
proceedings with respect to the Property, any such tax audit, examination or
challenge or similar proceeding, or any such calculation of sums payable under
Section 5, said cooperation to be at no material cost or expense to Buyer.
15.2 Seller shall cooperate with Buyer in connection with the assignment
of all transferable Licenses and Permits to Buyer and the application for and
procurement of replacements of any non-transferable Licenses and Permits.
SECTION 16
NOTICES
16.1 Addresses. Whenever any notice, demand or request is required or
permitted hereunder, such notice, demand or request shall be made in writing and
shall be (a) sent via a nationally recognized overnight courier service fully
prepaid, (b) deposited in the United States by mail, registered or certified,
return receipt requested, postage prepaid, or (c) sent via telefacsimile,
provided that the original of such notice, demand or request shall also be sent
via one of the methods described in (a) and (b) above, in each case to the
addressees (and individuals) set forth below:
As to Seller:
New Remington Partners
c/o Al Anwa USA Incorporated
1925 Century Park East
Suite 1900
Los Angeles, CA 90067
Attn: General Counsel
Telefacsimile: (310) 229-2939
With a copy to Seller's Additional Addressees:
Gordon Eng, Esq.
19191 S. Vermont Avenue
Suite 420
Torrance, CA 90502
Telefacsimile: (310) 207-1006
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Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
As to Buyer:
Starwood Lodging Corporation
Starwood Lodging Trust
2231 E. Camelback Road
Suite 400
Phoenix, AZ 85016
Attn: Steven R. Goldman
Telefacsimile: (602) 852-0115
With a copy to Buyer's Additional Addressee:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
As to Escrow Holder:
Chicago Title Insurance Company
700 South Flower Street, Suite 900
Los Angeles, CA 90017
Attn: Maggie Watson
Telefacsimile: (213) 488-4388
16.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Buyer and its Additional Addressee in the manner aforesaid shall be
deemed sufficiently given to and received by Buyer for all purposes hereunder,
and any notice, demand or request that shall be delivered to Seller and its
Additional Addresses in the manner aforesaid shall be deemed sufficiently given
to and received by Seller for all purposes hereunder (i) the next business day
following the day such notice, demand or request is delivered by a nationally
recognized overnight courier service fully prepaid, to such party and its
Additional Addressee, (ii) if sent via registered or certified mail, at the time
of receipt by such party and its Additional Addressee, or (iii) if sent via
telefacsimile, as of the date and time stated upon confirmation reports
generated
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<PAGE> 56
by the sending party's telefacsimile machine confirming the delivery of such
notice, demand or request to such party and its Additional Addressee.
16.3 Refusal of Delivery. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this Section 16 refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
16.4 Change of Address. Each party shall have the right from time to time
to designate by written notice to the other parties hereto such other person or
persons and such other place or places as said party may desire written notices
to be delivered or sent in accordance herewith.
SECTION 17
GENERAL PROVISIONS
17.1 Amendment. Except as provided in Section 4.1, no provision of this
Agreement or of any documents or instrument entered into, given or made pursuant
to this Agreement may be amended, changed, waived, discharged or terminated
except by an instrument in writing, signed by the party against whom enforcement
of the amendment, change, waiver, discharge or termination is sought.
17.2 Time of Essence. All times provided for in this Agreement for the
performance of any act will be strictly construed, time being of the essence.
17.3 Entire Agreement. This Agreement and other documents delivered at
Closing, set forth the entire agreement and understanding of the parties in
respect of the transactions contemplated by this Agreement, and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof. No representation, promise, inducement or statement of
intention has been made by Seller or Buyer which is not embodied in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance delivered pursuant to this Agreement,
and neither Buyer nor Seller shall be bound by or liable for any alleged
representations, promise, inducement or statement of intention not therein so
set forth.
17.4 No Waiver. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder shall constitute a waiver of any party's right to demand
strict compliance with the terms of this Agreement.
17.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of
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this Agreement or of such an amendment, supplement, document or instrument may
be detached from any counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another counterpart identical in form
thereto but having attached to it one or more additional signature pages.
17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby (including, without limitation, the enforcement of
any obligation to indemnify, defend or hold harmless provided for herein or
therein), or because of an alleged dispute, default, or misrepresentation in
connection with any of the provisions of this Agreement or of such document or
instrument, or if Escrow Holder commences any action with respect to the
Escrow(s), the successful or prevailing party shall be entitled to recover
actual attorneys' fees, charges and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
17.7 Payments; Interests. Except as otherwise provided herein, payment of
all amounts required by the terms of this Agreement shall be made in the United
States and in immediately available funds of the United States of America which,
at the time of payment, is accepted for the payment of all public and private
obligations and debts. Unless the parties otherwise agree, payments shall be
made through the Escrow Holder. If any payment due under this Agreement is not
paid when due, it shall thereafter bear interest at a variable rate equal to the
rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
17.8 Transfer By Buyer. Buyer shall not have the right to assign this
Agreement, but shall be permitted to designate an Affiliate or Affiliates to
take title to the Property. In the event that Buyer elects to so designate any
Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall
upon close of Escrow be released of all obligations hereunder other than
pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and
Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or
Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such
Affiliate of Affiliates shall represent and warrant to Seller that such entities
are duly organized and validly existing and otherwise as to the matters covered
in Section 6.1.1 and Section 6.1.2 as applicable.
17.9 Parties in Interest. Subject to Section 17.8, the rights and
obligations of the parties hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and the legal representatives of their respective estates. Nothing in this
Agreement is intended to confer any right or remedy under this Agreement on any
person other than the parties to this Agreement and their respective successors
and permitted assigns, or to relieve or discharge the obligation or liability of
any person to any party to this Agreement or to give any person any right of
subrogation or action over or against any party to this Agreement.
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17.10 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state in which the Real Property
is located without giving effect to the conflict-of-law rules and principles of
that state.
17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement.
17.12 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Seller" shall include the respective permitted successors
and assigns of Seller, and the term "Buyer" shall include the permitted
successors and assigns of Buyer, if any.
17.13 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
17.14 Announcements. Seller and Buyer shall consult with each other and
provide each other one (1) Business Day prior notice with regard to all press
releases and other announcements issued at or prior to the Close of Escrow and
during the one year period thereafter concerning the existence of this Agreement
or the sale of the Property and, except as permitted under Section 17.19,
neither Seller nor Buyer shall issue any such press release or other such
publicity prior to the Close of Escrow without the prior written consent of the
other party, which consent may be withheld in such other party's sole and
absolute discretion. Buyer will not issue any public announcement with respect
to Seller (other than to describe the transaction contemplated hereby to the
extent permitted hereunder) without the prior written consent of Seller which
may be withheld in its sole and absolute discretion. The agreements of the
parties in this Section 17.14 shall survive the Close of Escrow or any
termination of this Agreement.
17.15 Submission of Agreement. The submission of this Agreement to Buyer
or its broker, agent or attorney for review or signature does not constitute an
offer to sell the Property to Buyer or the granting of an option or other rights
with respect to the Property to Buyer. No agreement with respect to the purchase
and sale of the Property shall exist, and this writing shall have no binding
force or effect, until this Agreement shall have been executed and delivered by
Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow
Holder.
17.16 Further Assurances. Buyer and Seller agree to execute such
instructions to the Escrow Holder and such other instruments and take such
further actions either before or after the Close of Escrow as may be reasonably
necessary to carry out the provisions of this Agreement provided that no
material additional cost or liability shall be created thereby.
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17.17 Cooperation. Buyer and Seller shall cooperate with the other to
carry out the purpose of this Agreement (provided, such cooperation shall not
require either party to expend any sum not otherwise required pursuant to the
other provisions of this Agreement). This Section 17.17 shall survive the Close
of Escrow.
17.18 Moratorium on Re-Sale. In the event Buyer does not consummate the
proposed acquisition of ITT Corporation, substantially as such transaction is
described in the Starwood Disclosure, the Buyer covenants and agrees that it
will not sell the Property to any third-party for a period (the "Transfer
Restriction Period") commencing upon the Close of Escrow and expiring upon the
later of (a) five (5) years following the Close of Escrow, and (b) settlement of
or the final non-appealable judgment is issued in connection with the existing
litigation between Seller and the Ritz Carlton Hotel Company, LLC and their
respective affiliates, provided, however, the foregoing prohibition shall not
apply to a sale of all or substantially all of the assets of Buyer, the merger
of Buyer into another entity or the transfer of the Property to a subsidiary
and/or Affiliate of Buyer but shall be binding upon the party succeeding to all
or substantially all of the assets of Buyer, the surviving entity in such
merger, or such subsidiary or Affiliate. In the event Buyer does consummate the
proposed acquisition of ITT Corporation described above, Buyer covenants and
agrees that it will not sell the Property to Marriott International, Inc., Host
Marriott, the Ritz Carlton Hotel Company, L.L.C. or any of their respective
affiliates, successors and assigns, or any other party that Buyer reasonably
believes will sell, and/or operate the Property pursuant to a franchise or
operating agreement with any of the above-described entities, (collectively,
"Excluded Parties") during the Transfer Restriction Period and shall cause any
permitted purchaser of the Property during the Transfer Restriction Period to
covenant and agree not to sell the Property to any Excluded Party for the
balance of the Transfer Restriction Period. The provisions of this Section 17.18
shall be specifically enforceable. Buyer hereby waives any requirement for
Seller to post a bond in order to seek or obtain any temporary restraining order
or other injunctive relief pursuant to this Section 17.18. The parties
acknowledge and agree that the provisions of this Section 17.18 form a material
part of the consideration to Seller for entering into this Agreement. The
parties agree that these provisions are reasonable in light of Seller's ongoing
litigation with Ritz Carlton Hotel Company and its affiliates.
17.19 Confidentiality. Buyer shall hold as confidential all information
concerning the transaction contemplated by this Agreement, Seller and the
Property disclosed in connection with this transaction and Buyer shall not,
prior to the Close of Escrow, release any such information relating to the
transaction, Seller or the Property to any governmental agencies or third
parties without Seller's prior written consent except as may be required by law
and in such case subject to the provisions of Section 17.14. Seller hereby gives
its consent to Buyer's disclosure of information relating to the transaction
contemplated hereby to Buyer's Counsel and other consultants, in each instance
to the extent reasonably necessary to verify information given to Buyer by
Seller or otherwise to carry out the purposes of this Agreement and provided in
each instance, such consultants agree in writing to be bound by the
confidentiality provisions of this Section 17.19. If the Close of Escrow shall
fail to occur for any reason, neither party shall issue any press release,
publicity or other public announcement of the subject matter of this Agreement,
or to make any other disclosure concerning the subject matter of this Agreement
(except as may be required by law and in such case subject to the provisions of
Section 17.14.),
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without the prior written consent of the other party, which consent may be
withheld in such other party's sole and absolute discretion. The agreements of
the parties in this Section 17.19 shall survive any termination of this
Agreement.
17.20 Interim Management Agreement. Seller shall provide Manager with a
notice of termination of the Management Agreement on January 2, 1998 or as soon
thereafter as Seller shall have obtained any required lender consent thereto.
Seller shall on or prior to January 2, 1998 seek any required lender consent and
use all reasonable commercial efforts to obtain same as promptly as possible.
Buyer and Seller shall enter into a management agreement with respect to the
Property in the form attached as Exhibit 17.20 hereto (the "Interim Management
Agreement") which shall be effective (and the Interim Management Agreement shall
be dated as of such effective date) on the earlier of (a) thirty days from the
date of delivery to Manager of such termination notice and (b) the effective
date of a written waiver of Manager of the notice of termination required under
the Management Agreement. Buyer shall advance any fee payable to Manager under
the Management Agreement on account of the termination thereof up to $80,620.00.
Buyer shall be deemed to have waived delivery of all items under Sections
4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement
is terminated in accordance with the provisions of this Section 17.20 prior to
the Closing Date.
17.21 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 Trust's 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.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the day and year first above written.
"Seller"
NEW REMINGTON PARTNERS,
a Texas general partnership
By: REMINGTON VENTURERS, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
---------------------------
Name: Mansor Dalaan
Title: President
By: REMINGTON VENTURERS II, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
---------------------------
Name: Mansor Dalaan
Title: President
"Buyer"
STARWOOD LODGING TRUST,
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
---------------------------
Name: Steven R. Goldman
Title: Senior Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /s/ Michael C. Mueller
---------------------------
Name: Michael C. Mueller
Title: Vice President
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<PAGE> 62
"Escrow Agent"
CHICAGO TITLE INSURANCE COMPANY,
a Missouri corporation
By:
---------------------------
Name:
Title:
55
<PAGE> 1
NY EXECUTION
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
By
And Between
N.Y. OVERNIGHT PARTNERS, L.P.,
a New York Limited Partnership
As Seller
And
STARWOOD LODGING TRUST,
a Maryland Real Estate Investment Trust
And
STARWOOD LODGING CORPORATION,
a Maryland Corporation,
As Buyer.
Dated As Of: December 30, 1997
Relating to the New York Luxury
Collection Hotel, New York
New York
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS......................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................10
SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................11
SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11
3.1 Purchase Price..................................................11
3.2 Payment.........................................................11
3.3 Investment of Escrowed Funds....................................11
3.4 Allocation of Purchase Price....................................12
3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12
SECTION 4 - ESCROW; CLOSING; COSTS..........................................13
4.1 Escrow..........................................................13
4.2 Seller's Deliveries to Escrow Holder............................13
4.2.1.1 Deed..................................................13
4.2.1.2 Assignment and Assumption of Tenant Leases............13
4.2.1.3 General Assignment....................................14
4.2.1.4 Assignment and Assumption of Management Agreement.....14
4.2.1.5 Bill of Sale..........................................14
4.2.1.6 Stock Agreement.......................................14
4.2.1.7 Liquor Licenses Management Agreement..................14
4.2.1.8 Assignment and Assumption of Ground Lease.............14
4.2.1.9 Assignment of Mortgage................................14
4.2.1.10 [Intentionally Omitted]...............................14
4.2.1.11 [Intentionally Omitted]...............................14
4.2.1.12 [Intentionally Omitted]...............................15
4.2.1.13 Non-Foreign Person Certificate........................15
4.2.1.14 Transfer Tax Forms....................................15
4.2.1.15 Certified Rent Roll...................................15
4.2.1.16 Certified Operating Statement.........................15
4.2.1.17 Guest Ledger..........................................15
4.2.1.18 Closing Certificate...................................15
4.2.1.19 Schedule of Bookings..................................15
4.2.1.20 Title Requirements....................................15
4.2.1.21 Payoff Letters........................................16
4.2.1.22 Notices to Tenants....................................16
4.2.1.23 Opinion of Seller's Counsel...........................16
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4.2.1.24 Other.................................................16
4.3 Buyer's Deliveries to Escrow Holder.............................16
4.3.1.1 The Cash Purchase Price...............................16
4.3.1.2 Stock Certificates....................................16
4.3.1.3 Assignment and Assumption of Management Agreement.....16
4.3.1.4 Value Letter..........................................16
4.3.1.5 Opinion of Buyer's Counsel............................17
4.3.1.6 Stock Agreement.......................................17
4.3.1.7 Assignment and Assumption of Ground Lease.............17
4.3.1.8 Liquor License Management Agreement...................17
4.3.1.9 [Intentionally Omitted]...............................17
4.3.1.10 [Intentionally Omitted]...............................17
4.3.1.11 [Intentionally Omitted]...............................17
4.3.1.12 Closing Certificate...................................17
4.3.1.13 The Assignment and Assumption of Tenant Leases........17
4.3.1.14 The General Assignment and Assumption Agreement.......17
4.3.1.15 Transfer Tax Forms....................................17
4.3.1.16 Other.................................................17
4.4 Seller's Deliveries to Buyer....................................17
4.4.1 Tenant Leases/Tenant Deposits.........................17
4.4.2 Service Contracts.....................................18
4.4.3 Licenses and Permits..................................18
4.4.4 Records and Plans.....................................18
4.5 Possession......................................................18
4.6 Evidence of Authorization.......................................18
4.7 Close of Escrow.................................................18
4.8 Costs of Escrow.................................................19
4.9 Other Costs.....................................................20
4.10 Maintenance of Confidentiality by Escrow Holder.................20
SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20
5.1 General.........................................................20
5.2 General and Specific Prorations.................................20
5.3 Deposits........................................................23
5.4 Tenant Leases...................................................23
5.5 Service Contracts and Other Intangible Property.................23
5.6 Tax Refunds and Proceedings.....................................23
5.7 Guest Baggage...................................................24
5.8 Safe Deposit Boxes..............................................24
5.9 Advance Bookings................................................24
SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24
6.1 Of the Trust....................................................24
6.1.1 Power and Authority...................................24
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6.1.2 Authorization; Valid Obligation.......................25
6.1.3 Capital Structure.....................................25
6.1.4 SEC Documents and Other Reports.......................25
6.1.5 Absence of Certain Changes or Events..................26
6.1.6 Actions and Proceedings...............................26
6.1.7 REIT Status...........................................26
6.1.8 Partnership Status....................................27
6.1.9 Hart-Scott-Rodino Act.................................27
6.2 Of the Corporation..............................................27
6.2.1 Power and Authority...................................27
6.2.2 Authorization; Valid Obligation.......................27
6.2.3 Capital Structure.....................................27
6.2.4 SEC Documents and Other Reports.......................27
6.2.5 Absence of Certain Changes or Events..................28
6.2.6 Actions and Proceedings...............................28
6.2.8 Hart-Scott-Rodino.....................................29
6.3 Of Seller.......................................................29
6.3.1 Regarding Seller's Authority..........................29
6.3.2 Tenant Leases.........................................29
6.3.3 Service Contracts.....................................30
6.3.4 Claims................................................30
6.3.5 Employees.............................................30
6.3.6 Compliance with Laws..................................30
6.3.7 Hazardous Materials...................................30
6.3.8 Records and Plans.....................................31
6.3.9 Licenses and Permits..................................31
6.3.10 Management Agreements.................................31
6.3.11 Personal Property.....................................31
6.3.12 Insurance.............................................31
6.3.13 Real Estate Taxes.....................................31
6.3.14 Residential Apartments; Rent Regulations..............31
6.3.15 Regarding The Ground Lease............................31
6.4 Buyer's Review of Records and Plans.............................32
6.4.1 Access to Records and Plans; Specific Disclosures.....32
6.4.2 Limitation on Access to Records and Plans.............32
6.5 PURCHASE AS IS..................................................33
6.6 Limitation on Representations and Warranties of Seller..........35
6.7 Right to Supplement Disclosures.................................35
6.8 Basket..........................................................35
6.9 Survival........................................................35
SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............36
7.1 Buyer's Review of Title.........................................36
7.1.1 Failure to Satisfy Certain Closing Conditions;
Monetary Liens........................................36
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7.1.2 [Intentionally omitted]...............................37
7.2 Title Insurance Policy..........................................37
7.3 Title to Real Property..........................................37
SECTION 8 - INTERIM ACTIVITIES..............................................38
SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38
9.1 Conditions Precedent to Buyer's Obligations.....................38
9.1.1 Seller's Deliveries...................................38
9.1.2 Title Policy..........................................38
9.1.3 Performance Under Related Agreement...................39
9.1.4 Ground Lessor Estoppel................................39
9.1.5 Seller Performance....................................39
9.1.6 Representations and Warranties of Seller..............39
9.2 Conditions Precedent to Seller's Obligations....................39
9.2.1 Funds and Documents...................................39
9.2.2 Representations and Warranties of Buyer...............39
9.2.3 No Material Changes...................................39
9.2.4 Ground Lessor Estoppel................................40
9.2.5 Performance Under Related Agreement...................40
9.3 Failure of Condition............................................40
SECTION 10 - BROKER.........................................................40
SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................41
11.1 Buyer's Remedies in General.....................................41
11.2 MATERIAL INDUCEMENT.............................................41
SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41
12.1 Insured Casualty................................................41
12.2 Uninsured Casualty..............................................42
SECTION 13 - CONDEMNATION...................................................43
SECTION 14 -EMPLOYEES.......................................................43
14.1 Hiring of Hotel Employees; WARN Act Compliance..................43
14.2 Collective Bargaining Agreements; ERISA Compliance..............44
14.3 Continuation of Benefits........................................44
14.5 Indemnification.................................................46
14.6 Survival........................................................46
SECTION 15 - COOPERATION....................................................46
SECTION 16 - NOTICES........................................................47
16.1 Addresses.......................................................47
16.2 Receipt of Notices..............................................48
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16.3 Refusal of Delivery.............................................49
16.4 Change of Address...............................................49
SECTION 17 - GENERAL PROVISIONS.............................................49
17.1 Amendment.......................................................49
17.2 Time of Essence.................................................49
17.3 Entire Agreement................................................49
17.4 No Waiver.......................................................49
17.5 Counterparts....................................................50
17.6 Costs and Attorneys' Fees.......................................50
17.7 Payments; Interests.............................................50
17.8 Transfer By Buyer...............................................50
17.9 Parties in Interest.............................................50
17.10 Applicable Law..................................................51
17.11 Incorporation of Recitals and Exhibits..........................51
17.12 Construction of Agreement.......................................51
17.13 Severability....................................................51
17.14 Announcements...................................................51
17.15 Submission of Agreement.........................................51
17.16 Further Assurances..............................................52
17.17 Cooperation.....................................................52
17.18 Moratorium on Re-Sale...........................................52
17.19 Confidentiality.................................................52
17.20 Interim Management Agreement....................................53
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EXHIBITS
Exhibit A...........................................Legal Description
Exhibit B......................................Memorandum of Contract
Exhibit 4.2.1.1..................................................Deed
Exhibit 4.2.1.2............Assignment and Assumption of Tenant Leases
Exhibit 4.2.1.3...........General Assignment and Assumption Agreement
Exhibit 4.2.1.4.....Assignment and Assumption of Management Agreement
Exhibit 4.2.1.5(a).....Bill of Sale for Capitalized Tangible Property
Exhibit 4.2.1.5(b)........Bill of Sale for Expensed Tangible Property
Exhibit 4.2.1.6.......................................Stock Agreement
Exhibit 4.2.1.7...................Liquor License Management Agreement
Exhibit 4.2.1.8.............Assignment and Assumption of Ground Lease
Exhibit 4.2.1.13.......................Non-Foreign Person Certificate
Exhibit 17.20............................Interim Management Agreement
SCHEDULES
Schedule 1.1.1.............................Approved Service Contracts
Schedule 1.1.2..................................Employment Agreements
Schedule 1.1.3.......................................Equipment Leases
Schedule 1.1.4......................................Excluded Property
Schedule 1.1.5...........................................Ground Lease
Schedule 1.1.6........................................Hotel Employees
Schedule 1.1.7..............................Schedule of Tenant Leases
Schedule 1.1.8......... Seller's Due Diligence and Seller's Knowledge
Schedule 1.1.9............................Specific Disclosure Matters
Schedule 3.4.............................Allocation of Purchase Price
Schedule 6.3.2...................Material Defaults Under Tenant Lease
Schedule 6.3.3.....Material Defaults Under Approved Service Contracts
Schedule 6.3.4........................................Material Claims
Schedule 6.3.5..........Material Defaults Under Employment Agreements
Schedule 6.3.6....................................Material Violations
Schedule 6.3.7......................Material Environmental Conditions
Schedule 6.3.9...................................Licenses and Permits
Schedule 6.3.12....................................Seller's Insurance
Schedule 6.3.13..................................Pending Tax Protests
Schedule 7.3...................................Permitted Encumbrances
Schedule 14.2........................Collective Bargaining Agreements
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PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is entered into as of the 30th day of December, 1997, by and
between N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership
("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate Investment Trust
(the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland corporation (the
"Corporation"; the Trust and the Corporation being referred to herein
collectively as, "Buyer").
A. Seller owns that certain parcel of land described in EXHIBIT A attached
hereto and made a part hereof, which is improved with a hotel building and
certain related improvements, all as more particularly set forth in this
Agreement.
B. Seller desires to sell, and Buyer desires to purchase, the above
described land and hotel together with the related improvements upon the terms
and subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Buyer and Seller agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms
"Accounts Receivable" shall mean, collectively, all Cash
Equivalent Receivables, all Invoiced Receivables and all Other Accounts
Receivable.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Approved Service Contracts" shall mean the Service Contracts
identified on SCHEDULE 1.1.1 annexed hereto and made a part hereof and any other
Service Contracts cancelable upon thirty (30) or fewer days notice without
penalty, which Service Contracts Buyer shall assume as of the Closing pursuant
to the General Assignment and Assumption Agreement.
"Assignment and Assumption of Ground Lease" shall have the meaning
set forth in SECTION 4.2.1.8.
<PAGE> 9
"Assignment and Assumption of Management Agreement" shall have the
meaning set forth in SECTION 4.2.1.4.
"Assignment and Assumption of Tenant Leases" shall have the meaning
set forth in SECTION 4.2.1.2.
"Assignment of Mortgage" shall have the meaning set forth in
SECTION 4.2.1.9.
"Bill of Sale" shall have the meaning set forth in SECTION
4.2.1.5.
"Business Day" shall mean any day other than Saturday or Sunday on
which the New York Stock Exchange is open for business.
"Booking" shall mean a contract or reservation for the use of guest
rooms, banquet facilities, meeting rooms, and/or conference facilities at the
Hotel.
"Buyer's Counsel" shall mean the law firm of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq.
"Buyer Default" shall have the meaning set forth in SECTION 3.5.1.
"Cash Equivalent Receivables" shall mean all Guest Ledger
Receivables which are in the form of drafts or checks written on any bank or
other financial institution, certified checks, money orders, amounts owed to
Seller from credit card, debit card, travel and entertainment card or traveler's
check companies, and are in such other forms which are considered to be cash
equivalents under generally acceptable accounting principles, whether or not
such Guest Ledger Receivables have been presented or billed to any such bank,
financial institution or other company as of the Closing Date.
"Cash Purchase Price" shall mean (a) Seventy-Six Million Eight
Hundred Thousand Dollars ($76,800,000.00) plus (b) an additional Three Million
Two Hundred Thousand Dollars ($3,200,000.00) if the Scheduled Closing Date does
not occur prior to July 15, 1998 plus (c) the Overage Cash Payment, if any, as
adjusted pursuant to SECTION 3.2.2.
"Closing" or "Close of Escrow" shall have the meaning set forth
in SECTION 4.7.2.
"Closing Agent" shall have the meaning set forth in SECTION
4.8.10.
"Closing Date" shall mean the day on which the Closing occurs
hereunder.
"Closing Payment" shall have the meaning set forth in SECTION
3.2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Collective Bargaining Agreements" shall have the meaning set
forth in SECTION 14.2.
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<PAGE> 10
"Conveyance Documents" shall mean the Deed, the Assignment and
Assumption of Ground Lease, the Assignment and Assumption of Management
Agreement, the Assignment and Assumption of Tenant Leases, the Bill of Sale and
the General Assignment and Assumption Agreement.
"Deed" shall have the meaning set forth in SECTION 4.2.1.1.
"Deposit" shall mean an amount equal to $4,571,428.00 held in
accordance with the provisions of SECTION 3 hereof together with all interest
accrued thereon.
"Employer Corporation" shall mean Luxury Holdings, Inc. (formerly
known as TQM Inc.).
"Employment Agreements" shall mean the Collective Bargaining
Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA),
affecting Hotel Employees, including pension, profit sharing, employee benefit
and similar plans, if any, and agreements with regard to any Hotel Employee each
of which are identified on or expressly described in the materials identified on
SCHEDULE 1.1.2 annexed hereto and made a part hereof.
"Environmental Condition" shall mean any condition with respect to
soil, surface waters, groundwater, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding the
Real Property, which results in any damage, loss, cost, expense, claim, demand,
order or liability to or against Seller or Buyer by any third party (including,
without limitation, any government entity) as a result of a violation of any
applicable Environmental Laws.
"Environmental Laws" shall mean all presently applicable statutes,
regulations, rules, ordinances, codes, licenses, permits and orders of any and
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof, and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous
state laws and regulations.
"Equipment Leases" shall mean all leases of equipment, vehicles,
furniture or other personal property leased by, or on behalf of, Seller and
located at, or used in the operation of the Real Property, together with any and
all amendments thereto, which are identified on SCHEDULE 1.1.3 annexed hereto.
"Equity Purchase Price" shall mean the number of Paired Shares with
a value as determined pursuant to the Stock Agreement equal to Two Million Nine
Hundred Forty Two Thousand Four Hundred Dollars ($2,942,400.00) (provided,
however, the Equity Purchase Price shall be reduced to Zero Dollars ($0.00) if
the Scheduled Closing Date does not occur prior to
3
<PAGE> 11
July 15, 1998) to be delivered in accordance with the applicable provisions of
the Stock Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"Escrow" shall mean an escrow opened with the Escrow Holder for the
purchase and sale of the Property in accordance with the provisions of this
Agreement.
"Escrow Holder" shall mean the Title Company unless otherwise agreed
in writing by Buyer and Seller.
"Escrow Instructions" shall have the meaning set forth in SECTION
4.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Property" shall mean all Seller's right, title and
interest in and to: (a) those claims of Seller attributable to the period prior
to the Closing Date and described on SCHEDULE 1.1.4 annexed hereto and made a
part hereof, or which Seller is entitled to assert under the express provisions
of SECTION 5; (b) all insurance proceeds under Seller's Insurance and workers'
compensation policies, including return premiums and dividends thereon and all
claims thereunder in each case to the extent attributable to acts or occurrences
prior to the Closing Date; (c) all accounts owned or maintained by Seller, or
Manager on Seller's behalf, in connection with the Hotel, including all
operating and reserve accounts; and (d) any books, records, files or papers
specifically described in SECTION 6.3.2 as excluded from the Property
Information.
"Excluded Parties" shall have the meaning set forth in SECTION
17.18
"Execution Date" shall mean the date hereof.
"General Assignment and Assumption Agreement" shall have the meaning
set forth in SECTION 4.2.1.3.
"Ground Lease" shall mean the Ground Lease entered into as of
December 30, 1963 by and between the Massachusetts Mutual Life Insurance Company
and Louis Berry & F.B.M. Manufacturing Company, Inc., as amended to date and
described more fully on SCHEDULE 1.1.5 hereto.
"Ground Lease Estoppel" shall have the meaning set forth in
SECTION 9.1.4.
"Ground Lease Transfer Requirement" shall have the meaning set
forth in SECTION 7.1.1
"Guest Ledger Receivables" shall mean amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms at
the Hotel or group, conference or banquet customers of Seller at the Hotel.
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<PAGE> 12
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder,
as the same has been amended from time to time.
"Hotel" shall mean the hotel located on the Land and commonly known
as the New York Luxury Collection Hotel.
"Hotel Employees" shall mean all full-time, part-time or temporary
employees of Seller and/or the Employer Corporation (but not employees of
Manager or any of its affiliates) who are employed by Seller and/or the Employer
Corporation exclusively at or in connection with the Hotel as of the Closing
Date and who are listed on SCHEDULE 1.1.6 annexed hereto and made a part hereof.
"Improvements" shall mean Seller's right, title and interest in and
to the hotel building and other improvements now or hereafter located on the
Land.
"Insured Casualty Notice" shall have the meaning set forth in
SECTION 12.1.1.
"Intangible Property" shall mean all of Seller's right, title and
interest in and to the following, in each case excluding any Excluded Property:
(i) Licenses and Permits; (ii) trademark rights, and other intangible property,
rights, titles, interests, privileges and appurtenances related to or used in
connection with the Hotel or its operations; (iii) warranties and guaranties of
architects, engineers, contractors, subcontractors, suppliers or materialmen
involved in the repair, construction, maintenance, design, reconstruction or
operation of the Hotel, or any equipment or systems constituting a part of the
Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and
(vii) computer programs, software and documentation thereof (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 variable descriptions, flow charts and
other related materials used in connection therewith; and (viii) any goodwill
associated with the operation of the Hotel.
"Interim Management Agreement" shall have the meaning set forth in
SECTION 17.20 hereto.
"Invoiced Receivables" shall mean all Guest Ledger Receivables other
than Cash Equivalent Receivables whether or not such Guest Ledger Receivables
have been invoiced by Seller as of the Closing Date.
"Land" shall mean Seller's right, title and interest in and to the
land described on EXHIBIT A annexed hereto and made a part hereof.
"Licenses and Permits" shall mean all licenses, permits,
registrations, certificates, authorizations and governmental approvals other
than the Liquor License obtained in connection with the design, construction,
rehabilitation, use and/or operation of the Hotel.
5
<PAGE> 13
"Liquor License" shall mean all licenses, permits, registrations,
certificates, authorizations and governmental approvals with respect to service
of alcoholic beverages at the Hotel.
"Liquor License Management Agreement" shall have the meaning set
forth in SECTION 4.2.1.8.
"Lock Price" shall have the meaning set forth in the Stock
Agreement.
"Losses" shall mean any and all losses, liabilities, obligations,
damages, claim or expense, including without limitation, reasonable attorneys'
and accountants' fees and disbursements related thereto.
"Manager" means Sheraton Operating Corporation, a wholly-owned
subsidiary of ITT Sheraton Corporation.
"Management Agreement" shall mean that certain Management Agreement
entered into as of August 13, 1997 between Seller and Manager.
"Market Price" shall have the meaning set forth in the Stock
Agreement.
"Material" shall mean $5,000 for any single occurrence and $15,000
in the aggregate for any group of occurrences whether or not related.
"Material Casualty" shall mean a casualty or casualties that, in the
aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel;
or (ii) will take twelve (12) months or longer from the date of the casualty to
fully remediate.
"Material Taking" shall mean an exercise by an applicable
governmental authority of the power of condemnation or eminent domain that
results in: (a) the taking of more than twenty percent (20%) of the Real
Property; (b) a material reduction or restriction in access to the Property; or
(c) the inability to operate the Hotel in substantially the same manner (without
material additional expense) as it was operated prior to such taking.
"Memorandum of Contract" shall mean a memorandum of this Agreement
in the form attached as EXHIBIT B hereto.
"Monetary Lien" shall mean any monetary lien affecting the Seller's
interest in the Real Property of an ascertainable amount, other than any lien
for taxes or assessments which are not yet due and payable.
"Non-Foreign Person Certificate" shall have the meaning set forth
in SECTION 4.2.1.13.
"Other Accounts Receivable" shall mean any and all rents, additional
rent, deposits, and other sums and charges owing to Seller that are in any way
attributable to the operation of the business at the Hotel, including, without
limitation, all rents and/or license fees
6
<PAGE> 14
due from Tenants under Tenant Leases, and including any such amounts which are
past due, but excluding Guest Ledger Receivables.
"Overage Cash Payment" shall mean the portion of the Equity Purchase
Price which is payable in cash at Closing as provided in SECTION 3.2.2.1, if
any.
"Ownership Limitation" shall mean 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.
"Paired Shares" shall mean one 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 the Pairing Agreement, which
shares shall be transferable as provided in the Stock Agreement and the Pairing
Agreement.
"Pairing Agreement" shall mean 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 beneficial interests of the
Trust and shares of the Corporation.
"Permitted Encumbrances" shall have the meaning set forth in
SECTION 7.3.
"Person" shall mean any natural person, partnership, corporation,
association, limited liability company, trust or any other legal entity.
"Personal Property" shall mean collectively the Tangible Personal
Property and the Intangible Property.
"Preliminary Title Report" shall have the meaning set forth in
SECTION 7.1.
"Property" shall mean collectively the Real Property, the Personal
Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the
Excluded Property.
"Property Information" shall have the meaning set forth in
SECTION 6.4.2.
"Proration Time" shall mean 12:01 a.m. Eastern Time on the
Closing Date.
"Purchase Price" shall mean the sum of the Cash Purchase Price and
the Equity Purchase Price.
"Real Property" shall mean the Land and the Improvements, together
with Seller's right, title and interest in and to all rights of way, easements,
water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon
substances, or any portion thereof, relating to the Land, and Seller's right,
title and interest in and to all streets, alleys, strips and gores abutting the
Land, if any.
7
<PAGE> 15
"Records and Plans" shall mean, all financial records showing the
income and expenses of the Hotel for the prior three (3) calendar years and for
the current year to date, certificates of occupancy, records of the Hotel's
operations (including utility bills), building plans, specifications and
drawings, lists of Personal Property, surveys, tax bills for the Real Property
for the last three (3) years and for the current year to date, copies of the
Service Contracts, Licenses and Permits and other documents related to the use,
maintenance, repair, management, construction and/or operation of the Hotel, in
each case, to the extent located on-site at the Hotel, or to Seller's Knowledge,
otherwise under the control of Seller.
"Related Agreement" shall have the meaning set forth in SECTION
9.1.3.
"Schedule of Advance Bookings" means the Schedule of Advance
Bookings delivered pursuant to SECTION 4.2.1.19.
"Schedule of Tenant Leases" means the Schedule of Tenant Leases set
forth in SCHEDULE 1.1.7 annexed hereto and made a part hereof.
"Scheduled Closing Date" shall mean January 15, 1998, as such date
may be extended in accordance with the provisions of SECTION 7.1 time being of
the essence.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall have the meaning set forth in SECTION 6.1.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Default" shall have the meaning set forth in SECTION 11.1.
"Seller's Closing Certificate" shall have the meaning set forth
in SECTION 4.2.1.18.
"Seller's Counsel" shall mean Morrison & Foerster LLP acting
through Thomas R. Fileti, Esq.
"Seller's Due Diligence" shall mean the information gathering and
review process described on SCHEDULE 1.1.8.
"Seller's Insurance" shall have the meaning set forth in SECTION
6.3.12.
"Seller's Knowledge" shall mean with respect to any representation
or warranty so qualified, the knowledge of the person(s) identified on SCHEDULE
1.1.8 annexed hereto and made a part hereof, on the date on or as of which such
representation or warranty is made, following the completion by such person(s)
of Seller's Due Diligence, but without any other duty to investigate or inquire
and without attribution to any such identified person(s) of facts and matters
otherwise within the personal knowledge of any other officers, employees, or
agents of Seller or any third parties (including, but not limited to, the
Manager or any previous manager of the Hotel), but not within the actual current
knowledge of such named person(s). It is understood
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that none of the individuals identified on SCHEDULE 1.1.8 shall have any
personal liability for any of Seller's representations, warranties and other
obligations under this Agreement.
"Service Contracts" shall mean any and all service contracts,
landscaping contracts, maintenance agreements, open purchase orders and other
contracts for the provision of services, materials or supplies to or for the
benefit of the Property, except for the Management Agreement, together with any
and all amendments thereto.
"Specific Disclosure Matters" shall mean certain disclosures and
information provided or disclosed by Seller to Buyer described on SCHEDULE 1.1.9
annexed hereto and made a part hereof.
"Starwood Disclosure" shall mean collectively, the Form S-3 filed by
the Corporation and the Trust with the SEC on November 12, 1997, and the Form
S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as
the same may be amended by any filing with the SEC made by the Trust or the
Corporation as amended to date and from time to time thereafter.
"Starwood Operating Partnership" shall mean SLC Operating Limited
Partnership, a Delaware limited partnership.
"Starwood Realty Partnership" shall mean SLT Realty Limited
Partnership, a Delaware limited partnership.
"State" shall mean the state in which the Hotel is located.
"Stock Agreement" shall have the meaning set forth in SECTION
4.2.1.6.
"Survey" shall mean an as-built customary survey of the Real
Property certified to the Title Company meeting all State land survey
requirements.
"Tangible Personal Property" shall mean, in each case to the extent
owned by Seller and excluding any and all of the Excluded Property: (i) all
Records and Plans; (ii) all "Inventories", as such term is defined in the
Uniform System of Accounts; (iii) all depreciable personal property; and (iv)
all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery,
equipment, licensed software and personal computer based security systems, if
any, specialized hotel equipment and other tangible personal property, used in
connection with the ownership, operation or maintenance of the Property,
including, without limitation, all china, glassware, silverware, linens, towels,
curtains, uniforms, engineering, maintenance, and housekeeping supplies,
draperies, materials and carpeting, used or intended for use, but not for sale,
in connection with the operation of the Hotel, all equipment used in the
operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners,
lobby, reservation desk and all merchandise, food and beverages held for sale in
connection with the operation of the Hotel, which are on hand on the Closing
Date; provided, however, that to the extent that any applicable law prohibits
the transfer of alcoholic beverages from Seller to Buyer, such beverages shall
not be considered a part of the Tangible Personal Property.
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"Tenant" shall mean a tenant, licensee or concessionaire occupying
space at any portion of the Property pursuant to a Tenant Lease.
"Tenant Lease" shall mean a lease, concession agreement or license
agreement entered into by or on behalf of Seller with a third party for the use
of any part of the Real Property, including those leases, concession agreements
and license agreements shown on the Schedule of Tenant Leases, together with any
amendments thereto but excluding Bookings.
"Tenant Security Deposits" shall mean all security deposits or other
security of Tenants under the Tenant Leases, plus accrued interest, if any,
payable thereon.
"Termination Charges" shall have the meaning set forth in SECTION
14.1.
"Termination Notice" shall have the meaning set forth in SECTION
3.5.1.
"Threshold Amount" shall mean One Million Dollars ($1,000,000).
"Title Company" shall mean Chicago Title Insurance Company.
"Title Policy" shall have the meaning set forth in SECTION 7.2.
"Transfer Restriction Period" shall have the meaning set forth in
SECTION 17.18.
"Uninsured Casualty Notice" shall have the meaning set forth in
SECTION 12.2.1.
"Uninsured Estimate to Repair" shall have the meaning set forth
in SECTION 12.2.1.
"Uniform System of Accounts" shall mean the Uniform System of
Accounts for Hotels, prepared by The Hotel Association of New York City,
Inc., in effect as of the date hereof.
"Utility Deposits" shall mean Seller's right, title and interest in
and to all deposits delivered by Seller to utilities, governmental agencies,
suppliers or others pursuant to an Approved Service Contract or otherwise in
connection with the Real Property.
"Value Letter" shall have the meaning set forth in SECTION
4.3.1.4.
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act and the Regulations promulgated thereunder, as the same has
been amended.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
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SECTION 2
PURCHASE AND SALE OF PROPERTY
On the terms and subject to the conditions of this Agreement, Seller
agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property
from Seller all as hereinafter provided. Notwithstanding any other provision of
this Agreement, there shall be excluded from the Property being conveyed
hereunder the Excluded Property.
SECTION 3
PURCHASE PRICE; PAYMENT;
BUYER'S DEFAULT; LIQUIDATED DAMAGES
3.1 Purchase Price. The purchase price for the Property shall be the
Purchase Price.
3.2 Payment. The Purchase Price shall be paid as follows:
3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow
Holder, in cash or other immediately available funds, the Deposit, to be held by
Escrow Holder strictly in accordance with the provisions of this Agreement. If
the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit
as a credit against the Purchase Price.
3.2.2 At least one (1) day prior to the Scheduled Closing Date
(unless extended pursuant to SECTION 7.1), Buyer shall deliver to Escrow Holder
an amount (the "Closing Payment") payable in the form specified in SECTIONS
3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the
Deposit. The Closing Payment shall be paid as follows:
3.2.2.1 The Equity Purchase Price, if any, shall be
delivered in Paired Shares without adjustment for the pro-rations hereunder,
which shares shall be delivered in accordance with and subject to and
transferable in accordance with the provisions of the Stock Agreement and the
Pairing Agreement. If any portion of the Equity Purchase Price cannot be paid in
Paired Shares on account of the Ownership Limitation, a cash payment in an
amount equal to the product of (a) the number of Paired Shares which are not
delivered hereunder or under the Stock Agreement because of the Ownership
Limitation and (b) the Market Price on the Closing Date (the "Overage Cash
Payment") shall be paid in cash or other immediately available funds.
3.2.2.2 The balance of the Closing Payment shall be paid in
cash or other immediately available funds adjusted for the pro-rations provided
for expressly in this Agreement.
3.3 Investment of Escrowed Funds. Escrow Holder shall invest and
reinvest any funds deposited by Buyer in the Escrow only in bonds, notes,
Treasury bills or other securities
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having maturities of thirty (30) days or less and constituting direct
obligations of, or fully guaranteed by, the United States of America (and
provided, further, that such direct obligations or guarantees, as the case may
be, are entitled to the full faith and credit of the United States of America)
or such other investments as Buyer may direct and Seller may approve, until
Escrow Holder is required to deliver or use such funds or any interest earned
thereon in accordance with the provisions of this Agreement. All interest
accruing on the Deposit shall be paid to the party ultimately entitled to the
Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer or
Escrow Holder.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets and property that comprise the Property as proposed by Seller
prior to Closing subject to the reasonable approval of Buyer, and such
allocation shall be used by Seller and Buyer in connection with the preparation
of their respective income tax, sales tax, transfer tax, and any other
applicable tax returns. Seller and Buyer shall not, nor shall they permit their
respective Affiliates to, take a federal or state income tax position with any
taxing or other public authorities in any jurisdiction which is materially
inconsistent with the allocation so agreed upon by the parties.
3.5 Default by Buyer Prior to Closing; Liquidated Damages.
3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF
BUYER BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND
FAILS TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER
DEFAULT"), THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM
SELLER TO BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE
AND ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS
LIQUIDATED DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR
THE BUYER DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY
FURTHER LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR
PERFORMANCE OF ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER
PROVISION HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS
AGREEMENT. NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN
SPECIFIC PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1.
3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION
3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE
AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR,
SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A
REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE
SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW
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TO OCCUR AND THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE
COMPENSATION TO SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO
OCCUR.
INITIALS: __________________________ _________________________
Seller Buyer
SECTION 4
ESCROW; CLOSING; COSTS
4.1 Escrow. The purchase and sale of the Property shall be consummated
through the Escrow. Immediately upon the execution of this Agreement, the
parties shall deposit a copy of this Agreement with Escrow Holder. This
Agreement, together with any general provisions agreed to in writing by Buyer
and Seller for the benefit of Escrow Holder, shall constitute the escrow
instructions for the transfer of the Property (the "Escrow Instructions"). In
the event of any conflict between this Agreement and such general provisions,
this Agreement shall control unless otherwise expressly agreed in writing by
Buyer, Seller and Escrow Holder. If any requirements relating to the duties or
obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow
Holder requires additional instructions, the parties shall make such deletions,
substitutions and additions to the Escrow Instructions as Buyer's Counsel and
Seller's Counsel shall mutually approve and which do not substantially alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow Holder and shall be binding upon the party whose counsel gave such
instructions to Escrow Holder.
4.2 Seller's Deliveries to Escrow Holder.
4.2.1 Prior to the Scheduled Closing Date (subject to extension
pursuant to SECTION 7.1), Seller shall deliver to Escrow Holder the following
documents duly executed and, where applicable, acknowledged by Seller, each of
which shall be undated and the delivery of each of which shall be a condition
precedent to the obligation of Buyer to close hereunder.
4.2.1.1 Deed. A deed with respect to the Improvements in the
form of EXHIBIT 4.2.1.1 annexed hereto and made a part hereof, sufficient to
transfer all of Seller's right, title and interest in and to the Improvements,
subject only to matters of record as of the Closing Date, from Seller to Buyer
(the "Deed");
4.2.1.2 Assignment and Assumption of Tenant Leases. An
Assignment and Assumption of Tenant Leases in the form of EXHIBIT 4.2.1.2
annexed hereto and made a part hereof pursuant to which Seller shall assign the
Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations
thereunder (the "Assignment and Assumption of Tenant Leases");
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4.2.1.3 General Assignment. A General Assignment and
Assumption Agreement in the form of EXHIBIT 4.2.1.3 annexed hereto and made a
part thereof pursuant to which Seller shall assign to Buyer all of Seller's
right, title and interest in and to all of the Intangible Property and Buyer
shall assume all obligations thereunder (the "General Assignment and Assumption
Agreement");
4.2.1.4 Assignment and Assumption of Management Agreement.
An Assignment and Assumption of Management Agreement in the form of EXHIBIT
4.2.1.4 annexed hereto and made a part hereof pursuant to which Seller shall
assign to Buyer the Management Agreement and Buyer shall assume the obligations
of Seller thereunder, provided, however, the obligation to deliver the
Assignment and Assumption of Management Agreement shall be irrevocably waived,
if prior to the Close of Escrow, the Management Agreement shall have been
terminated and the Interim Management Agreement shall have become effective in
accordance with SECTION 17.20;
4.2.1.5 Bill of Sale. One or more Bills of Sale in the form
of EXHIBITS 4.2.1.5A AND 4.2.1.5B annexed hereto and made a part hereof
conveying to Buyer or designees of Buyer all of Seller's right, title and
interest in and to the Tangible Personal Property (the "Bill of Sale");
4.2.1.6 Stock Agreement. The Stock Agreement in the
form of EXHIBIT 4.2.1.6 annexed hereto and made a part hereof (the "Stock
Agreement");
4.2.1.7 Liquor License Management Agreement. The
Liquor License Management Agreement in the form of EXHIBIT 4.2.1.7 annexed
hereto and made a part hereof (the "Liquor License Management Agreement");
4.2.1.8 Assignment and Assumption of Ground Lease. An
Assignment and Assumption of Ground Lease in the form of EXHIBIT 4.2.1.8 annexed
hereto and made a part hereof pursuant to which Seller shall assign the Ground
Lease to Buyer and Buyer shall assume all of Seller's obligations thereunder
(the "Assignment and Assumption of Ground Lease");
4.2.1.9 Assignment of Mortgage. Seller shall use reasonable
efforts to obtain an assignment with covenant of the mortgages presently
encumbering Seller's interest in the Ground Lease and Improvements (the
"Assignment of Mortgage") fully executed and acknowledged by the holders of such
mortgages pursuant to which the holders of such mortgage shall assign the same
to a lender identified by Buyer and a release from the holders of such
mortgages, pursuant to which Seller shall be released from any and all liability
under said mortgages and under any related loan documents; it being understood
that Seller has no obligation to deliver an affidavit pursuant to Section 275 of
the Real Property Law of the State of New York;
4.2.1.10 [Intentionally Omitted]
4.2.1.11 [Intentionally Omitted]
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4.2.1.12 [Intentionally Omitted]
4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign
Person Certificate in the form of EXHIBIT 4.2.1.13 annexed hereto and made a
part hereof (the "Non-Foreign Person Certificate");
4.2.1.14 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Seller in order to effect the Closing;
4.2.1.15 Certified Rent Roll. A copy of the rent roll
for the Property dated as of the Closing Date and certified by Seller to be
(a) a true, correct and complete copy of the rent roll for the Property
provided to Seller by the Manager; and (b) to Seller's Knowledge, to be true,
correct and complete;
4.2.1.16 Certified Operating Statement. An operating
statement for the Property dated as of a date no more than thirty (30) days
prior to the Closing Date and certified by Seller to be (a) a true, correct and
complete copy of the operating statement for the Property provided to Seller by
Manager for the period of Manager's employment at the Property; and (b) to
Seller's Knowledge, to be, true, correct and complete;
4.2.1.17 Guest Ledger. A copy of the guest ledger dated as
of the Proration Time showing all Guest Ledger Receivables and certified by
Seller (a) to be a true, correct and complete copy of the guest ledger provided
to Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and
complete;
4.2.1.18 Closing Certificate. A certification by Seller to
Seller's Knowledge that the representations and warranties set forth in SECTION
6.3 are true, correct and complete as of the Closing Date, except to the extent
that any such representation or warranty is expressly made only as of the
Execution Date subject to Seller's right to make revisions pursuant to SECTION
6.7 to such representations and warranties ("Seller's Closing Certificate");
4.2.1.19 Schedule of Bookings. A schedule of all Bookings
relating to periods after the Proration Time, certified by Seller (a) to be a
true, correct and complete copy of the schedule of Bookings provided to Seller
by Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.20 Title Requirements. Any and all certificates,
affidavits and other instruments and documents which the Title Company shall
reasonably require to permit it to issue the Title Policy in the condition
required herein; provided, however, that (a) Seller is given written notice by
Title Company of the requirement of any such certificates, affidavits or other
instruments and documents within a reasonably sufficient time in advance of the
Scheduled Closing Date and (b) such incidental documents do not create any
liability to Seller that is inconsistent with the liability retained by Seller
under the terms of this Agreement;
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4.2.1.21 Payoff Letters. A pay-off letter from the holder
of any mortgage or deed of trust presently encumbering the Real Property
indicating all sums required to satisfy the debt secured by and permit the
discharge of record the lien of such mortgage or deed of trust;
4.2.1.22 Notices to Tenants. Notices to Tenants of the
assignment to Buyer of the Tenant Leases in form and substance satisfactory
to Seller and Buyer;
4.2.1.23 Opinion of Seller's Counsel. An opinion of
Seller's Counsel in a form to be agreed upon by the parties; and
4.2.1.24 Other. Any other incidental documents, not
otherwise expressly provided for herein, reasonably required by Escrow Holder to
consummate the purchase and sale of the Property; provided, however, that (a)
Seller is given written notice by Escrow Holder of the requirement of any such
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date (subject to extension in accordance with the provisions
of SECTION 7.1); and (b) such incidental documents do not create any liability
to Seller that is inconsistent with the liability retained by Seller under the
terms of the this Agreement.
4.3 Buyer's Deliveries to Escrow Holder.
4.3.1 Prior to the Scheduled Closing Date (subject to extension in
accordance with the provisions of SECTION 7.1), and subject further to the
provisions of SECTION 4.3.1.4 in the case of the Value Letter, Buyer shall
deliver to Escrow Holder the following items and documents, which documents
shall be duly executed and, where applicable, acknowledged by Buyer or its
designee, as applicable, and undated, and the delivery of each of which shall be
a condition precedent to the obligation of Seller to close hereunder:
4.3.1.1 The Cash Purchase Price. The Cash Purchase
Price;
4.3.1.2 Stock Certificates. Paired Shares in the
amount required to be delivered at the Closing in accordance with the
provisions of this Agreement and in accordance with and subject to the
provisions of the Stock Agreement;
4.3.1.3 Assignment and Assumption of Management Agreement. A
counterpart of the Assignment and Assumption of Management Agreement, provided,
however, the obligation to deliver the Assignment and Assumption of Management
Agreement shall be irrevocably waived, if prior to the Close of Escrow, the
Management Agreement shall have been terminated and the Interim Management
Agreement shall have become effective in accordance with SECTION 17.20;
4.3.1.4 Value Letter. A letter (the "Value Letter") to be
obtained by Buyer at Buyer's expense with respect to the reasonableness of the
allocation of the purchase price among the transactions being entered into as of
the date hereof between Buyer and Seller and/or Seller's Affiliates issued by
Bear Stearns;
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4.3.1.5 Opinion of Buyer's Counsel. An opinion of
Buyer's counsel in a form to be agreed upon by the parties;
4.3.1.6 Stock Agreement. A counterpart of the Stock
Agreement;
4.3.1.7 Assignment and Assumption of Ground Lease. A
counterpart of the Assignment and Assumption of Ground Lease;
4.3.1.8 Liquor License Management Agreement. A
counterpart of the Liquor License Management Agreement;
4.3.1.9 [Intentionally Omitted]
4.3.1.10 [Intentionally Omitted]
4.3.1.11 [Intentionally Omitted]
4.3.1.12 Closing Certificate. A certification by Buyer
that the representations and warranties set forth in SECTION 6.1 and SECTION
6.2 are true, correct and complete as of the Closing Date;
4.3.1.13 The Assignment and Assumption of Tenant
Leases. A counterpart of the Assignment and Assumption of Tenant Leases;
4.3.1.14 The General Assignment and Assumption
Agreement. A counterpart of the General Assignment and Assumption Agreement;
4.3.1.15 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Buyer in order to effect the closing; and
4.3.1.16 Other. Any other incidental documents, not
otherwise expressly provided for herein, required by Escrow Holder to consummate
the purchase and sale of the Property; provided, however, that (a) Buyer is
given written notice by Escrow Holder of the requirement of such incidental
documents within a reasonably sufficient time in advance of the Scheduled
Closing Date; and (b) Buyer shall not be required to incur any liability, in
connection with the delivery of such incidental documents inconsistent with the
provisions of this Agreement.
4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow,
Seller shall deliver to Buyer or cause to be available to Buyer on-site at the
Hotel, the following documents, to the extent the same have not already been
delivered and to the extent in the possession or control of Seller:
4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases
(or if not available, the best available copies), and the originals of Tenant
Security Deposits which are evidenced by letters of credit or escrow agreements,
if any, and if necessary to enable Buyer to
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realize or draw upon same, consents of the applicable Tenants and/or financial
institutions or replacement letters of credit or escrow agreements in favor of
Buyer;
4.4.2 Service Contracts. The originals, or, if not
available, the best available copies, of the Approved Service Contracts;
4.4.3 Licenses and Permits. The originals, or, if not
available, the best available copies of the Licenses and Permits; and
4.4.4 Records and Plans. The originals, or, if not
available, the best available copies of the Records and Plans.
4.5 Possession. Seller shall deliver the keys and possession of the
Property to Buyer at the Close of Escrow free and clear of all leases, tenancies
and occupancies, except for the Management Agreement, the Bookings, the rights
of guests in guest rooms, banquet facilities, conference rooms and meeting
rooms, the rights of Tenants under the Tenant Leases (including their assignees,
subtenants or licensees), and the other Permitted Encumbrances.
4.6 Evidence of Authorization. At the Close of Escrow, each party shall
deliver to the other party evidence in form and content reasonably satisfactory
to the other party and the Title Company that (a) the party is duly organized
and validly existing under the laws of the state of its organization and has the
power and authority to enter into this Agreement, (b) this Agreement and all
documents delivered pursuant hereto have been duly executed and delivered by the
party, and (c) the performance by the party of its obligations under this
Agreement have been duly authorized by all necessary corporate, partnership or
other action.
4.7 Close of Escrow.
4.7.1 The Escrow shall close on or before the Scheduled
Closing Date.
4.7.2 Provided that Escrow Holder has not received from either
party written notice of the failure of any condition precedent specified in
SECTION 9 to the obligations of such party (or any previous such notice has been
withdrawn), then when the parties have each deposited into the Escrow the
documents and funds required by this Agreement and the Title Company is
unconditionally prepared to issue the Title Policy at the Close of Escrow,
Escrow Holder shall perform the following actions (collectively, "Close of
Escrow" or "Closing"):
4.7.2.1 Prepare a closing statement for the transaction
for approval by Seller and Buyer prior to the Close of Escrow;
4.7.2.2 Insert the Closing Date as the date of any
undated document to be delivered through Escrow;
4.7.2.3 Cause the Deed, the Assignment and Assumption of
Ground Lease, and the Assignment of Mortgage to be recorded in the land records
of the state and county where the Real Property is located;
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4.7.2.4 Deliver to Buyer the documents deposited into
the Escrow for delivery to Buyer at the Close of Escrow;
4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to
be received by Seller from Buyer through the Escrow at the Close of Escrow less
(i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and
(ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances
on the Real Property or other matters pursuant to the written instruction of
Seller, and (b) the documents deposited into the Escrow for delivery to Seller
at the Close of Escrow; and
4.7.2.6 Cause the Title Policy to be issued by the
Title Company and delivered to Buyer.
4.8 Costs of Escrow. Costs of the Escrow shall be allocated as
follows:
4.8.1 Buyer and Seller shall each pay one-half (1/2) of the
fees of Escrow Holder;
4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost
of providing the Survey required to be delivered in accordance with the
provisions of SECTION 7.1; provided, however, Buyer shall be responsible for the
full cost of the Survey in the event the Closing does not occur hereunder other
than on account of default of Seller;
4.8.3 Buyer and Seller shall each pay one-half (1/2) of all
transfer taxes and recording fees payable in connection with the conveyance of
each portion of the Real Property and/or the recording of the Deed and any other
documents or instruments recorded pursuant to this Agreement (other than the
Assignment of Mortgage);
4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales
or other personal property taxes, levies, fees and charges payable as a result
of the transfer of the Personal Property to Buyer and the consummation of the
transactions contemplated hereby. Buyer shall be the reporting person for such
purposes and shall prepare the necessary sales tax reports based upon the
allocations set forth in SECTION 3.4. The parties acknowledge that additional
sales tax may be assessed as a result of the transfer of the Personal Property
to Buyer and the consummation of the transactions contemplated hereby after the
Closing and that Buyer and Seller shall continue to each be responsible for
one-half of any such additional taxes. The provisions of Section 4.8.3 and
Section 4.8.4 shall survive the Closing;
4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of
obtaining the coverage under the Title Policy, except that the cost of any
special endorsements shall be paid exclusively by Buyer;
4.8.6 At Closing or thereafter Buyer shall pay for the cost of
the Value Letter;
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4.8.7 Buyer shall pay any legal and other fees to obtain, and any
mortgage recording taxes payable in connection therewith, if any, in connection
with the Assignment of Mortgage;
4.8.8 If the Close of Escrow fails to occur other than as a result
of a default hereunder by either party, including, without limitation, as a
result of a failure of a condition precedent set forth in SECTION 9, the fees of
the Escrow Holder and Title Company (including, without limitation, cancellation
fees) shall be borne equally between Buyer and Seller;
4.8.9 If the Close of Escrow fails to occur as a result of a default
hereunder by either party, the fees of the Escrow Holder and Title Company
(including, without limitation, cancellation fees) shall be borne by the
defaulting party; and
4.8.10 Pursuant to Section 6045 of the Internal Revenue and Taxation
Code, the Title Company shall be designated the "Closing Agent" hereunder and
shall be solely responsible for complying with the Tax Reform Act of 1986 with
regard to the reporting of all settlement information to the Internal Revenue
Service.
4.9 Other Costs. Except as set forth in SECTION 4.8.6, SECTION 11.1 and
SECTION 15.1.6, each party shall pay all of its own legal, accounting and
consulting fees and other costs and expenses incurred in connection with this
Agreement.
4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall
maintain in strict confidence and not disclose to anyone the existence of the
Escrow, the identity of the parties thereto, the amount of the Purchase Price,
the existence or provisions of this Agreement or any other information
concerning the Escrow or the transactions contemplated hereby, without the prior
written consent of Buyer and Seller.
SECTION 5
PRORATIONS AND ASSUMPTION OF OBLIGATIONS
5.1 General. All income, receivables, expenses (whether payable or
prepaid) and payables of the Property shall be apportioned equitably between the
parties as of the Proration Time in accordance with the provisions of this
SECTION 5 (all prorations are to be based upon the number of days in a 365 day
year). The obligation to make apportionments under SECTIONS 5.1 AND 5.2 shall,
unless otherwise expressly provided in this SECTION 5, survive the Close of
Escrow for a period of sixty (60) days at which time such apportionment shall be
final unless disputed during such period.
5.2 General and Specific Prorations. Without limitation, the
following items shall be apportioned:
5.2.1 At the Closing, Buyer shall assume all of the accounts
payable relating to goods and services ordered or obtained in the ordinary
course of operation of the business of the
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Hotel (including without limitation, payments under the Service Contracts and
Equipment Leases) prior to the Proration Time. Seller shall be obligated to
credit Buyer at the Close of Escrow with an amount mutually agreed upon by Buyer
and Seller at the Closing, reflecting the parties' good faith estimate of such
accounts payable as of the Proration Time (which estimate shall deduct any
discounts then available in the ordinary course of business for the prompt
payment of such accounts payable), plus a further credit for any late fees then
payable with respect to any identified accounts payable. Buyer shall be
responsible for paying when due all accounts payable arising from the operation
of the Property on or after the Proration Time, and Seller shall have no further
liability for such payables or charges. As of the date which is sixty (60) days
following the Closing Date, Buyer and Seller shall calculate the amount of all
accounts payable relating to goods and services ordered or obtained in the
ordinary course of operation of the business of the Hotel (including without
limitation, payments under the Service Contracts and Equipment Leases) prior to
the Proration Time. Seller shall reimburse Buyer for any payments made on
account of any such accounts payable which were not reflected in the Parties'
estimate of such amount credited to Buyer at Closing and which have been paid by
Buyer or for which Buyer is obligated to pay in accordance with the provisions
hereof, and if the amount of such credit exceeds the amounts so paid or for
which Buyer is so obligated, Buyer shall pay such excess amount to Seller;
5.2.2 At the Closing, Seller shall assign to Buyer all of the
Accounts Receivable, for which Seller shall receive a credit at the Close of
Escrow in an amount equal to (a) the full, aggregate outstanding balance of the
Cash Equivalent Receivables (without discount except for service charges due to
charge card companies) plus (b) the full aggregate outstanding balance of the
Invoiced Receivables and Other Accounts Receivable as of the Proration Time,
provided, Buyer shall at its option accept or reject any Invoiced Receivables
and Other Accounts Receivable over ninety (90) days and Seller shall not receive
a credit for any Invoiced Receivables and Other Accounts Receivable over ninety
(90) days rejected by Buyer; provided, that Buyer shall at its own expense use
reasonable efforts to collect any such rejected Invoiced Receivables and Other
Accounts Receivable on behalf of Seller for a period of sixty (60) days after
the Closing Date and thereafter Seller shall have the right to collect same for
its own account; provided, further, as of the date which is sixty (60) days
following the Closing Date, Buyer and Seller shall make any adjustments required
to reflect the collectibility of any Invoiced Receivables and Other Accounts
Receivable (it being agreed that (a) any accounts receivable not listed on the
schedule of accounts receivable of the Property as of the date which is sixty
(60) days following the Closing Date shall be deemed paid as of such date and
(b) except as provided in (a), any accounts receivable which are more than
ninety (90) days past due as of the date which is sixty (60) days following the
Closing Date shall be deemed uncollectable as of such date) and Seller and Buyer
shall make a corresponding payment to the other as required to accurately
reflect the collectibility of such Invoiced Receivables and Other Accounts
Receivable and any accounts receivable deemed uncollectable as of such date in
accordance with the terms hereof shall be the property of Seller and Seller
shall be permitted at its expense and for its own account to collect the same;
5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall
each receive credit for one-half (1/2) of all Guest Ledger Receivables
attributable to the room night during
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which the Proration Time occurs. Seller shall receive the income from all
restaurant and bar facilities located at the Property through the Proration Time
and Buyer shall receive such income thereafter;
5.2.4 [Intentionally Omitted]
5.2.5 All sales, use and occupancy taxes arising from the
operation of the Property shall be prorated as of the Proration Time;
5.2.6 Fees for transferable annual permits, licenses, and/or
inspection fees, if any, for periods during which the Proration Time occurs
shall be prorated as of the Proration Time;
5.2.7 Utility charges with respect to the Property levied against
Seller or the Property and the value of fuel stored on the Property shall be
prorated at Seller's cost therefor as of the Proration Time. Seller shall notify
all utilities, governmental agencies, suppliers and others providing services to
the Property of the prospective change in ownership and operation of the
Property, and Seller shall use its reasonable efforts to cause all utilities
furnished to the Property, including, but not limited to, electricity, gas,
water and sewer, along with any fuel storage tanks to be read the day prior to
the Proration Time;
5.2.8 Permitted administrative charges, if any, on Tenant
Security Deposits shall be prorated;
5.2.9 Buyer shall receive a credit for advance payments and/or
deposits, if any, under Bookings to the extent the Bookings relate to a period
after the Proration Time;
5.2.10 Vending machine monies will be removed by Seller as
of the Proration Time for the benefit of Seller;
5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or
Seller shall receive a credit therefore) all petty cash funds and cash in the
Property's house banks at 100% of face value at the Proration Time;
5.2.12 Wages, salaries and payroll taxes and other payroll
deductions for all Hotel Employees shall be apportioned as of the Proration Time
(i.e., the night shift shall be prorated 50/50 for the night preceding the
Closing Date). Buyer shall assume all accrued vacation benefits and sick leave
benefits due to such Hotel Employees which relate to any period prior to the
Proration Time and shall receive a credit for the full amount of all such
accrued benefits reasonably expected to be paid after the Closing Date;
provided, that as of the date which is sixty (60) days following the Closing,
Buyer and Seller shall adjust the amount of the credit if required to take into
account the benefits actually required to be paid by Buyer or then reasonably
expected to be paid following the Closing Date by Buyer. Buyer shall also assume
all obligations of Seller and the Employer Corporation, under the Employment
Agreements and/or the Management Agreement to pay all such wages, salaries, and
compensation set forth above accruing subsequent to Proration Time; provided,
however, that other than as set forth in SECTION
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14.1 hereof, no provision contained in this Agreement shall be construed to
prevent the Buyer from terminating or amending in any manner such Employment
Agreements and Management Agreements subsequent to the Proration Time. The
obligation to pay bonuses, if any, following the Closing shall be allocated as
of the Proration Time and adjusted between Buyer and Seller; and
5.2.13 Real and personal property taxes, assessments and special
district levies shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current available tax bills, Seller
being charged through the day prior to the Closing Date and Buyer with the
Closing Date and thereafter.
5.3 Deposits. All rights to utility, assessment, and other cash deposits
(including, without limitation, any Utility Deposits) held by others for
Seller's account, and all certificates of deposit or other forms of cash
collateral held by or otherwise pledged to others for Seller's account to secure
obligations of Seller under Service Contracts, Equipment Leases or other
obligations assumed by Buyer, shall be assigned or transferred to Buyer at the
Close of Escrow; provided, that if any of such deposits are not transferable,
Seller shall retain all rights with respect thereto and there shall be no debit
made to Buyer on account thereof.
5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment
and Assumption of Tenant Leases, Buyer shall assume all of the obligations of
Seller under the Tenant Leases as of the Proration Time, including, without
limitation, tenant improvement obligations of landlord thereunder and
obligations with respect to Tenant Security Deposits (to the extent received by
Buyer or credited to Buyer hereunder).
5.5 Service Contracts and Other Intangible Property. At the Close of
Escrow, Seller shall assign to Buyer pursuant to the terms of the General
Assignment and Assumption Agreement, all right, title and interest of Seller in
and to the Approved Service Contracts and other Intangible Property, and Buyer
shall assume all of the obligations of Seller under the Approved Service
Contracts arising from and after the Close of Escrow. Buyer shall protect, hold
harmless, indemnify and defend Seller and its directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons from any Losses attributable to the period beginning on and after the
Closing Date with respect to the Approved Service Contracts. Seller shall be
responsible for all obligations thereunder attributable to the period prior to
the Closing Date with respect to Approved Service Contracts (except to the
extent that Buyer shall have received a credit hereunder with respect to any
such obligations). The provisions of this SECTION 5.5 shall survive the Close of
Escrow.
5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to
commence or continue any proceeding to determine the assessed value of the
Property, the real or personal property taxes payable with respect to the
Property or any action to contest water charges, sewer charges, sales tax or use
tax for the relevant taxable period during which the Proration Time occurs and
to settle or compromise any claim thereof, and any refunds or proceeds resulting
from such proceedings along with the costs (including reasonable legal and
accounting fees) incurred by Buyer in obtaining the same, shall be prorated as
of the Proration Time. In prosecuting any
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such action, Buyer shall utilize the services of Marvin Poer & Co. Seller shall
retain the right to continue, commence, prosecute, settle or compromise any
proceedings relating exclusively to any relevant taxable period or periods prior
to the period during which the Proration Time shall occur. Buyer and Seller
agree to cooperate with each other and to execute any and all documents
reasonably requested in furtherance of the foregoing. The provisions of SECTION
5.6 shall survive the Closing.
5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and
hold harmless Seller against all Losses with respect to all baggage of departed
guests or guests who are still registered at the Hotel on the Closing Date which
has been checked with the Hotel. As of the Close of Escrow, Seller shall assign
to Buyer all claims and causes of action against the Manager with respect to any
Losses with respect to such baggage. Seller agrees to submit to Seller's
Insurance any claims for Losses with respect to such baggage which arose from
acts or omissions prior to the Closing Date to the extent coverage is available
under said insurance and provide Buyer with the proceeds therefrom provided
Buyer is not in default under this SECTION 5.7. The provisions of this SECTION
5.7 shall survive the Closing.
5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify
and hold harmless Seller against all Losses with respect to the contents of any
safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller
shall assign to Buyer all claims and causes of action against the Manager with
respect to any Losses relating to said safety deposit boxes. Seller agrees to
submit to Seller's insurance any claims for Losses which arose from acts or
omissions prior to the Closing Date to the extent coverage is available under
said insurance and provide Buyer with the proceeds therefrom provided Buyer is
not in default under this SECTION 5.8. The provisions of this SECTION 5.8 shall
survive the Closing.
5.9 Advance Bookings. Buyer shall assume and honor for its account all
Bookings relating to dates after the Proration Time set forth on the Schedule of
Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to
SECTION 4.2.1.9.
SECTION 6
REPRESENTATIONS AND WARRANTIES;
CONDITION OF PROPERTY
6.1 Of the Trust. As an inducement to Seller to enter into this
Agreement, the Trust hereby represents, warrants and covenants to Seller as
follows:
6.1.1 Power and Authority. The Trust is a real estate investment
trust duly organized and validly existing under the laws of the State of
Maryland. The Trust has the power and authority to carry on its present
business, to enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the Trust,
nor the performance by the Trust of the Trust's obligations hereunder will
violate or
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constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which the
Trust is a party or by which the Trust is bound and/or violate any applicable
law, rule or regulation, the violation of which would have a Material effect
upon the principal benefits intended to be provided by this Agreement.
6.1.2 Authorization; Valid Obligation. All proceedings required to
be taken by or on behalf of the Trust to authorize the Trust to make, deliver
and carry out the terms of this Agreement will be duly taken prior to the
Closing Date. No consent to the execution, delivery and performance of this
Agreement will be required from any partner, board of directors, shareholder,
creditor, investor, judicial or administrative body, governmental authority or
other person, other than any such consent which already has been (or prior to
the Closing will have been unconditionally given. The individuals executing this
Agreement and the documents referenced herein on behalf of the Trust have the
legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement is a valid and binding obligation of Trust,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
6.1.3 Capital Structure. The authorized and outstanding capital
stock and units of the Trust and its operating partnership are as set forth in
the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase
Price at the Closing in accordance with this Agreement will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights and will be paired with each other in the same ratio as all
other shares are paired with each other pursuant to the Pairing Agreement.
6.1.4 SEC Documents and Other Reports. The Trust has filed all
required documents with the SEC since January 1, 1996 (such documents together
with the Starwood Disclosure being referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of applicable law, and, at the respective times
they were filed, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Trust included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Regulation S-X of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Trust and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the SEC Documents or as
required by generally accepted accounting principles, the Trust has not, since
December 31, 1996, made any change in the accounting practices or policies
applied in the preparation of their
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financial statements. Prior to the Closing Date, the Trust will file all
required documents with the SEC, which documents will comply in all material
respects with the requirements of the applicable law, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.1.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Trust and its
subsidiaries taken as a whole, or (b) there has not been any split, combination
or reclassification of any of the capital stock or units of the Trust or its
operating partnership or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of, or in substitution for shares of
such capital stock.
6.1.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Trust or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Trust or any of its
subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole. Except as set forth in the SEC Documents,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the knowledge of the Trust,
threatened against or involving the Trust or any of its subsidiaries or any of
their directors, officers or employees, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, have had,
or would reasonably be expected to have, a material adverse change in or effect
on the financial condition, properties, business, results of operations or
prospects of the Trust and its subsidiaries taken as a whole. As of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of
their subsidiaries or any of their officers, directors or employees, as such, or
any of their properties, assets or business relating to the transactions
contemplated by this Agreement.
6.1.7 REIT Status. The Trust is currently a "real estate
investment trust" ("REIT") for federal income tax purposes and, to its
knowledge, the Trust is and at all times during the testing period described in
Code Section 897(h)(4)(D) has been a "domestically controlled REIT" (as defined
in Section 897(h)(4)(D) of the Code). From and after January 1, 1995, neither
the Internal Revenue Service nor any other taxing entity or authority has made
any assertion that the Trust does not qualify as a REIT for income tax purposes,
nor has there been any challenge to the REIT status of the Trust. From time to
time upon request by the Seller or its assigns after the Closing Date, the Trust
agrees to inform Seller or such assigns whether to its knowledge it complies
with the representation and warranties set forth in this Section 6.1.7.
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6.1.8 Partnership Status. Starwood Realty Partnership is
classified and taxable as a partnership for U.S. federal income tax purposes.
6.1.9 Hart-Scott-Rodino Act. The provisions of the
Hart-Scott-Rodino Act are not applicable to the transactions contemplated hereby
and neither the Trust nor Seller is required to make any filings or submissions
or obtain any approvals thereunder in connection herewith.
6.2 Of the Corporation. As an inducement to Seller to enter into this
Agreement, the Corporation hereby represents, warrants and covenants to Seller
as follows:
6.2.1 Power and Authority. The Corporation is a corporation duly
organized and validly existing under the laws of the State of Maryland. The
Corporation has the power and authority to carry on its present business, to
enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the
Corporation nor the performance by the Corporation of the Corporation's
obligations hereunder will violate or constitute an event of default under any
material terms or material provisions of any agreement, document, instrument,
judgment, order or decree to which the Corporation is a party or by which the
Corporation is bound and/or violate any applicable law, rule or regulation, the
violation of which would have a Material effect upon the principal benefits
intended to be provided by this Agreement.
6.2.2 Authorization; Valid Obligation. All proceedings required to
be taken by, or on behalf of the Corporation, to authorize the Corporation to
make, deliver and carry out the terms of this Agreement will be duly taken prior
to the Closing Date. No consent to the execution, delivery and performance of
this Agreement will be required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, governmental
authority or other person, other than any such consent which already has been
(or prior to the Closing will have been) unconditionally given. The individuals
executing this Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement is a valid and
binding obligation of Corporation, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
6.2.3 Capital Structure. The authorized and outstanding capital
stock and units of the Corporation and its operating partnership are as set
forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity
Purchase Price at the Closing in accordance with this Agreement will, when so
issued, be duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights and will be paired with each other in the same ratio
as all other shares are paired with each other pursuant to the Pairing
Agreement.
6.2.4 SEC Documents and Other Reports. The Corporation has filed
all required SEC Documents since January 1, 1996. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
applicable law, and, at the respective times they were filed, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to
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make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Corporation included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as of their respective dates of filing, were prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented the consolidated financial position of the
Corporation and its consolidated subsidiaries as of the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the SEC Documents or as required by generally
accepted accounting principles, the Corporation has not, since December 31,
1996, made any change in the accounting practices or policies applied in the
preparation of their financial statements. Prior to the Closing Date, the
Corporation will file all required documents with the SEC, which documents will
comply in all material respects with the requirements of the applicable law, and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.2.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole, or (b) there has not been any split,
combination or reclassification of any of the capital stock or units of the
Corporation or its respective operating partnerships or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of such capital stock.
6.2.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Corporation or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Corporation or any
of its subsidiaries, as such, or any of its or their properties, assets or
business that, individually or in the aggregate, have had, or would reasonably
be expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the
Corporation and its subsidiaries taken as a whole. Except as set forth in the
SEC Documents, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the knowledge of the
Corporation, threatened against or involving the Corporation or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole. As of the date hereof, there
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are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
knowledge of the Corporation, threatened against or affecting the Corporation or
any of their subsidiaries or any of their officers, directors or employees, as
such, or any of their properties, assets or business relating to the
transactions contemplated by this Agreement.
6.2.7 Starwood Operating Partnership is classified and
taxable as a partnership for U.S. Federal Income Tax purposes.
6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino
Act are not applicable to the transactions contemplated hereby and neither the
Corporation nor Seller is required to make any filings or submissions to obtain
any approvals thereunder in connection herewith.
6.3 Of Seller. As an inducement to Buyer to enter into this Agreement,
Seller, represents, warrants and covenants to Buyer as follows:
6.3.1 Regarding Seller's Authority.
6.3.1.1 Seller is a limited partnership in dissolution
under the laws of the State of New York. Seller has the power and authority to
enter into this Agreement and the Conveyance Documents and, to sell the Property
on the terms set forth in this Agreement. The execution and delivery hereof and
the performance by Seller of its obligations hereunder, will not violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which
Seller is a party or by which Seller is bound and/or violate any applicable law,
rule or regulation, the violation of which would have a Material effect upon the
principal benefits intended to be provided by this Agreement.
6.3.1.2 The individuals executing this Agreement and the
documents referenced herein on behalf of Seller have the legal power, right and
actual authority to bind Seller to the terms and conditions hereof. This
Agreement is a valid and binding obligation of Seller, enforceable in accordance
with its terms, except as the same may be affected by bankruptcy, insolvency,
moratorium or similar laws, or by legal or equitable principles relating to or
limiting the rights of contracting parties generally.
6.3.2 Tenant Leases. There are no leases, licenses or concessions
for space which will affect the Real Property or any portion thereof following
the Close of Escrow other than as set forth on the Schedule of Tenant Leases.
Seller has delivered to Buyer a true, correct and complete copy of each lease
and agreement listed on the Schedule of Lease. Seller has not received written
notice of any sublease and/or assignment of any Tenant Lease except as set forth
on SCHEDULE 6.3.2. No outstanding written notice of any Material default has
been delivered by Seller or received by Seller with respect to any Tenant Lease,
except as disclosed on the SCHEDULE 6.3.2 annexed hereto and made a part hereof.
To Seller's knowledge, all rent under the leases listed on the Schedule of
Leases is being paid currently. All Material brokerage, leasing and other
commissions due in connection with the Tenant Leases have been paid by Seller
other
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than those payable with respect to the renewal or extension of such Tenant
Leases or expansion of the leased premises thereunder after the Closing Date,
each of which are payable under agreements described on SCHEDULE 6.3.2.
6.3.3 Service Contracts. There are no Service Contracts which will
affect the Property after the Closing Date except for the Approved Service
Contracts. No outstanding written notice of any Material default has been
delivered by Seller or received by Seller with respect to any Approved Service
Contract, except as disclosed on SCHEDULE 6.3.3 annexed hereto and made a part
hereof.
6.3.4 Claims. There are no pending litigation or condemnation
proceedings with respect to Seller or the Property which would result in an
adverse effect on the ability of Buyer to operate the Property after the
Closing, except as disclosed on SCHEDULE 6.3.4 annexed hereto and made a part
hereof. There is no pending litigation or to Seller's knowledge, other claims of
Seller with respect to the Property attributable to the period prior to the date
hereof which may result in a material judgment in favor of Seller except as
disclosed on SCHEDULE 6.3.4.
6.3.5 Employees. To Seller's Knowledge, SCHEDULE 1.1.6 sets forth
a true and complete list of all Hotel Employees as of the Execution Date
together with their positions, salaries or hourly wages, as applicable, and
years of service. Except for or pursuant to the Employment Agreements, the
Collective Bargaining Agreements, the Management Agreement and the agreements
related to the Ritz-Carlton management of the Hotel described on SCHEDULE 6.3.5
hereto, neither Seller nor the Employer Corporation has relating to the Property
(i) at any time maintained, contributed to or participated in, (ii) or had at
any time obligation to maintain, contribute to, or participate in, or (iii) any
liability or contingent liability, direct or indirect, with respect to: any
employment agreement, oral or written retirement or deferred compensation plan,
incentive compensation plan, stock plan, unemployment compensation plan,
vacation pay plan, severance plan, bonus plan, stock compensation plan or any
other type or form of employee-related (or independent contractor-related)
arrangement, program, policy, plan or agreement. Except as set forth on SCHEDULE
6.3.5, to Seller's knowledge there is no Material default under any of the
Employment Agreements.
6.3.6 Compliance with Laws. During the past twelve (12) months,
Seller has not received any written notice from any party, including, without
limitation, from any municipal, state, federal or other governmental authority,
of a Material violation of any zoning, building, fire, water, use, health, or
other similar statute, ordinance, or code bearing on the construction, operation
or use of the Property or any part thereof (other than as to matters previously
cured), except as disclosed on SCHEDULE 6.3.6 annexed hereto and made a part
hereof and except for violations of Environmental Laws, which are addressed in
SECTION 6.3.7 below.
6.3.7 Hazardous Materials. Seller has not received any written
notice from any municipal, state, federal or other governmental authority or
from any other person during the last three (3) years of (a) any Material
violation of applicable Environmental Laws or (b) any Environmental Condition
requiring Material remediation under applicable Environmental Laws,
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in either case only to the extent relating to Environmental Conditions at or on
the Real Property, except as disclosed on SCHEDULE 6.3.7 annexed hereto and made
a part hereof;
6.3.8 Records and Plans. Seller will have delivered to
Buyer on the Closing Date true and correct copies of the Records and Plans.
6.3.9 Licenses and Permits. Seller has delivered to Buyer true and
correct copies of the Liquor License and all other Material Licenses and Permits
and such Licenses and Permits are identified on SCHEDULE 6.3.9 annexed hereto
and made a part hereof.
6.3.10 Management Agreements. There are no hotel management or
property management agreements, which will be binding upon Buyer after the
Closing Date, other than the Management Agreement, a true and complete copy of
which will be delivered to Buyer on the Closing Date. Seller has not sent or
received any notice of default or notice of termination under or with respect to
the Management Agreement.
6.3.11 Personal Property. Seller owns the Tangible Personal
Property (other than the Tangible Personal Property that is subject to the
Equipment Leases) free and clear of any liens and/or encumbrances other than the
Permitted Encumbrances.
6.3.12 Insurance. The Seller in respect of the Real Property is
insured under those policies of casualty and general liability insurance
("Seller's Insurance") described on SCHEDULE 6.3.12 annexed hereto, each of
which is in full force and effect as of the date hereof and will remain in full
force and effect through the Closing Date. Seller has received no notices of any
Material default or demands to cure from any applicable insurer in respect of
Seller's Insurance.
6.3.13 Real Estate Taxes. Except as set forth on SCHEDULE 6.3.13
annexed hereto and made a part hereof, Seller has not commenced any proceedings
which are pending for the reduction of the assessed valuation of the Real
Property or any portion thereof, and other than the Permitted Encumbrances, to
Seller's Knowledge, there are no special assessments affecting the Property.
Nothing in this SECTION 6.3.13 or any other provision of this Agreement shall be
construed to limit Seller's rights to initiate or prosecute after the Close of
Escrow additional proceedings for property tax refunds for taxes relating to any
relevant taxable period or periods prior to the taxable period during which the
Proration Time occurs.
6.3.14 Residential Apartments; Rent Regulations. Except for
Apartment 1706, which is currently leased to Lenore Morse, there are no rooms at
the Property that are leased to third parties as residential apartments whether
through written or statutory leases. Except for Apartment 1706, there are no
apartments at the Property that are subject to Rent Control, Rent Stabilization
or any similar governmental rent regulation.
6.3.15 Regarding The Ground Lease. There is no outstanding
default of lessee under the Ground Lease. Seller has not received any notice by
or on behalf of lessor thereunder or otherwise claiming a default under the
Ground Lease. The Ground Lease has not been
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amended or modified whether by agreement of lessor and lessee, pursuant to the
order of any court or otherwise except as set forth in SCHEDULE 1.1.5 hereto.
6.4 Buyer's Review of Records and Plans.
6.4.1 Access to Records and Plans; Specific Disclosures. Buyer
acknowledges that prior to the Closing Date, Buyer has been provided with such
access to the Records and Plans and such other information relating to the Hotel
as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware
of and given an opportunity to inquire into the Specific Disclosure Matters
described herein; (b) has been given access to the Property and the opportunity
to conduct such inquiries and analyses as Buyer has deemed necessary or
appropriate in order to evaluate the physical condition of the Property and any
and all other matters concerning the current and future use, feasibility, or
value, or any other matter or circumstance relevant to Buyer concerning the
Property or its marketability; and (c) the Records and Plans and the other books
and records of Seller with respect to the Hotel may not be complete.
6.4.2 Limitation on Access to Records and Plans. Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges and agrees that
the Records and Plans or other information made available to or delivered to
Buyer prior to, or at the Closing, shall not include any information which is
privileged, confidential or proprietary to Seller or any of its constituent
partners or affiliates, including without limitation, (i) Seller's internal
financial analyses, any appraisals undertaken for Seller or other parties,
income tax returns, financial statements, corporate or partnership governance
records, investment advisory records, and other records concerning Seller's
professional relationships, any Hotel Employee personnel files (prior to the
Closing), or any other internal, proprietary, or confidential information,
files, or records of Seller, (ii) the work papers, memoranda, analysis,
correspondence, and similar materials prepared by or for Seller in connection
with the negotiation and documentation of the transaction contemplated hereby or
any other offer to purchase the Property received by Seller, and (iii) any
documents or communications subject to the attorney/client privilege or attorney
work product privilege. Buyer expressly agrees that its review of the Records
and Plans, and any and all other information of any type or nature, whether oral
or written, provided to Buyer by or on behalf of Seller and relating to the
Property (collectively, the "PROPERTY INFORMATION") is for informational
purposes only, and neither Seller nor any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller
has verified either the accuracy of the Property Information, or the adequacy of
any method used to compile the Property Information or the qualifications of any
person preparing the Property Information except that, in delivering or making
available a copy of any document or papers to Buyer, Seller has delivered or
made available copies of the originals of such documents or papers in Seller's
possession or included in the Records and Plans. Except as expressly set forth
in this SECTION 6, neither Seller nor any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller
is making or giving any representation or warranty about, or assuming any
responsibility for, the accuracy or completeness of the Property Information.
Reliance by Buyer upon any Property Information shall not create or give rise to
any liability of or against Seller or any agent, advisor, officer, attorney,
representative or other person acting or purporting to act on behalf of Seller.
Subject to Seller's express representations and warranties
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set forth herein, the consummation of the Closing shall constitute Buyer's
unconditional approval of all aspects of the Property and Buyer's unconditional
acknowledgment that Buyer has had the opportunity to request from Seller and
review such documents and materials relating of the Property as Buyer deems
appropriate. All copies of such documents delivered to Buyer shall be returned
to Seller if the Closing fails to occur for any reason.
6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER
THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE
PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON
SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS
CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING
WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS
AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY
EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO:
(A) THE VALUE OF THE PROPERTY;
(B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND
USES WHICH BUYER MAY CONDUCT THEREON;
(D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY;
(E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE
PROPERTY;
(F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING
WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY
OR BODY;
(H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY;
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(I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR
THE AMERICANS WITH DISABILITIES ACT;
(J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY;
(K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND
PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE
PROPERTY;
(L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR
SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY
HAVE BEEN OR MAY BE PROVIDED TO BUYER;
(M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE
APPLICABLE ZONING OR BUILDING REQUIREMENTS;
(N) DEFICIENCY OF ANY UNDER SHORING;
(O) DEFICIENCY OF ANY DRAINAGE;
(P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON
OR NEAR AN EARTHQUAKE FAULT LINE;
(Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENTS AFFECTING THE PROPERTY;
(R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY
(INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY
FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE
SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE
LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN;
(S) THE GROUND LEASE;
(T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR
(U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY, THE
MANAGEMENT AGREEMENT AND THE GROUND LEASE, ARE WITHOUT ANY EXPRESS OR IMPLIED
WARRANTIES OR REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, (1) WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY
OF THE MANAGEMENT AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE, (3)
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WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP OR CAPACITY
OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES THAT THE
TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES, ORDINANCES
RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO, (5)
WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM.
6.6 Limitation on Representations and Warranties of Seller. In no event
shall Buyer be entitled to seek recovery against Seller for an alleged breach of
any representation or warranty by Seller if the information, transaction, or
occurrence alleged to give rise to such breach was disclosed to, made available
to or discovered by Buyer, whether in the course of its review of the Records
and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with
respect to same being as set forth in SECTION 6.7 below). Without limiting the
foregoing, each of the representations and warranties by Seller set forth herein
shall be deemed to be qualified in their entirety by the Specific Disclosure
Matters in addition to any other qualifications of such representations and
warranties.
6.7 Right to Supplement Disclosures. At any time prior to the Closing,
Seller may add additional disclosures to the Specific Disclosure Matters and the
Schedules referenced in this SECTION 6, and may make appropriate revisions
thereto, provided, however, that any such revisions do not in the aggregate
disclose any matter or matters which would reasonably be expected to have an
impact upon the value of the Property in excess of the amount of the Deposit;
and provided, further, that the receipt of any notice of termination under the
Management Agreement shall not be deemed to create any diminution in value to
the Property. In the event that Buyer or Seller discovers any matter or matters
which would be expected to exceed the Threshold Amount, then, in such event, the
provisions of SECTION 7.1.1 shall apply.
6.8 Basket. In no event will Seller be liable to Buyer for any breach of
a representation or warranty hereunder unless and to the extent the Loss
actually and directly incurred by Buyer as results of such breach together with
the Loss actually and directly incurred by Buyer as results of any other
breach(s) in the aggregate exceed the Threshold Amount, provided, that in no
event shall Seller have any liability to Buyer for any consequential damages
arising from a breach by Seller of any representation or warranty unless such
breach results from the intentional concealment by Seller.
6.9 Survival. The Trust, the Corporation and Seller each hereby
covenants and agrees with the other that the representations and warranties of
the Trust, the Corporation and Seller (as the case may be) set forth in SECTIONS
6.1.1 through 6.1.3, inclusive, SECTION 6.2.1 through SECTION 6.2.3, inclusive
and SECTION 6.3.1 and SECTION 6.3.2 shall survive the Close of Escrow without
limitation as to duration. The remaining warranties and representations set
forth in SECTION 6 shall survive the Close of Escrow until the date which is one
(1) year following the Closing Date, at which time such representations and
warranties shall expire unless prior to such time Buyer or Seller, as the case
may be, have duly commenced an action in a court of competent
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jurisdiction, alleging a breach of such representation or warranty.
Notwithstanding anything herein to the contrary, in no event shall either Buyer
or Seller have any right to make a claim after the Closing with respect to any
representation or warranty, the breach of which such party shall have discovered
prior to the Closing, unless such party shall have notified the other party of
such breach prior to the Close of Escrow. Nothing contained in this SECTION 6.9
shall limit the right of Seller to any remedy otherwise available under Federal
or other applicable securities law.
SECTION 7
TITLE TO THE REAL PROPERTY:
EXTENSION OF THE CLOSING
7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer
and Buyer's Counsel a current preliminary title commitment for title insurance
issued by the Title Company showing the condition of title to the Real Property
(the "Preliminary Title Report") together with a copy of all documents
evidencing or creating the exceptions to title referenced therein.
7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary
Liens. On or prior to the Close of Escrow, Seller shall be obligated (i) to
cause to be insured over or removed of record all Monetary Liens affecting the
Seller's interest in the Real Property as of the date hereof; and (ii) to remove
or to bond over any Monetary Lien arising after the issuance of the Preliminary
Title Report which (a) was created by or with the consent of Seller, or (b) is
in an amount less than or equal to the Deposit. In the event that any Monetary
Lien not reflected on the Preliminary Title Report exceeds the Deposit and was
not created by or with the consent of Seller or any other title defect or other
matters arise which requires Seller to supplement its disclosure pursuant to
SECTION 6.7 and which in the aggregate may create a diminution in value to the
Property in excess of the Deposit, and/or the Ground Lease Estoppel has not been
obtained on or prior to the Closing Date in the form required pursuant to
SECTION 9.1.4. (i) the Deposit shall be refunded by Escrow Holder to Buyer on
February 28, 1998 if the Closing does not occur by such date in accordance with
the provisions hereof; (ii) the Scheduled Closing Date shall be extended and
Seller shall use all reasonable efforts, to remove or bond over or otherwise
cause the Title Company to omit such Monetary Lien as an exception from coverage
under the Title Policy and/or remove or cure as applicable such other defect or
condition or obtain the Ground Lease Estoppel as applicable; and (iii) Buyer
shall be permitted to record the Memorandum of Contract in the real property
records of the state and county in which the Real Property is located. In the
event that the Scheduled Closing Date is so extended and Seller is able to
remove or cure such Monetary Lien, remove or cure as applicable the title defect
or other condition and/or the Ground Lease Estoppel is delivered as is required,
a consent to the transfer of the Ground Lease is obtained in form reasonably
acceptable to Buyer and Seller or a judicial determination that no default
exists is obtained as provided below, the Close of Escrow shall occur as soon as
practicable following such removal, cure, or delivery with time being of the
essence as to the performance of both Buyer's and Seller's obligations
hereunder. THE PARTIES ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN
ADEQUATE REMEDY TO SELLER IF BUYER SHALL DEFAULT IN ITS OBLIGATION
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TO CLOSE IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND
CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS SECTION 7.1.1 SHALL BE
SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN CONSIDERATION FOR THE REFUND TO
BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS SECTION 7.1.1, THE RIGHT OF BUYER
TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT TO THIS SECTION 7.1.1, SELLER'S
AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT AGREEMENT PURSUANT TO THE
PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH AGREEMENT THE VALUE OF THE HOTEL
MAY BE AFFECTED BY THE PERFORMANCE BY THE MANAGER OF ITS RESPONSIBILITIES
THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH THIS AGREEMENT FOR A PERIOD OF UP
TO FIVE (5) YEARS IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1.1 AND IN
LIGHT OF THE RISKS WHICH SELLER WILL BE ASSUMING AS A RESULT IN RELATION TO THE
VALUE OF THE EQUITY PURCHASE PRICE TO BE DELIVERED IF AND WHEN THE CLOSING
OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT THE PROVISIONS OF THIS SECTION
7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST AS AND TO THE EXTENT
PROVIDED IN THE PRECEDING SENTENCE. In the event that a Monetary Lien cannot be
removed or cured or a title defect or other condition cannot be removed or cured
as required hereunder to close within five (5) years of the date of this
Agreement, this Agreement shall terminate and the parties hereto shall have no
further obligations. In the event that the Ground Lease Estoppel is not obtained
by April 15, 1998, then, in such event, Seller shall, upon written request of
Buyer at any time thereafter, at its expense and with the full cooperation and
support of Buyer at its expense, commence and prosecute to completion a lawsuit
against lessor under the Ground Lease to obtain the delivery of the Ground Lease
Estoppel or, in the alternative, a consent to the transfer of the Ground Lease
in form reasonably acceptable to Buyer or a judicial determination that no
default then exists under the Ground Lease and the Scheduled Closing Date shall
be extended until such time as such Ground Lease Estoppel is obtained, a consent
is given or a judicial determination is so made. (The satisfaction of one or
more of the foregoing conditions being referred to herein as the "Ground Lease
Transfer Requirement").
7.1.2 [Intentionally omitted]
7.2 Title Insurance Policy. Buyer's title to the Real Property shall be
insured at Closing by an ALTA extended coverage owner's policy or policies of
title insurance in the amount of the Purchase Price (the "Title Policy") issued
by the Title Company, insuring title to the Improvements and the lessee's
interest under the Ground Lease vested in Buyer, subject only to the Permitted
Encumbrances, together with such customary endorsements or affirmative insurance
as may be reasonably requested by Buyer and purchased at Buyer's sole cost and
expense.
7.3 Title to Real Property. At the Close of Escrow, title to the
Improvements and the lessee's interest under the Ground Lease will be conveyed
to Buyer by Seller pursuant to the Deed and the Assignment of Ground Lease,
subject only to the matters of title respecting the Property shown on SCHEDULE
7.3 annexed hereto and, if the Closing is delayed pursuant to
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SECTION 7.1.1, any additional easements, covenants, conditions, restrictions or
other matters entered into with the prior written consent of Buyer which consent
shall not be unreasonably withheld, delayed or conditioned (collectively, the
"Permitted Encumbrances"); Buyer agrees to rely exclusively on the Title Policy
for protection against any title defects except as set forth in SECTION 7.1.2.
Buyer shall have no claim following the Closing against Seller on account of the
Permitted Encumbrances. Buyer's agreement under this SECTION 7.1 shall survive
the execution, delivery, and recordation of the Deed and the Assignment of
Ground Lease.
SECTION 8
INTERIM ACTIVITIES
During the period from the Execution Date through the Close of Escrow,
Seller shall (subject to the provisions of the Interim Management Agreement if
entered into in accordance with the provisions of this Agreement) cause the
Property to be continued to be operated in ordinary course as a hotel consistent
with current operating practices during the period since Manager has been
manager of the Hotel. Buyer shall have the right to enter onto and inspect the
Property, from and after the date hereof, through the Closing Date to inspect
the Property and otherwise perform its due diligence provided such inspections
are performed upon prior notice to Seller and so as not to interfere with the
operation of the Property or to disclose the pendency of the transaction
contemplated hereby. All fees and expenses of any kind relating to the
inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to
keep the Property free from any liens arising out of or in connection with
Buyer's or its agents entry or the Property. Buyer shall at its sole cost and
expense, clean up and repair the Property as reasonably necessary after Buyer's
or its agents entry thereon. Buyer shall hold harmless, indemnify and defend
Seller from all Losses relating to any action by Buyer, its Affiliates and/or
agents at or on the Property prior to Closing. Any of Buyer's agents shall be
bound by the provisions of SECTION 17.19.
SECTION 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and
the obligation of Buyer to purchase the Property is subject to the satisfaction,
not later than the Scheduled Closing Date, (subject to extensions as provided in
Section 7.1) of the following conditions:
9.1.1 Seller's Deliveries. Seller shall have delivered the items
described in SECTION 4.2 and shall be prepared to deliver the items described in
SECTION 4.4;
9.1.2 Title Policy. The Title Company shall be unconditionally
prepared (subject only to payment of all necessary title insurance premiums and
other charges) to issue to
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Buyer the Title Policy insuring Buyer's title to the Real Property subject only
to the Permitted Encumbrances;
9.1.3 Performance Under Related Agreement. All conditions
precedent to the closing of the transactions contemplated by that certain
Purchase and Sale Agreement and Joint Escrow Instructions (the "Related
Agreement") dated as of the date hereof by and between D.C. Overnight Partners,
L.P. and Buyer shall have been satisfied or waived and the Seller and Escrow
Holder thereunder shall be ready, willing and able to perform thereunder, and
there shall be no default of Seller under such agreement;
9.1.4 Ground Lessor Estoppel. The lessor (or its agent) under the
Ground Lease shall have delivered a certificate in form and substance
satisfactory to the Title Company, confirming that there are no defaults
thereunder as of the Closing Date and otherwise sufficient to allow the Title
Company to issue the Title Policy in the form required pursuant to this
Agreement (the "Ground Lease Estoppel") and/or the Ground Lease Transfer
Requirement shall have otherwise been satisfied; and
9.1.5 Seller Performance. Seller shall have performed in all
material respects all of the obligations of Seller under this Agreement, to the
extent required to be performed at or prior to the Close of Escrow.
9.1.6 Representations and Warranties of Seller. The Seller's
representations and warranties set forth in SECTION 6.3 shall be true, correct
and complete, as of the Close of Escrow subject to modification thereof to the
extent permitted under SECTION 6.7 and subject further to the applicable
provisions of SECTION 7.1.1.
The conditions set forth in this SECTION 9.1 are solely for the benefit of
Buyer and may be waived only by Buyer. Buyer shall at all times have the right
to waive any such condition. Any such waiver or waivers shall be in writing and
shall be delivered to Seller and Escrow Holder.
9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow
and Seller's obligation with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Scheduled Closing
Date, of the following conditions:
9.2.1 Funds and Documents. Buyer shall have delivered to Escrow
Holder, prior to the Closing Date, for disbursement as directed by Seller, the
Paired Shares and all cash or other immediately available funds due from Buyer
in accordance with SECTION 4 of this Agreement and the documents described in
SECTION 4.3;
9.2.2 Representations and Warranties of Buyer. The Trust's
representations and warranties set forth in SECTION 6.1 and the Corporation's
representations and warranties set forth in SECTION 6.2 shall be true,
correct and complete, as of the Close of Escrow;
9.2.3 No Material Changes. There shall have been no casualty or
condemnation for which Buyer has elected to terminate this Agreement pursuant to
SECTION 12 or SECTION 13 of this Agreement;
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9.2.4 Ground Lessor Estoppel . The lessor (or its agent) under the
Ground Lease shall have delivered the Ground Lease Estoppel or the Ground Lease
Transfer Requirement shall have otherwise been satisfied; and
9.2.5 Performance Under Related Agreement. All conditions
precedent to the closing of the transactions contemplated by the Related
Agreement shall have been satisfied or waived and the Buyer and Escrow Holder
thereunder shall be ready, willing and able to perform thereunder and there
shall be no default of Buyer under such agreement.
The conditions set forth in this SECTION 9.2 are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any such condition. Any such waiver or waivers shall be in
writing and shall be delivered to Buyer and Escrow Holder.
9.3 Failure of Condition. Except as otherwise provided in this
Agreement, if the Escrow fails to close on the Outside Closing Date for any
reason whatsoever, including, without limitation, a failure of a condition
precedent set forth in this SECTION 9, either Buyer or Seller, if not then in
default under this Agreement, may terminate the Escrow and this Agreement upon
notice to the other; and, thereupon:
9.3.1 This Agreement and the Escrow shall terminate;
9.3.2 The costs of the Escrow through the Scheduled Closing
Date shall be governed by SECTION 4.8;
9.3.3 All monies paid into the Escrow and all documents deposited
in the Escrow shall be returned to the party paying or depositing the same
together with interest earned thereon; and
9.3.4 Each party shall be released from all obligations under this
Agreement except for the obligations that are expressly stated to survive the
termination of this Agreement.
SECTION 10
BROKER
Buyer and Seller each represent and warrant to the other that it has not
dealt with any broker, finder or other middleman in connection with this
Agreement, or the transactions contemplated hereby and that no broker, finder,
middleman or other person has claimed, or has the right to claim a commission,
finder's fee or other brokerage fee in connection with this Agreement or the
transactions contemplated hereby. Each party shall indemnify, protect, defend
and hold the other party harmless from and against any costs, claims or expenses
(including actual attorneys' fees and expenses), arising out of the breach by
the indemnifying party of any of its representations, warranties or agreements
contained in this SECTION 10. The representations and obligations under this
SECTION 10 shall survive the Close of Escrow, or, if the Close of Escrow does
not occur, the termination of this Agreement.
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SECTION 11
REMEDIES FOR SELLER'S DEFAULT
11.1 Buyer's Remedies in General. If Buyer shall discover prior to the
Close of Escrow any default in any of Seller's obligations under this Agreement
(a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a
reasonable period of time (not in excess of thirty (30) days) unless extended by
Buyer in its sole discretion in which to cure such default, in which case the
Scheduled Closing Date shall be extended during the continuation of such cure
period. If there shall be any Seller Default discovered by Buyer prior to the
Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole
right and remedy other than with respect to a breach of a representation and
warranty which shall be subject to the provisions of SECTION 6.7, shall be to
compel specific performance of this Agreement; provided, however, that Buyer
shall only be entitled to compel specific performance of this Agreement if, as
of the time of Seller's default, Buyer shall (a) not be in default hereunder,
(b) shall be ready, willing and able to perform its obligations hereunder, and
(c) shall have waived all contingencies to closing other than those relating to
Seller's default.
11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE
LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER
FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL
INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION.
SECTION 12
DAMAGE TO OR DESTRUCTION OF THE PROPERTY
12.1 Insured Casualty.
12.1.1 If, prior to the Close of Escrow, the Property is damaged
or destroyed, whether by fire or other insured casualty, Seller shall promptly
notify Buyer of such damage or destruction and of the good-faith estimate of a
reputable licensed contractor selected by Seller and reasonably approved by
Buyer of the cost to repair the damage and Seller's good-faith belief that such
casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty
Notice indicates that such casualty is a Material Casualty, Buyer may elect to
be released from its obligations hereunder (including its obligation to purchase
the Property) by delivering to Seller written notice of Buyer's intent to do so
within ten (10) days after the date Buyer receives the Insured Casualty Notice.
In such event, the Deposit together with all interest accrued thereon shall be
promptly returned to Buyer.
12.1.2 If the casualty is insured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate
this Agreement in accordance with this SECTION 12.1, then the Escrow and this
Agreement shall remain in full force and effect, the
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Closing shall occur on or before the Outside Closing Date, and Seller shall
assign to Buyer, as a condition precedent to the Close of Escrow, all of
Seller's right, title and interest in and to any of the casualty insurance
proceeds or claims therefor with respect to such damage or destruction, together
with any and all rental loss or business interruption insurance of Seller, if
any, payable with respect to the Property for any period after the Proration
Time and any and all claims against other persons for such damage or
destruction. Additionally, if the Escrow and this Agreement remain in full force
and effect, Seller shall pay to Buyer, by way of a reduction in the Cash Portion
of the Closing Payment, an amount equal to the deductible under the casualty
insurance. Within twelve (12) months following the Close of Escrow, Buyer shall
upon thirty (30) days written notice by Seller, present reasonably satisfactory
evidence to Seller that Buyer applied the proceeds of such insurance to the
Property. If Buyer fails to present such evidence or such evidence is not
reasonably satisfactory to Seller, Buyer shall promptly, but in any event within
thirty (30) days of demand therefor from Seller, pay to Seller the proceeds of
the casualty insurance assigned by Seller to Buyer as provided herein, together
with an amount equal to the deductible under such insurance for which Buyer
received a credit to the Purchase Price.
12.2 Uninsured Casualty.
12.2.1 If, prior to the Close of Escrow, all or any portion of the
property is damaged or destroyed by an uninsured casualty (including, without
limitation, a casualty as to which coverage has been disclaimed by Seller's
insurers), Seller shall promptly notify Buyer of such damage or destruction and
of the Seller's reasonable estimate of the cost to Seller to repair the same of
a reputable licensed contractor selected by Seller and reasonably approved by
Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that
such casualty is uninsured (the "Uninsured Casualty Notice").
12.2.2 If such Uninsured Estimate to Repair indicates the
occurrence of a Material Casualty, either Seller or Buyer may elect to terminate
this Agreement by giving to the other party written notice of its intent to do
so within ten (10) days after the Seller delivers the Uninsured Casualty Notice
to Buyer. If this Agreement is terminated pursuant to this SECTION 12.2.2, the
Deposit together with interest accrued thereon shall be promptly returned to
Buyer.
12.2.3 If the casualty is uninsured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not
elected to terminate this Agreement in accordance with SECTION 12.2.2, then the
Escrow and this Agreement shall remain in full force and effect, the Closing
shall occur on or before the Outside Closing Date, and Buyer shall be entitled
to a reduction in the Purchase Price in an amount equal to the Uninsured
Estimate to Repair.
12.2.4 If and to the extent that the Purchase Price is adjusted
pursuant to this SECTION 12.2 as a result of a disclaimer of coverage by
Seller's insurers, Buyer shall not be entitled to insurance proceeds due under
Seller's policies, or to be assigned any claim under or with respect to Seller's
policies, and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom, it being the intent of this SECTION 12 that there be
no double recovery by, or double compensation of, Buyer for the casualty.
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SECTION 13
CONDEMNATION
If, prior to the Close of Escrow, a Material Taking has occurred or is
pending, Seller shall immediately notify Buyer of such fact. In such event,
Buyer may elect upon written notice to Seller given not later than fifteen (15)
days after receipt of Seller's notice to terminate this Agreement. If Buyer does
not exercise option which Buyer may have pursuant to this SECTION 13 to
terminate this Agreement, or if any such taking is not a Material Taking, then
neither party shall have the right to terminate this Agreement, but Seller shall
assign and turn over, and Buyer shall be entitled to receive and keep, all
awards for the taking of any of the Real Property by eminent domain which accrue
to Seller (other than those relating to loss of use prior to the Closing), and
the parties shall proceed to the Close of Escrow pursuant to the terms hereof,
without modification of the terms of this Agreement and without any reduction in
the Purchase Price.
SECTION 14
EMPLOYEES
14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to
make an offer of employment to all existing Hotel Employees as of the Close of
Escrow, on terms and conditions generally comparable to their existing terms and
conditions of employment (to the extent such terms and conditions have been
disclosed by Seller and/or its agents to Buyer) and to make all reasonable
efforts to retain such employees for a reasonable period of time. Without
limiting the foregoing, Buyer shall offer to maintain without loss of employment
(as defined in the WARN Act) the employment at the Property (other than upon
good cause for termination) of such number of Hotel Employees and on such terms
and conditions as shall not result in, and only to the extent necessary to
prevent, a plant closing or mass layoff as defined in the WARN Act. Buyer (i)
shall also cause each of the health and medical benefit plans maintained for
Hotel Employees to waive any preexisting condition in connection with employment
at the Property that was not excluded under the applicable program as of the
Closing Date, (ii) shall also cause each of such benefit plans to take into
account any deductibles or coinsurance amounts incurred by each Hotel Employee
for the year in which the Closing Date occurs, and (iii) shall also cause each
of the health and medical benefit plans to deem each Hotel Employee to be
eligible for participation in such Plan as of the Close of Escrow. In the event
that Buyer fails to comply with any of the foregoing covenants, Buyer agrees
that Buyer shall be solely responsible for the payment of any and all costs,
charges, penalties, compensation, severance pay, benefits and liabilities,
arising under the WARN Act, and any other applicable law, rule or regulation on
account thereof, and Buyer agrees to indemnify, defend and hold Seller and the
Employer Corporation and their directors, officers, agents, affiliates,
principals, partners, shareholders representatives and controlling persons
harmless from and against any and all claims, causes of action, judgments,
damages, penalties and liabilities asserted under the WARN Act or any other
applicable law, rule or regulation, whether against Buyer or Seller, the
Employer Corporation or
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any other such indemnified party and whether based on employment of any of the
Hotel Employees prior to or following the Closing, arising from Buyer's failure
to comply with the foregoing covenants (collectively, "Termination Charges").
Following the Closing, if Buyer desires to terminate the employment of any Hotel
Employees other than for cause, Buyer shall be solely responsible for complying
with all applicable provisions of the WARN Act and all other applicable laws,
rules and regulations with respect to such termination, including without
limitation, the payment of all costs and termination payments owing under the
WARN Act and all other applicable laws, rules and regulations to any of such
employees. Buyer shall assume all obligations under the Employment Agreement for
the Director of Finance attributable to the period from and after the Closing
Date (it being agreed that the Director of Finance may resign thereunder at any
time without penalty).
14.2 Collective Bargaining Agreements. Without limiting the provisions
of SECTION 14.1, immediately upon the Close of Escrow, without the necessity of
further action by Buyer, Buyer shall assume each collective bargaining agreement
or other labor union contracts identified on SCHEDULE 14.2 (the "Collective
Bargaining Agreements"). Buyer further agrees to indemnify Seller and the
Employer Corporation and their directors, officers, employees, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons for any and all liability to the bargaining agents or Hotel Employees,
resulting from the failure of Buyer to comply with the terms and conditions of
any of the Collective Bargaining Agreements with respect to periods beginning
after the Close of Escrow.
14.3 Continuation of Benefits.
14.3.1 Except as provided in SECTION 14.3.2 , on and after the
Closing Date, Seller (or any insurer at Seller's cost) shall continue to process
and pay (or cause applicable insurers and third party administrators, including
ITT Sheraton, to process and pay) in an expeditious manner and with respect to
all covered Hotel Employees (and, to the extent applicable, their covered
spouses, dependents and beneficiaries) all claims under the Employment
Agreements that provide health and medical, or other welfare, benefits submitted
for covered expenses with respect to occurrences commencing on or prior to the
Closing Date, including, but not limited to: (A) covered hospital benefits for
any confinements; (B) covered life and survivor income benefits, if any, for
deaths which occur on or prior to the Closing Date; (C) workers' compensation
benefits for disabilities resulting from a work-related accident which occurred
on or prior to the Closing Date; (D) all covered benefits that are being, or
that may be, paid to, or with respect to, any of such individuals who are on
short or long term disability, or medical, personal or other leaves of absence
as of the Closing Date; (E) covered benefits under any "spending account," or
similar arrangement, under any "cafeteria plan" (as defined under Section 125 of
the Internal Code) with respect to salary reduction elections made prior to the
Closing Date; and (F) covered benefits under all other such Employment
Agreements which accrue on or before the Closing Date; but, only in each
instance, to the extent that Buyer shall not have received a credit against the
Purchase Price on account of such item.
14.3.2 Buyer (or any plan maintained by Buyer) will provide
continued health and medical coverage as required under Section 4980B of the
Code, Part 6 of Title I of ERISA or
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any other applicable federal, state or local law or ordinance to all current and
former Hotel Employees (and their spouses, dependents and beneficiaries) with
respect to whom a "qualifying event" (as such term is defined under Sections
4980B(f)(3) of the Code or 603 of ERISA) or other triggering event described
under the applicable federal, state or local laws or ordinances occurred on or
before the Closing Date.
14.3.3 Buyer shall maintain supplies of claims forms necessary
for Hotel Employees to make claims under Employment Agreements that provide
health, medical or other welfare benefits with respect to occurrences commencing
on or prior to the Closing Date, and shall furnish such forms to the Hotel
Employees when needed and otherwise assist the Hotel Employees in presenting
such claims.
14.4 Buyer and Seller intend by this Agreement to comply with Section
4204 of ERISA, so as to prevent Seller from incurring at the Closing Date a
complete or partial withdrawal in respect of any employee benefit plans, if any,
in which the Hotel Employees currently participate that are "multiemployer
plans," as defined in Section 4001(a)(3) of ERISA (and which have been disclosed
to Buyer on the Schedule of Employment Agreements), determined as if Buyer is
the "buyer" referred to in such Section 4204. Accordingly, with respect to such
multiemployer plans, Buyer agrees as follows:
(A) For the first plan year of each such multiemployer plan
commencing after the Close of Escrow, and for each of the succeeding four plan
years for each such plan, Buyer shall assume the obligation to contribute to
each such plan with respect to operations conducted with business assets
acquired from Seller for substantially the same number of contribution base
units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an
obligation to contribute to such plan.
(B) Prior to each such multiemployer plan's first plan year
beginning after the Close of Escrow, Buyer shall apply to such plan for a
variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be
obtained or an amount be held in escrow as provided in said Section. In the
event any such plan determines that the request does not qualify for a variance
on it, Buyer shall obtain any required bond or establish any required escrow
within thirty (30) days after the date on which it receives notice of the plan's
decision, and shall maintain such bond or escrow until the earliest of: (i) the
date a variance is obtained from the plan; (ii) the date a variance or exemption
is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day
of the fifth (5th) plan year commencing after the Close of Escrow; which bond or
escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make
a contribution to such plan when due, at any time during the first (1st) five
(5) plan years of such plan beginning after the Closing Date. In order to comply
with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete
withdrawal or a partial withdrawal from any multiemployer plan with respect to
which Buyer has assumed an obligation to contribute pursuant to this Agreement
and such withdrawal or partial withdrawal occurs during the five (5) plan years
commencing with the first (1st) plan year beginning after the date of the Close
of Escrow, Seller shall be secondarily liable for any withdrawal liability it
would have had to such
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multiemployer plan on the date of the Close of Escrow under Title IV of ERISA.
Buyer agrees to provide Seller with reasonable advance notice of its anticipated
failure to pay any withdrawal liability and to furnish Seller promptly with a
copy of any notice of withdrawal liability it may receive with respect to such
plans.
14.5 Indemnification. Buyer and Seller (as applicable, the
"Indemnitor") agrees to indemnify, defend, protect and hold the other and, the
Employer Corporation in the case of Seller, and their directors, officers,
agents, affiliates, principals, partners, shareholders, representatives and
controlling persons (as applicable, the "Indemnitee") harmless from and against
any and all claims, damages, liabilities, losses, and expenses, (including
attorneys' fees and costs) paid, suffered or incurred by the Indemnitee, arising
out of or related to Indemnitor's failure to comply with any of the covenants,
obligations, or duties contained in SECTION 14.
14.6 Survival. The provisions of this SECTION 14 shall survive
the Close of Escrow.
SECTION 15
COOPERATION
15.1 Seller has advised Buyer that it may be necessary after the Close
of Escrow for Seller (or its representatives) to audit the Records and Plans
with respect to the period prior to the Closing Date. In addition, Seller may
require access to the such Books and Records in connection with any litigation
by or against Seller and its Affiliates with respect to the Property, any tax
audit, examination or challenge or similar proceeding, or any calculation of
sums payable under SECTION 5. Accordingly, Buyer hereby: (i) agrees to retain
the Records and Plans with respect to the period prior to the Closing Date at
the Property for a period of seven (7) years after the Close of Escrow or such
additional period as may reasonably be requested by Seller; (ii) grants Seller,
its Affiliates and their respective representatives access to the such Records
and Plans and the Property after the Close of Escrow, at reasonable times and
upon reasonable prior notice, for such purposes; (iii) subject to the rights of
guests in guest rooms, tenants under tenant leases, grants Seller, its
Affiliates, and their respective representatives access to the Property after
the Close of Escrow for the purpose of conducting such inspections and/or
testing (including destructive testing) of the Property as may be necessary or
advisable in connection with any litigation and other proceedings to which
Seller is a party (provided that Seller shall give Buyer prior notice of the
scope of such inspections and testing) which shall be scheduled for such periods
as shall be reasonably agreeable to the parties.
15.1.1 All inspections fees, appraisal fees, engineering fees and
other expenses of any kind relating to the inspection of the Property by Seller
or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate.
15.1.2 Prior to Seller or Seller's Affiliate's entry on the
Property for the purpose of conducting inspections and/or tests, Seller or
Seller's Affiliate shall provide Buyer with
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certificates of insurance from Seller's agents from an insurance carrier and for
such risks and policy limits as Seller shall reasonably approve.
15.1.3 Seller agrees to keep the Property free from any liens
arising out of or in connection with such testing and inspection.
15.1.4 Seller, shall, at its sole cost and expense, clean up and
repair the Property as reasonably necessary, after Seller's or Seller's agents,
entry thereon.
15.1.5 Seller shall hold harmless, indemnify and defend Buyer for
all losses relating to any action by Seller, its Affiliates and/or agents at or
on the Property after the Closing.
15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and
their respective representatives in connection with any such litigation or
proceedings with respect to the Property, any such tax audit, examination or
challenge or similar proceeding, or any such calculation of sums payable under
SECTION 5, said cooperation to be at no material cost or expense to Buyer.
15.2 Seller shall cooperate with Buyer in connection with the assignment
of all transferable Licenses and Permits to Buyer and the application for and
procurement of replacements of any non-transferable Licenses and Permits.
SECTION 16
NOTICES
16.1 Addresses. Whenever any notice, demand or request is required or
permitted hereunder, such notice, demand or request shall be made in writing and
shall be (a) sent via a nationally recognized overnight courier service fully
prepaid, (b) deposited in the United States by mail, registered or certified,
return receipt requested, postage prepaid, or (c) sent via telefacsimile,
provided that the original of such notice, demand or request shall also be sent
via one of the methods described in (a) and (b) above, in each case to the
addressees (and individuals) set forth below:
As to Seller:
N.Y. Overnight Partners, L.P.
c/o Al Anwa USA Incorporated
1925 Century Park East
Suite 1900
Los Angeles, CA 90067
Attn: General Counsel
Telefacsimile: (310) 229-2939
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With a copy to Seller's Additional Addressees:
Gordon Eng, Esq.
19191 S. Vermont Avenue
Suite 420
Torrance, CA 90502
Telefacsimile: (310) 207-1006
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
As to Buyer:
Starwood Lodging Corporation
Starwood Lodging Trust
2231 E. Camelback Road
Suite 400
Phoenix, AZ 85016
Attn: Steven R. Goldman
Telefacsimile: (602) 852-0115
With a copy to Buyer's Additional Addressee:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
As to Escrow Holder:
Chicago Title Insurance Company
700 South Flower Street, Suite 900
Los Angeles, CA 90017
Attn: Maggie Watson
Telefacsimile: (213) 488-4388
16.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Buyer and its Additional Addressee in the manner aforesaid shall be
deemed sufficiently given to and received by Buyer for all purposes hereunder,
and any notice, demand or request that shall be
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delivered to Seller and its Additional Addresses in the manner aforesaid shall
be deemed sufficiently given to and received by Seller for all purposes
hereunder (i) the next business day following the day such notice, demand or
request is delivered by a nationally recognized overnight courier service fully
prepaid, to such party and its Additional Addressee, (ii) if sent via registered
or certified mail, at the time of receipt by such party and its Additional
Addressee, or (iii) if sent via telefacsimile, as of the date and time stated
upon confirmation reports generated by the sending party's telefacsimile machine
confirming the delivery of such notice, demand or request to such party and its
Additional Addressee.
16.3 Refusal of Delivery. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this SECTION 16 refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
16.4 Change of Address. Each party shall have the right from time to
time to designate by written notice to the other parties hereto such other
person or persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
SECTION 17
GENERAL PROVISIONS
17.1 Amendment. Except as provided in SECTION 4.1, no provision of this
Agreement or of any documents or instrument entered into, given or made pursuant
to this Agreement may be amended, changed, waived, discharged or terminated
except by an instrument in writing, signed by the party against whom enforcement
of the amendment, change, waiver, discharge or termination is sought.
17.2 Time of Essence. All times provided for in this Agreement for the
performance of any act will be strictly construed, time being of the essence.
17.3 Entire Agreement. This Agreement and other documents delivered at
Closing, set forth the entire agreement and understanding of the parties in
respect of the transactions contemplated by this Agreement, and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof. No representation, promise, inducement or statement of
intention has been made by Seller or Buyer which is not embodied in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance delivered pursuant to this Agreement,
and neither Buyer nor Seller shall be bound by or liable for any alleged
representations, promise, inducement or statement of intention not therein so
set forth.
17.4 No Waiver. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder
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shall constitute a waiver of any party's right to demand strict compliance with
the terms of this Agreement.
17.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
17.6 Costs and Attorneys' Fees. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby (including, without limitation, the enforcement of
any obligation to indemnify, defend or hold harmless provided for herein or
therein), or because of an alleged dispute, default, or misrepresentation in
connection with any of the provisions of this Agreement or of such document or
instrument, or if Escrow Holder commences any action with respect to the
Escrow(s), the successful or prevailing party shall be entitled to recover
actual attorneys' fees, charges and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
17.7 Payments; Interests. Except as otherwise provided herein, payment
of all amounts required by the terms of this Agreement shall be made in the
United States and in immediately available funds of the United States of America
which, at the time of payment, is accepted for the payment of all public and
private obligations and debts. Unless the parties otherwise agree, payments
shall be made through the Escrow Holder. If any payment due under this Agreement
is not paid when due, it shall thereafter bear interest at a variable rate equal
to the rate announced from time to time by Citibank, N.A. as its prime or
reference rate, plus five percent (5%) per annum, but in no event more than the
maximum rate, if any, allowed by law to be charged by the party receiving the
interest on such type of indebtedness.
17.8 Transfer By Buyer. Buyer shall not have the right to assign this
Agreement, but shall be permitted to designate an Affiliate or Affiliates to
take title to the Property. In the event that Buyer elects to so designate any
Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall
upon close of Escrow be released of all obligations hereunder other than
pursuant to SECTION 6, SECTION 7.1, SECTION 10, SECTION 17.18, SECTION 17.19 and
SECTION 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or
Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such
Affiliate of Affiliates shall represent and warrant to Seller that such entities
are duly organized and validly existing and otherwise as to the matters covered
in SECTION 6.1.1 and SECTION 6.1.2 as applicable.
17.9 Parties in Interest. Subject to SECTION 17.8, the rights and
obligations of the parties hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their
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respective successors, assigns, heirs and the legal representatives of their
respective estates. Nothing in this Agreement is intended to confer any right or
remedy under this Agreement on any person other than the parties to this
Agreement and their respective successors and permitted assigns, or to relieve
or discharge the obligation or liability of any person to any party to this
Agreement or to give any person any right of subrogation or action over or
against any party to this Agreement.
17.10 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state in which the Real Property
is located without giving effect to the conflict-of-law rules and principles of
that state.
17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement.
17.12 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Seller" shall include the respective permitted successors
and assigns of Seller, and the term "Buyer" shall include the permitted
successors and assigns of Buyer, if any.
17.13 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
17.14 Announcements. Seller and Buyer shall consult with each other and
provide each other one (1) Business Day prior notice with regard to all press
releases and other announcements issued at or prior to the Close of Escrow and
during the one year period thereafter concerning the existence of this Agreement
or the sale of the Property and, except as permitted under SECTION 17.19,
neither Seller nor Buyer shall issue any such press release or other such
publicity prior to the Close of Escrow without the prior written consent of the
other party, which consent may be withheld in such other party's sole and
absolute discretion. Buyer will not issue any public announcement with respect
to Seller (other than to describe the transaction contemplated hereby to the
extent permitted hereunder) without the prior written consent of Seller which
may be withheld in its sole and absolute discretion. The agreements of the
parties in this SECTION 17.14 shall survive the Close of Escrow or any
termination of this Agreement.
17.15 Submission of Agreement. The submission of this Agreement to
Buyer or its broker, agent or attorney for review or signature does not
constitute an offer to sell the Property to Buyer or the granting of an option
or other rights with respect to the Property to Buyer. No agreement with respect
to the purchase and sale of the Property shall exist, and this writing shall
have no binding force or effect, until this Agreement shall have been executed
and delivered by Buyer and by Seller and Buyer shall have deposited the Deposit
with Escrow Holder.
51
<PAGE> 59
17.16 Further Assurances. Buyer and Seller agree to execute such
instructions to the Escrow Holder and such other instruments and take such
further actions either before or after the Close of Escrow as may be reasonably
necessary to carry out the provisions of this Agreement provided that no
material additional cost or liability shall be created thereby.
17.17 Cooperation. Buyer and Seller shall cooperate with the other to
carry out the purpose of this Agreement (provided, such cooperation shall not
require either party to expend any sum not otherwise required pursuant to the
other provisions of this Agreement). This SECTION 17.17 shall survive the Close
of Escrow.
17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will
not sell the Property to any third-party for a period (the "Transfer Restriction
Period") commencing upon the Close of Escrow and expiring upon the later of (a)
five (5) years following the Close of Escrow and (b) settlement of or the final
non-appealable judgment is issued in connection with the existing litigation
between Seller and the Ritz Carlton Hotel Company, LLC and their respective
affiliates, provided, however, the foregoing prohibition shall not apply to a
sale of all or substantially all of the assets of Buyer, the merger of Buyer
into another entity or the transfer of the Property to a subsidiary and/or
Affiliate of Buyer but shall be binding upon the party succeeding to all or
substantially all of the assets of Buyer, the surviving entity in such merger,
or such subsidiary or Affiliate. The provisions of this SECTION 17.18 shall be
specifically enforceable. Buyer hereby waives any requirement for Seller to post
a bond in order to seek or obtain any temporary restraining order or other
injunctive relief pursuant to this SECTION 17.18. The parties acknowledge and
agree that the provisions of this SECTION 17.18 form a material part of the
consideration to Seller for entering into this Agreement. The parties agree that
these provisions are reasonable in light of Seller's ongoing litigation with
Ritz Carlton Hotel Company, LLC and its affiliates.
17.19 Confidentiality. Buyer shall hold as confidential all information
concerning the transaction contemplated by this Agreement, Seller and the
Property disclosed in connection with this transaction and Buyer shall not,
prior to the Close of Escrow, release any such information relating to the
transaction, Seller or the Property to any governmental agencies or third
parties without Seller's prior written consent except as may be required by law
and in such case subject to the provisions of SECTION 17.14. Seller hereby gives
its consent to Buyer's disclosure of information relating to the transaction
contemplated hereby to Buyer's Counsel and other consultants, in each instance
to the extent reasonably necessary to verify information given to Buyer by
Seller or otherwise to carry out the purposes of this Agreement and provided in
each instance, such consultants agree in writing to be bound by the
confidentiality provisions of this SECTION 17.19. If the Close of Escrow shall
fail to occur for any reason, neither party shall issue any press release,
publicity or other public announcement of the subject matter of this Agreement,
or to make any other disclosure concerning the subject matter of this Agreement
(except as may be required by law and in such case subject to the provisions of
SECTION 17.14.), without the prior written consent of the other party, which
consent may be withheld in such other party's sole and absolute discretion. The
agreements of the parties in this SECTION 17.19 shall survive any termination of
this Agreement.
52
<PAGE> 60
17.20 Interim Management Agreement. Seller shall provide Manager with a
notice of termination of the Management Agreement on January 2, 1998 or as soon
thereafter as Seller shall have obtained any required lender consent thereto.
Seller shall, on or prior to January 2,1998, seek any required lender contents
and use all reasonable commercial efforts to obtain the same as promptly as
possible. Buyer and Seller shall enter into a management agreement with respect
to the Property in the form attached as EXHIBIT 17.20 hereto (the "Interim
Management Agreement") which shall be effective (and the Interim Management
Agreement shall be dated as of such effective date) on the earlier of (a) thirty
days from the date of that et delivery to Manager of such Termination Notice,
and (b) the effective date of a written waiver of Manager of the notice of
termination required under the Management Agreement. Buyer shall advance any fee
payable to Manager under the Management Agreement on account of the termination
thereof up to $69,767.00. Buyer shall be deemed to have waived delivery of all
items under SECTIONS 4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the
Management Agreement is terminated in accordance with the provisions of this
SECTION 17.20 prior to the Closing Date.
17.21 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 Trust's 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.
[BALANCE OF PAGE INTENTIONALLY BLANK]
53
<PAGE> 61
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the day and year first above written.
"Seller"
N.Y. OVERNIGHT PARTNERS, L.P.,
a New York limited partnership
By: N.Y. OVERNIGHT, INC. a New York
corporation, its sole General Partner
By: /s/ Tarek Ayoubi
---------------------------------
Name: Tarek Ayoubi
Its: President
"Buyer"
STARWOOD LODGING TRUST,
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
--------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /s/ Michael C. Mueller
--------------------------------
Name: Michael C. Mueller
Title: Vice President
"Escrow Agent"
CHICAGO TITLE INSURANCE COMPANY,
a Missouri corporation
By: /s/ Maggie G. Watsu*
--------------------------------
Name: Maggie G. Watsu
Title: Authorized Signatory
* Subject to receiving mutual
instruction in the event
Paragraph 3.5 becomes operative.
54
<PAGE> 1
D.C. Execution
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
By
And Between
D.C. OVERNIGHT PARTNERS, L.P.,
a District of Columbia Limited Partnership,
As Seller
And
STARWOOD LODGING TRUST,
a Maryland Real Estate Investment Trust
And
STARWOOD LODGING CORPORATION,
a Maryland Corporation,
As Buyer.
Dated As Of: December 30, 1997
Relating to the D.C. Luxury Collection Hotel
Washington, D.C.
<PAGE> 2
TABLE OF CONTENTS
SECTION 1 - DEFINITIONS......................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................10
SECTION 2 - PURCHASE AND SALE OF PROPERTY...................................10
SECTION 3 - PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED DAMAGES....11
3.1 Purchase Price..................................................11
3.2 Payment.........................................................11
3.3 Investment of Escrowed Funds....................................11
3.4 Allocation of Purchase Price....................................12
3.5 Default by Buyer Prior to Closing; Liquidated Damages...........12
SECTION 4 - ESCROW; CLOSING; COSTS..........................................13
4.1 Escrow..........................................................13
4.2 Seller's Deliveries to Escrow Holder............................13
4.2.1.1 Deed...................................................13
4.2.1.2 Assignment and Assumption of Tenant Leases.............13
4.2.1.3 General Assignment.....................................13
4.2.1.4 Assignment and Assumption of Management Agreement......13
4.2.1.5 Bill of Sale...........................................14
4.2.1.6 Stock Agreement........................................14
4.2.1.7 Liquor Licenses Management Agreement...................14
4.2.1.8 [Intentionally Omitted]................................14
4.2.1.9 [Intentionally Omitted]................................14
4.2.1.10 [Intentionally Omitted]................................14
4.2.1.11 [Intentionally Omitted]................................14
4.2.1.12 [Intentionally Omitted]................................14
4.2.1.13 Non-Foreign Person Certificate.........................14
4.2.1.14 Transfer Tax Forms.....................................14
4.2.1.15 Certified Rent Roll....................................14
4.2.1.16 Certified Operating Statement..........................14
4.2.1.17 Guest Ledger...........................................15
4.2.1.18 Closing Certificate....................................15
4.2.1.19 Schedule of Bookings...................................15
4.2.1.20 Title Requirements.....................................15
4.2.1.21 Payoff Letters.........................................15
4.2.1.22 Notices to Tenants.....................................15
4.2.1.23 Opinion of Seller's Counsel............................15
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<PAGE> 3
4.2.1.24 Other..................................................15
4.3 Buyer's Deliveries to Escrow Holder.............................16
4.3.1.1 The Cash Purchase Price................................16
4.3.1.2 Stock Certificates.....................................16
4.3.1.3 Assignment and Assumption of Management Agreement......16
4.3.1.4 Value Letter...........................................16
4.3.1.5 Opinion of Buyer's Counsel.............................16
4.3.1.6 Stock Agreement........................................16
4.3.1.7 [Intentionally Omitted]................................16
4.3.1.8 Liquor License Management Agreement....................16
4.3.1.9 [Intentionally Omitted]................................16
4.3.1.10 [Intentionally Omitted]................................16
4.3.1.11 [Intentionally Omitted]................................16
4.3.1.12 Closing Certificate....................................16
4.3.1.13 The Assignment and Assumption of Tenant Leases.........17
4.3.1.14 The General Assignment and Assumption Agreement........17
4.3.1.15 Transfer Tax Forms.....................................17
4.3.1.16 Other..................................................17
4.4 Seller's Deliveries to Buyer....................................17
4.4.1 Tenant Leases/Tenant Deposits..........................17
4.4.2 Service Contracts......................................17
4.4.3 Licenses and Permits...................................17
4.4.4 Records and Plans......................................17
4.5 Possession......................................................17
4.6 Evidence of Authorization.......................................17
4.7 Close of Escrow.................................................18
4.8 Costs of Escrow.................................................18
4.9 Other Costs.....................................................19
4.10 Maintenance of Confidentiality by Escrow Holder.................19
SECTION 5 - PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................20
5.1 General.........................................................20
5.2 General and Specific Prorations.................................20
5.3 Deposits........................................................22
5.4 Tenant Leases...................................................22
5.5 Service Contracts and Other Intangible Property.................23
5.6 Tax Refunds and Proceedings.....................................23
5.7 Guest Baggage...................................................23
5.8 Safe Deposit Boxes..............................................23
5.9 Advance Bookings................................................24
5.10 [Intentionally Omitted].........................................24
SECTION 6 - REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY...........24
6.1 Of the Trust....................................................24
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<PAGE> 4
6.1.1 Power and Authority....................................24
6.1.2 Authorization; Valid Obligation........................24
6.1.3 Capital Structure......................................24
6.1.4 SEC Documents and Other Reports........................25
6.1.5 Absence of Certain Changes or Events...................25
6.1.6 Actions and Proceedings................................25
6.1.7 REIT Status............................................26
6.1.8 Partnership Status.....................................26
6.1.9 Hart-Scott-Rodino Act..................................26
6.2 Of the Corporation..............................................26
6.2.1 Power and Authority....................................26
6.2.2 Authorization; Valid Obligation........................26
6.2.3 Capital Structure......................................27
6.2.4 SEC Documents and Other Reports........................27
6.2.5 Absence of Certain Changes or Events...................27
6.2.6 Actions and Proceedings................................28
6.2.8 Hart-Scott-Rodino......................................28
6.3 Of Seller.......................................................28
6.3.1 Regarding Seller's Authority...........................28
6.3.2 Tenant Leases..........................................29
6.3.3 Service Contracts......................................29
6.3.4 Claims.................................................29
6.3.5 Employees..............................................29
6.3.6 Compliance with Laws...................................30
6.3.7 Hazardous Materials....................................30
6.3.8 Records and Plans......................................30
6.3.9 Licenses and Permits...................................30
6.3.10 Management Agreements..................................30
6.3.11 Personal Property......................................30
6.3.12 Insurance..............................................30
6.3.13 Real Estate Taxes......................................31
6.3.14 [Intentionally Omitted]................................31
6.3.15 [Intentionally Omitted]................................31
6.3.16 District of Columbia Underground Storage Tank
Disclosure Notice......................................31
6.4 Buyer's Review of Records and Plans.............................31
6.4.1 Access to Records and Plans; Specific Disclosures......31
6.4.2 Limitation on Access to Records and Plans..............31
6.5 PURCHASE AS IS..................................................32
6.6 Limitation on Representations and Warranties of Seller..........34
6.7 Right to Supplement Disclosures.................................34
6.8 Basket..........................................................35
6.9 Survival........................................................35
6.10 Soil Disclosure.................................................35
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<PAGE> 5
SECTION 7 - TITLE TO THE REAL PROPERTY: EXTENSION OF THE CLOSING............35
7.1 Buyer's Review of Title.........................................35
7.1.1 Failure to Satisfy Certain Closing Conditions;
Monetary Liens.........................................36
7.1.2 [Intentionally Omitted]................................36
7.2 Title Insurance Policy..........................................37
7.3 Title to Real Property..........................................37
SECTION 8 - INTERIM ACTIVITIES..............................................37
SECTION 9 - CONDITIONS PRECEDENT TO CLOSING.................................38
9.1 Conditions Precedent to Buyer's Obligations.....................38
9.1.1 Seller's Deliveries....................................38
9.1.2 Title Policy...........................................38
9.1.3 Performance Under Related Agreements...................38
9.1.4 [Intentionally Omitted]................................38
9.1.5 Seller Performance.....................................38
9.1.6 Representations and Warranties of Seller...............38
9.2 Conditions Precedent to Seller's Obligations....................38
9.2.1 Funds and Documents....................................38
9.2.2 Representations and Warranties of Buyer................39
9.2.3 No Material Changes....................................39
9.2.4 [Intentionally Omitted]................................39
9.2.5 Performance Under Related Agreements...................39
9.3 Failure of Condition............................................39
SECTION 10 - BROKER.........................................................40
SECTION 11 - REMEDIES FOR SELLER'S DEFAULT..................................40
11.1 Buyer's Remedies in General.....................................40
11.2 MATERIAL INDUCEMENT.............................................40
SECTION 12 - DAMAGE TO OR DESTRUCTION OF THE PROPERTY.......................41
12.1 Insured Casualty................................................41
12.2 Uninsured Casualty..............................................41
SECTION 13 - CONDEMNATION...................................................42
SECTION 14 -EMPLOYEES.......................................................42
14.1 Hiring of Hotel Employees; WARN Act Compliance..................42
14.2 Collective Bargaining Agreements................................43
14.3 Continuation of Benefits........................................44
14.5 Indemnification.................................................45
14.6 Survival........................................................45
SECTION 15 - COOPERATION....................................................46
iv
<PAGE> 6
SECTION 16 - NOTICES........................................................47
16.1 Addresses.......................................................47
16.2 Receipt of Notices..............................................48
16.3 Refusal of Delivery.............................................48
16.4 Change of Address...............................................49
SECTION 17 - GENERAL PROVISIONS.............................................49
17.1 Amendment.......................................................49
17.2 Time of Essence.................................................49
17.3 Entire Agreement................................................49
17.4 No Waiver.......................................................49
17.5 Counterparts....................................................49
17.6 Costs and Attorneys' Fees.......................................49
17.7 Payments; Interests.............................................50
17.8 Transfer By Buyer...............................................50
17.9 Parties in Interest.............................................50
17.10 Applicable Law..................................................50
17.11 Incorporation of Recitals and Exhibits..........................50
17.12 Construction of Agreement.......................................50
17.13 Severability....................................................51
17.14 Announcements...................................................51
17.15 Submission of Agreement.........................................51
17.16 Further Assurances..............................................51
17.17 Cooperation.....................................................51
17.18 Moratorium on Re-Sale...........................................51
17.19 Confidentiality.................................................52
17.20 Interim Management Agreement....................................52
v
<PAGE> 7
EXHIBITS
Exhibit A.................................................Legal Description
Exhibit B............................................Memorandum of Contract
Exhibit 4.2.1.1........................................................Deed
Exhibit 4.2.1.2..................Assignment and Assumption of Tenant Leases
Exhibit 4.2.1.3.................General Assignment and Assumption Agreement
Exhibit 4.2.1.4...........Assignment and Assumption of Management Agreement
Exhibit 4.2.1.5(a)...........Bill of Sale for Capitalized Tangible Property
Exhibit 4.2.1.5(b)..............Bill of Sale for Expensed Tangible Property
Exhibit 4.2.1.6.............................................Stock Agreement
Exhibit 4.2.1.7.........................Liquor License Management Agreement
Exhibit 4.2.1.13.............................Non-Foreign Person Certificate
Exhibit 6.3.16.................District of Columbia Storage Tank Disclosure
Exhibit 17.20..................................Interim Management Agreement
SCHEDULES
Schedule 1.1.1...................................Approved Service Contracts
Schedule 1.1.2........................................Employment Agreements
Schedule 1.1.3.............................................Equipment Leases
Schedule 1.1.4............................................Excluded Property
Schedule 1.1.5......................................[Intentionally Omitted]
Schedule 1.1.6..............................................Hotel Employees
Schedule 1.1.7....................................Schedule of Tenant Leases
Schedule 1.1.8............... Seller's Due Diligence and Seller's Knowledge
Schedule 1.1.9..................................Specific Disclosure Matters
Schedule 6.3.2.........................Material Defaults Under Tenant Lease
Schedule 6.3.3...........Material Defaults Under Approved Service Contracts
Schedule 6.3.4..............................................Material Claims
Schedule 6.3.5................Material Defaults Under Employment Agreements
Schedule 6.3.6..........................................Material Violations
Schedule 6.3.7............................Material Environmental Conditions
Schedule 6.3.9.........................................Licenses and Permits
Schedule 6.3.12..........................................Seller's Insurance
Schedule 6.3.13........................................Pending Tax Protests
Schedule 7.3.........................................Permitted Encumbrances
Schedule 14.2..............................Collective Bargaining Agreements
vi
<PAGE> 8
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is entered into as of the 30th day of December, 1997, by and
between D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited
partnership ("Seller"), and STARWOOD LODGING TRUST, a Maryland Real Estate
Investment Trust (the "Trust"), and STARWOOD LODGING CORPORATION, a Maryland
corporation (the "Corporation"; the Trust and the Corporation being referred to
herein collectively as, "Buyer").
A. Seller owns that certain parcel of land described in Exhibit A attached
hereto and made a part hereof, which is improved with a hotel building and
certain related improvements, all as more particularly set forth in this
Agreement.
B. Seller desires to sell, and Buyer desires to purchase, the above
described land and hotel together with the related improvements upon the terms
and subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Buyer and Seller agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms
"Accounts Receivable" shall mean, collectively, all Cash Equivalent
Receivables, all Invoiced Receivables and all Other Accounts Receivable.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Approved Service Contracts" shall mean the Service Contracts
identified on Schedule 1.1.1 annexed hereto and made a part hereof and any other
Service Contracts cancelable upon thirty (30) or fewer days notice without
penalty, which Service Contracts Buyer shall assume as of the Closing pursuant
to the General Assignment and Assumption Agreement.
"Assignment and Assumption of Management Agreement" shall have the
meaning set forth in Section 4.2.1.4.
<PAGE> 9
"Assignment and Assumption of Tenant Leases" shall have the meaning
set forth in Section 4.2.1.2.
"Bill of Sale" shall have the meaning set forth in Section 4.2.1.5.
"Business Day" shall mean any day other than Saturday or Sunday on
which the New York Stock Exchange is open for business.
"Booking" shall mean a contract or reservation for the use of guest
rooms, banquet facilities, meeting rooms, and/or conference facilities at the
Hotel.
"Buyer's Counsel" shall mean the law firm of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel acting through Andrew E. Zobler, Esq.
"Buyer Default" shall have the meaning set forth in Section 3.5.1.
"Cash Equivalent Receivables" shall mean all Guest Ledger
Receivables which are in the form of drafts or checks written on any bank or
other financial institution, certified checks, money orders, amounts owed to
Seller from credit card, debit card, travel and entertainment card or traveler's
check companies, and are in such other forms which are considered to be cash
equivalents under generally acceptable accounting principles, whether or not
such Guest Ledger Receivables have been presented or billed to any such bank,
financial institution or other company as of the Closing Date.
"Cash Purchase Price" shall mean (a) Forty Three Million Two Hundred
Thousand Dollars ($43,200,000) plus (b) an additional One Million Eight Hundred
Thousand Dollars ($1,800,000) if the Scheduled Closing Date does not occur prior
to July 15, 1998 plus (c) the Overage Cash Payment, if any, as adjusted pursuant
to Section 3.2.2.
"Closing" or "Close of Escrow" shall have the meaning set forth in
Section 4.7.2.
"Closing Agent" shall have the meaning set forth in Section 4.8.10.
"Closing Date" shall mean the day on which the Closing occurs
hereunder.
"Closing Payment" shall have the meaning set forth in Section 3.2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Collective Bargaining Agreements" shall have the meaning set forth
in Section 14.2.
"Conveyance Documents" shall mean the Deed, the Assignment and
Assumption of Management Agreement, the Assignment and Assumption of Tenant
Leases, the Bill of Sale and the General Assignment and Assumption Agreement.
2
<PAGE> 10
"Deed" shall have the meaning set forth in Section 4.2.1.1.
"Deposit" shall mean an amount equal to $2,571,429.00, held in
accordance with the provisions of Section 3 hereof together with all interest
accrued thereon.
"Employer Corporation" shall mean Luxury Holdings, Inc. (formerly
known as TQM Inc.).
"Employment Agreements" shall mean the Collective Bargaining
Agreements and Employee Benefit Plans (as defined in Section 3(3) of ERISA),
affecting Hotel Employees, including pension, profit sharing, employee benefit
and similar plans, if any, and agreements with regard to any Hotel Employee each
of which are identified on or expressly described in the materials identified on
Schedule 1.1.2 annexed hereto and made a part hereof.
"Environmental Condition" shall mean any condition with respect to
soil, surface waters, groundwater, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding the
Real Property, which results in any damage, loss, cost, expense, claim, demand,
order or liability to or against Seller or Buyer by any third party (including,
without limitation, any government entity) as a result of a violation of any
applicable Environmental Laws.
"Environmental Laws" shall mean all presently applicable statutes,
regulations, rules, ordinances, codes, licenses, permits and orders of any and
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof, and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and analogous
state laws and regulations.
"Equipment Leases" shall mean all leases of equipment, vehicles,
furniture or other personal property leased by, or on behalf of, Seller and
located at, or used in the operation of the Real Property, together with any and
all amendments thereto, which are identified on Schedule 1.1.3 annexed hereto.
"Equity Purchase Price" shall mean the number of Paired Shares with
a value as determined pursuant to the Stock Agreement equal to One Million Six
Hundred Fifty Five Thousand One Hundred Dollars ($1,655,100.00) provided,
however, the Equity Purchase Price shall be reduced to Zero Dollars ($0.00) if
the Scheduled Closing Date does not occur prior to July 15, 1998 to be delivered
in accordance with the applicable provisions of the Stock Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
3
<PAGE> 11
"Escrow" shall mean an escrow opened with the Escrow Holder for the
purchase and sale of the Property in accordance with the provisions of this
Agreement.
"Escrow Holder" shall mean the Title Company unless otherwise agreed
in writing by Buyer and Seller.
"Escrow Instructions" shall have the meaning set forth in Section
4.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Property" shall mean all Seller's right, title and
interest in and to: (a) those claims of Seller attributable to the period prior
to the Closing Date and described on Schedule 1.1.4 annexed hereto and made a
part hereof, or which Seller is entitled to assert under the express provisions
of Section 5; (b) all insurance proceeds under Seller's Insurance and workers'
compensation policies, including return premiums and dividends thereon and all
claims thereunder in each case to the extent attributable to acts or occurrences
prior to the Closing Date; (c) all accounts owned or maintained by Seller, or
Manager on Seller's behalf, in connection with the Hotel, including all
operating and reserve accounts; and (d) any books, records, files or papers
specifically described in Section 6.3.2 as excluded from the Property
Information.
"Excluded Parties" shall have the meaning set forth in Section 17.18
"Execution Date" shall mean the date hereof.
"General Assignment and Assumption Agreement" shall have the meaning
set forth in Section 4.2.1.3.
"Guest Ledger Receivables" shall mean amounts, including, without
limitation, room charges, accrued to the accounts of guests occupying rooms at
the Hotel or group, conference or banquet customers of Seller at the Hotel.
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder,
as the same has been amended from time to time.
"Hotel" shall mean the hotel located on the Land and commonly known
as the D.C. Luxury Collection Hotel.
"Hotel Employees" shall mean all full-time, part-time or temporary
employees of Seller and/or the Employer Corporation (but not employees of
Manager or any of its affiliates) who are employed by Seller and/or the Employer
Corporation exclusively at or in connection with the Hotel as of the Closing
Date and who are listed on Schedule 1.1.6 annexed hereto and made a part hereof.
"Improvements" shall mean Seller's right, title and interest in and
to the hotel building and other improvements now or hereafter located on the
Land.
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"Insured Casualty Notice" shall have the meaning set forth in
Section 12.1.1.
"Intangible Property" shall mean all of Seller's right, title and
interest in and to the following, in each case excluding any Excluded Property:
(i) Licenses and Permits; (ii) trademark rights, and other intangible property,
rights, titles, interests, privileges and appurtenances related to or used in
connection with the Hotel or its operations; (iii) warranties and guaranties of
architects, engineers, contractors, subcontractors, suppliers or materialmen
involved in the repair, construction, maintenance, design, reconstruction or
operation of the Hotel, or any equipment or systems constituting a part of the
Hotel; (iv) Approved Service Contracts; (v) Equipment Leases; (vi) Bookings; and
(vii) computer programs, software and documentation thereof (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 variable descriptions, flow charts and
other related materials used in connection therewith; and (viii) any goodwill
associated with the operation of the Hotel.
"Interim Management Agreement" shall have the meaning set forth in
Section 17.20 hereto.
"Invoiced Receivables" shall mean all Guest Ledger Receivables other
than Cash Equivalent Receivables whether or not such Guest Ledger Receivables
have been invoiced by Seller as of the Closing Date.
"Land" shall mean Seller's right, title and interest in and to the
land described on Exhibit A annexed hereto and made a part hereof.
"Licenses and Permits" shall mean all licenses, permits,
registrations, certificates, authorizations and governmental approvals other
than the Liquor License obtained in connection with the design, construction,
rehabilitation, use and/or operation of the Hotel.
"Liquor License" shall mean all licenses, permits, registrations,
certificates, authorizations and governmental approvals with respect to service
of alcoholic beverages at the Hotel.
"Liquor License Management Agreement" shall have the meaning set
forth in Section 4.2.1.8.
"Lock Price" shall have the meaning set forth in the Stock
Agreement.
"Losses" shall mean any and all losses, liabilities, obligations,
damages, claim or expense, including without limitation, reasonable attorneys'
and accountants' fees and disbursements related thereto.
"Manager" means Sheraton Operating Corporation, a wholly-owned
subsidiary of ITT Sheraton Corporation.
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"Management Agreement" shall mean that certain Management Agreement
entered into as of August 13, 1997 between Seller and Manager.
"Market Price" shall have the meaning set forth in the Stock
Agreement.
"Material" shall mean $5,000 for any single occurrence and $15,000
in the aggregate for any group of occurrences whether or not related.
"Material Casualty" shall mean a casualty or casualties that, in the
aggregate: (i) causes in excess of $10,000,000.00 worth of damage to the Hotel;
or (ii) will take twelve (12) months or longer from the date of the casualty to
fully remediate.
"Material Taking" shall mean an exercise by an applicable
governmental authority of the power of condemnation or eminent domain that
results in: (a) the taking of more than twenty percent (20%) of the Real
Property; (b) a material reduction or restriction in access to the Property; or
(c) the inability to operate the Hotel in substantially the same manner (without
material additional expense) as it was operated prior to such taking.
"Memorandum of Contract" shall mean a memorandum of this Agreement
in the form attached as Exhibit B hereto.
"Monetary Lien" shall mean any monetary lien affecting the Real
Property of an ascertainable amount, other than any lien for taxes or
assessments which are not yet due and payable.
"Non-Foreign Person Certificate" shall have the meaning set forth in
Section 4.2.1.13.
"Other Accounts Receivable" shall mean any and all rents, additional
rent, deposits, and other sums and charges owing to Seller that are in any way
attributable to the operation of the business at the Hotel, including, without
limitation, all rents and/or license fees due from Tenants under Tenant Leases,
and including any such amounts which are past due, but excluding Guest Ledger
Receivables.
"Overage Cash Payment" shall mean the portion of the Equity Purchase
Price which is payable in cash at Closing as provided in Section 3.2.2.1, if
any.
"Ownership Limitation" shall mean 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.
"Paired Shares" shall mean one 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
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that are subject to the Pairing Agreement, which shares shall be transferable as
provided in the Stock Agreement and the Pairing Agreement.
"Pairing Agreement" shall mean 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 beneficial interests of the
Trust and shares of the Corporation.
"Permitted Encumbrances" shall have the meaning set forth in Section
7.3.
"Person" shall mean any natural person, partnership, corporation,
association, limited liability company, trust or any other legal entity.
"Personal Property" shall mean collectively the Tangible Personal
Property and the Intangible Property.
"Preliminary Title Report" shall have the meaning set forth in
Section 7.1.
"Property" shall mean collectively the Real Property, the Personal
Property, the Tenant Leases, and the Accounts Receivable, but shall exclude the
Excluded Property.
"Property Information" shall have the meaning set forth in Section
6.4.2.
"Proration Time" shall mean 12:01 a.m. Eastern Time on the Closing
Date.
"Purchase Price" shall mean the sum of the Cash Purchase Price and
the Equity Purchase Price.
"Real Property" shall mean the Land and the Improvements, together
with Seller's right, title and interest in and to all rights of way, easements,
water or littoral rights, rights to any minerals, oil, gas and other hydrocarbon
substances, or any portion thereof, relating to the Land, and Seller's right,
title and interest in and to all streets, alleys, strips and gores abutting the
Land, if any.
"Records and Plans" shall mean, all financial records showing the
income and expenses of the Hotel for the prior three (3) calendar years and for
the current year to date, certificates of occupancy, records of the Hotel's
operations (including utility bills), building plans, specifications and
drawings, lists of Personal Property, surveys, tax bills for the Real Property
for the last three (3) years and for the current year to date, copies of the
Service Contracts, Licenses and Permits and other documents related to the use,
maintenance, repair, management, construction and/or operation of the Hotel, in
each case, to the extent located on-site at the Hotel, or to Seller's Knowledge,
otherwise under the control of Seller.
"Related Agreement" shall have the meaning set forth in Section
9.1.3.
"Schedule of Advance Bookings" means the Schedule of Advance
Bookings delivered pursuant to Section 4.2.1.19.
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"Schedule of Tenant Leases" means the Schedule of Tenant Leases set
forth in Schedule 1.1.7 annexed hereto and made a part hereof.
"Scheduled Closing Date" shall mean January 15, 1998, as such date
may be extended in accordance with the provisions of Section 7.1 time being of
the essence.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall have the meaning set forth in Section 6.1.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Default" shall have the meaning set forth in Section 11.1.
"Seller's Closing Certificate" shall have the meaning set forth in
Section 4.2.1.18.
"Seller's Counsel" shall mean Morrison & Foerster LLP acting through
Thomas R. Fileti, Esq.
"Seller's Due Diligence" shall mean the information gathering and
review process described on Schedule 1.1.8.
"Seller's Insurance" shall have the meaning set forth in Section
6.3.12.
"Seller's Knowledge" shall mean with respect to any representation
or warranty so qualified, the knowledge of the person(s) identified on Schedule
1.1.8 annexed hereto and made a part hereof, on the date on or as of which such
representation or warranty is made, following the completion by such person(s)
of Seller's Due Diligence, but without any other duty to investigate or inquire
and without attribution to any such identified person(s) of facts and matters
otherwise within the personal knowledge of any other officers, employees, or
agents of Seller or any third parties (including, but not limited to, the
Manager or any previous manager of the Hotel), but not within the actual current
knowledge of such named person(s). It is understood that none of the individuals
identified on Schedule 1.1.8 shall have any personal liability for any of
Seller's representations, warranties and other obligations under this Agreement.
"Service Contracts" shall mean any and all service contracts,
landscaping contracts, maintenance agreements, open purchase orders and other
contracts for the provision of services, materials or supplies to or for the
benefit of the Property, except for the Management Agreement, together with any
and all amendments thereto.
"Specific Disclosure Matters" shall mean certain disclosures and
information provided or disclosed by Seller to Buyer described on Schedule 1.1.9
annexed hereto and made a part hereof.
"Starwood Disclosure" shall mean collectively, the Form S-3 filed by
the Corporation and the Trust with the SEC on November 12, 1997, and the Form
S-4 filed by the Corporation and the Trust with the SEC on November 20, 1997, as
the same may be amended by
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any filing with the SEC made by the Trust or the Corporation, as amended to date
and from time to time thereafter .
"Starwood Operating Partnership" shall mean SLC Operating Limited
Partnership, a Delaware limited partnership.
"Starwood Realty Partnership" shall mean SLT Realty Limited
Partnership, a Delaware limited partnership.
"State" shall mean the state in which the Hotel is located.
"Stock Agreement" shall have the meaning set forth in Section
4.2.1.6.
"Survey" shall mean an as-built ALTA survey of the Real Property
certified to the Title Company meeting all State land survey requirements.
"Tangible Personal Property" shall mean, in each case to the extent
owned by Seller and excluding any and all of the Excluded Property: (i) all
Records and Plans; (ii) all "Inventories", as such term is defined in the
Uniform System of Accounts; (iii) all depreciable personal property; and (iv)
all other tools, vehicles, supplies, artwork, furniture, furnishings, machinery,
equipment, licensed software and personal computer based security systems, if
any, specialized hotel equipment and other tangible personal property, used in
connection with the ownership, operation or maintenance of the Property,
including, without limitation, all china, glassware, silverware, linens, towels,
curtains, uniforms, engineering, maintenance, and housekeeping supplies,
draperies, materials and carpeting, used or intended for use, but not for sale,
in connection with the operation of the Hotel, all equipment used in the
operation of the kitchen, dining rooms, lounges, bars, laundry, dry cleaners,
lobby, reservation desk and all merchandise, food and beverages held for sale in
connection with the operation of the Hotel, which are on hand on the Closing
Date; provided, however, that to the extent that any applicable law prohibits
the transfer of alcoholic beverages from Seller to Buyer, such beverages shall
not be considered a part of the Tangible Personal Property.
"Tenant" shall mean a tenant, licensee or concessionaire occupying
space at any portion of the Property pursuant to a Tenant Lease.
"Tenant Lease" shall mean a lease, concession agreement or license
agreement entered into by or on behalf of Seller with a third party for the use
of any part of the Real Property, including those leases, concession agreements
and license agreements shown on the Schedule of Tenant Leases, together with any
amendments thereto but excluding Bookings.
"Tenant Security Deposits" shall mean all security deposits or other
security of Tenants under the Tenant Leases, plus accrued interest, if any,
payable thereon.
"Termination Charges" shall have the meaning set forth in Section
14.1.
"Termination Notice" shall have the meaning set forth in Section
3.5.1.
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"Threshold Amount" shall mean One Million Dollars ($1,000,000).
"Title Company" shall mean Chicago Title Insurance Company.
"Title Policy" shall have the meaning set forth in Section 7.2.
"Transfer Restriction Period" shall have the meaning set forth in
Section 17.18.
"Uninsured Casualty Notice" shall have the meaning set forth in
Section 12.2.1.
"Uninsured Estimate to Repair" shall have the meaning set forth in
Section 12.2.1.
"Uniform System of Accounts" shall mean the Uniform System of
Accounts for Hotels, prepared by The Hotel Association of New York City, Inc.,
in effect as of the date hereof.
"Utility Deposits" shall mean Seller's right, title and interest in
and to all deposits delivered by Seller to utilities, governmental agencies,
suppliers or others pursuant to an Approved Service Contract or otherwise in
connection with the Real Property.
"Value Letter" shall have the meaning set forth in Section 4.3.1.4.
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act and the Regulations promulgated thereunder, as the same has
been amended.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
PURCHASE AND SALE OF PROPERTY
On the terms and subject to the conditions of this Agreement, Seller
agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property
from Seller all as hereinafter provided. Notwithstanding any other provision of
this Agreement, there shall be excluded from the Property being conveyed
hereunder the Excluded Property.
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SECTION 3
PURCHASE PRICE; PAYMENT;
BUYER'S DEFAULT; LIQUIDATED DAMAGES
3.1 Purchase Price. The purchase price for the Property shall be the
Purchase Price.
3.2 Payment. The Purchase Price shall be paid as follows:
3.2.1 Upon the execution hereof, Buyer shall deliver to Escrow
Holder, in cash or other immediately available funds, the Deposit, to be held by
Escrow Holder strictly in accordance with the provisions of this Agreement. If
the Close of Escrow shall occur, Seller shall be entitled to receive the Deposit
as a credit against the Purchase Price.
3.2.2 At least one (1) day prior to the Scheduled Closing Date
(unless extended pursuant to Section 7.1), Buyer shall deliver to Escrow Holder
an amount (the "Closing Payment") payable in the form specified in Sections
3.2.2.1 and 3.2.2.2 below, equal to the Purchase Price less the amount of the
Deposit. The Closing Payment shall be paid as follows:
3.2.2.1 The Equity Purchase Price, if any, shall be delivered
in Paired Shares without adjustment for the pro-rations hereunder, which shares
shall be delivered in accordance with and subject to and transferable in
accordance with the provisions of the Stock Agreement and the Pairing Agreement.
If any portion of the Equity Purchase Price cannot be paid in Paired Shares on
account of the Ownership Limitation, a cash payment in an amount equal to the
product of (a) the number of Paired Shares which are not delivered hereunder or
under the Stock Agreement because of the Ownership Limitation and (b) the Market
Price on the Closing Date (the "Overage Cash Payment") shall be paid in cash or
other immediately available funds.
3.2.2.2 The balance of the Closing Payment shall be paid in
cash or other immediately available funds adjusted for the pro-rations provided
for expressly in this Agreement.
3.3 Investment of Escrowed Funds. Escrow Holder shall invest and reinvest
any funds deposited by Buyer in the Escrow only in bonds, notes, Treasury bills
or other securities having maturities of thirty (30) days or less and
constituting direct obligations of, or fully guaranteed by, the United States of
America (and provided, further, that such direct obligations or guarantees, as
the case may be, are entitled to the full faith and credit of the United States
of America) or such other investments as Buyer may direct and Seller may
approve, until Escrow Holder is required to deliver or use such funds or any
interest earned thereon in accordance with the provisions of this Agreement. All
interest accruing on the Deposit shall be paid to the party ultimately entitled
to the Deposit. All risk of loss on funds held in Escrow shall be borne by Buyer
or Escrow Holder.
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3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets and property that comprise the Property as proposed by Seller
prior to Closing subject to the reasonable approval of Buyer, and such
allocation shall be used by Seller and Buyer in connection with the preparation
of their respective income tax, sales tax, transfer tax, and any other
applicable tax returns. Seller and Buyer shall not, nor shall they permit their
respective Affiliates to, take a federal or state income tax position with any
taxing or other public authorities in any jurisdiction which is materially
inconsistent with the allocation so agreed upon by the parties.
3.5 Default by Buyer Prior to Closing; Liquidated Damages.
3.5.1 EXCEPT AS PROVIDED TO THE CONTRARY IN SECTION 7.1.1., IF BUYER
BREACHES ITS OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT AND FAILS
TO CURE SUCH BREACH ON OR BEFORE THE SCHEDULED CLOSING DATE (A "BUYER DEFAULT"),
THEN UPON WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM SELLER TO
BUYER AND ESCROW HOLDER, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE AND
ESCROW HOLDER SHALL DISBURSE FROM THE ESCROW THE DEPOSIT TO SELLER AS LIQUIDATED
DAMAGES, WHICH SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER
DEFAULT, AND THEREAFTER NEITHER PURCHASER NOR SELLER SHALL HAVE ANY FURTHER
LIABILITY HEREUNDER, EXCEPT THAT BUYER SHALL REMAIN OBLIGATED FOR PERFORMANCE OF
ITS OBLIGATIONS UNDER SECTIONS 8, 10, 17.14, 17.19 AND ANY OTHER PROVISION
HEREOF WHICH BY ITS EXPRESS TERMS SURVIVES THE TERMINATION OF THIS AGREEMENT.
NOTHING CONTAINED HEREIN SHALL LIMIT SELLER'S RIGHT TO OBTAIN SPECIFIC
PERFORMANCE OF BUYER'S OBLIGATION TO CLOSE PURSUANT TO SECTION 7.1.1.
3.5.2 THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION
3.5.2 THAT IF A BUYER DEFAULT OCCURS ON OR PRIOR TO THE SCHEDULED CLOSING DATE
AND IF, AS A RESULT OF SUCH BUYER DEFAULT, CLOSE OF ESCROW FAILS TO OCCUR,
SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A
REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE
SUFFERED BY SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR AND
THAT SELLER'S RETENTION OF THE DEPOSIT IS FAIR AND REASONABLE COMPENSATION TO
SELLER BY REASON OF SUCH FAILURE OF THE CLOSE OF ESCROW TO OCCUR.
INITIALS: __________________________ _________________________
Seller Buyer
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SECTION 4
ESCROW; CLOSING; COSTS
4.1 Escrow. The purchase and sale of the Property shall be consummated
through the Escrow. Immediately upon the execution of this Agreement, the
parties shall deposit a copy of this Agreement with Escrow Holder. This
Agreement, together with any general provisions agreed to in writing by Buyer
and Seller for the benefit of Escrow Holder, shall constitute the escrow
instructions for the transfer of the Property (the "Escrow Instructions"). In
the event of any conflict between this Agreement and such general provisions,
this Agreement shall control unless otherwise expressly agreed in writing by
Buyer, Seller and Escrow Holder. If any requirements relating to the duties or
obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow
Holder requires additional instructions, the parties shall make such deletions,
substitutions and additions to the Escrow Instructions as Buyer's Counsel and
Seller's Counsel shall mutually approve and which do not substantially alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow Holder and shall be binding upon the party whose counsel gave such
instructions to Escrow Holder.
4.2 Seller's Deliveries to Escrow Holder.
4.2.1 Prior to the Scheduled Closing Date (subject to extension
pursuant to Section 7.1), Seller shall deliver to Escrow Holder the following
documents duly executed and, where applicable, acknowledged by Seller, each of
which shall be undated and the delivery of each of which shall be a condition
precedent to the obligation of Buyer to close hereunder.
4.2.1.1 Deed. A deed with respect to the Real Property in the
form of Exhibit 4.2.1.1 annexed hereto and made a part hereof, sufficient to
transfer all of Seller's right, title and interest in and to the Real Property,
subject only to matters of record as of the Closing Date, from Seller to Buyer
(the "Deed");
4.2.1.2 Assignment and Assumption of Tenant Leases. An
Assignment and Assumption of Tenant Leases in the form of Exhibit 4.2.1.2
annexed hereto and made a part hereof pursuant to which Seller shall assign the
Tenant Leases to Buyer and Buyer shall assume all of Seller's obligations
thereunder (the "Assignment and Assumption of Tenant Leases");
4.2.1.3 General Assignment. A General Assignment and
Assumption Agreement in the form of Exhibit 4.2.1.3 annexed hereto and made a
part thereof pursuant to which Seller shall assign to Buyer all of Seller's
right, title and interest in and to all of the Intangible Property and Buyer
shall assume all obligations thereunder (the "General Assignment and Assumption
Agreement");
4.2.1.4 Assignment and Assumption of Management Agreement. An
Assignment and Assumption of Management Agreement in the form of Exhibit 4.2.1.4
annexed hereto and made a part hereof pursuant to which Seller shall assign to
Buyer the
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Management Agreement and Buyer shall assume the obligations of Seller
thereunder, provided, however, the obligation to deliver the Assignment and
Assumption of Management Agreement shall be irrevocably waived, if prior to the
Close of Escrow, the Management Agreement shall have been terminated and the
Interim Management Agreement shall have become effective in accordance with
Section 17.20;
4.2.1.5 Bill of Sale. One or more Bills of Sale in the form of
Exhibit 4.2.1.5A and 4.2.1.5B annexed hereto and made a part hereof conveying to
Buyer or designees of Buyer all of Seller's right, title and interest in and to
the Tangible Personal Property (the "Bill of Sale");
4.2.1.6 Stock Agreement. The Stock Agreement in the form of
Exhibit 4.2.1.6 annexed hereto and made a part hereof (the "Stock Agreement");
4.2.1.7 Liquor License Management Agreement. The Liquor
License Management Agreement in the form of Exhibit 4.2.1.7 annexed hereto and
made a part hereof (the "Liquor License Management Agreement");
4.2.1.8 [Intentionally Omitted]
4.2.1.9 [Intentionally Omitted]
4.2.1.10 [Intentionally Omitted]
4.2.1.11 [Intentionally Omitted]
4.2.1.12 [Intentionally Omitted]
4.2.1.13 Non-Foreign Person Certificate. A Non-Foreign Person
Certificate in the form of Exhibit 4.2.1.13 annexed hereto and made a part
hereof (the "Non-Foreign Person Certificate");
4.2.1.14 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Seller in order to effect the Closing;
4.2.1.15 Certified Rent Roll. A copy of the rent roll for the
Property dated as of the Closing Date and certified by Seller to be (a) a true,
correct and complete copy of the rent roll for the Property provided to Seller
by the Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.16 Certified Operating Statement. An operating statement
for the Property dated as of a date no more than thirty (30) days prior to the
Closing Date and certified by Seller to be (a) a true, correct and complete copy
of the operating statement for the Property provided to Seller by Manager for
the period of Manager's employment at the Property; and (b) to Seller's
Knowledge, to be, true, correct and complete;
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4.2.1.17 Guest Ledger. A copy of the guest ledger dated as of
the Proration Time showing all Guest Ledger Receivables and certified by Seller
(a) to be a true, correct and complete copy of the guest ledger provided to
Seller by Manager; and (b) to Seller's Knowledge, to be true, correct and
complete;
4.2.1.18 Closing Certificate. A certification by Seller to
Seller's Knowledge that the representations and warranties set forth in Section
6.3 are true, correct and complete as of the Closing Date, except to the extent
that any such representation or warranty is expressly made only as of the
Execution Date subject to Seller's right to make revisions pursuant to Section
6.7 to such representations and warranties ("Seller's Closing Certificate");
4.2.1.19 Schedule of Bookings. A schedule of all Bookings
relating to periods after the Proration Time, certified by Seller (a) to be a
true, correct and complete copy of the schedule of Bookings provided to Seller
by Manager; and (b) to Seller's Knowledge, to be true, correct and complete;
4.2.1.20 Title Requirements. Any and all certificates,
affidavits and other instruments and documents which the Title Company shall
reasonably require, to permit it to issue the Title Policy in the condition
required herein; provided, however, that (a) Seller is given written notice by
Title Company of the requirement of any such certificates, affidavits or other
instruments and documents within a reasonably sufficient time in advance of the
Scheduled Closing Date and (b) such incidental documents do not create any
liability to Seller that is inconsistent with the liability retained by Seller
under the terms of this Agreement;
4.2.1.21 Payoff Letters. A pay-off letter from the holder of
any mortgage or deed of trust presently encumbering the Real Property indicating
all sums required to satisfy the debt secured by and permit the discharge of
record the lien of such mortgage or deed of trust;
4.2.1.22 Notices to Tenants. Notices to Tenants of the
assignment to Buyer of the Tenant Leases in form and substance satisfactory to
Seller and Buyer;
4.2.1.23 Opinion of Seller's Counsel. An opinion of Seller's
Counsel in a form to be agreed upon by the parties; and
4.2.1.24 Other. Any other incidental documents, not otherwise
expressly provided for herein, reasonably required by Escrow Holder to
consummate the purchase and sale of the Property; provided, however, that (a)
Seller is given written notice by Escrow Holder of the requirement of any such
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date (subject to extension in accordance with the provisions
of Section 7.1); and (b) such incidental documents do not create any liability
to Seller that is inconsistent with the liability retained by Seller under the
terms of the this Agreement.
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4.3 Buyer's Deliveries to Escrow Holder.
4.3.1 Prior to the Scheduled Closing Date (subject to extension in
accordance with the provisions of Section 7.1), and subject further to the
provisions of Section 4.3.1.4 in the case of the Value Letter, Buyer shall
deliver to Escrow Holder the following items and documents, which documents
shall be duly executed and, where applicable, acknowledged by Buyer or its
designee, as applicable, and undated, and the delivery of each of which shall be
a condition precedent to the obligation of Seller to close hereunder:
4.3.1.1 The Cash Purchase Price. The Cash Purchase Price;
4.3.1.2 Stock Certificates. Paired Shares in the amount
required to be delivered at the Closing in accordance with the provisions of
this Agreement and in accordance with and subject to the provisions of the Stock
Agreement;
4.3.1.3 Assignment and Assumption of Management Agreement. A
counterpart of the Assignment and Assumption of Management Agreement, provided,
however, the obligation to deliver the Assignment and Assumption of Management
Agreement shall be irrevocably waived, if prior to the Close of Escrow, the
Management Agreement shall have been terminated and the Interim Management
Agreement shall have become effective in accordance with Section 17.20;
4.3.1.4 Value Letter. A letter (the "Value Letter") to be
obtained by Buyer at Buyer's expense with respect to the reasonableness of the
allocation of the purchase price among the transactions being entered into as of
the date hereof between Buyer and Seller and/or Seller's Affiliates issued by
Bear Stearns;
4.3.1.5 Opinion of Buyer's Counsel. An opinion of Buyer's
counsel in a form to be agreed upon by the parties;
4.3.1.6 Stock Agreement. A counterpart of the Stock Agreement;
4.3.1.7 [Intentionally Omitted]
4.3.1.8 Liquor License Management Agreement. A counterpart of
the Liquor License Management Agreement;
4.3.1.9 [Intentionally Omitted]
4.3.1.10 [Intentionally Omitted]
4.3.1.11 [Intentionally Omitted]
4.3.1.12 Closing Certificate. A certification by Buyer that
the representations and warranties set forth in Section 6.1 and Section 6.2 are
true, correct and complete as of the Closing Date;
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4.3.1.13 The Assignment and Assumption of Tenant Leases. A
counterpart of the Assignment and Assumption of Tenant Leases;
4.3.1.14 The General Assignment and Assumption Agreement. A
counterpart of the General Assignment and Assumption Agreement;
4.3.1.15 Transfer Tax Forms. Any statements, such as a
transfer or conveyance tax forms or returns required by applicable state or
local law to be executed by Buyer in order to effect the closing; and
4.3.1.16 Other. Any other incidental documents, not otherwise
expressly provided for herein, required by Escrow Holder to consummate the
purchase and sale of the Property; provided, however, that (a) Buyer is given
written notice by Escrow Holder of the requirement of such incidental documents
within a reasonably sufficient time in advance of the Scheduled Closing Date;
and (b) Buyer shall not be required to incur any liability, in connection with
the delivery of such incidental documents inconsistent with the provisions of
this Agreement.
4.4 Seller's Deliveries to Buyer. At or prior to the Close of Escrow,
Seller shall deliver to Buyer or cause to be available to Buyer on-site at the
Hotel, the following documents, to the extent the same have not already been
delivered and to the extent in the possession or control of Seller:
4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases (or
if not available, the best available copies), and the originals of Tenant
Security Deposits which are evidenced by letters of credit or escrow agreements,
if any, and if necessary to enable Buyer to realize or draw upon same, consents
of the applicable Tenants and/or financial institutions or replacement letters
of credit or escrow agreements in favor of Buyer;
4.4.2 Service Contracts. The originals, or, if not available, the
best available copies, of the Approved Service Contracts;
4.4.3 Licenses and Permits. The originals, or, if not available, the
best available copies of the Licenses and Permits; and
4.4.4 Records and Plans. The originals, or, if not available, the
best available copies of the Records and Plans.
4.5 Possession. Seller shall deliver the keys and possession of the
Property to Buyer at the Close of Escrow free and clear of all leases, tenancies
and occupancies, except for the Management Agreement, the Bookings, the rights
of guests in guest rooms, banquet facilities, conference rooms and meeting
rooms, the rights of Tenants under the Tenant Leases (including their assignees,
subtenants or licensees), and the other Permitted Encumbrances.
4.6 Evidence of Authorization. At the Close of Escrow, each party shall
deliver to the other party evidence in form and content reasonably satisfactory
to the other party and the Title
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Company that (a) the party is duly organized and validly existing under the laws
of the state of its organization and has the power and authority to enter into
this Agreement, (b) this Agreement and all documents delivered pursuant hereto
have been duly executed and delivered by the party, and (c) the performance by
the party of its obligations under this Agreement have been duly authorized by
all necessary corporate, partnership or other action.
4.7 Close of Escrow.
4.7.1 The Escrow shall close on or before the Scheduled Closing
Date.
4.7.2 Provided that Escrow Holder has not received from either party
written notice of the failure of any condition precedent specified in Section 9
to the obligations of such party (or any previous such notice has been
withdrawn), then when the parties have each deposited into the Escrow the
documents and funds required by this Agreement and the Title Company is
unconditionally prepared to issue the Title Policy at the Close of Escrow,
Escrow Holder shall perform the following actions (collectively, "Close of
Escrow" or "Closing"):
4.7.2.1 Prepare a closing statement for the transaction for
approval by Seller and Buyer prior to the Close of Escrow;
4.7.2.2 Insert the Closing Date as the date of any undated
document to be delivered through Escrow;
4.7.2.3 Cause the Deed to be recorded in the land records of
the state and county where the Real Property is located;
4.7.2.4 Deliver to Buyer the documents deposited into the
Escrow for delivery to Buyer at the Close of Escrow;
4.7.2.5 Deliver to Seller (a) all funds and Paired Shares to
be received by Seller from Buyer through the Escrow at the Close of Escrow less
(i) all amounts to be paid by Seller for Escrow Holder's fees and expenses and
(ii) all amounts paid by Escrow Holder in satisfaction of liens and encumbrances
on the Real Property or other matters pursuant to the written instruction of
Seller, and (b) the documents deposited into the Escrow for delivery to Seller
at the Close of Escrow; and
4.7.2.6 Cause the Title Policy to be issued by the Title
Company and delivered to Buyer.
4.8 Costs of Escrow. Costs of the Escrow shall be allocated as follows:
4.8.1 Buyer and Seller shall each pay one-half (1/2) of the fees of
Escrow Holder;
4.8.2 Buyer and Seller shall each pay one-half (1/2) of the cost of
providing the Survey required to be delivered in accordance with the provisions
of Section 7.1; provided,
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however, Buyer shall be responsible for the full cost of the Survey in the event
the Closing does not occur hereunder other than on account of default of Seller;
4.8.3 Buyer and Seller shall each pay one-half (1/2) of all transfer
taxes and recording fees payable in connection with the conveyance of each
portion of the Real Property and/or the recording of the Deed and any other
documents or instruments recorded pursuant to this Agreement (other than the
Assignment of Mortgage);
4.8.4 Buyer and Seller shall each pay one-half (1/2) of all sales or
other personal property taxes, levies, fees and charges payable as a result of
the transfer of the Personal Property to Buyer and the consummation of the
transactions contemplated hereby. Buyer shall be the reporting person for such
purposes and shall prepare the necessary sales tax reports based upon the
allocations set forth in Section 3.4. The parties acknowledge that additional
sales tax may be assessed as a result of the transfer of the Personal Property
to Buyer and the consummation of the transactions contemplated hereby after the
Closing and that Buyer and Seller shall continue to each be responsible for
one-half of any such additional taxes. The provisions of Section 4.8.3 and
Section 4.8.4 shall survive the Closing;
4.8.5 Buyer and Seller shall each pay one-half (1/2) of the cost of
obtaining the coverage under the Title Policy, except that the cost of any
special endorsements shall be paid exclusively by Buyer;
4.8.6 At Closing or thereafter Buyer shall pay for the cost of the
Value Letter;
4.8.7 [Intentionally Omitted]
4.8.8 If the Close of Escrow fails to occur other than as a result
of a default hereunder by either party, including, without limitation, as a
result of a failure of a condition precedent set forth in Section 9, the fees of
the Escrow Holder and Title Company (including, without limitation, cancellation
fees) shall be borne equally between Buyer and Seller;
4.8.9 If the Close of Escrow fails to occur as a result of a default
hereunder by either party, the fees of the Escrow Holder and Title Company
(including, without limitation, cancellation fees) shall be borne by the
defaulting party; and
4.8.10 Pursuant to ss.6045 of the Internal Revenue and Taxation
Code, the Title Company shall be designated the "Closing Agent" hereunder and
shall be solely responsible for complying with the Tax Reform Act of 1986 with
regard to the reporting of all settlement information to the Internal Revenue
Service.
4.9 Other Costs. Except as set forth in Section 4.8.6, Section 11.1 and
Section 15.1.6, each party shall pay all of its own legal, accounting and
consulting fees and other costs and expenses incurred in connection with this
Agreement.
4.10 Maintenance of Confidentiality by Escrow Holder. Escrow Holder shall
maintain in strict confidence and not disclose to anyone the existence of the
Escrow, the identity of the
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parties thereto, the amount of the Purchase Price, the existence or provisions
of this Agreement or any other information concerning the Escrow or the
transactions contemplated hereby, without the prior written consent of Buyer and
Seller.
SECTION 5
PRORATIONS AND ASSUMPTION OF OBLIGATIONS
5.1 General. All income, receivables, expenses (whether payable or
prepaid) and payables of the Property shall be apportioned equitably between the
parties as of the Proration Time in accordance with the provisions of this
Section 5 (all prorations are to be based upon the number of days in a 365 day
year). The obligation to make apportionments under Sections 5.1 and 5.2 shall,
unless otherwise expressly provided in this Section 5, survive the Close of
Escrow for a period of sixty (60) days at which time such apportionment shall be
final unless disputed during such period.
5.2 General and Specific Prorations. Without limitation, the following
items shall be apportioned:
5.2.1 At the Closing, Buyer shall assume all of the accounts payable
relating to goods and services ordered or obtained in the ordinary course of
operation of the business of the Hotel (including without limitation, payments
under the Service Contracts and Equipment Leases) prior to the Proration Time.
Seller shall be obligated to credit Buyer at the Close of Escrow with an amount
mutually agreed upon by Buyer and Seller at the Closing, reflecting the parties'
good faith estimate of such accounts payable as of the Proration Time (which
estimate shall deduct any discounts then available in the ordinary course of
business for the prompt payment of such accounts payable), plus a further credit
for any late fees then payable with respect to any identified accounts payable.
Buyer shall be responsible for paying when due all accounts payable arising from
the operation of the Property on or after the Proration Time, and Seller shall
have no further liability for such payables or charges. As of the date which is
sixty (60) days following the Closing Date, Buyer and Seller shall calculate the
amount of all accounts payable relating to goods and services ordered or
obtained in the ordinary course of operation of the business of the Hotel
(including without limitation, payments under the Service Contracts and
Equipment Leases) prior to the Proration Time. Seller shall reimburse Buyer for
any payments made on account of any such accounts payable which were not
reflected in the Parties' estimate of such amount credited to Buyer at Closing
and which have been paid by Buyer or for which Buyer is obligated to pay in
accordance with the provisions hereof, and if the amount of such credit exceeds
the amounts so paid or for which Buyer is so obligated, Buyer shall pay such
excess amount to Seller.
5.2.2 At the Closing, Seller shall assign to Buyer all of the
Accounts Receivable, for which Seller shall receive a credit at the Close of
Escrow in an amount equal to (a) the full, aggregate outstanding balance of the
Cash Equivalent Receivables (without discount except for service charges due to
charge card companies) plus (b) the full aggregate outstanding
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balance of the Invoiced Receivables and Other Accounts Receivable as of the
Proration Time, provided, Buyer shall at its option accept or reject any
Invoiced Receivables and Other Accounts Receivable over ninety (90) days and
Seller shall not receive a credit for any Invoiced Receivables and Other
Accounts Receivable over ninety (90) days rejected by Buyer; provided, that
Buyer shall at its own expense use reasonable efforts to collect any such
rejected Invoiced Receivables and Other Accounts Receivable on behalf of Seller
for a period of sixty (60) days after the Closing Date and thereafter Seller
shall have the right to collect same for its own account; provided, further, as
of the date which is sixty (60) days following the Closing Date, Buyer and
Seller shall make any adjustments required to reflect the collectibility of any
Invoiced Receivables and Other Accounts Receivable (it being agreed that (a) any
accounts receivable not listed on the schedule of accounts receivable of the
Property as of the date which is sixty (60) days following the Closing Date
shall be deemed paid as of such date and (b) except as provided in (a), any
accounts receivable which are more than ninety (90) days past due as of the date
which is sixty (60) days following the Closing Date shall be deemed
uncollectable as of such date) and Seller and Buyer shall make a corresponding
payment to the other as required to accurately reflect the collectibility of
such Invoiced Receivables and Other Accounts Receivable and any accounts
receivable deemed uncollectable as of such date in accordance with the terms
hereof shall be the property of Seller and Seller shall be permitted (at its
expense and for its own account) to collect the same;
5.2.3 In prorating the Accounts Receivable, Buyer and Seller shall
each receive credit for one-half (1/2) of all Guest Ledger Receivables
attributable to the room night during which the Proration Time occurs. Seller
shall receive the income from all restaurant and bar facilities located at the
Property through the Proration Time and Buyer shall receive such income
thereafter;
5.2.4 [Intentionally Omitted]
5.2.5 All sales, use and occupancy taxes arising from the operation
of the Property shall be prorated as of the Proration Time;
5.2.6 Fees for transferable annual permits, licenses, and/or
inspection fees, if any, for periods during which the Proration Time occurs
shall be prorated as of the Proration Time;
5.2.7 Utility charges with respect to the Property levied against
Seller or the Property and the value of fuel stored on the Property shall be
prorated at Seller's cost therefor as of the Proration Time. Seller shall notify
all utilities, governmental agencies, suppliers and others providing services to
the Property of the prospective change in ownership and operation of the
Property, and Seller shall use its reasonable efforts to cause all utilities
furnished to the Property, including, but not limited to, electricity, gas,
water and sewer, along with any fuel storage tanks to be read the day prior to
the Proration Time;
5.2.8 Permitted administrative charges, if any, on Tenant Security
Deposits shall be prorated;
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5.2.9 Buyer shall receive a credit for advance payments and/or
deposits, if any, under Bookings to the extent the Bookings relate to a period
after the Proration Time;
5.2.10 Vending machine monies will be removed by Seller as of the
Proration Time for the benefit of Seller;
5.2.11 Buyer shall purchase and Seller shall sell to Buyer (or
Seller shall receive a credit therefore) all petty cash funds and cash in the
Property's house banks at 100% of face value at the Proration Time;
5.2.12 Wages, salaries and payroll taxes and other payroll
deductions for all Hotel Employees shall be apportioned as of the Proration Time
(i.e., the night shift shall be prorated 50/50 for the night preceding the
Closing Date). Buyer shall assume all accrued vacation benefits and sick leave
benefits due to such Hotel Employees which relate to any period prior to the
Proration Time and shall receive a credit for the full amount of all such
accrued benefits reasonably expected to be paid after the Closing Date;
provided, that as of the date which is sixty (60) days following the Closing,
Buyer and Seller shall adjust the amount of the credit if required to take into
account the benefits actually required to be paid by Buyer or then reasonably
expected to be paid following the Closing Date by Buyer. Buyer shall also assume
all obligations of Seller and the Employer Corporation, under the Employment
Agreements and/or the Management Agreement to pay all such wages, salaries, and
compensation set forth above accruing subsequent to Proration Time; provided,
however, that other than as set forth in Section 14.1 hereof, no provision
contained in this Agreement shall be construed to prevent the Buyer from
terminating or amending in any manner such Employment Agreements and Management
Agreements subsequent to the Proration Time. The obligation to pay bonuses, if
any, following the Closing shall be allocated as of the Proration Time and
adjusted between Buyer and Seller; and
5.2.13 Real and personal property taxes, assessments and special
district levies shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current available tax bills, Seller
being charged through the day prior to the Closing Date and Buyer with the
Closing Date and thereafter.
5.3 Deposits. All rights to utility, assessment, and other cash deposits
(including, without limitation, any Utility Deposits) held by others for
Seller's account, and all certificates of deposit or other forms of cash
collateral held by or otherwise pledged to others for Seller's account to secure
obligations of Seller under Service Contracts, Equipment Leases or other
obligations assumed by Buyer, shall be assigned or transferred to Buyer at the
Close of Escrow; provided, that if any of such deposits are not transferable,
Seller shall retain all rights with respect thereto and there shall be no debit
made to Buyer on account thereof.
5.4 Tenant Leases. At the Close of Escrow, pursuant to the Assignment and
Assumption of Tenant Leases, Buyer shall assume all of the obligations of Seller
under the Tenant Leases as of the Proration Time, including, without limitation,
tenant improvement obligations of landlord thereunder and obligations with
respect to Tenant Security Deposits (to the extent received by Buyer or credited
to Buyer hereunder).
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5.5 Service Contracts and Other Intangible Property. At the Close of
Escrow, Seller shall assign to Buyer pursuant to the terms of the General
Assignment and Assumption Agreement, all right, title and interest of Seller in
and to the Approved Service Contracts and other Intangible Property, and Buyer
shall assume all of the obligations of Seller under the Approved Service
Contracts arising from and after the Close of Escrow. Buyer shall protect, hold
harmless, indemnify and defend Seller and its directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons from any Losses attributable to the period beginning on and after the
Closing Date with respect to the Approved Service Contracts. Seller shall be
responsible for all obligations thereunder attributable to the period prior to
the Closing Date with respect to Approved Service Contracts (except to the
extent that Buyer shall have received a credit hereunder with respect to any
such obligations). The provisions of this Section 5.5 shall survive the Close of
Escrow.
5.6 Tax Refunds and Proceedings. Buyer shall have the exclusive right to
commence or continue any proceeding to determine the assessed value of the
Property, the real or personal property taxes payable with respect to the
Property or any action to contest water charges, sewer charges, sales tax or use
tax for the relevant taxable period during which the Proration Time occurs and
to settle or compromise any claim thereof, and any refunds or proceeds resulting
from such proceedings along with the costs (including reasonable legal and
accounting fees) incurred by Buyer in obtaining the same, shall be prorated as
of the Proration Time. In prosecuting any such action, Buyer shall utilize the
services of Marvin Poer & Co. Seller shall retain the right to continue,
commence, prosecute, settle or compromise any proceedings relating exclusively
to any relevant taxable period or periods prior to the period during which the
Proration Time shall occur. Buyer and Seller agree to cooperate with each other
and to execute any and all documents reasonably requested in furtherance of the
foregoing. The provisions of Section 5.6 shall survive the Closing.
5.7 Guest Baggage. As of the Close of Escrow, Buyer shall indemnify and
hold harmless Seller against all Losses with respect to all baggage of departed
guests or guests who are still registered at the Hotel on the Closing Date which
has been checked with the Hotel. As of the Close of Escrow, Seller shall assign
to Buyer all claims and causes of action against the Manager with respect to any
Losses with respect to such baggage. Seller agrees to submit to Seller's
Insurance any claims for Losses with respect to such baggage which arose from
acts or omissions prior to the Closing Date to the extent coverage is available
under said insurance and provide Buyer with the proceeds therefrom provided
Buyer is not in default under this Section 5.7. The provisions of this Section
5.7 shall survive the Closing.
5.8 Safe Deposit Boxes. As of the Close of Escrow, Buyer shall indemnify
and hold harmless Seller against all Losses with respect to the contents of any
safety deposit boxes in use at the Hotel. As of the Close of Escrow, Seller
shall assign to Buyer all claims and causes of action against the Manager with
respect to any Losses relating to said safety deposit boxes. Seller agrees to
submit to Seller's insurance any claims for Losses which arose from acts or
omissions prior to the Closing Date to the extent coverage is available under
said insurance and provide Buyer with the proceeds therefrom provided Buyer is
not in default under this Section 5.8. The provisions of this Section 5.8 shall
survive the Closing.
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5.9 Advance Bookings. Buyer shall assume and honor for its account all
Bookings relating to dates after the Proration Time set forth on the Schedule of
Advance Bookings delivered by Seller to Buyer at the Close of Escrow pursuant to
Section 4.2.1.9.
5.10 [Intentionally Omitted]
SECTION 6
REPRESENTATIONS AND WARRANTIES;
CONDITION OF PROPERTY
6.1 Of the Trust. As an inducement to Seller to enter into this Agreement,
the Trust hereby represents, warrants and covenants to Seller as follows:
6.1.1 Power and Authority. The Trust is a real estate investment
trust duly organized and validly existing under the laws of the State of
Maryland. The Trust has the power and authority to carry on its present
business, to enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the Trust,
nor the performance by the Trust of the Trust's obligations hereunder will
violate or constitute an event of default under any material terms or material
provisions of any agreement, document, instrument, judgment, order or decree to
which the Trust is a party or by which the Trust is bound and/or violate any
applicable law, rule or regulation the violation of which would have a Material
effect upon the principal benefits intended to be provided by this Agreement.
6.1.2 Authorization; Valid Obligation. All proceedings required to
be taken by or on behalf of the Trust to authorize the Trust to make, deliver
and carry out the terms of this Agreement will be duly taken prior to the
Closing Date. No consent to the execution, delivery and performance of this
Agreement will be required from any partner, board of directors, shareholder,
creditor, investor, judicial or administrative body, governmental authority or
other person, other than any such consent which already has been (or prior to
the Closing will have been unconditionally given. The individuals executing this
Agreement and the documents referenced herein on behalf of the Trust have the
legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement is a valid and binding obligation of Trust,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
6.1.3 Capital Structure. The authorized and outstanding capital
stock and units of the Trust and its operating partnership are as set forth in
the Starwood Disclosure. All Paired Shares to be issued as the Equity Purchase
Price at the Closing in accordance with this Agreement will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights and will be paired with each other in the same ratio as all
other shares are paired with each other pursuant to the Pairing Agreement.
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6.1.4 SEC Documents and Other Reports. The Trust has filed all
required documents with the SEC since January 1, 1996 (such documents together
with the Starwood Disclosure being referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of applicable law, and, at the respective times
they were filed, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Trust included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto as of their respective dates of filing, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Regulation S-X of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Trust and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the SEC Documents or as
required by generally accepted accounting principles, the Trust has not, since
December 31, 1996, made any change in the accounting practices or policies
applied in the preparation of their financial statements. Prior to the Closing
Date, the Trust will file all required documents with the SEC, which documents
will comply in all material respects with the requirements of the applicable
law, and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.1.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Trust and its
subsidiaries taken as a whole, or (b) there has not been any split, combination
or reclassification of any of the capital stock or units of the Trust or its
operating partnership or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of, or in substitution for shares of
such capital stock.
6.1.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Trust or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Trust or any of its
subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, have had, or would reasonably be
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole. Except as set forth in the SEC Documents,
there are no actions, suits or claims or legal, administrative or arbitrative
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proceedings or investigations pending or, to the knowledge of the Trust,
threatened against or involving the Trust or any of its subsidiaries or any of
their directors, officers or employees, as such, or any of its or their
properties, assets or business that, individually or in the aggregate, have had,
or would reasonably be expected to have, a material adverse change in or effect
on the financial condition, properties, business, results of operations or
prospects of the Trust and its subsidiaries taken as a whole. As of the date
hereof, there are no actions, suits, labor disputes or other litigation, legal
or administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of
their subsidiaries or any of their officers, directors or employees, as such, or
any of their properties, assets or business relating to the transactions
contemplated by this Agreement.
6.1.7 REIT Status. The Trust is currently a "real estate investment
trust" ("REIT") for federal income tax purposes and, to its knowledge, the Trust
is and at all times during the testing period described in Code Section
897(h)(4)(D) has been a "domestically controlled REIT" (as defined in Section
897(h)(4)(D) of the Code). From and after January 1, 1995, neither the Internal
Revenue Service nor any other taxing entity or authority has made any assertion
that the Trust does not qualify as a REIT for income tax purposes, nor has there
been any challenge to the REIT status of the Trust. From time to time upon
request by the Seller or its assigns after the Closing Date, the Trust agrees to
inform Seller or such assigns whether to its knowledge it complies with the
representation and warranties set forth in this Section 6.1.7.
6.1.8 Partnership Status. Starwood Realty Partnership is classified
and taxable as a partnership for U.S. federal income tax purposes.
6.1.9 Hart-Scott-Rodino Act. The provisions of the Hart-Scott-Rodino
Act are not applicable to the transactions contemplated hereby and neither the
Trust nor Seller is required to make any filings or submissions or obtain any
approvals thereunder in connection herewith.
6.2 Of the Corporation. As an inducement to Seller to enter into this
Agreement, the Corporation hereby represents, warrants and covenants to Seller
as follows:
6.2.1 Power and Authority. The Corporation is a corporation duly
organized and validly existing under the laws of the State of Maryland. The
Corporation has the power and authority to carry on its present business, to
enter into this Agreement and to consummate the transactions herein
contemplated; neither the execution and delivery of this Agreement by the
Corporation nor the performance by the Corporation of the Corporation's
obligations hereunder will violate or constitute an event of default under any
material terms or material provisions of any agreement, document, instrument,
judgment, order or decree to which the Corporation is a party or by which the
Corporation is bound and/or violate any applicable law, rule or regulation the
violation of which would have a Material effect upon the principal benefits
intended to be provided by this Agreement.
6.2.2 Authorization; Valid Obligation. All proceedings required to
be taken by, or on behalf of the Corporation, to authorize the Corporation to
make, deliver and carry out the terms of this Agreement will be duly taken prior
to the Closing Date. No consent to the execution, delivery and performance of
this Agreement will be required from any partner, board
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of directors, shareholder, creditor, investor, judicial or administrative body,
governmental authority or other person, other than any such consent which
already has been (or prior to the Closing will have been) unconditionally given.
The individuals executing this Agreement and the documents referenced herein on
behalf of the Corporation have the legal power, right and actual authority to
bind the Corporation to the terms and conditions hereof. This Agreement is a
valid and binding obligation of Corporation, enforceable in accordance with its
terms, except as the same may be affected by bankruptcy, insolvency, moratorium
or similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
6.2.3 Capital Structure. The authorized and outstanding capital
stock and units of the Corporation and its operating partnership are as set
forth in the Starwood Disclosure. All Paired Shares to be issued as the Equity
Purchase Price at the Closing in accordance with this Agreement will, when so
issued, be duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights and will be paired with each other in the same ratio
as all other shares are paired with each other pursuant to the Pairing
Agreement.
6.2.4 SEC Documents and Other Reports. The Corporation has filed all
required SEC Documents since January 1, 1996. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
applicable law, and, at the respective times they were filed, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including, in each case,
any notes thereto) of the Corporation included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Corporation and
its consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Corporation has not, since December 31, 1996, made
any change in the accounting practices or policies applied in the preparation of
their financial statements. Prior to the Closing Date, the Corporation will file
all required documents with the SEC, which documents will comply in all material
respects with the requirements of the applicable law, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.2.5 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement, since December 31,
1996, (a) there have not been any events, changes or developments that,
individually or in the aggregate, have had or would reasonably be expected to
have, a material adverse change in or effect on the financial
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condition, properties, business, results of operations or prospects of the
Corporation and its subsidiaries taken as a whole, or (b) there has not been any
split, combination or reclassification of any of the capital stock or units of
the Corporation or its respective operating partnerships or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of such capital stock.
6.2.6 Actions and Proceedings. Except as set forth in the SEC
Documents filed prior to the date of this Agreement, there are no outstanding
orders, judgments, injunctions, awards or decrees of any governmental entity
against or involving the Corporation or any of its subsidiaries, or against or
involving any of the directors, officers or employees of the Corporation or any
of its subsidiaries, as such, or any of its or their properties, assets or
business that, individually or in the aggregate, have had, or would reasonably
be expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the
Corporation and its subsidiaries taken as a whole. Except as set forth in the
SEC Documents, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the knowledge of the
Corporation, threatened against or involving the Corporation or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole. As of the date hereof, there are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of their subsidiaries or any of
their officers, directors or employees, as such, or any of their properties,
assets or business relating to the transactions contemplated by this Agreement.
6.2.7 Starwood Operating Partnership is classified and taxable as a
partnership for U.S. Federal Income Tax purposes.
6.2.8 Hart-Scott-Rodino. The provisions of the Hart-Scott-Rodino Act
are not applicable to the transactions contemplated hereby and neither the
Corporation nor Seller is required to make any filings or submissions to obtain
any approvals thereunder in connection herewith.
6.3 Of Seller. As an inducement to Buyer to enter into this Agreement,
Seller, represents, warrants and covenants to Buyer as follows:
6.3.1 Regarding Seller's Authority.
6.3.1.1 Seller is a limited partnership in dissolution under
the laws of the District of Columbia. Seller has the power and authority to
enter into this Agreement and the Conveyance Documents and, to sell the Property
on the terms set forth in this Agreement. The execution and delivery hereof and
the performance by Seller of its obligations hereunder, will not violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which
Seller is a party or by
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which Seller is bound and/or violate any applicable law, rule or regulation the
violation of which would have a Material effect upon the principal benefits
intended to be provided by this Agreement.
6.3.1.2 The individuals executing this Agreement and the
documents referenced herein on behalf of Seller have the legal power, right and
actual authority to bind Seller to the terms and conditions hereof. This
Agreement is a valid and binding obligation of Seller, enforceable in accordance
with its terms, except as the same may be affected by bankruptcy, insolvency,
moratorium or similar laws, or by legal or equitable principles relating to or
limiting the rights of contracting parties generally.
6.3.2 Tenant Leases. There are no leases, licenses or concessions
for space which will affect the Real Property or any portion thereof following
the Close of Escrow other than as set forth on the Schedule of Tenant Leases.
Seller has delivered to Buyer a true, correct and complete copy of each lease
and agreement listed on the Schedule of Lease. Seller has not received written
notice of any sublease and/or assignment of any Tenant Lease except as set forth
on Schedule 6.3.2. No outstanding written notice of any Material default has
been delivered by Seller or received by Seller with respect to any Tenant Lease,
except as disclosed on the Schedule 6.3.2 annexed hereto and made a part hereof.
To Seller's knowledge, all rent under the leases listed on the Schedule of
Leases is being paid currently. All Material brokerage, leasing and other
commissions due in connection with the Tenant Leases have been paid by Seller
other than those payable with respect to the renewal or extension of such Tenant
Leases or expansion of the leased premises thereunder after the Closing Date,
each of which are payable under agreements described on Schedule 6.3.2.
6.3.3 Service Contracts. There are no Service Contracts which will
affect the Property after the Closing Date except for the Approved Service
Contracts. No outstanding written notice of any Material default has been
delivered by Seller or received by Seller with respect to any Approved Service
Contract, except as disclosed on Schedule 6.3.3 annexed hereto and made a part
hereof.
6.3.4 Claims. There are no pending litigation or condemnation
proceedings with respect to Seller or the Property which would result in an
adverse effect on the ability of Buyer to operate the Property after the
Closing, except as disclosed on Schedule 6.3.4 annexed hereto and made a part
hereof. There is no pending litigation or to Seller's knowledge, other claims of
Seller with respect to the Property attributable to the period prior to the date
hereof which may result in a material judgment in favor of Seller except as
disclosed on Schedule 6.3.4.
6.3.5 Employees. To Seller's Knowledge, Schedule 1.1.6 sets forth a
true and complete list of all Hotel Employees as of the Execution Date together
with their positions, salaries or hourly wages, as applicable, and years of
service. Except for or pursuant to the Employment Agreements, the Collective
Bargaining Agreements, the Management Agreement and the agreements related to
the Ritz-Carlton management of the Hotel described on Schedule 6.3.5 hereto,
neither Seller nor the Employer Corporation has relating to the Property (i) at
any time maintained, contributed to or participated in, (ii) or had at any time
obligation to maintain,
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contribute to, or participate in, or (iii) any liability or contingent
liability, direct or indirect, with respect to: any employment agreement, oral
or written retirement or deferred compensation plan, incentive compensation
plan, stock plan, unemployment compensation plan, vacation pay plan, severance
plan, bonus plan, stock compensation plan or any other type or form of
employee-related (or independent contractor-related) arrangement, program,
policy, plan or agreement. Except as set forth on Schedule 6.3.5, to Seller's
knowledge there is no Material default under any of the Employment Agreements.
6.3.6 Compliance with Laws. During the past twelve (12) months,
Seller has not received any written notice from any party, including, without
limitation, from any municipal, state, federal or other governmental authority,
of a Material violation of any zoning, building, fire, water, use, health, or
other similar statute, ordinance, or code bearing on the construction, operation
or use of the Property or any part thereof (other than as to matters previously
cured), except as disclosed on Schedule 6.3.6 annexed hereto and made a part
hereof and except for violations of Environmental Laws, which are addressed in
Section 6.3.7 below.
6.3.7 Hazardous Materials. Seller has not received any written
notice from any municipal, state, federal or other governmental authority or
from any other person during the last three (3) years of (a) any Material
violation of applicable Environmental Laws or (b) any Environmental Condition
requiring Material remediation under applicable Environmental Laws, in either
case only to the extent relating to Environmental Conditions at or on the Real
Property, except as disclosed on Schedule 6.3.7 annexed hereto and made a part
hereof;
6.3.8 Records and Plans. Seller will have delivered to Buyer on the
Closing Date true and correct copies of the Records and Plans.
6.3.9 Licenses and Permits. Seller has delivered to Buyer true and
correct copies of the Liquor License and all other Material Licenses and Permits
and such Licenses and Permits are identified on Schedule 6.3.9 annexed hereto
and made a part hereof.
6.3.10 Management Agreements. There are no hotel management or
property management agreements, which will be binding upon Buyer after the
Closing Date, other than the Management Agreement, a true and complete copy of
which will be delivered to Buyer on the Closing Date. Seller has not sent or
received any notice of default or notice of termination under or with respect to
the Management Agreement.
6.3.11 Personal Property. Seller owns the Tangible Personal Property
(other than the Tangible Personal Property that is subject to the Equipment
Leases) free and clear of any liens and/or encumbrances other than the Permitted
Encumbrances.
6.3.12 Insurance. The Seller in respect of the Real Property is
insured under those policies of casualty and general liability insurance
("Seller's Insurance") described on Schedule 6.3.12 annexed hereto, each of
which is in full force and effect as of the date hereof and will remain in full
force and effect through the Closing Date. Seller has received no notices of any
Material default or demands to cure from any applicable insurer in respect of
Seller's Insurance.
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6.3.13 Real Estate Taxes. Except as set forth on Schedule 6.3.13
annexed hereto and made a part hereof, Seller has not commenced any proceedings
which are pending for the reduction of the assessed valuation of the Real
Property or any portion thereof, and other than the Permitted Encumbrances, to
Seller's Knowledge, there are no special assessments affecting the Property.
Nothing in this Section 6.3.13 or any other provision of this Agreement shall be
construed to limit Seller's rights to initiate or prosecute after the Close of
Escrow additional proceedings for property tax refunds for taxes relating to any
relevant taxable period or periods prior to the taxable period during which the
Proration Time occurs.
6.3.14 [Intentionally Omitted]
6.3.15 [Intentionally Omitted]
6.3.16 District of Columbia Underground Storage Tank Disclosure
Notice. In accordance with the requirements of the D.C. Underground Storage Tank
Management Act of 1990 as amended by the District of Columbia Underground
Storage Tank Management Act of 1990 Amendment Act of 1992 (D.C. Code 6-995.1 et
seq.) (the "Act") and the D.C. Underground Storage Tank Regulations, 20 DCMR
Chapters 55-68 (the "Regulations"), Seller hereby informs Buyer that Seller has
knowledge of the past existence of one or more "underground storage tanks" in,
under, or upon the Property as that term is defined in the Act and the
Regulations. In accordance with the Regulations, Seller has executed the
disclosure form attached as Exhibit 6.3.16. This disclosure notice was provided
to Buyer prior to entering into this Agreement.
6.4 Buyer's Review of Records and Plans.
6.4.1 Access to Records and Plans; Specific Disclosures. Buyer
acknowledges that prior to the Closing Date, Buyer has been provided with such
access to the Records and Plans and such other information relating to the Hotel
as Buyer has deemed relevant. Buyer acknowledges that it (a) has been made aware
of and given an opportunity to inquire into the Specific Disclosure Matters
described herein; (b) has been given access to the Property and the opportunity
to conduct such inquiries and analyses as Buyer has deemed necessary or
appropriate in order to evaluate the physical condition of the Property and any
and all other matters concerning the current and future use, feasibility, or
value, or any other matter or circumstance relevant to Buyer concerning the
Property or its marketability; and (c) the Records and Plans and the other books
and records of Seller with respect to the Hotel may not be complete.
6.4.2 Limitation on Access to Records and Plans. Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges and agrees that
the Records and Plans or other information made available to or delivered to
Buyer prior to, or at the Closing, shall not include any information which is
privileged, confidential or proprietary to Seller or any of its constituent
partners or affiliates, including without limitation, (i) Seller's internal
financial analyses, any appraisals undertaken for Seller or other parties,
income tax returns, financial statements, corporate or partnership governance
records, investment advisory records, and other records concerning Seller's
professional relationships, any Hotel Employee personnel files (prior to the
Closing), or any other internal, proprietary, or confidential information,
files, or records of
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Seller, (ii) the work papers, memoranda, analysis, correspondence, and similar
materials prepared by or for Seller in connection with the negotiation and
documentation of the transaction contemplated hereby or any other offer to
purchase the Property received by Seller, and (iii) any documents or
communications subject to the attorney/client privilege or attorney work product
privilege. Buyer expressly agrees that its review of the Records and Plans, and
any and all other information of any type or nature, whether oral or written,
provided to Buyer by or on behalf of Seller and relating to the Property
(collectively, the "Property Information") is for informational purposes only,
and neither Seller nor any agent, advisor, officer, attorney, representative or
other person acting or purporting to act on behalf of Seller has verified either
the accuracy of the Property Information, or the adequacy of any method used to
compile the Property Information or the qualifications of any person preparing
the Property Information except that, in delivering or making available a copy
of any document or papers to Buyer, Seller has delivered or made available
copies of the originals of such documents or papers in Seller's possession or
included in the Records and Files. Except as expressly set forth in this Section
6, neither Seller nor any agent, advisor, officer, attorney, representative or
other person acting or purporting to act on behalf of Seller is making or giving
any representation or warranty about, or assuming any responsibility for, the
accuracy or completeness of the Property Information. Reliance by Buyer upon any
Property Information shall not create or give rise to any liability of or
against Seller or any agent, advisor, officer, attorney, representative or other
person acting or purporting to act on behalf of Seller. Subject to Seller's
express representations and warranties set forth herein, the consummation of the
Closing shall constitute Buyer's unconditional approval of all aspects of the
Property and Buyer's unconditional acknowledgment that Buyer has had the
opportunity to request from Seller and review such documents and materials
relating of the Property as Buyer deems appropriate. All copies of such
documents delivered to Buyer shall be returned to Seller if the Closing fails to
occur for any reason.
6.5 PURCHASE AS IS. BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER
THAT BUYER HAS INDEPENDENTLY AND PERSONALLY INSPECTED THE PROPERTY AND THE
PROPERTY INFORMATION AND THAT BUYER HAS ENTERED INTO THIS AGREEMENT BASED UPON
SUCH PERSONAL EXAMINATION AND INSPECTION. BUYER ACCEPTS THE PROPERTY, IN ITS
CONDITION ON THE CLOSE OF ESCROW AS-IS AND WITH ALL ITS FAULTS, INCLUDING
WITHOUT LIMITATION, ANY FAULTS AND CONDITIONS SPECIFICALLY REFERENCED IN THIS
AGREEMENT. NO PERSON ACTING ON BEHALF OF SELLER IS AUTHORIZED TO MAKE, AND BY
EXECUTION HEREOF, BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO:
(A) THE VALUE OF THE PROPERTY;
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(B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND
USES WHICH BUYER MAY CONDUCT THEREON;
(D) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY;
(E) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE
PROPERTY;
(F) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING
WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(G) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY
LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY
OR BODY;
(H) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY;
(I) THE COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL LAWS OR
THE AMERICANS WITH DISABILITIES ACT;
(J) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY;
(K) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE RECORDS AND
PLANS OR OTHER INFORMATION PROVIDED BY SELLER TO BUYER WITH RESPECT TO THE
PROPERTY;
(L) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR
SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY
HAVE BEEN OR MAY BE PROVIDED TO BUYER;
(M) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE
APPLICABLE ZONING OR BUILDING REQUIREMENTS;
(N) DEFICIENCY OF ANY UNDER SHORING;
(O) DEFICIENCY OF ANY DRAINAGE;
(P) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON
OR NEAR AN EARTHQUAKE FAULT LINE;
(Q) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING
ENTITLEMENTS AFFECTING THE PROPERTY;
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(R) WITH RESPECT TO ANY OTHER MATTER CONCERNING THE PROPERTY
(INCLUDING, WITHOUT LIMITATION, THE TENANT LEASES, THE EQUIPMENT LEASES, ANY
FIXTURES AND EQUIPMENT, THE LICENSES AND PERMITS, THE PERSONAL PROPERTY, THE
SERVICE CONTRACTS, THE EMPLOYMENT CONTRACTS, ANY EMPLOYEE BENEFIT PLANS AND THE
LIQUOR LICENSE) EXCEPT AS MAY BE OTHERWISE EXPRESSLY STATED HEREIN;
(S) [INTENTIONALLY OMITTED]
(T) ANY OF THE SPECIFIC DISCLOSURE MATTERS; OR
(U) WITHOUT LIMITING THE OTHER DISCLAIMERS SET FORTH HEREIN BUT
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT, THE ASSIGNMENTS AND CONVEYANCES OF THE PERSONAL PROPERTY AND THE
MANAGEMENT AGREEMENT ARE WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES OR
REPRESENTATIONS OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, (1)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY OR ASSIGNABILITY OF THE MANAGEMENT
AGREEMENT, (2) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE, (3) WARRANTIES RELATING TO THE DESIGN, CONDITION, QUALITY, WORKMANSHIP
OR CAPACITY OF THE TANGIBLE PERSONAL PROPERTY, (4) REPRESENTATIONS OR WARRANTIES
THAT THE TANGIBLE PERSONAL PROPERTY IS IN COMPLIANCE WITH ALL LAWS, STATUTES,
ORDINANCES RULES, REGULATIONS, SPECIFICATIONS OR CONTRACTS PERTAINING THERETO,
(5) WARRANTIES AGAINST PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, AND (F)
WARRANTIES AS TO THE VALIDITY, ENFORCEABILITY, OR COLLECTIBILITY OF ANY ITEM.
6.6 Limitation on Representations and Warranties of Seller. In no event
shall Buyer be entitled to seek recovery against Seller for an alleged breach of
any representation or warranty by Seller if the information, transaction, or
occurrence alleged to give rise to such breach was disclosed to, made available
to or discovered by Buyer, whether in the course of its review of the Records
and Plans or otherwise, prior to the Close of Escrow (the sole adjustment with
respect to same being as set forth in Section 6.7 below). Without limiting the
foregoing, each of the representations and warranties by Seller set forth herein
shall be deemed to be qualified in their entirety by the Specific Disclosure
Matters in addition to any other qualifications of such representations and
warranties.
6.7 Right to Supplement Disclosures. At any time prior to the Closing,
Seller may add additional disclosures to the Specific Disclosure Matters and the
Schedules referenced in this Section 6, and may make appropriate revisions
thereto, provided, however, that any such revisions do not in the aggregate
disclose any matter or matters which would reasonably be expected to have an
impact upon the value of the Property in excess of the amount of the Deposit;
and provided, further, that the receipt of any notice of termination under the
Management Agreement shall not be deemed to create any diminution in value to
the Property.
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In the event that Buyer or Seller discovers any matter or matters which would be
expected to exceed the Threshold Amount, then, in such event, the provisions of
Section 7.1.1 shall apply.
6.8 Basket. In no event will Seller be liable to Buyer for any breach of a
representation or warranty hereunder unless and to the extent the Loss actually
and directly incurred by Buyer as results of such breach together with the Loss
actually and directly incurred by Buyer as results of any other breach(s) in the
aggregate exceed the Threshold Amount, provided, that in no event shall Seller
have any liability to Buyer for any consequential damages arising from a breach
by Seller of any representation or warranty unless such breach results from the
intentional concealment by Seller.
6.9 Survival. The Trust, the Corporation and Seller each hereby covenants
and agrees with the other that the representations and warranties of the Trust,
the Corporation and Seller (as the case may be) set forth in Sections 6.1.1
through 6.1.3, inclusive, Section 6.2.1 through Section 6.2.3, inclusive and
Section 6.3.1 and Section 6.3.2 shall survive the Close of Escrow without
limitation as to duration. The remaining warranties and representations set
forth in Section 6 shall survive the Close of Escrow until the date which is one
(1) year following the Closing Date, at which time such representations and
warranties shall expire unless prior to such time Buyer or Seller, as the case
may be, have duly commenced an action in a court of competent jurisdiction,
alleging a breach of such representation or warranty. Notwithstanding anything
herein to the contrary, in no event shall either Buyer or Seller have any right
to make a claim after the Closing with respect to any representation or
warranty, the breach of which such party shall have discovered prior to the
Closing, unless such party shall have notified the other party of such breach
prior to the Close of Escrow. Nothing contained in this Section 6.9 shall limit
the right of Seller to any remedy otherwise available under Federal or other
applicable securities law.
6.10 Soil Disclosure. In accordance with D.C. Code ss.45-508(b), Seller
advises Buyer that the characteristics of the soil on the Property is Urban
Land. For further information, Buyer can contact a soil testing laboratory, the
D.C. Department of Consumer and Regulatory Affairs or the Soil Conservation
Service (U.S.D.A.). The foregoing is given pursuant to District of Columbia
statutory requirements and does not constitute a representation or warranty by
Seller as to soil characteristics or conditions.
SECTION 7
TITLE TO THE REAL PROPERTY:
EXTENSION OF THE CLOSING
7.1 Buyer's Review of Title. Seller has caused to be delivered to Buyer
and Buyer's Counsel a current preliminary title commitment for title insurance
issued by the Title Company showing the condition of title to the Real Property
(the "Preliminary Title Report") together with a copy of all documents
evidencing or creating the exceptions to title referenced therein.
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7.1.1 Failure to Satisfy Certain Closing Conditions; Monetary Liens.
On or prior to the Close of Escrow, Seller shall be obligated (i) to cause to be
insured over or removed of record all Monetary Liens affecting the Property as
of the date hereof; and (ii) to remove or to bond over any Monetary Lien arising
after the issuance of the Preliminary Title Report which (a) was created by or
with the consent of Seller, or (b) is in an amount less than the Deposit. In the
event that any Monetary Lien not reflected on the Preliminary Title Report
exceeds the Deposit and was not created by or with the consent of Seller or any
other title defect or other matters arise which requires Seller to supplement
its disclosure pursuant to Section 6.7 and which in the aggregate may create a
diminution in value to the Property in excess of the Deposit, (i) the Deposit
shall be refunded by Escrow Holder to Buyer on February 28, 1998 if the Closing
does not occur by such date in accordance with the provisions hereof; (ii) the
Scheduled Closing Date shall be extended and Seller shall use all reasonable
efforts, to remove or bond over or otherwise cause the Title Company to omit
such Monetary Lien as an exception from coverage under the Title Policy and/or
remove or cure as applicable such other defect or condition as applicable; and
(iii) Buyer shall be permitted to record the Memorandum of Contract in the real
property records of the state and county in which the Real Property is located.
In the event that the Scheduled Closing Date is so extended and Seller is able
to remove or cure such Monetary Lien, remove or cure as applicable the title
defect or other condition, the Close of Escrow shall occur as soon as
practicable following such removal or cure with time being of the essence as to
the performance of both Buyer's and Seller's obligations hereunder. THE PARTIES
ACKNOWLEDGE AND AGREE THAT DAMAGES WILL NOT BE AN ADEQUATE REMEDY TO SELLER IF
BUYER SHALL DEFAULT IN ITS OBLIGATION TO CLOSE IN ACCORDANCE WITH THE PROVISIONS
OF THIS SECTION 7.1.1 AND CONSEQUENTLY THAT BUYER'S OBLIGATIONS UNDER THIS
SECTION 7.1.1 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST THE TRUST. IN
CONSIDERATION FOR THE REFUND TO BUYER OF THE DEPOSIT PROVIDED FOR UNDER THIS
SECTION 7.1.1, THE RIGHT OF BUYER TO RECORD THE MEMORANDUM OF CONTRACT PURSUANT
TO THIS SECTION 7.1.1, SELLER'S AGREEMENT TO ENTER INTO THE INTERIM MANAGEMENT
AGREEMENT PURSUANT TO THE PROVISIONS OF THIS SECTION 17.20 (UNDER WHICH
AGREEMENT THE VALUE OF THE HOTEL MAY BE AFFECTED BY THE PERFORMANCE BY THE
MANAGER OF ITS RESPONSIBILITIES THEREUNDER) AND TO ENCUMBER THE PROPERTY WITH
THIS AGREEMENT FOR A PERIOD OF UP TO FIVE (5) YEARS IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION 7.1.1 AND IN LIGHT OF THE RISKS WHICH SELLER WILL BE
ASSUMING AS A RESULT IN RELATION TO THE VALUE OF THE EQUITY PURCHASE PRICE TO BE
DELIVERED IF AND WHEN THE CLOSING OCCURS HEREUNDER, THE PARTIES HAVE AGREED THAT
THE PROVISIONS OF THIS SECTION 7.1.1 ARE SPECIFICALLY ENFORCEABLE AGAINST THE
TRUST AS AND TO THE EXTENT PROVIDED IN THE PRECEDING SENTENCE. In the event that
a Monetary Lien cannot be removed or cured or a title defect or other condition
cannot be removed or cured as required hereunder to close within five (5) years
of the date of this Agreement, this Agreement shall terminate and the parties
hereto shall have no further obligations.
7.1.2 [Intentionally Omitted]
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7.2 Title Insurance Policy. Buyer's title to the Real Property shall be
insured at Closing by an ALTA extended coverage owner's policy or policies of
title insurance in the amount of the Purchase Price (the "Title Policy") issued
by the Title Company, insuring title to the Real Property vested in Buyer,
subject only to the Permitted Encumbrances, together with such customary
endorsements or affirmative insurance as may be reasonably requested by Buyer
and purchased at Buyer's sole cost and expense.
7.3 Title to Real Property. At the Close of Escrow, title to the Real
Property will be conveyed to Buyer by Seller pursuant to the Deed, subject only
to the matters of title respecting the Property shown on Schedule 7.3 annexed
hereto and, if the Closing is delayed pursuant to Section 7.1.1, any additional
easements, covenants, conditions, restrictions or other matters entered into
with the prior written consent of Buyer which consent shall not be unreasonably
withheld, delayed or conditioned (collectively, the "Permitted Encumbrances");
Buyer agrees to rely exclusively on the Title Policy for protection against any
title defects except as set forth in Section 7.1.2. Buyer shall have no claim
following the Closing against Seller on account of the Permitted Encumbrances.
Buyer's agreement under this Section 7.1 shall survive the execution, delivery,
and recordation of the Deed.
SECTION 8
INTERIM ACTIVITIES
During the period from the Execution Date through the Close of Escrow,
Seller shall (subject to the provisions of the Interim Management Agreement if
entered into in accordance with the provisions of this Agreement) cause the
Property to be continued to be operated in ordinary course as a hotel consistent
with current operating practices during the period since Manager has been
manager of the Hotel. Buyer shall have the right to enter onto and inspect the
Property, from and after the date hereof, through the Closing Date to inspect
the Property and otherwise perform its due diligence provided such inspections
are performed upon prior notice to Seller and so as not to interfere with the
operation of the Property or to disclose the pendency of the transaction
contemplated hereby. All fees and expenses of any kind relating to the
inspection of the Property by Buyer will be paid for by Buyer. Buyer agrees to
keep the Property free from any liens arising out of or in connection with
Buyer's or its agents entry or the Property. Buyer shall at its sole cost and
expense, clean up and repair the Property as reasonably necessary after Buyer's
or its agents entry thereon. Buyer shall hold harmless, indemnify and defend
Seller from all Losses relating to any action by Buyer, its Affiliates and/or
agents at or on the Property prior to Closing. Any of Buyer's agents shall be
bound by the provisions of Section 17.19.
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SECTION 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Buyer's Obligations. The Close of Escrow and
the obligation of Buyer to purchase the Property is subject to the satisfaction,
not later than the Scheduled Closing Date, (subject to extensions as provided in
Section 7.1) of the following conditions:
9.1.1 Seller's Deliveries. Seller shall have delivered the items
described in Section 4.2 and shall be prepared to deliver the items described in
Section 4.4;
9.1.2 Title Policy. The Title Company shall be unconditionally
prepared (subject only to payment of all necessary title insurance premiums and
other charges) to issue to Buyer the Title Policy insuring Buyer's title to the
Real Property subject only to the Permitted Encumbrances;
9.1.3 Performance Under Related Agreements. All conditions precedent
to the closing of the transactions contemplated by that certain Purchase and
Sale Agreements with Joint Escrow Instructions (the "Related Agreement"), dated
as of the date hereof, by and between N.Y. Overnight Partners, L.P. and Buyer,
shall have been satisfied or waived and the Seller and Escrow Holder thereunder
shall be ready, willing and able to perform thereunder, and there shall be no
default of Seller under such agreement.
9.1.4 [Intentionally Omitted]
9.1.5 Seller Performance. Seller shall have performed in all
material respects all of the obligations of Seller under this Agreement, to the
extent required to be performed at or prior to the Close of Escrow.
9.1.6 Representations and Warranties of Seller. The Seller's
representations and warranties set forth in Section 6.3 shall be true, correct
and complete, as of the Close of Escrow subject to modification thereof to the
extent permitted under Section 6.7 and subject further to the applicable
provisions of Section 7.1.1.
The conditions set forth in this Section 9.1 are solely for the benefit of
Buyer and may be waived only by Buyer. Buyer shall at all times have the right
to waive any such condition. Any such waiver or waivers shall be in writing and
shall be delivered to Seller and Escrow Holder.
9.2 Conditions Precedent to Seller's Obligations. The Close of Escrow and
Seller's obligation with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Scheduled Closing
Date, of the following conditions:
9.2.1 Funds and Documents. Buyer shall have delivered to Escrow
Holder, prior to the Closing Date, for disbursement as directed by Seller, the
Paired Shares and all cash
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or other immediately available funds due from Buyer in accordance with Section 4
of this Agreement and the documents described in Section 4.3;
9.2.2 Representations and Warranties of Buyer. The Trust's
representations and warranties set forth in Section 6.1 and the Corporation's
representations and warranties set forth in Section 6.2 shall be true, correct
and complete, as of the Close of Escrow;
9.2.3 No Material Changes. There shall have been no casualty or
condemnation for which Buyer has elected to terminate this Agreement pursuant to
Section 12 or Section 13 of this Agreement;
9.2.4 [Intentionally Omitted]
9.2.5 Performance Under Related Agreements. All conditions precedent
to the closing of the transactions contemplated by the Related Agreement shall
have been satisfied or waived and the Buyer and Escrow Holder thereunder shall
be ready, willing and able to perform thereunder and there shall be no default
of Buyer under such agreement.
The conditions set forth in this Section 9.2 are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any such condition. Any such waiver or waivers shall be in
writing and shall be delivered to Buyer and Escrow Holder.
9.3 Failure of Condition. Except as otherwise provided in this Agreement,
if the Escrow fails to close on the Outside Closing Date for any reason
whatsoever, including, without limitation, a failure of a condition precedent
set forth in this Section 9, either Buyer or Seller, if not then in default
under this Agreement, may terminate the Escrow and this Agreement upon notice to
the other; and, thereupon:
9.3.1 This Agreement and the Escrow shall terminate;
9.3.2 The costs of the Escrow through the Scheduled Closing Date
shall be governed by Section 4.8;
9.3.3 All monies paid into the Escrow and all documents deposited in
the Escrow shall be returned to the party paying or depositing the same together
with interest earned thereon; and
9.3.4 Each party shall be released from all obligations under this
Agreement except for the obligations that are expressly stated to survive the
termination of this Agreement.
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SECTION 10
BROKER
Buyer and Seller each represent and warrant to the other that it has not
dealt with any broker, finder or other middleman in connection with this
Agreement, or the transactions contemplated hereby and that no broker, finder,
middleman or other person has claimed, or has the right to claim a commission,
finder's fee or other brokerage fee in connection with this Agreement or the
transactions contemplated hereby. Each party shall indemnify, protect, defend
and hold the other party harmless from and against any costs, claims or expenses
(including actual attorneys' fees and expenses), arising out of the breach by
the indemnifying party of any of its representations, warranties or agreements
contained in this Section 10. The representations and obligations under this
Section 10 shall survive the Close of Escrow, or, if the Close of Escrow does
not occur, the termination of this Agreement.
SECTION 11
REMEDIES FOR SELLER'S DEFAULT
11.1 Buyer's Remedies in General. If Buyer shall discover prior to the
Close of Escrow any default in any of Seller's obligations under this Agreement
(a "Seller Default"), Buyer shall notify Seller thereof, and Seller shall have a
reasonable period of time (not in excess of thirty (30) days) unless extended by
Buyer in its sole discretion in which to cure such default, in which case the
Scheduled Closing Date shall be extended during the continuation of such cure
period. If there shall be any Seller Default discovered by Buyer prior to the
Close of Escrow and not cured by the Scheduled Closing Date, then Buyer's sole
right and remedy other than with respect to a breach of a representation and
warranty which shall be subject to the provisions of Section 6.7, shall be to
compel specific performance of this Agreement; provided, however, that Buyer
shall only be entitled to compel specific performance of this Agreement if, as
of the time of Seller's default, Buyer shall (a) not be in default hereunder,
(b) shall be ready, willing and able to perform its obligations hereunder, and
(c) shall have waived all contingencies to closing other than those relating to
Seller's default.
11.2 MATERIAL INDUCEMENT. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE
LIMITATIONS ON DAMAGES AND SURVIVAL AND OTHER REMEDIES WHICH BUYER MAY RECOVER
FROM AND ENFORCE AGAINST SELLER UNDER THIS AGREEMENT ARE A SPECIFIC AND MATERIAL
INDUCEMENT TO SELLER TO ENTER INTO THIS TRANSACTION.
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SECTION 12
DAMAGE TO OR DESTRUCTION OF THE PROPERTY
12.1 Insured Casualty.
12.1.1 If, prior to the Close of Escrow, the Property is damaged or
destroyed, whether by fire or other insured casualty, Seller shall promptly
notify Buyer of such damage or destruction and of the good-faith estimate of a
reputable licensed contractor selected by Seller and reasonably approved by
Buyer of the cost to repair the damage and Seller's good-faith belief that such
casualty is insured (the "Insured Casualty Notice"). If the Insured Casualty
Notice indicates that such casualty is a Material Casualty, Buyer may elect to
be released from its obligations hereunder (including its obligation to purchase
the Property) by delivering to Seller written notice of Buyer's intent to do so
within ten (10) days after the date Buyer receives the Insured Casualty Notice.
In such event, the Deposit together with all interest accrued thereon shall be
promptly returned to Buyer.
12.1.2 If the casualty is insured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty, but Buyer elects not to terminate
this Agreement in accordance with this Section 12.1, then the Escrow and this
Agreement shall remain in full force and effect, the Closing shall occur on or
before the Outside Closing Date, and Seller shall assign to Buyer, as a
condition precedent to the Close of Escrow, all of Seller's right, title and
interest in and to any of the casualty insurance proceeds or claims therefor
with respect to such damage or destruction, together with any and all rental
loss or business interruption insurance of Seller, if any, payable with respect
to the Property for any period after the Proration Time and any and all claims
against other persons for such damage or destruction. Additionally, if the
Escrow and this Agreement remain in full force and effect, Seller shall pay to
Buyer, by way of a reduction in the Cash Portion of the Closing Payment, an
amount equal to the deductible under the casualty insurance. Within twelve (12)
months following the Close of Escrow, Buyer shall upon thirty (30) days written
notice by Seller, present reasonably satisfactory evidence to Seller that Buyer
applied the proceeds of such insurance to the Property. If Buyer fails to
present such evidence or such evidence is not reasonably satisfactory to Seller,
Buyer shall promptly, but in any event within thirty (30) days of demand
therefor from Seller, pay to Seller the proceeds of the casualty insurance
assigned by Seller to Buyer as provided herein, together with an amount equal to
the deductible under such insurance for which Buyer received a credit to the
Purchase Price.
12.2 Uninsured Casualty.
12.2.1 If, prior to the Close of Escrow, all or any portion of the
property is damaged or destroyed by an uninsured casualty (including, without
limitation, a casualty as to which coverage has been disclaimed by Seller's
insurers), Seller shall promptly notify Buyer of such damage or destruction and
of the Seller's reasonable estimate of the cost to Seller to repair the same of
a reputable licensed contractor selected by Seller and reasonably approved by
Buyer (the "Uninsured Estimate to Repair") and Seller's reasonable belief that
such casualty is uninsured (the "Uninsured Casualty Notice").
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12.2.2 If such Uninsured Estimate to Repair indicates the occurrence
of a Material Casualty, either Seller or Buyer may elect to terminate this
Agreement by giving to the other party written notice of its intent to do so
within ten (10) days after the Seller delivers the Uninsured Casualty Notice to
Buyer. If this Agreement is terminated pursuant to this Section 12.2.2, the
Deposit together with interest accrued thereon shall be promptly returned to
Buyer.
12.2.3 If the casualty is uninsured, and (i) it is not a Material
Casualty, or (ii) it is a Material Casualty and Buyer and Seller have not
elected to terminate this Agreement in accordance with Section 12.2.2, then the
Escrow and this Agreement shall remain in full force and effect, the Closing
shall occur on or before the Outside Closing Date, and Buyer shall be entitled
to a reduction in the Purchase Price in an amount equal to the Uninsured
Estimate to Repair.
12.2.4 If and to the extent that the Purchase Price is adjusted
pursuant to this Section 12.2 as a result of a disclaimer of coverage by
Seller's insurers, Buyer shall not be entitled to insurance proceeds due under
Seller's policies, or to be assigned any claim under or with respect to Seller's
policies, and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom, it being the intent of this Section 12 that there be
no double recovery by, or double compensation of, Buyer for the casualty.
SECTION 13
CONDEMNATION
If, prior to the Close of Escrow, a Material Taking has occurred or is
pending, Seller shall immediately notify Buyer of such fact. In such event,
Buyer may elect upon written notice to Seller given not later than fifteen (15)
days after receipt of Seller's notice to terminate this Agreement. If Buyer does
not exercise option which Buyer may have pursuant to this Section 13 to
terminate this Agreement, or if any such taking is not a Material Taking, then
neither party shall have the right to terminate this Agreement, but Seller shall
assign and turn over, and Buyer shall be entitled to receive and keep, all
awards for the taking of any of the Real Property by eminent domain which accrue
to Seller (other than those relating to loss of use prior to the Closing), and
the parties shall proceed to the Close of Escrow pursuant to the terms hereof,
without modification of the terms of this Agreement and without any reduction in
the Purchase Price.
SECTION 14
EMPLOYEES
14.1 Hiring of Hotel Employees; WARN Act Compliance. Buyer agrees to make
an offer of employment to all existing Hotel Employees as of the Close of
Escrow, on terms and conditions generally comparable to their existing terms and
conditions of employment (to the
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extent such terms and conditions have been disclosed by Seller and/or its agents
to Buyer) and to make all reasonable efforts to retain such employees for a
reasonable period of time. Without limiting the foregoing, Buyer shall offer to
maintain without loss of employment (as defined in the WARN Act) the employment
at the Property (other than upon good cause for termination) of such number of
Hotel Employees and on such terms and conditions as shall not result in, and
only to the extent necessary to prevent, a plant closing or mass layoff as
defined in the WARN Act. Buyer (i) shall also cause each of the health and
medical benefit plans maintained for Hotel Employees to waive any preexisting
condition in connection with employment at the Property that was not excluded
under the applicable program as of the Closing Date, (ii) shall also cause each
of such benefit plans to take into account any deductibles or coinsurance
amounts incurred by each Hotel Employee for the year in which the Closing Date
occurs and (iii) shall also cause each of the health and medical benefit plans
to deem each Hotel Employee to be eligible for participation in such plan as of
the Close of Escrow. In the event that Buyer fails to comply with any of the
foregoing covenants, Buyer agrees that Buyer shall be solely responsible for the
payment of any and all costs, charges, penalties, compensation, severance pay,
benefits and liabilities, arising under the WARN Act, and any other applicable
law, rule or regulation on account thereof, and Buyer agrees to indemnify,
defend and hold Seller and the Employer Corporation and their directors,
officers, agents, affiliates, principals, partners, shareholders representatives
and controlling persons harmless from and against any and all claims, causes of
action, judgments, damages, penalties and liabilities asserted under the WARN
Act or any other applicable law, rule or regulation, whether against Buyer or
Seller, the Employer Corporation or any other such indemnified party and whether
based on employment of any of the Hotel Employees prior to or following the
Closing, arising from Buyer's failure to comply with the foregoing covenants
(collectively, "Termination Charges"). Following the Closing, if Buyer desires
to terminate the employment of any Hotel Employees other than for cause, Buyer
shall be solely responsible for complying with all applicable provisions of the
WARN Act and all other applicable laws, rules and regulations with respect to
such termination, including without limitation, the payment of all costs and
termination payments owing under the WARN Act and all other applicable laws,
rules and regulations to any of such employees. Buyer shall assume all
obligations under the Employment Agreement for the Director of Finance
attributable to the period from and after the Closing Date (it being agreed that
the Director of Finance may resign thereunder at any time without penalty).
14.2 Collective Bargaining Agreements. Without limiting the provisions of
Section 14.1, immediately upon the Close of Escrow, without the necessity of
further action by Buyer, Buyer shall assume each collective bargaining agreement
or other labor union contracts identified on Schedule 14.2 (the "Collective
Bargaining Agreements"). Buyer further agrees to indemnify Seller and the
Employer Corporation and their directors, officers, employees, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons for any and all liability to the bargaining agents or Hotel Employees,
resulting from the failure of Buyer to comply with the terms and conditions of
any of the Collective Bargaining Agreements with respect to periods beginning
after the Close of Escrow.
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14.3 Continuation of Benefits.
14.3.1 (i) Except as provided in Section 14.3.2 , on and after the
Closing Date, Seller (or any insurer at Seller's cost) shall continue to process
and pay (or cause applicable insurers and third party administrators, including
ITT Sheraton, to process and pay) in an expeditious manner and with respect to
all covered Hotel Employees (and, to the extent applicable, their covered
spouses, dependents and beneficiaries) all claims under the Employment
Agreements that provide health and medical, or other welfare, benefits submitted
for covered expenses with respect to occurrences commencing on or prior to the
Closing Date, including, but not limited to: (A) covered hospital benefits for
any confinements; (B) covered life and survivor income benefits, if any, for
deaths which occur on or prior to the Closing Date; (C) workers' compensation
benefits for disabilities resulting from a work-related accident which occurred
on or prior to the Closing Date; (D) all covered benefits that are being, or
that may be, paid to, or with respect to, any of such individuals who are on
short or long term disability, or medical, personal or other leaves of absence
as of the Closing Date; (E) covered benefits under any "spending account," or
similar arrangement, under any "cafeteria plan" (as defined under Section 125 of
the Internal Code) with respect to salary reduction elections made prior to the
Closing Date; and (F) covered benefits under all other such Employment
Agreements which accrue on or before the Closing Date; but, only in each
instance, to the extent that Buyer shall not have received a credit against the
Purchase Price on account of such item.
(ii) [Intentionally Omitted]
14.3.2 Buyer (or any plan maintained by Buyer) will provide
continued health and medical coverage as required under Section 4980B of the
Code, Part 6 of Title I of ERISA or any other applicable federal, state or local
law or ordinance to all current and former Hotel Employees (and their spouses,
dependents and beneficiaries) with respect to whom a "qualifying event" (as such
term is defined under Sections 4980B(f)(3) of the Code or 603 of ERISA) or other
triggering event described under the applicable federal, state or local laws or
ordinances occurred on or before the Closing Date.
14.3.3 Buyer shall maintain supplies of claims forms necessary for
Hotel Employees to make claims under Employment Agreements that provide health,
medical or other welfare benefits with respect to occurrences commencing on or
prior to the Closing Date, and shall furnish such forms to the Hotel Employees
when needed and otherwise assist the Hotel Employees in presenting such claims.
14.4 Buyer and Seller intend by this Agreement to comply with Section 4204
of ERISA, so as to prevent Seller from incurring at the Closing Date a complete
or partial withdrawal in respect of any employee benefit plans, if any, in which
the Hotel Employees currently participate that are "multiemployer plans," as
defined in Section 4001(a)(3) of ERISA (and which have been disclosed to Buyer
on the Schedule of Employment Agreements), determined as if Buyer is the "buyer"
referred to in such Section 4204. Accordingly, with respect to such
multiemployer plans, Buyer agrees as follows:
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(A) For the first plan year of each such multiemployer plan
commencing after the Close of Escrow, and for each of the succeeding four plan
years for each such plan, Buyer shall assume the obligation to contribute to
each such plan with respect to operations conducted with business assets
acquired from Seller for substantially the same number of contribution base
units (as defined in Section 4001(a)(11) of ERISA) for which Seller had an
obligation to contribute to such plan.
(B) Prior to each such multiemployer plan's first plan year
beginning after the Close of Escrow, Buyer shall apply to such plan for a
variance from the requirement of Section 4204(a)(1)(b) of ERISA, that a bond be
obtained or an amount be held in escrow as provided in said Section. In the
event any such plan determines that the request does not qualify for a variance
on it, Buyer shall obtain any required bond or establish any required escrow
within thirty (30) days after the date on which it receives notice of the plan's
decision, and shall maintain such bond or escrow until the earliest of: (i) the
date a variance is obtained from the plan; (ii) the date a variance or exemption
is obtained from the Pension Benefit Guaranty Corporation; or (iii) the last day
of the fifth (5th) plan year commencing after the Close of Escrow; which bond or
escrow shall be paid to such plan if Buyer withdraws therefrom or fails to make
a contribution to such plan when due, at any time during the first (1st) five
(5) plan years of such plan beginning after the Closing Date. In order to comply
with subsection (a)(1)(C) of such Section 4204, if Buyer withdraws in a complete
withdrawal or a partial withdrawal from any multiemployer plan with respect to
which Buyer has assumed an obligation to contribute pursuant to this Agreement
and such withdrawal or partial withdrawal occurs during the five (5) plan years
commencing with the first (1st) plan year beginning after the date of the Close
of Escrow, Seller shall be secondarily liable for any withdrawal liability it
would have had to such multiemployer plan on the date of the Close of Escrow
under Title IV of ERISA. Buyer agrees to provide Seller with reasonable advance
notice of its anticipated failure to pay any withdrawal liability and to furnish
Seller promptly with a copy of any notice of withdrawal liability it may receive
with respect to such plans.
14.5 Indemnification. Buyer and Seller (as applicable, the "Indemnitor")
agrees to indemnify, defend, protect and hold the other and, the Employer
Corporation in the case of Seller, and their directors, officers, agents,
affiliates, principals, partners, shareholders, representatives and controlling
persons (as applicable, the "Indemnitee") harmless from and against any and all
claims, damages, liabilities, losses, and expenses, (including attorneys' fees
and costs) paid, suffered or incurred by the Indemnitee, arising out of or
related to Indemnitor's failure to comply with any of the covenants,
obligations, or duties contained in Section 14.
14.6 Survival. The provisions of this Section 14 shall survive the Close
of Escrow.
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SECTION 15
COOPERATION
15.1 Seller has advised Buyer that it may be necessary after the Close of
Escrow for Seller (or its representatives) to audit the Records and Plans with
respect to the period prior to the Closing Date. In addition, Seller may require
access to the such Books and Records in connection with any litigation by or
against Seller and its Affiliates with respect to the Property, any tax audit,
examination or challenge or similar proceeding, or any calculation of sums
payable under Section 5. Accordingly, Buyer hereby: (i) agrees to retain the
Records and Plans with respect to the period prior to the Closing Date at the
Property for a period of seven (7) years after the Close of Escrow or such
additional period as may reasonably be requested by Seller; (ii) grants Seller,
its Affiliates and their respective representatives access to the such Records
and Plans and the Property after the Close of Escrow, at reasonable times and
upon reasonable prior notice, for such purposes; (iii) subject to the rights of
guests in guest rooms, tenants under tenant leases, grants Seller, its
Affiliates, and their respective representatives access to the Property after
the Close of Escrow for the purpose of conducting such inspections and/or
testing (including destructive testing) of the Property as may be necessary or
advisable in connection with any litigation and other proceedings to which
Seller is a party (provided that Seller shall give Buyer prior notice of the
scope of such inspections and testing) which shall be scheduled for such periods
as shall be reasonably agreeable to the parties;
15.1.1 All inspections fees, appraisal fees, engineering fees and
other expenses of any kind relating to the inspection of the Property by Seller
or Seller's Affiliate will paid for by Seller and/or Seller's Affiliate.
15.1.2 Prior to Seller or Seller's Affiliate's entry on the Property
for the purpose of conducting inspections and/or tests, Seller or Seller's
Affiliate shall provide Buyer with certificates of insurance from Seller's
agents from an insurance carrier and for such risks and policy limits as Seller
shall reasonably approve.
15.1.3 Seller agrees to keep the Property free from any liens
arising out of or in connection with such testing and inspection.
15.1.4 Seller, shall, at its sole cost and expense, clean up and
repair the Property as reasonably necessary, after Seller's or Seller's agents,
entry thereon.
15.1.5 Seller shall hold harmless, indemnify and defend Buyer for
all losses relating to any action by Seller, its Affiliates and/or agents at or
on the Property after the Closing; [and]
15.1.6 Buyer agrees to cooperate with Seller, its Affiliates and
their respective representatives in connection with any such litigation or
proceedings with respect to the Property, any such tax audit, examination or
challenge or similar proceeding, or any such calculation of sums payable under
Section 5, said cooperation to be at no material cost or expense to Buyer; and
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15.2 Seller shall cooperate with Buyer in connection with the assignment
of all transferable Licenses and Permits to Buyer and the application for and
procurement of replacements of any non-transferable Licenses and Permits.
SECTION 16
NOTICES
16.1 Addresses. Whenever any notice, demand or request is required or
permitted hereunder, such notice, demand or request shall be made in writing and
shall be (a) sent via a nationally recognized overnight courier service fully
prepaid, (b) deposited in the United States by mail, registered or certified,
return receipt requested, postage prepaid, or (c) sent via telefacsimile,
provided that the original of such notice, demand or request shall also be sent
via one of the methods described in (a) and (b) above, in each case to the
addressees (and individuals) set forth below:
As to Seller:
D.C. Overnight Partners, L.P.
c/o Al Anwa USA International
1925 Century Park East
Suite 1900
Los Angeles, CA 90067
Attn: General Counsel
Telefacsimile: (310) 229-2939
With a copy to Seller's Additional Addressees:
Gordon Eng, Esq.
19191 S. Vermont Avenue
Suite 420
Torrance, CA 90502
Telefacsimile: (310) 207-1006
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
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As to Buyer:
Starwood Lodging Corporation
Starwood Lodging Trust
2231 E. Camelback Road
Suite 400
Phoenix, AZ 85016
Attn: Steven R. Goldman
Telefacsimile: (602) 852-0115
With a copy to Buyer's Additional Addressee:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
As to Escrow Holder:
Chicago Title Insurance Company
700 South Flower Street, Suite 900
Los Angeles, CA 90017
Attn: Maggie Watson
Telefacsimile: (213) 488-4388
16.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Buyer and its Additional Addressee in the manner aforesaid shall be
deemed sufficiently given to and received by Buyer for all purposes hereunder,
and any notice, demand or request that shall be delivered to Seller and its
Additional Addresses in the manner aforesaid shall be deemed sufficiently given
to and received by Seller for all purposes hereunder (i) the next business day
following the day such notice, demand or request is delivered by a nationally
recognized overnight courier service fully prepaid, to such party and its
Additional Addressee, (ii) if sent via registered or certified mail, at the time
of receipt by such party and its Additional Addressee, or (iii) if sent via
telefacsimile, as of the date and time stated upon confirmation reports
generated by the sending party's telefacsimile machine confirming the delivery
of such notice, demand or request to such party and its Additional Addressee.
16.3 Refusal of Delivery. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this Section 16 refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
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<PAGE> 56
16.4 Change of Address. Each party shall have the right from time to time
to designate by written notice to the other parties hereto such other person or
persons and such other place or places as said party may desire written notices
to be delivered or sent in accordance herewith.
SECTION 17
GENERAL PROVISIONS
17.1 Amendment. Except as provided in Section 4.1, no provision of this
Agreement or of any documents or instrument entered into, given or made pursuant
to this Agreement may be amended, changed, waived, discharged or terminated
except by an instrument in writing, signed by the party against whom enforcement
of the amendment, change, waiver, discharge or termination is sought.
17.2 Time of Essence. All times provided for in this Agreement for the
performance of any act will be strictly construed, time being of the essence.
17.3 Entire Agreement. This Agreement and other documents delivered at
Closing, set forth the entire agreement and understanding of the parties in
respect of the transactions contemplated by this Agreement, and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof. No representation, promise, inducement or statement of
intention has been made by Seller or Buyer which is not embodied in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance delivered pursuant to this Agreement,
and neither Buyer nor Seller shall be bound by or liable for any alleged
representations, promise, inducement or statement of intention not therein so
set forth.
17.4 No Waiver. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder shall constitute a waiver of any party's right to demand
strict compliance with the terms of this Agreement.
17.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
17.6 Costs and Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby
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<PAGE> 57
(including, without limitation, the enforcement of any obligation to indemnify,
defend or hold harmless provided for herein or therein), or because of an
alleged dispute, default, or misrepresentation in connection with any of the
provisions of this Agreement or of such document or instrument, or if Escrow
Holder commences any action with respect to the Escrow(s), the successful or
prevailing party shall be entitled to recover actual attorneys' fees, charges
and other costs incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
17.7 Payments; Interests. Except as otherwise provided herein, payment of
all amounts required by the terms of this Agreement shall be made in the United
States and in immediately available funds of the United States of America which,
at the time of payment, is accepted for the payment of all public and private
obligations and debts. Unless the parties otherwise agree, payments shall be
made through the Escrow Holder. If any payment due under this Agreement is not
paid when due, it shall thereafter bear interest at a variable rate equal to the
rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
17.8 Transfer By Buyer. Buyer shall not have the right to assign this
Agreement, but shall be permitted to designate an Affiliate or Affiliates to
take title to the Property. In the event that Buyer elects to so designate any
Affiliate or Affiliates to take title to the Property hereunder, (i) Buyer shall
upon close of Escrow be released of all obligations hereunder other than
pursuant to Section 6, Section 7.1, Section 10, Section 17.18, Section 17.19 and
Section 17.20 or arising prior to the Close of Escrow, (ii) such Affiliate or
Affiliates shall assume all of Buyer's obligations hereunder; and (iii) such
Affiliate of Affiliates shall represent and warrant to Seller that such entities
are duly organized and validly existing and otherwise as to the matters covered
in Section 6.1.1 and Section 6.1.2 as applicable.
17.9 Parties in Interest. Subject to Section 17.8, the rights and
obligations of the parties hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and the legal representatives of their respective estates. Nothing in this
Agreement is intended to confer any right or remedy under this Agreement on any
person other than the parties to this Agreement and their respective successors
and permitted assigns, or to relieve or discharge the obligation or liability of
any person to any party to this Agreement or to give any person any right of
subrogation or action over or against any party to this Agreement.
17.10 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state in which the Real Property
is located without giving effect to the conflict-of-law rules and principles of
that state.
17.11 Incorporation of Recitals and Exhibits. The Recitals and Exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement.
17.12 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of
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<PAGE> 58
the parties hereto. Headings at the beginning of sections of this Agreement are
solely for the convenience of the parties and are not a part of this Agreement.
When required by the context, whenever the singular number is used in this
Agreement, the same shall include the plural, and the plural shall include the
singular, the masculine gender shall include the feminine and neuter genders,
and vice versa. As used in this Agreement, the term "Seller" shall include the
respective permitted successors and assigns of Seller, and the term "Buyer"
shall include the permitted successors and assigns of Buyer, if any.
17.13 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
17.14 Announcements. Seller and Buyer shall consult with each other and
provide each other One (1) Business Day prior notice with regard to all press
releases and other announcements issued at or prior to the Close of Escrow and
during the one year period thereafter concerning the existence of this Agreement
or the sale of the Property and, except as permitted under Section 17.19,
neither Seller nor Buyer shall issue any such press release or other such
publicity prior to the Close of Escrow without the prior written consent of the
other party, which consent may be withheld in such other party's sole and
absolute discretion. Buyer will not issue any public announcement with respect
to Seller (other than to describe the transaction contemplated hereby to the
extent permitted hereunder) without the prior written consent of Seller which
may be withheld in its sole and absolute discretion. The agreements of the
parties in this Section 17.14 shall survive the Close of Escrow or any
termination of this Agreement.
17.15 Submission of Agreement. The submission of this Agreement to Buyer
or its broker, agent or attorney for review or signature does not constitute an
offer to sell the Property to Buyer or the granting of an option or other rights
with respect to the Property to Buyer. No agreement with respect to the purchase
and sale of the Property shall exist, and this writing shall have no binding
force or effect, until this Agreement shall have been executed and delivered by
Buyer and by Seller and Buyer shall have deposited the Deposit with Escrow
Holder.
17.16 Further Assurances. Buyer and Seller agree to execute such
instructions to the Escrow Holder and such other instruments and take such
further actions either before or after the Close of Escrow as may be reasonably
necessary to carry out the provisions of this Agreement provided that no
material additional cost or liability shall be created thereby.
17.17 Cooperation. Buyer and Seller shall cooperate with the other to
carry out the purpose of this Agreement (provided, such cooperation shall not
require either party to expend any sum not otherwise required pursuant to the
other provisions of this Agreement). This Section 17.17 shall survive the Close
of Escrow.
17.18 Moratorium on Re-Sale. Buyer covenants and agrees that it will not
sell the Property to Marriott International, Inc., Host Marriott, the Ritz
Carlton Hotel Company, L.L.C. or any of their respective affiliates, successors
and assigns, or any other party that Buyer reasonably believes will sell, and/or
operate the Property pursuant to a franchise or operating
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<PAGE> 59
agreement with any of the above-described entities, (collectively, "Excluded
Parties") during the period (the "Transfer Restriction Period") commencing upon
the Close of Escrow and expiring upon the later of (a) five (5) years following
the Close of Escrow and (b) settlement of or the final non-appealable judgment
is issued in connection with the existing litigation between Seller and the Ritz
Carlton Hotel Company, LLC and their respective affiliates and shall cause any
permitted purchaser of the Property during the Transfer Restriction Period to
covenant and agree not to sell the Property to any Excluded Party for the
balance of the Transfer Restriction Period. The provisions of this Section 17.18
shall be specifically enforceable. Buyer hereby waives any requirement for
Seller to post a bond in order to seek or obtain any temporary restraining order
or other injunctive relief pursuant to this Section 17.18. The parties
acknowledge and agree that the provisions of this Section 17.18 form a material
part of the consideration to Seller for entering into this Agreement. The
parties agree that these provisions are reasonable in light of Seller's ongoing
litigation with Ritz Carlton Hotel Company and its affiliates.
17.19 Confidentiality. Buyer shall hold as confidential all information
concerning the transaction contemplated by this Agreement, Seller and the
Property disclosed in connection with this transaction and Buyer shall not,
prior to the Close of Escrow, release any such information relating to the
transaction, Seller or the Property to any governmental agencies or third
parties without Seller's prior written consent except as may be required by law
and in such case subject to the provisions of Section 17.14. Seller hereby gives
its consent to Buyer's disclosure of information relating to the transaction
contemplated hereby to Buyer's Counsel and other consultants, in each instance
to the extent reasonably necessary to verify information given to Buyer by
Seller or otherwise to carry out the purposes of this Agreement and provided in
each instance, such consultants agree in writing to be bound by the
confidentiality provisions of this Section 17.19. If the Close of Escrow shall
fail to occur for any reason, neither party shall issue any press release,
publicity or other public announcement of the subject matter of this Agreement,
or to make any other disclosure concerning the subject matter of this Agreement
(except as may be required by law and in such case subject to the provisions of
Section 17.14.), without the prior written consent of the other party, which
consent may be withheld in such other party's sole and absolute discretion. The
agreements of the parties in this Section 17.19 shall survive any termination of
this Agreement.
17.20 Interim Management Agreement. Seller shall provide Manager with a
notice of termination of the Management Agreement on January 2, 1998 or as soon
thereafter as Seller shall have obtained any required lender consent thereto.
Seller shall, on or prior to January 2, 1998, seek any required lender consents
and use all reasonable commercial efforts to obtain the same as promptly as
possible. Buyer and Seller shall enter into a management agreement with respect
to the Property in the form attached as Exhibit 17.20 hereto (the "Interim
Management Agreement") which shall be effective (and the Interim Management
Agreement shall be dated as of such effective date) on the earlier of (a) thirty
days from the date of the delivery to Manager of such termination notice, and
(b) the effective date of a written waiver of Manager of the notice of
termination required under the Management Agreement. Buyer shall advance any fee
payable to Manager under the Management Agreement on account of the termination
thereof up to $127,132.00. Buyer shall be deemed to have waived delivery of all
items under Sections
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<PAGE> 60
4.2.1.15, 4.2.1.16, 4.2.1.17 and 4.2.1.19 in the event the Management Agreement
is terminated in accordance with the provisions of this Section 17.20 prior to
the Closing Date.
17.21 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 Trust's 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.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 61
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the day and year first above written.
"Seller"
D.C. OVERNIGHT PARTNERS, L.P.,
a District of Columbia limited partnership
By: D.C. OVERNIGHT, INC. a District of
Columbia corporation, its sole General
Partner
By: /s/ Tarek Ayoubi
--------------------------------------
Name: Tarek Ayoubi
Its: President
"Buyer"
STARWOOD LODGING TRUST,
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
--------------------------
Name: Steven R. Goldman
Title: Senior Vice President
STARWOOD LODGING CORPORATION,
a Maryland corporation
By: /s/ Michael C. Mueller
--------------------------
Name: Michael C. Mueller
Title: Vice President
"Escrow Agent"
CHICAGO TITLE INSURANCE COMPANY,
a Missouri corporation
By: /s/ Maggie G. Watsu*
--------------------------
Name: Maggie G. Watsu
Title: Authorized Signatory
*Subject to receiving mutual
instruction in the event Paragraph 3.5
becomes operative.
54
<PAGE> 1
STOCK AGREEMENT
by and among
SAVANAH LIMITED PARTNERSHIP
a District of Columbia Limited Partnership
as Stock Purchaser
and
STARWOOD HOTELS & RESORTS TRUST,
a Maryland real estate investment trust
and
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland corporation,
Dated as of January 15, 1998
<PAGE> 2
STOCK AGREEMENT
THIS STOCK AGREEMENT (this "Agreement") is entered into as of
January 15, 1998 (the "Closing Date") by and between SAVANAH LIMITED
PARTNERSHIP, a District of Columbia limted partnership, ("Stock Purchaser"),
STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the
"Trust"), and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation
(the "Corporation", and, with the Trust, "Starwood Lodging").
R E C I T A L S
A. Stock Purchaser has agreed to acquire from Starwood Lodging, and
Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired
Shares in partial consideration for certain assets owned by Stock Purchaser.
B. The parties desire to enter into this Agreement in order to set
forth certain terms and conditions under which the Paired Shares are to be
issued to and held by Stock Purchaser.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Starwood Lodging and Stock Purchaser agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms.
"Accredited Investor" shall have the meaning ascribed to that term
in Rule 501 promulgated by the SEC under the Securities Act.
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with such first
Person.
"Applicable Percentage" shall mean: (a) if Starwood Lodging delivers
Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and
(b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1
hereof, 91.95%.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business.
"Closing Date" shall mean the date hereof.
"Equity Value" shall mean One Hundred Fifty-Two Million Six Hundred
Thirty-Seven Thousand Dollars ($152,637,000), divided by the Applicable
Percentage, rounded to the nearest whole number.
"ITT Closing" shall have the meaning set forth in the Registration
Rights Agreement.
<PAGE> 3
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Attachment A hereto.
"LIBOR" means the average of the interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to publish such a compilation of interbank offered
rates, or if The Wall Street Journal ceases to be published, then Starwood
Lodging shall propose a substitute method of determining the interest rate
generally known as the three-month LIBOR rate, which method, absent manifest
error, shall be binding on all holders of the Subject Shares and Starwood.
"Lock Price" shall mean $53.75 per Paired Share if the Closing Date
occurs on or before the 60th day after seven Business Days after January 15,
1998 (or thereafter because of a default by the Trust or the Corporation), and
the Market Price as of the Closing Date if the Closing Date occurs thereafter
for any reason other than a default by the Trust or the Corporation provided,
however, that in the event that, at any time during the period between December
30, 1997 and the Settlement Date, the Corporation or the Trust effects any
reclassification, stock split or stock dividend with respect to their stock, any
change or conversion of stock into other securities, or any other dividend or
distribution with respect to the Paired Shares, other than (i) dividends
contemplated by the Starwood Lodging Disclosure in effect as of December 30,
1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the
current rate (as of December 30, 1997) of their dividends (together with any
increases in such rate in the ordinary course) and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of the Internal
Revenue Code) without regard to any net capital gains or the deduction for
dividends paid, appropriate and proportionate adjustments shall be made to the
Lock Price.
"Market Price" shall mean, as of any date, the average closing
prices of the Paired Shares on the New York Stock Exchange during the ten
consecutive Business Days immediately preceding such date.
"Open Market Sale" means one or more sales of Stock Agreements
Shares (including "short sales" initiated with the intention of delivering Stock
Agreements Shares) made or proposed to be made by placing one or more sale
orders or offers to sell with one or more securities brokers or dealers with a
view toward the consummation of one or more sale transactions that are required
to be, or that actually are, reported to the New York Stock Exchange or the
National Association of Securities Dealers.
"Orderly Market Disposition" means the sale of Stock Agreements
Shares by placing one or more sell orders with one or more securities brokers or
dealers with a view toward the disposition in the market of such Stock
Agreements Shares.
"Other Stock Agreements" shall mean, collectively, (i) that certain
Stock Agreement, dated as of January 15, 1998, among New Remington Partners, as
stock purchaser, and Starwood Lodging, (ii) that certain Stock Agreement, dated
as of January 15, 1998, among N.Y. Overnight Partners, L.P., as stock purchaser,
and Starwood Lodging, and (iii) that certain Stock Agreement, dated as of
January 15, 1998, among D.C. Overnight Partners, L.P., as stock purchaser, and
Starwood Lodging.
"Paired Shares" shall mean one 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
2
<PAGE> 4
subject to the Pairing Agreement. For purposes of calculating the number of
Paired Shares to be delivered hereunder, each pair of the shares of the stock of
the Trust and the Corporation shall be considered one share.
"Pairing Agreement" shall mean 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 shares of the Corporation and
the Trust.
"Payment Rights" shall have the meaning set forth in Section 5
hereof.
"Person" shall have the meaning set forth in the Registration Rights
Agreement.
"Proposed Disposition Shares" shall have the meaning set forth in
Section 3 hereof.
"Put Price" and "Put Right" shall have the meaning set forth in
Section 2.4 hereof.
"Registered Shares" means Subject Shares the issuance of which to
Stock Purchaser has been registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among Stock Purchaser, the Trust and the Corporation in the
form of Attachment B hereto.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Required Effectiveness Date" shall have the meaning set forth in
the Registration Rights Agreement.
"Response Date" shall have the meaning set forth in Section 3
hereof.
"Restricted Group" shall mean two (2) or more Restricted Holders
acting in concert or under common direction.
"Restricted Holder" shall mean Stock Purchaser and any other Person
who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale. A Restricted Holder shall not include any
Person who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale if such Transfer occurs after the first Open
Market Sale of such Stock Agreements Shares.
"Sale Notice" shall have the meaning set forth in Section 3 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" means all documents required to have been filed by
the Trust or the Corporation with the SEC since January 1, 1996 and through the
date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Settlement Date" shall mean, if Starwood Lodging shall deliver
Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood
Lodging or its counsel shall notify Stock
3
<PAGE> 5
Purchaser that (i) the Registration Statement has been declared effective by the
SEC, (ii) that the Subject Shares have been registered, on the terms and subject
to the provisions of the Registration Rights Agreement, for Transfer by the
selling shareholders named therein in Open Market Sales and in such other manner
as is provided in the Registration Statement, and (iii) that Starwood Lodging
has completed all deliveries and other actions required to enable trading of the
Subject Shares on the New York Stock Exchange; provided, however, that if such
notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be
deemed for all purposes to occur on the Business Day following the date of such
notice.
"Starwood Lodging Disclosure" shall mean, collectively, the Form S-3
filed by the Corporation and the Trust with the SEC on November 12, 1997, and
the Form S-4 filed by the Corporation and the Trust with the SEC on November 20,
1997, as the same has been or may hereafter be amended by any filing with the
SEC made by the Trust or the Corporation.
"Stock Agreements Shares" shall mean the aggregate of the Subject
Shares and the other Paired Shares delivered pursuant to the Other Stock
Agreements.
.
"Stock Purchaser Affiliates" shall have the meaning set forth in
Section 6.1 hereof.
"Subject Shares" means the 3,088,372 Paired Shares delivered by
Starwood Lodging pursuant to Section 2.1 hereof.
"Transfer" shall have the meaning set forth in the Registration
Rights Agreement.
"Transfer Agent" shall mean the transfer agent for the Paired
Shares.
"Unregistered Shares" means Subject Shares the issuance of which to
Stock Purchaser has not been registered under the Securities Act.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
CALCULATION OF SUBJECT SHARES
2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to
Stock Purchaser on the Closing Date Paired Shares in an amount equal to the
Equity Value divided by the Lock Price. Starwood Lodging shall have the option
to deliver Registered Shares or Unregistered Shares on the Closing Date.
2.2 Delivery Requirements for Paired Shares. The Paired Shares to
be delivered hereunder shall be properly endorsed and certificated Paired Shares
in the amount required to be delivered in accordance with the provisions of this
Agreement. If Registered Shares are delivered, such shares shall be unlegended
and fully and freely transferable without any consent of, registration
4
<PAGE> 6
with or notice to any Person (except as provided for in Sections 3 and 4 hereof
and in the Pairing Agreement). If Unregistered Shares are issued, each
certificate evidencing Subject Shares shall be stamped or otherwise imprinted
with a legend in substantially the following form (and no other restrictive
legends):
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS
SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF.
There shall be no legend on the Paired Shares reflecting the restrictions in
Sections 3 or 4 hereof.
2.3 Other Deliveries. Concurrently with the delivery of the Paired
Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such
as a transfer or conveyance tax forms or returns required by applicable federal
or New York law to be executed by Starwood Lodging, as may reasonably be
requested by Stock Purchaser in order to effect the delivery of the Subject
Shares to Stock Purchaser.
2.4 Registration Rights and Requirements.
(a) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing
Date execute and deliver to each other the Registration Rights Agreement and the
parties thereto shall perform their respective obligations thereunder. If
Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the
Registration Rights Agreement shall not be executed or delivered and none of the
parties shall have any obligations thereunder.
(b) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, and if the Settlement Date shall not have occurred on or
before the seventh Business Day after the Required Effectiveness Date, Starwood
Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount
equal to the "Interest Factor." For each Restricted Holder, the "Interest
Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum
for each day after the seventh Business Day after the Required Effectiveness
Date to and including the earlier of the Settlement Date or the date that is 60
days after the Required Effectiveness Date, multiplied by (ii) the Market Price
multiplied by the number of Subject Shares held by such Restricted Holder on the
date of such payment.
(c) In the event that the Settlement Date shall not have occurred by
the date that is 60 days after the Required Effectiveness Date, each Person who
is a Restricted Holder as of such date shall have the non-transferrable right
(its "Put Right"), exercisable at any one time for each such Restricted Holder
after such 60th day and through the earlier to occur of (i) the Settlement Date,
and (ii) the day immediately prior to the first anniversary of the Closing, to
"put" some or all of the Subject Shares held by such Restricted Holder to
Starwood Lodging for an amount per share equal to the Put
5
<PAGE> 7
Price; provided, however, that the Put Right shall not be exercisable by any
Restricted Holder for a number of Subject Shares that is less than the lesser of
(i) 100,000, or (ii) the number of Subject Shares then held by such Restricted
Holder. Such right shall be exercised by such Restricted Holder giving Starwood
Lodging notice of its election to exercise its Put Right and the number of
Subject Shares to be purchased by Starwood, whereupon Starwood Lodging shall
purchase such shares at 9:00 a.m. (Eastern Time) on the second Business Day
following its receipt of such notice, with payment to be delivered (against
delivery to Starwood Lodging of such shares free of all rights of other Persons)
on the third Business Day thereafter in cash or immediately available funds to
such account as such Restricted Holder may designate in such notice. The Put
Price shall be the Market Price determined as of the date such notice is given.
Starwood Lodging shall have the right to satisfy its obligations under the Put
Rights by designating another Person as the purchaser of such shares, and such
obligations shall be deemed satisfied upon such other Person's purchase of such
shares for the Put Price and at the time and in the manner set forth herein.
Such designation shall not affect Starwood's obligation to pay the Interest
Factor as provided herein.
(d) The Interest Factor and the right of each Restricted Holder to
receive the Put Price in the event it elects to exercise its Put Right shall be
each Restricted Holder's sole and exclusive monetary remedies arising from
Starwood's failure to cause the Settlement Date to occur on or before the
seventh Business Day after the Required Effectiveness Date and shall be deemed
liquidated damages in respect of such failure; and each Restricted Holder shall
be deemed to have waived its other monetary remedies. However, from and after
the seventh Business Day after the Required Effectiveness Date, each Holder
shall at all times have such equitable remedies as may be available under
applicable law.
SECTION 3
NOTICE PROCEDURES REGARDING OPEN MARKET SALE
OF STOCK AGREEMENTS SHARES
3.1 If, at any time any Restricted Holder or Restricted Group elects
to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares
on any single Business Day (300,000 Stock Agreements Shares from and after the
first Business Day after the ITT Closing), prior to executing such Transfer the
designated representative of such Restricted Holder or Restricted Group shall
provide Starwood's representative, the Chief Financial Officer of the Trust (or
any successor representative identified by a notice given hereunder), with
telephonic notice at (602) 852-3900 along with a confirmation of such notice by
telefacsimile to Starwood Lodging and Starwood's additional addressees as
provided in Section 7.1 hereof. Such notice (the "Sale Notice") shall indicate
the number of Stock Agreements Shares which such Restricted Holder or Restricted
Group has determined to Transfer in an Open Market Sale (the "Proposed
Disposition Shares") on such day or days and shall comply with Section 3.5
hereof (if applicable). Such notice shall be deemed given on the Business Day
the telephonic notice described above is given so long as such notice is given
by 5:00 P.M., Eastern time, on such day; if given after that time, it shall be
deemed given on the next Business Day. In the event that, at any time while this
Section 3.1 is in effect, the Corporation or the Trust effects any
reclassification, stock split or stock dividend with respect to their stock, any
change or conversion of stock into other securities, or any other dividend or
distribution with respect to the Paired Shares, other than (i) dividends
contemplated by the Starwood Lodging Disclosure as in effect on December 30,
1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the
current rate (as of December 30, 1997) of their dividends (together with any
increases in such rate in the ordinary course) and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of the Internal
Revenue Code) without regard to any net capital gains or the deduction for
dividends paid,
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appropriate and proportionate adjustments shall be made to the numbers of Stock
Agreements Shares set forth in the first sentence of this Section 3.1.
3.2 No later than noon, Eastern time, on the second Business Day
after the Sale Notice is given as described above, Starwood Lodging may provide
the representative(s) of such Restricted Holder or Restricted Group with
telephonic notice, along with a confirmation of such notice to such
representatives by telefacsimile, that Starwood Lodging is irrevocably offering
to purchase or place all of the Proposed Disposition Shares at a price per share
equal to the average of the closing prices on the New York Stock Exchange on the
first and second Business Days following the giving of the Sale Notice. Such
notice shall be given as provided in Section 3.5 hereof. It shall be a condition
to such notice and the consummation of such transaction that such transaction
not constitute a violation of Regulation M promulgated by the SEC. If Starwood
Lodging fails to make such an offer within such period, it shall have no further
rights under this Section 3 with respect to any Orderly Market Disposition by
such Restricted Holder or Restricted Group of Stock Agreements Shares up to the
amount of the Proposed Disposition Shares that is commenced not later than the
seventh Business Day after the Sale Notice is given.
3.3 If Starwood Lodging duly makes such an offer, such Restricted
Holder or Restricted Group shall elect by telephonic notice to Starwood's
representative delivered and confirmed as described above, given by 8:30 a.m.
(Eastern Time) on the Business Day following receipt of Starwood's offer (such
day is referred to herein as the "Response Date"), in their sole and absolute
discretion, to either (i) proceed with such proposed disposition, in which
instance Starwood Lodging shall purchase or place the Proposed Disposition
Shares at 9:00 a.m. (Eastern Time), on the Response Date, with payment to be
delivered (against delivery to Starwood Lodging of the Proposed Disposition
Shares free of all rights of other Persons) on the third Business Day after the
Response Date in cash or immediately available funds to such account as such
Restricted Holder may designate by notice to Starwood, or (ii) not to proceed
with such proposed disposition, in which instance the Sale Notice shall be
withdrawn and such Restricted Holder shall continue to hold the Proposed
Disposition Shares subject to the terms of this Section 3 (to the extent
applicable). If such Restricted Holder shall fail to so elect by 8:30 a.m.
(Eastern Time) on the Response Date, it shall irrevocably be deemed to have
elected not to proceed with such proposed disposition.
3.4 On the first anniversary of the Settlement Date, the provisions
of this Section 3 shall automatically lapse and be of no further force or effect
with respect to each Restricted Holder that holds less than 500,000 Stock
Agreements Shares (except (i) to the extent that such Restricted Holder acts on
or after such date as a member of a Restricted Group that holds in the aggregate
500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted
Holder, either alone or as a member of a Restricted Group, has given or was
required to have given Starwood Lodging a Sale Notice prior to such date and as
to which the procedures in this Section 3 have not been fully performed).
3.5 Any notice given by Starwood Lodging pursuant to Section 3.2
hereof to Stock Purchaser shall be given telephonically to Mansor Dalaan at
(310) 229-2929 and by telefacsimile to (310) 229-2927, or to such other
telephone and telefacsimile numbers as may be set forth for such purpose in the
Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof
to any other Restricted Holder or Restricted Group shall be given to the
telephone and telefacsimile numbers as may be set forth for such purpose in the
Sale Notice, and no Sale Notice from a Restricted Holder other than Stock
Purchaser or from any Restricted Group shall be deemed properly given in
accordance with Section 3.1 unless such numbers are set forth in such Sale
Notice.
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3.6 Time is of the essence in the performance by the parties of
their obligations under this Section 3.
SECTION 4
TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES
4.1 Each Restricted Holder covenants and agrees that, as a condition
to any Transfer by a such Restricted Holder of Subject Shares in a transaction
that does not constitute an Open Market Sale, such Restricted Holder will obtain
and deliver to Starwood Lodging a Joinder Agreement duly executed by the
transferee or the intended transferee; and any purported Transfer of Subject
Shares made in breach of this provision shall be null and void ab initio.
4.2 Each Restricted Holder covenants and agrees that, prior to the
effectiveness of the Registration Statement, it will not "sell short" (as such
term is commonly understood in the brokerage industry) any Paired Shares,
whether "against the box" or otherwise.
SECTION 5
PAYMENT RIGHTS
On the Settlement Date, Starwood Lodging shall pay to Stock
Purchaser in cash or other immediately available funds an amount equal to the
amount, if any, by which the Lock Price exceeds the Market Price as of the
Settlement Date, multiplied by the number of Paired Shares delivered by Starwood
Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the
payments from Starwood Lodging described in this section are referred to herein
as the "Payment Rights." Pursuant to a written instrument a copy of which is
delivered to Starwood Lodging promptly following its execution by Stock
Purchaser, Stock Purchaser may distribute to its partners or their shareholders
or assign to any other Person all or any portion of the Payment Rights either
together with or separately from the Paired Shares delivered hereunder.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Stock Purchaser represents and warrants to Starwood Lodging as
follows:
(a) Stock Purchaser has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery hereof and thereof and the
performance by Stock Purchaser of its obligations hereunder and thereunder will
not violate or constitute an event of default under any material term or
material provision of any agreement, document, instrument, judgment, order or
decree to which Stock Purchaser is a party or by which it is bound, or violate
any law, rule or regulation the violation of which would have a material adverse
effect upon the principal benefits intended to be provided under this Agreement
or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement on behalf of Stock Purchaser have the legal power, right and
actual authority to bind Stock Purchaser to the terms and conditions hereof and
thereof. Each of this Agreement and the Registration Rights Agreement is a valid
and binding obligation of Stock Purchaser, enforceable in accordance with
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its terms, except as the same may be affected by bankruptcy, insolvency,
moratorium or similar laws, or by legal or equitable principles relating to or
limiting the rights of contracting parties generally.
(c) Stock Purchaser is acquiring the Subject Shares to be issued to
it for investment, solely for the account of itself, on behalf of its partners
and Persons who are stockholders of such partners, or on behalf of certain
Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a
creditor of Stock Purchaser (collectively, such partners and other Persons the
"Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates
of Stock Purchaser is acquiring Subject Shares with a view to or for sale in
connection with any distribution of such Subject Shares in violation of
applicable securities laws.
(d) Stock Purchaser and each of the Stock Purchaser Affiliates is an
Accredited Investor.
(e) Stock Purchaser has obtained and reviewed the Starwood Lodging
Disclosure and the SEC Documents that have been filed with the SEC through the
date hereof.
6.2 By its execution of its Joinder Agreement, each Restricted
Holder other than Stock Purchaser shall be deemed to have represented and
warranted to Starwood, as of the date of its delivery of such Joinder Agreement,
as follows:
(a) Such Restricted Holder has the power and authority to enter into
this Agreement, the Registration Rights Agreement and its Joinder Agreement and
to perform its obligations hereunder and thereunder. The execution and delivery
hereof and thereof and the performance by such Restricted Holder of its
obligations hereunder and thereunder will not violate or constitute an event of
default under any material term or material provision of any agreement,
document, instrument, judgment, order or decree to which such Restricted Holder
is a party or by which it is bound, or violate any law, rule or regulation the
violation of which would have a material adverse effect upon the principal
benefits intended to be provided under this Agreement or the Registration Rights
Agreement.
(b) The individuals executing this Agreement, the Registration
Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder
have the legal power, right and actual authority to bind such Restricted Holder
to the terms and conditions hereof and thereof. Each of this Agreement, the
Registration Rights Agreement and its Joinder Agreement is a valid and binding
obligation of such Restricted Holder, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Such Restricted Holder is acquiring the Subject Shares
Transferred or to be Transferred to it for investment, solely for the account of
itself and not with a view to or for sale in connection with any distribution of
such Subject Shares in violation of applicable securities laws; provided,
however, that if such Restricted Holder is Stock Purchaser Affiliate, such
Restricted Holder may acquire the Subject Shares on behalf of Persons who are
stockholders of such Restricted Holder if each of such Persons is an Accredited
Investor.
(d) Such Restricted Holder is an Accredited Investor.
(e) Such Restricted Holder has had the opportunity, prior to making
the determination to acquire any Subject Shares, to obtain and review the
Starwood Lodging Disclosure
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and the SEC Documents that have been filed with the SEC through the date of the
execution of such Restricted Holder's Joinder Agreement.
6.3 The Trust hereby represents and warrants to Stock Purchaser as
follows:
(a) The Trust has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Trust, nor the performance
by the Trust of the Trust's obligations hereunder or thereunder will violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which the
Trust is a party or by which the Trust is bound, or violate any law, rule or
regulation the violation of which would have a material adverse effect upon the
principal benefits intended to be provided under this Agreement or the
Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the Trust have
the legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement and the Registration Rights Agreement is a
valid and binding obligation of Trust, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Trust has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Trust included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Trust and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Trust has not, since December 31, 1996, made any
change in the accounting practices or policies applied in the preparation of
their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be
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<PAGE> 12
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole, or (ii) there has not been any split,
combination or reclassification of any of the capital stock or units of the
Trust or its operating partnership or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of, or in substitution
for shares of such capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Trust or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Trust or any of its subsidiaries, as
such, or any of its or their properties, assets or business that, individually
or in the aggregate, have had, or would reasonably be expected to have, a
material adverse change in or effect on the financial condition, properties,
business, results of operations or prospects of the Trust and its subsidiaries
taken as a whole; and there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
knowledge of the Trust, threatened against or involving the Trust or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole. As
of the date hereof, there are no actions, suits or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of its
subsidiaries or any of their officers, directors or employees, as such, or any
of their properties, assets or business relating to the transactions
contemplated by this Agreement and the Registration Rights Agreement.
6.4 The Corporation hereby represents and warrants to Stock Purchaser as
follows:
(a) The Corporation has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Corporation, nor the
performance by the Corporation of the Corporation's obligations hereunder or
thereunder will violate or constitute an event of default under any material
terms or material provisions of any agreement, document, instrument, judgment,
order or decree to which the Corporation is a party or by which the Corporation
is bound, or violate any law, rule or regulation the violation of which would
have a material adverse effect upon the principal benefits intended to be
provided under this Agreement or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement and the
Registration Rights Agreement is a valid and binding obligation of Corporation,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
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(d) The Corporation has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Corporation included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as of their respective dates of filing, were prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented the consolidated financial position of the
Corporation and its consolidated subsidiaries as of the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the SEC Documents or as required by generally
accepted accounting principles, the Corporation has not, since December 31,
1996, made any change in the accounting practices or policies applied in the
preparation of their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole, or (ii) there has not been any split, combination or reclassification of
any of the capital stock or units of the Corporation or its operating
partnership or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of, or in substitution for shares of such
capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Corporation or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Corporation or any of its subsidiaries,
as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole; and there are no actions, suits or claims or
legal, administrative or arbitrative proceedings or investigations pending or,
to the knowledge of the Corporation, threatened against or involving the
Corporation or any of its subsidiaries or any of their directors, officers or
employees, as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole. As of the date hereof, there are no actions,
suits or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of its subsidiaries or any of their
officers, directors or employees, as such, or any of their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Registration Rights Agreement (other than those arising in connection with the
Registration Statement or the performance by the Corporation of its obligations
under the Registration Rights Agreement).
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SECTION 7
NOTICES
7.1 Addresses. Except for the notices given pursuant to Section 3,
whenever any notice, demand or request is required or permitted hereunder, such
notice, demand or request shall be made in writing and shall be (a) sent via a
nationally recognized overnight courier service fully prepaid, (b) deposited in
the United States by mail, registered or certified, return receipt requested,
postage prepaid, or (c) sent via telefacsimile, provided that the original of
such notice, demand or request shall also be sent via one of the methods
described in (a) and (b) above, in each case to the addressees (and individuals)
set forth below:
As to Stock Purchaser:
c/o Al Anwa USA, Inc.
1925 Century Park East, Suite 1900
Los Angeles, CA 90067
Attn: Mansor Dalaan
Telefacsimile: (310) 229-2927
With a copy to Stock Purchaser's additional addressees:
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
Gordon K. Eng, Esq.
19191 South Vermont Avenue, Suite 420
Torrance, California 90502
Telefacsimile: (310) 207-1066
As to Starwood Lodging:
Starwood Hotels & Resorts Trust
2231 E. Camelback Rd., Suite 410
Phoenix, AZ 85016
Attn: Ronald C. Brown or Chief Financial Officer
Telefacsimile: (602) 852-0115
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Rd., Suite 400
Phoenix, AZ 85016
Attn: Alan M. Schnaid or Vice President
Telefacsimile: (602) 852-0115
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With a copy to Starwood Lodging's additional addressees:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, CA 90013
Attn: Sherwin L. Samuels, Esq.
and Kenneth H. Levin, Esq.
Telefacsimile: (213) 896-6600
If to any Restricted Holder other than Stock Purchaser: to the address and
telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or
to any other address or telefacsimile number provided to Starwood Lodging in
writing pursuant to a notice given by such Restricted Holder pursuant to this
Section 7.1).
7.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Starwood Lodging and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Starwood Lodging
for all purposes hereunder, and any notice, demand or request that shall be
delivered to Stock Purchaser and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Stock Purchaser
for all purposes hereunder (i) the next business day following the day such
notice, demand or request is delivered by a nationally recognized overnight
courier service fully prepaid, to such party and its Additional Addressee, (ii)
if sent via registered or certified mail, at the time of receipt by such party
and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date
and time stated upon confirmation reports generated by the sending party's
telefacsimile machine confirming the delivery of such notice, demand or request
to such party and its Additional Addressee.
7.3 Refusal of Delivery. The inability to deliver any notice, demand
or request because the individual to whom it is properly addressed in accordance
with this Section 7 refused delivery thereof or no longer can be located at that
address shall constitute delivery thereof to such individual.
7.4 Change of Address. Each party shall have the right from time to
time to designate by written notice to the other parties hereto such other
Person or Persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
SECTION 8
GENERAL PROVISIONS
8.1 Amendment. No provision of this Agreement or of any documents or
instrument entered into, given or made pursuant to this Agreement may be
amended, changed, waived, discharged or terminated except by an instrument in
writing, signed by the party against whom enforcement of the amendment, change,
waiver, discharge or termination is sought.
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8.2 Time of Essence. All times provided for in this Agreement for
the performance of any act will be strictly construed, time being of the
essence.
8.3 Entire Agreement. This Agreement and other documents delivered
pursuant to this Agreement set forth the entire agreement and understanding of
the parties in respect of the transactions contemplated by this Agreement, and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof and thereof. No representation, promise, inducement or
statement of intention with respect to the subject matter hereof has been made
by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement,
and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for
any alleged representations, promise, inducement or statement of intention not
therein so set forth.
8.4 No Waiver. No failure of any party to exercise any power given
such party hereunder or to insist upon strict compliance by the other party with
its obligations hereunder shall constitute a waiver of any party's right to
demand strict compliance with the terms of this Agreement.
8.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
8.6 Costs and Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of an alleged dispute, default, or misrepresentation in connection
with any of the provisions of this Agreement the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees, charges and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.7 Payments; Interests. Except as otherwise provided herein,
payment of all amounts required by the terms of this Agreement shall be made in
the United States and in immediately available funds of the United States of
America which, at the time of payment, is accepted for the payment of all public
and private obligations and debts. If any payment due under this Agreement is
not paid when due, it shall thereafter bear interest at a variable rate equal to
the rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
8.8 Parties in Interest. The rights and obligations of the parties
hereto shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and the legal representatives of
their respective estates. However, none of Stock Purchaser's rights under this
Agreement shall be assignable except (i) in the case of the Payment Rights, as
provided in Section 5 hereof, and (ii) in the case of all other rights of Stock
Purchaser or another Restricted Holder, to a transferee of Subject Shares in a
transaction not constituting an Open Market Sale if such transferee delivers a
Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement
is intended to confer any right or remedy under this Agreement on any Person
other than the parties to this Agreement and their respective successors and
assigns, or to relieve or discharge the obligation or liability of any Person to
any party to this Agreement or to give any Person any right of subrogation or
action over or against any party to this Agreement.
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<PAGE> 17
8.9 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict-of-law rules and principles of that state.
8.10 Incorporation of Recitals. The recitals of this Agreement are
incorporated into and made a part of this Agreement.
8.11 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Stock Purchaser" shall include the respective permitted
successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall
include the permitted successors and assigns of Starwood Lodging, if any.
8.12 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree
to execute upon the request of the other party such instruments and take such
actions as may be reasonably necessary to carry out the provisions of this
Agreement provided that no material additional cost or liability shall incurred
thereby by the party of whom such request is made.
8.14 Starwood Hotels & Resorts Trust. The parties hereto understand
and agree that the name "Starwood Hotels & Resorts Trust" is a designation of
the Trust and its trustees (as trustees but not personally) under the Trust's
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.
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<PAGE> 18
IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused
this Agreement to be executed as of the day and year first above written.
"Stock Purchaser"
SAVANAH LIMITED PARTNERSHIP,
a District of Columbia limited partnership
By: ASPEN ENTERPRISES INTERNATIONAL, INC.,
a Colorado corporation, its General Partner
By:
------------------------------
Mansor Dalaan
President
"Starwood Lodging"
STARWOOD HOTELS & RESORTS TRUST,
a Maryland real estate investment trust
By:
----------------------------
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland corporation
By:
----------------------------
Nir E. Margalit
Secretary
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<PAGE> 19
ATTACHMENT A
to Stock Agreement
AGREEMENT TO BE BOUND
BY THE STOCK AGREEMENT
(JOINDER AGREEMENT)
The undersigned, being the transferee or the intended transferee of
______________ Paired Shares (the "Subject Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (together, the "Company"), as a
condition to the transfer to and acquisition by the undersigned of such Subject
Shares, acknowledges that certain sales or other transfers of such Subject
Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of
January 15, 1998, initially among the Company and Savanah Limited Partnership, a
District of Columbia limited partnership , and the undersigned hereby (1)
acknowledges receipt of a copy of the Stock Agreement, and (2) agrees to be
bound as a "Restricted Holder" by the terms of the Stock Agreement, as the same
has been or may be amended from time to time (including without limitation the
representations and warranties of the undersigned set forth therein that will be
deemed made by virtue hereof).
The undersigned is hereby advised that the Subject Shares have not
been registered under the Securities Act of 1933 and in such event cannot be
resold unless they are registered under said act or unless an exemption from
registration under said act is available.
The following is the undersigned's representative and such
representative's address, telephone number and fax number for all purposes under
the Stock Agreement:
_________________________________
_________________________________
_________________________________
Agreed to this ____ day of __________, ____.
________________________________
By:
__________________________
Its:
__________________________
<PAGE> 1
STOCK AGREEMENT
by and among
NEW REMINGTON PARTNERS
a Texas general partnership
as Stock Purchaser
and
STARWOOD HOTELS & RESORTS TRUST,
a Maryland Real Estate Investment Trust
and
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland Corporation,
Dated as of January 15, 1998
<PAGE> 2
STOCK AGREEMENT
THIS STOCK AGREEMENT (this "Agreement") is entered into as of
January 15, 1998 (the "Closing Date") by and between NEW REMINGTON PARTNERS, a
Texas general partnership, ("Stock Purchaser"), STARWOOD HOTELS & RESORTS TRUST,
a Maryland real estate investment trust (the "Trust"), and STARWOOD HOTELS &
RESORTS WORLDWIDE, INC., a Maryland corporation (the "Corporation", and, with
the Trust, "Starwood Lodging").
R E C I T A L S
A. Stock Purchaser has agreed to acquire from Starwood Lodging, and
Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired
Shares in partial consideration for certain assets owned by Stock Purchaser.
B. The parties desire to enter into this Agreement in order to set
forth certain terms and conditions under which the Paired Shares are to be
issued to and held by Stock Purchaser.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Starwood Lodging and Stock Purchaser agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms.
"Accredited Investor" shall have the meaning ascribed to that term
in Rule 501 promulgated by the SEC under the Securities Act.
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with such first
Person.
"Applicable Percentage" shall mean: (a) if Starwood Lodging delivers
Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and
(b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1
hereof, 91.95%.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business.
"Closing Date" shall mean the date hereof.
"Equity Value" shall mean Twenty-Six Million Six Hundred Sixty-Five
Thousand Five Hundred Dollars ($26,665,500), divided by the Applicable
Percentage, rounded to the nearest whole number.
"ITT Closing" shall have the meaning set forth in the Registration
Rights Agreement.
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<PAGE> 3
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Attachment A hereto.
"LIBOR" means the average of the interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to publish such a compilation of interbank offered
rates, or if The Wall Street Journal ceases to be published, then Starwood
Lodging shall propose a substitute method of determining the interest rate
generally known as the three-month LIBOR rate, which method, absent manifest
error, shall be binding on all holders of the Subject Shares and Starwood
Lodging.
"Lock Price" shall mean $53.75 per Paired Share if the Closing Date
occurs on or before the 60th day after seven Business Days after January 15,
1998 (or thereafter because of a default by the Trust or the Corporation), and
the Market Price as of the Closing Date if the Closing Date occurs thereafter
for any reason other than a default by the Trust or the Corporation, provided,
however, that in the event that, at any time during the period between December
30, 1997 and the Settlement Date, the Corporation or the Trust effects any
reclassification, stock split or stock dividend with respect to their stock, any
change or conversion of stock into other securities, or any other dividend or
distribution with respect to the Paired Shares, other than (i) dividends
contemplated by the Starwood Lodging Disclosure in effect as of December 30,
1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the
current rate (as of December 30, 1997) of their dividends (together with any
increases in such rate in the ordinary course) and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of the Internal
Revenue Code) without regard to any net capital gains or the deduction for
dividends paid, appropriate and proportionate adjustments shall be made to the
Lock Price.
"Market Price" shall mean, as of any date, the average closing
prices of the Paired Shares on the New York Stock Exchange during the ten
consecutive Business Days immediately preceding such date.
"Open Market Sale" means one or more sales of Stock Agreements
Shares (including "short sales" initiated with the intention of delivering Stock
Agreements Shares) made or proposed to be made by placing one or more sale
orders or offers to sell with one or more securities brokers or dealers with a
view toward the consummation of one or more sale transactions that are required
to be, or that actually are, reported to the New York Stock Exchange or the
National Association of Securities Dealers.
"Orderly Market Disposition" means the sale of Stock Agreements
Shares by placing one or more sell orders with one or more securities brokers or
dealers with a view toward the disposition in the market of such Stock
Agreements Shares.
"Other Stock Agreements" shall mean, collectively, (i) that certain
Stock Agreement, dated as of January 15, 1998, among Savanah Limited
Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock
Agreement, dated as of January 15, 1998, among N.Y. Overnight Partners, L.P., as
stock purchaser, and Starwood Lodging and (iii) that certain Stock Agreement,
dated as of January 15, 1998, among D.C. Overnight Partners, L.P., as stock
purchaser, and Starwood Lodging.
"Paired Shares" shall mean one 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
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<PAGE> 4
subject to the Pairing Agreement. For purposes of calculating the number of
Paired Shares to be delivered hereunder, each pair of the shares of the stock of
the Trust and the Corporation shall be considered one share.
"Pairing Agreement" shall mean 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 shares of the Corporation and
the Trust.
"Payment Rights" shall have the meaning set forth in Section 5
hereof.
"Person" shall have the meaning set forth in the Registration Rights
Agreement.
"Proposed Disposition Shares" shall have the meaning set forth in
Section 3 hereof.
"Put Price" and "Put Right" shall have the meaning set forth in
Section 2.4 hereof.
"Registered Shares" means Subject Shares the issuance of which to
Stock Purchaser has been registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among Stock Purchaser, the Trust and the Corporation in the
form of Attachment B hereto.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Required Effectiveness Date" shall have the meaning set forth in
the Registration Rights Agreement.
"Response Date" shall have the meaning set forth in Section 3
hereof.
"Restricted Group" shall mean two (2) or more Restricted Holders
acting in concert or under common direction.
"Restricted Holder" shall mean Stock Purchaser and any other Person
who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale. A Restricted Holder shall not include any
Person who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale if such Transfer occurs after the first Open
Market Sale of such Stock Agreements Shares.
"Sale Notice" shall have the meaning set forth in Section 3 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" means all documents required to have been filed by
the Trust or the Corporation with the SEC since January 1, 1996 and through the
date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Settlement Date" shall mean, if Starwood Lodging shall deliver
Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood
Lodging or its counsel shall notify Stock
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<PAGE> 5
Purchaser that (i) the Registration Statement has been declared effective by the
SEC, (ii) that the Subject Shares have been registered, on the terms and subject
to the provisions of the Registration Rights Agreement, for Transfer by the
selling shareholders named therein in Open Market Sales and in such other manner
as is provided in the Registration Statement, and (iii) that Starwood Lodging
has completed all deliveries and other actions required to enable trading of the
Subject Shares on the New York Stock Exchange; provided, however, that if such
notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be
deemed for all purposes to occur on the Business Day following the date of such
notice.
"Starwood Lodging Disclosure" shall mean, collectively, the Form S-3
filed by the Corporation and the Trust with the SEC on November 12, 1997, and
the Form S-4 filed by the Corporation and the Trust with the SEC on November 20,
1997, as the same has been or may hereafter be amended by any filing with the
SEC made by the Trust or the Corporation.
"Stock Agreements Shares" shall mean the aggregate of the Subject
Shares and the other Paired Shares delivered pursuant to the Other Stock
Agreements.
"Stock Purchaser Affiliates" shall have the meaning set forth in
Section 6.1 hereof.
"Subject Shares" means the 539,535 Paired Shares delivered by
Starwood Lodging pursuant to Section 2.1 hereof.
"Transfer" shall have the meaning set forth in the Registration
Rights Agreement.
"Transfer Agent" shall mean the transfer agent for the Paired
Shares.
"Unregistered Shares" means Subject Shares the issuance of which to
Stock Purchaser has not been registered under the Securities Act.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
CALCULATION OF SUBJECT SHARES
2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to
Stock Purchaser on the Closing Date Paired Shares in an amount equal to the
Equity Value divided by the Lock Price. Starwood Lodging shall have the option
to deliver Registered Shares or Unregistered Shares on the Closing Date.
2.2 Delivery Requirements for Paired Shares. The Paired Shares to be
delivered hereunder shall be properly endorsed and certificated Paired Shares in
the amount required to be delivered in accordance with the provisions of this
Agreement. If Registered Shares are delivered, such shares shall be unlegended
and fully and freely transferable without any consent of, registration
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<PAGE> 6
with or notice to any Person (except as provided for in Sections 3 and 4 hereof
and in the Pairing Agreement). If Unregistered Shares are issued, each
certificate evidencing Subject Shares shall be stamped or otherwise imprinted
with a legend in substantially the following form (and no other restrictive
legends):
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS
SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF.
There shall be no legend on the Paired Shares reflecting the restrictions in
Sections 3 or 4 hereof.
2.3 Other Deliveries. Concurrently with the delivery of the Paired
Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such
as a transfer or conveyance tax forms or returns required by applicable federal
or New York law to be executed by Starwood Lodging, as may reasonably be
requested by Stock Purchaser in order to effect the delivery of the Subject
Shares to Stock Purchaser.
2.4 Registration Rights and Requirements.
(a) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing
Date execute and deliver to each other the Registration Rights Agreement and the
parties thereto shall perform their respective obligations thereunder. If
Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the
Registration Rights Agreement shall not be executed or delivered and none of the
parties shall have any obligations thereunder.
(b) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, and if the Settlement Date shall not have occurred on or
before the seventh Business Day after the Required Effectiveness Date, Starwood
Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount
equal to the "Interest Factor." For each Restricted Holder, the "Interest
Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum
for each day after the seventh Business Day after the Required Effectiveness
Date to and including the earlier of the Settlement Date or the date that is 60
days after the Required Effectiveness Date, multiplied by (ii) the Market Price
multiplied by the number of Subject Shares held by such Restricted Holder on the
date of such payment.
(c) In the event that the Settlement Date shall not have occurred by
the date that is 60 days after the Required Effectiveness Date, each Person who
is a Restricted Holder as of such date shall have the non-transferrable right
(its "Put Right"), exercisable at any one time for each such Restricted Holder
after such 60th day and through the earlier to occur of (i) the Settlement Date,
and (ii) the day immediately prior to the first anniversary of the Closing, to
"put" some or all of the Subject Shares held by such Restricted Holder to
Starwood Lodging for an amount per share equal to the Put
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<PAGE> 7
Price; provided, however, that the Put Right shall not be exercisable by any
Restricted Holder for a number of Subject Shares that is less than the lesser of
(i) 100,000, or (ii) the number of Subject Shares then held by such Restricted
Holder. Such right shall be exercised by such Restricted Holder giving Starwood
Lodging notice of its election to exercise its Put Right and the number of
Subject Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging
shall purchase such shares at 9:00 a.m. (Eastern Time) on the second Business
Day following its receipt of such notice, with payment to be delivered (against
delivery to Starwood Lodging of such shares free of all rights of other Persons)
on the third Business Day thereafter in cash or immediately available funds to
such account as such Restricted Holder may designate in such notice. The Put
Price shall be the Market Price determined as of the date such notice is given.
Starwood Lodging shall have the right to satisfy its obligations under the Put
Rights by designating another Person as the purchaser of such shares, and such
obligations shall be deemed satisfied upon such other Person's purchase of such
shares for the Put Price and at the time and in the manner set forth herein.
Such designation shall not affect Starwood Lodging's obligation to pay the
Interest Factor as provided herein.
(d) The Interest Factor and the right of each Restricted Holder to
receive the Put Price in the event it elects to exercise its Put Right shall be
each Restricted Holder's sole and exclusive monetary remedies arising from
Starwood Lodging's failure to cause the Settlement Date to occur on or before
the seventh Business Day after the Required Effectiveness Date and shall be
deemed liquidated damages in respect of such failure; and each Restricted Holder
shall be deemed to have waived its other monetary remedies. However, from and
after the seventh Business Day after the Required Effectiveness Date, each
Holder shall at all times have such equitable remedies as may be available under
applicable law.
SECTION 3
NOTICE PROCEDURES REGARDING OPEN MARKET SALE
OF STOCK AGREEMENTS SHARES
3.1 If, at any time any Restricted Holder or Restricted Group elects
to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares
on any single Business Day (300,000 Stock Agreements Shares from and after the
first Business Day after the ITT Closing), prior to executing such Transfer the
designated representative of such Restricted Holder or Restricted Group shall
provide Starwood Lodging's representative, the Chief Financial Officer of the
Trust (or any successor representative identified by a notice given hereunder),
with telephonic notice at (602) 852-3900 along with a confirmation of such
notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional
addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice")
shall indicate the number of Stock Agreements Shares which such Restricted
Holder or Restricted Group has determined to Transfer in an Open Market Sale
(the "Proposed Disposition Shares") on such day or days and shall comply with
Section 3.5 hereof (if applicable). Such notice shall be deemed given on the
Business Day the telephonic notice described above is given so long as such
notice is given by 5:00 P.M., Eastern time, on such day; if given after that
time, it shall be deemed given on the next Business Day. In the event that, at
any time while this Section 3.1 is in effect, the Corporation or the Trust
effects any reclassification, stock split or stock dividend with respect to
their stock, any change or conversion of stock into other securities, or any
other dividend or distribution with respect to the Paired Shares, other than (i)
dividends contemplated by the Starwood Lodging Disclosure as in effect on
December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater
of (a) the current rate (as of December 30, 1997) of their dividends (together
with any increases in such rate in the ordinary course) and (b) the Trust's
"real estate investment taxable income" (as such term is defined for purposes of
the Internal Revenue Code) without regard to any net capital gains or the
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<PAGE> 8
deduction for dividends paid, appropriate and proportionate adjustments shall be
made to the numbers of Stock Agreements Shares set forth in the first sentence
of this Section 3.1.
3.2 No later than noon, Eastern time, on the second Business Day
after the Sale Notice is given as described above, Starwood Lodging may provide
the representative(s) of such Restricted Holder or Restricted Group with
telephonic notice, along with a confirmation of such notice to such
representatives by telefacsimile, that Starwood Lodging is irrevocably offering
to purchase or place all of the Proposed Disposition Shares at a price per share
equal to the average of the closing prices on the New York Stock Exchange on the
first and second Business Days following the giving of the Sale Notice. Such
notice shall be given as provided in Section 3.5 hereof. It shall be a condition
to such notice and the consummation of such transaction that such transaction
not constitute a violation of Regulation M promulgated by the SEC. If Starwood
Lodging fails to make such an offer within such period, it shall have no further
rights under this Section 3 with respect to any Orderly Market Disposition by
such Restricted Holder or Restricted Group of Stock Agreements Shares up to the
amount of the Proposed Disposition Shares that is commenced not later than the
seventh Business Day after the Sale Notice is given.
3.3 If Starwood Lodging duly makes such an offer, such Restricted
Holder or Restricted Group shall elect by telephonic notice to Starwood
Lodging's representative delivered and confirmed as described above, given by
8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood
Lodging's offer (such day is referred to herein as the "Response Date"), in
their sole and absolute discretion, to either (i) proceed with such proposed
disposition, in which instance Starwood Lodging shall purchase or place the
Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date,
with payment to be delivered (against delivery to Starwood Lodging of the
Proposed Disposition Shares free of all rights of other Persons) on the third
Business Day after the Response Date in cash or immediately available funds to
such account as such Restricted Holder may designate by notice to Starwood
Lodging, or (ii) not to proceed with such proposed disposition, in which
instance the Sale Notice shall be withdrawn and such Restricted Holder shall
continue to hold the Proposed Disposition Shares subject to the terms of this
Section 3 (to the extent applicable). If such Restricted Holder shall fail to so
elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be
deemed to have elected not to proceed with such proposed disposition.
3.4 On the first anniversary of the Settlement Date, the provisions
of this Section 3 shall automatically lapse and be of no further force or effect
with respect to each Restricted Holder that holds less than 500,000 Stock
Agreements Shares (except (i) to the extent that such Restricted Holder acts on
or after such date as a member of a Restricted Group that holds in the aggregate
500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted
Holder, either alone or as a member of a Restricted Group, has given or was
required to have given Starwood Lodging a Sale Notice prior to such date and as
to which the procedures in this Section 3 have not been fully performed).
3.5 Any notice given by Starwood Lodging pursuant to Section 3.2
hereof to Stock Purchaser shall be given telephonically to Mansor Dalaan at
(310) 229-2929 and by telefacsimile to (310) 229-2927, or to such other
telephone and telefacsimile numbers as may be set forth for such purpose in the
Sale Notice. Any notice given by Starwood Lodging pursuant to Section 3.2 hereof
to any other Restricted Holder or Restricted Group shall be given to the
telephone and telefacsimile numbers as may be set forth for such purpose in the
Sale Notice, and no Sale Notice from a Restricted Holder other than Stock
Purchaser or from any Restricted Group shall be deemed properly given in
accordance with Section 3.1 unless such numbers are set forth in such Sale
Notice.
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<PAGE> 9
3.6 Time is of the essence in the performance by the parties of
their obligations under this Section 3.
SECTION 4
TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES
4.1 Each Restricted Holder covenants and agrees that, as a condition
to any Transfer by a such Restricted Holder of Subject Shares in a transaction
that does not constitute an Open Market Sale, such Restricted Holder will obtain
and deliver to Starwood Lodging a Joinder Agreement duly executed by the
transferee or the intended transferee; and any purported Transfer of Subject
Shares made in breach of this provision shall be null and void ab initio.
4.2 Each Restricted Holder covenants and agrees that, prior to the
effectiveness of the Registration Statement, it will not "sell short" (as such
term is commonly understood in the brokerage industry) any Paired Shares,
whether "against the box" or otherwise.
SECTION 5
PAYMENT RIGHTS
On the Settlement Date, Starwood Lodging shall pay to Stock
Purchaser in cash or other immediately available funds an amount equal to the
amount, if any, by which the Lock Price exceeds the Market Price as of the
Settlement Date, multiplied by the number of Paired Shares delivered by Starwood
Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the
payments from Starwood Lodging described in this section are referred to herein
as the "Payment Rights." Pursuant to a written instrument a copy of which is
delivered to Starwood Lodging promptly following its execution by Stock
Purchaser, Stock Purchaser may distribute to its partners or their shareholders
or assign to any other Person all or any portion of the Payment Rights either
together with or separately from the Paired Shares delivered hereunder.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Stock Purchaser represents and warrants to Starwood Lodging as
follows:
(a) Stock Purchaser has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery hereof and thereof and the
performance by Stock Purchaser of its obligations hereunder and thereunder will
not violate or constitute an event of default under any material term or
material provision of any agreement, document, instrument, judgment, order or
decree to which Stock Purchaser is a party or by which it is bound, or violate
any law, rule or regulation the violation of which would have a material adverse
effect upon the principal benefits intended to be provided under this Agreement
or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement on behalf of Stock Purchaser have the legal power, right and
actual authority to bind Stock Purchaser to the terms and conditions hereof and
thereof. Each of this Agreement and the Registration Rights Agreement is a valid
and binding obligation of Stock Purchaser, enforceable in accordance with
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<PAGE> 10
its terms, except as the same may be affected by bankruptcy, insolvency,
moratorium or similar laws, or by legal or equitable principles relating to or
limiting the rights of contracting parties generally.
(c) Stock Purchaser is acquiring the Subject Shares to be issued to
it for investment, solely for the account of itself, on behalf of its partners
and Persons who are stockholders of such partners, or on behalf of certain
Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a
creditor of Stock Purchaser (collectively, such partners and other Persons the
"Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates
of Stock Purchaser is acquiring Subject Shares with a view to or for sale in
connection with any distribution of such Subject Shares in violation of
applicable securities laws.
(d) Stock Purchaser and each of the Stock Purchaser Affiliates is an
Accredited Investor.
(e) Stock Purchaser has obtained and reviewed the Starwood Lodging
Disclosure and the SEC Documents that have been filed with the SEC through the
date hereof.
6.2 By its execution of its Joinder Agreement, each Restricted
Holder other than Stock Purchaser shall be deemed to have represented and
warranted to Starwood Lodging, as of the date of its delivery of such Joinder
Agreement, as follows:
(a) Such Restricted Holder has the power and authority to enter into
this Agreement, the Registration Rights Agreement and its Joinder Agreement and
to perform its obligations hereunder and thereunder. The execution and delivery
hereof and thereof and the performance by such Restricted Holder of its
obligations hereunder and thereunder will not violate or constitute an event of
default under any material term or material provision of any agreement,
document, instrument, judgment, order or decree to which such Restricted Holder
is a party or by which it is bound, or violate any law, rule or regulation the
violation of which would have a material adverse effect upon the principal
benefits intended to be provided under this Agreement or the Registration Rights
Agreement.
(b) The individuals executing this Agreement, the Registration
Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder
have the legal power, right and actual authority to bind such Restricted Holder
to the terms and conditions hereof and thereof. Each of this Agreement, the
Registration Rights Agreement and its Joinder Agreement is a valid and binding
obligation of such Restricted Holder, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Such Restricted Holder is acquiring the Subject Shares
Transferred or to be Transferred to it for investment, solely for the account of
itself and not with a view to or for sale in connection with any distribution of
such Subject Shares in violation of applicable securities laws; provided,
however, that if such Restricted Holder is Stock Purchaser Affiliate, such
Restricted Holder may acquire the Subject Shares on behalf of Persons who are
stockholders of such Restricted Holder if each of such Persons is an Accredited
Investor.
(d) Such Restricted Holder is an Accredited Investor.
(e) Such Restricted Holder has had the opportunity, prior to making
the determination to acquire any Subject Shares, to obtain and review the
Starwood Lodging Disclosure
9
<PAGE> 11
and the SEC Documents that have been filed with the SEC through the date of the
execution of such Restricted Holder's Joinder Agreement.
6.3 The Trust hereby represents and warrants to Stock Purchaser as
follows:
(a) The Trust has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Trust, nor the performance
by the Trust of the Trust's obligations hereunder or thereunder will violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which the
Trust is a party or by which the Trust is bound, or violate any law, rule or
regulation the violation of which would have a material adverse effect upon the
principal benefits intended to be provided under this Agreement or the
Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the Trust have
the legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement and the Registration Rights Agreement is a
valid and binding obligation of Trust, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Trust has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Trust included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Trust and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Trust has not, since December 31, 1996, made any
change in the accounting practices or policies applied in the preparation of
their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be
10
<PAGE> 12
expected to have, a material adverse change in or effect on the financial
condition, properties, business, results of operations or prospects of the Trust
and its subsidiaries taken as a whole, or (ii) there has not been any split,
combination or reclassification of any of the capital stock or units of the
Trust or its operating partnership or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of, or in substitution
for shares of such capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Trust or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Trust or any of its subsidiaries, as
such, or any of its or their properties, assets or business that, individually
or in the aggregate, have had, or would reasonably be expected to have, a
material adverse change in or effect on the financial condition, properties,
business, results of operations or prospects of the Trust and its subsidiaries
taken as a whole; and there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
knowledge of the Trust, threatened against or involving the Trust or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole. As
of the date hereof, there are no actions, suits or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of its
subsidiaries or any of their officers, directors or employees, as such, or any
of their properties, assets or business relating to the transactions
contemplated by this Agreement and the Registration Rights Agreement.
6.4 The Corporation hereby represents and warrants to Stock Purchaser as
follows:
(a) The Corporation has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Corporation, nor the
performance by the Corporation of the Corporation's obligations hereunder or
thereunder will violate or constitute an event of default under any material
terms or material provisions of any agreement, document, instrument, judgment,
order or decree to which the Corporation is a party or by which the Corporation
is bound, or violate any law, rule or regulation the violation of which would
have a material adverse effect upon the principal benefits intended to be
provided under this Agreement or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement and the
Registration Rights Agreement is a valid and binding obligation of Corporation,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
11
<PAGE> 13
(d) The Corporation has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Corporation included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as of their respective dates of filing, were prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented the consolidated financial position of the
Corporation and its consolidated subsidiaries as of the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the SEC Documents or as required by generally
accepted accounting principles, the Corporation has not, since December 31,
1996, made any change in the accounting practices or policies applied in the
preparation of their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole, or (ii) there has not been any split, combination or reclassification of
any of the capital stock or units of the Corporation or its operating
partnership or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of, or in substitution for shares of such
capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Corporation or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Corporation or any of its subsidiaries,
as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole; and there are no actions, suits or claims or
legal, administrative or arbitrative proceedings or investigations pending or,
to the knowledge of the Corporation, threatened against or involving the
Corporation or any of its subsidiaries or any of their directors, officers or
employees, as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole. As of the date hereof, there are no actions,
suits or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of its subsidiaries or any of their
officers, directors or employees, as such, or any of their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Registration Rights Agreement (other than those arising in connection with the
Registration Statement or the performance by the Corporation of its obligations
under the Registration Rights Agreement).
12
<PAGE> 14
SECTION 7
NOTICES
7.1 Addresses. Except for the notices given pursuant to Section 3,
whenever any notice, demand or request is required or permitted hereunder, such
notice, demand or request shall be made in writing and shall be (a) sent via a
nationally recognized overnight courier service fully prepaid, (b) deposited in
the United States by mail, registered or certified, return receipt requested,
postage prepaid, or (c) sent via telefacsimile, provided that the original of
such notice, demand or request shall also be sent via one of the methods
described in (a) and (b) above, in each case to the addressees (and individuals)
set forth below:
As to Stock Purchaser:
c/o Al Anwa USA, Inc.
1925 Century Park East, Suite 1900
Los Angeles, CA 90067
Attn: Tarek Ayoubi
Telefacsimile: (310) 229-2939
With a copy to Stock Purchaser's additional addressees:
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
Gordon K. Eng, Esq.
19191 South Vermont Avenue, Suite 420
Torrance, California 90502
Telefacsimile: (310) 207-1066
As to Starwood Lodging:
Starwood Hotels & Resorts Trust
2231 E. Camelback Rd., Suite 410
Phoenix, AZ 85016
Attn: Ronald C. Brown or Chief Financial Officer
Telefacsimile: (602) 852-0115
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Rd., Suite 400
Phoenix, AZ 85016
Attn: Alan M. Schnaid or Vice President
Telefacsimile: (602) 852-0115
13
<PAGE> 15
With a copy to Starwood Lodging's additional addressees:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, CA 90013
Attn: Sherwin L. Samuels, Esq.
and Kenneth H. Levin, Esq.
Telefacsimile: (213) 896-6600
If to any Restricted Holder other than Stock Purchaser: to the address and
telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or
to any other address or telefacsimile number provided to Starwood Lodging in
writing pursuant to a notice given by such Restricted Holder pursuant to this
Section 7.1).
7.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Starwood Lodging and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Starwood Lodging
for all purposes hereunder, and any notice, demand or request that shall be
delivered to Stock Purchaser and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Stock Purchaser
for all purposes hereunder (i) the next business day following the day such
notice, demand or request is delivered by a nationally recognized overnight
courier service fully prepaid, to such party and its Additional Addressee, (ii)
if sent via registered or certified mail, at the time of receipt by such party
and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date
and time stated upon confirmation reports generated by the sending party's
telefacsimile machine confirming the delivery of such notice, demand or request
to such party and its Additional Addressee.
7.3 Refusal of Delivery. The inability to deliver any notice, demand
or request because the individual to whom it is properly addressed in accordance
with this Section 7 refused delivery thereof or no longer can be located at that
address shall constitute delivery thereof to such individual.
7.4 Change of Address. Each party shall have the right from time to
time to designate by written notice to the other parties hereto such other
Person or Persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
SECTION 8
GENERAL PROVISIONS
8.1 Amendment. No provision of this Agreement or of any documents or
instrument entered into, given or made pursuant to this Agreement may be
amended, changed, waived, discharged or terminated except by an instrument in
writing, signed by the party against whom enforcement of the amendment, change,
waiver, discharge or termination is sought.
14
<PAGE> 16
8.2 Time of Essence. All times provided for in this Agreement for
the performance of any act will be strictly construed, time being of the
essence.
8.3 Entire Agreement. This Agreement and other documents delivered
pursuant to this Agreement set forth the entire agreement and understanding of
the parties in respect of the transactions contemplated by this Agreement, and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof and thereof. No representation, promise, inducement or
statement of intention with respect to the subject matter hereof has been made
by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement,
and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for
any alleged representations, promise, inducement or statement of intention not
therein so set forth.
8.4 No Waiver. No failure of any party to exercise any power given
such party hereunder or to insist upon strict compliance by the other party with
its obligations hereunder shall constitute a waiver of any party's right to
demand strict compliance with the terms of this Agreement.
8.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
8.6 Costs and Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of an alleged dispute, default, or misrepresentation in connection
with any of the provisions of this Agreement the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees, charges and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.7 Payments; Interests. Except as otherwise provided herein,
payment of all amounts required by the terms of this Agreement shall be made in
the United States and in immediately available funds of the United States of
America which, at the time of payment, is accepted for the payment of all public
and private obligations and debts. If any payment due under this Agreement is
not paid when due, it shall thereafter bear interest at a variable rate equal to
the rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
8.8 Parties in Interest. The rights and obligations of the parties
hereto shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and the legal representatives of
their respective estates. However, none of Stock Purchaser's rights under this
Agreement shall be assignable except (i) in the case of the Payment Rights, as
provided in Section 5 hereof, and (ii) in the case of all other rights of Stock
Purchaser or another Restricted Holder, to a transferee of Subject Shares in a
transaction not constituting an Open Market Sale if such transferee delivers a
Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement
is intended to confer any right or remedy under this Agreement on any Person
other than the parties to this Agreement and their respective successors and
assigns, or to relieve or discharge the obligation or liability of any Person to
any party to this Agreement or to give any Person any right of subrogation or
action over or against any party to this Agreement.
15
<PAGE> 17
8.9 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict-of-law rules and principles of that state.
8.10 Incorporation of Recitals. The recitals of this Agreement are
incorporated into and made a part of this Agreement.
8.11 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Stock Purchaser" shall include the respective permitted
successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall
include the permitted successors and assigns of Starwood Lodging, if any.
8.12 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree
to execute upon the request of the other party such instruments and take such
actions as may be reasonably necessary to carry out the provisions of this
Agreement provided that no material additional cost or liability shall incurred
thereby by the party of whom such request is made.
8.14 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 Trust's 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.
16
<PAGE> 18
IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused
this Agreement to be executed as of the day and year first above written.
"Stock Purchaser"
NEW REMINGTON PARTNERS,
a Texas general partnership
By: REMINGTON VENTURERS, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
------------------------------
Mansor Dalaan
President
By: REMINGTON VENTURERS II, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
------------------------------
Mansor Dalaan
President
"Starwood Lodging"
STARWOOD HOTELS & RESORTS TRUST ,
a Maryland Real Estate Investment Trust
By: /s/ Steven R. Goldman
----------------------------
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland Corporation
By: /s/ Nir E. Margalit
----------------------------
Nir E. Margalit
Secretary
17
<PAGE> 19
ATTACHMENT A
to Stock Agreement
AGREEMENT TO BE BOUND
BY THE STOCK AGREEMENT
(JOINDER AGREEMENT)
The undersigned, being the transferee or the intended transferee of
_____________ Paired Shares (the "Subject Shares") of Starwood Lodging Trust, a
Maryland real estate investment trust, and Starwood Lodging Corporation, a
Maryland corporation (together, the "Company"), as a condition to the transfer
to and acquisition by the undersigned of such Subject Shares, acknowledges that
certain sales or other transfers of such Subject Shares are governed by the
Stock Agreement (the "Stock Agreement"), dated as of January 15, 1998 initially
among the Company and New Remington Partners, a Texas general partnership, and
the undersigned hereby (1) acknowledges receipt of a copy of the Stock
Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of
the Stock Agreement, as the same has been or may be amended from time to time
(including without limitation the representations and warranties of the
undersigned set forth therein that will be deemed made by virtue hereof).
The undersigned is hereby advised that the Subject Shares have not
been registered under the Securities Act of 1933 and in such event cannot be
resold unless they are registered under said act or unless an exemption from
registration under said act is available.
The following is the undersigned's representative and such
representative's address, telephone number and fax number for all purposes under
the Stock Agreement:
_________________________________
_________________________________
_________________________________
Agreed to this ____ day of __________, ____.
________________________________
By: ____________________________
Its: ___________________________
<PAGE> 1
STOCK AGREEMENT
by and among
N.Y. OVERNIGHT PARTNERS, L.P.
a New York limited partnership
as Stock Purchaser
and
STARWOOD HOTELS & RESORTS TRUST,
a Maryland Real Estate Investment Trust
and
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland Corporation,
Dated as of January 15, 1998
<PAGE> 2
STOCK AGREEMENT
THIS STOCK AGREEMENT (this "Agreement") is entered into as of
January 15, 1998 (the "Closing Date") by and between N.Y. OVERNIGHT PARTNERS,
L.P., a New York limited partnership, ("Stock Purchaser"), STARWOOD HOTELS &
RESORTS TRUST, a Maryland real estate investment trust (the "Trust"), and
STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the
"Corporation", and, with the Trust, "Starwood Lodging").
R E C I T A L S
A. Stock Purchaser has agreed to acquire from Starwood Lodging, and
Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired
Shares in partial consideration for certain assets owned by Stock Purchaser.
B. The parties desire to enter into this Agreement in order to set
forth certain terms and conditions under which the Paired Shares are to be
issued to and held by Stock Purchaser.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Starwood Lodging and Stock Purchaser agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms.
"Accredited Investor" shall have the meaning ascribed to that term
in Rule 501 promulgated by the SEC under the Securities Act.
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with such first
Person.
"Applicable Percentage" shall mean: (a) if Starwood Lodging delivers
Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and
(b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1
hereof, 91.95%.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business.
"Closing Date" shall mean the date hereof.
"Equity Value" shall mean Two Million Nine Hundred Forty-Two
Thousand Four Hundred Dollars ($2,942,400), divided by the Applicable
Percentage, rounded to the nearest whole number.
<PAGE> 3
"ITT Closing" shall have the meaning set forth in the Registration
Rights Agreement.
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Attachment A hereto.
"LIBOR" means the average of the interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to publish such a compilation of interbank offered
rates, or if The Wall Street Journal ceases to be published, then Starwood
Lodging shall propose a substitute method of determining the interest rate
generally known as the three-month LIBOR rate, which method, absent manifest
error, shall be binding on all holders of the Subject Shares and Starwood
Lodging.
"Lock Price" shall mean the Market Price as of the Closing Date,
provided, however, that in the event that, at any time during the period between
December 30, 1997 and the Settlement Date, the Corporation or the Trust effects
any reclassification, stock split or stock dividend with respect to their stock,
any change or conversion of stock into other securities, or any other dividend
or distribution with respect to the Paired Shares, other than (i) dividends
contemplated by the Starwood Lodging Disclosure in effect as of December 30,
1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the
current rate (as of December 30, 1997) of their dividends (together with any
increases in such rate in the ordinary course) and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of the Internal
Revenue Code) without regard to any net capital gains or the deduction for
dividends paid, appropriate and proportionate adjustments shall be made to the
Lock Price.
"Market Price" shall mean, as of any date, the average closing
prices of the Paired Shares on the New York Stock Exchange during the ten
consecutive Business Days immediately preceding such date.
"Open Market Sale" means one or more sales of Stock Agreements
Shares (including "short sales" initiated with the intention of delivering Stock
Agreements Shares) made or proposed to be made by placing one or more sale
orders or offers to sell with one or more securities brokers or dealers with a
view toward the consummation of one or more sale transactions that are required
to be, or that actually are, reported to the New York Stock Exchange or the
National Association of Securities Dealers.
"Orderly Market Disposition" means the sale of Stock Agreements
Shares by placing one or more sell orders with one or more securities brokers or
dealers with a view toward the disposition in the market of such Stock
Agreements Shares.
"Other Stock Agreements" shall mean, collectively, (i) that certain
Stock Agreement, dated as of January 15, 1998, among Savanah Limited
Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock
Agreement, dated as of January 15, 1998, among New Remington Partners, as stock
purchaser, and Starwood Lodging, and (iii) that certain Stock Agreement, dated
as of January 15, 1998, among D.C. Overnight Partners, L.P., as stock purchaser,
and Starwood Lodging.
"Paired Shares" shall mean one 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
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subject to the Pairing Agreement. For purposes of calculating the number of
Paired Shares to be delivered hereunder, each pair of the shares of the stock of
the Trust and the Corporation shall be considered one share.
"Pairing Agreement" shall mean 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 shares of the Corporation and
the Trust.
"Payment Rights" shall have the meaning set forth in Section 5
hereof.
"Person" shall have the meaning set forth in the Registration Rights
Agreement.
"Proposed Disposition Shares" shall have the meaning set forth in
Section 3 hereof.
"Put Price" and "Put Right" shall have the meaning set forth in
Section 2.4 hereof.
"Registered Shares" means Subject Shares the issuance of which to
Stock Purchaser has been registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among Stock Purchaser, the Trust and the Corporation in the
form of Attachment B hereto.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Required Effectiveness Date" shall have the meaning set forth in
the Registration Rights Agreement.
"Response Date" shall have the meaning set forth in Section 3
hereof.
"Restricted Group" shall mean two (2) or more Restricted Holders
acting in concert or under common direction.
"Restricted Holder" shall mean Stock Purchaser and any other Person
who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale. A Restricted Holder shall not include any
Person who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale if such Transfer occurs after the first Open
Market Sale of such Stock Agreements Shares.
"Sale Notice" shall have the meaning set forth in Section 3 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" means all documents required to have been filed by
the Trust or the Corporation with the SEC since January 1, 1996 and through the
date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Settlement Date" shall mean, if Starwood Lodging shall deliver
Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood
Lodging or its counsel shall notify Stock Purchaser that (i) the Registration
Statement has been declared effective by the SEC, (ii) that the Subject Shares
have been registered, on the terms and subject to the provisions of the
Registration Rights Agreement, for Transfer by the selling shareholders named
therein in Open Market Sales and in such other manner as is provided in the
Registration Statement, and (iii) that Starwood Lodging has completed all
deliveries and other actions required to enable trading of the Subject Shares on
the New York Stock Exchange; provided, however, that if such notice is given
later than 1:00 PM Eastern Time, the Settlement Date shall be deemed for all
purposes to occur on the Business Day following the date of such notice.
"Starwood Lodging Disclosure" shall mean, collectively, the Form S-3
filed by the Corporation and the Trust with the SEC on November 12, 1997, and
the Form S-4 filed by the Corporation and the Trust with the SEC on November 20,
1997, as the same has been or may hereafter be amended by any filing with the
SEC made by the Trust or the Corporation.
"Stock Agreements Shares" shall mean the aggregate of the Subject
Shares and the other Paired Shares delivered pursuant to the Other Stock
Agreements.
"Stock Purchaser Affiliates" shall have the meaning set forth in
Section 6.1 hereof.
"Subject Shares" means the 57,405 Paired Shares delivered by
Starwood Lodging pursuant to Section 2.1 hereof.
"Transfer" shall have the meaning set forth in the Registration
Rights Agreement.
"Transfer Agent" shall mean the transfer agent for the Paired
Shares.
"Unregistered Shares" means Subject Shares the issuance of which to
Stock Purchaser has not been registered under the Securities Act.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
CALCULATION OF SUBJECT SHARES
2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to
Stock Purchaser on the Closing Date Paired Shares in an amount equal to the
Equity Value divided by the Lock Price. Starwood Lodging shall have the option
to deliver Registered Shares or Unregistered Shares on the Closing Date.
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2.2 Delivery Requirements for Paired Shares. The Paired Shares to
be delivered hereunder shall be properly endorsed and certificated Paired Shares
in the amount required to be delivered in accordance with the provisions of this
Agreement. If Registered Shares are delivered, such shares shall be unlegended
and fully and freely transferable without any consent of, registration with or
notice to any Person (except as provided for in Sections 3 and 4 hereof and in
the Pairing Agreement). If Unregistered Shares are issued, each certificate
evidencing Subject Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form (and no other restrictive legends):
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS
SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF.
There shall be no legend on the Paired Shares reflecting the restrictions in
Sections 3 or 4 hereof.
2.3 Other Deliveries. Concurrently with the delivery of the Paired
Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such
as a transfer or conveyance tax forms or returns required by applicable federal
or New York law to be executed by Starwood Lodging, as may reasonably be
requested by Stock Purchaser in order to effect the delivery of the Subject
Shares to Stock Purchaser.
2.4 Registration Rights and Requirements.
(a) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing
Date execute and deliver to each other the Registration Rights Agreement and the
parties thereto shall perform their respective obligations thereunder. If
Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the
Registration Rights Agreement shall not be executed or delivered and none of the
parties shall have any obligations thereunder.
(b) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, and if the Settlement Date shall not have occurred on or
before the seventh Business Day after the Required Effectiveness Date, Starwood
Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount
equal to the "Interest Factor." For each Restricted Holder, the "Interest
Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum
for each day after the seventh Business Day after the Required Effectiveness
Date to and including the earlier of the Settlement Date or the date that is 60
days after the Required Effectiveness Date, multiplied by (ii) the Market Price
multiplied by the number of Subject Shares held by such Restricted Holder on the
date of such payment.
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(c) In the event that the Settlement Date shall not have occurred by
the date that is 60 days after the Required Effectiveness Date, each Person who
is a Restricted Holder as of such date shall have the non-transferrable right
(its "Put Right"), exercisable at any one time for each such Restricted Holder
after such 60th day and through the earlier to occur of (i) the Settlement Date,
and (ii) the day immediately prior to the first anniversary of the Closing, to
"put" some or all of the Subject Shares held by such Restricted Holder to
Starwood Lodging for an amount per share equal to the Put Price; provided,
however, that the Put Right shall not be exercisable by any Restricted Holder
for a number of Subject Shares that is less than the lesser of (i) 100,000, or
(ii) the number of Subject Shares then held by such Restricted Holder. Such
right shall be exercised by such Restricted Holder giving Starwood Lodging
notice of its election to exercise its Put Right and the number of Subject
Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging shall
purchase such shares at 9:00 a.m. (Eastern Time) on the second Business Day
following its receipt of such notice, with payment to be delivered (against
delivery to Starwood Lodging of such shares free of all rights of other Persons)
on the third Business Day thereafter in cash or immediately available funds to
such account as such Restricted Holder may designate in such notice. The Put
Price shall be the Market Price determined as of the date such notice is given.
Starwood Lodging shall have the right to satisfy its obligations under the Put
Rights by designating another Person as the purchaser of such shares, and such
obligations shall be deemed satisfied upon such other Person's purchase of such
shares for the Put Price and at the time and in the manner set forth herein.
Such designation shall not affect Starwood Lodging's obligation to pay the
Interest Factor as provided herein.
(d) The Interest Factor and the right of each Restricted Holder to
receive the Put Price in the event it elects to exercise its Put Right shall be
each Restricted Holder's sole and exclusive monetary remedies arising from
Starwood Lodging's failure to cause the Settlement Date to occur on or before
the seventh Business Day after the Required Effectiveness Date and shall be
deemed liquidated damages in respect of such failure; and each Restricted Holder
shall be deemed to have waived its other monetary remedies. However, from and
after the seventh Business Day after the Required Effectiveness Date, each
Holder shall at all times have such equitable remedies as may be available under
applicable law.
SECTION 3
NOTICE PROCEDURES REGARDING OPEN MARKET SALE
OF STOCK AGREEMENTS SHARES
3.1 If, at any time any Restricted Holder or Restricted Group elects
to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares
on any single Business Day (300,000 Stock Agreements Shares from and after the
first Business Day after the ITT Closing), prior to executing such Transfer the
designated representative of such Restricted Holder or Restricted Group shall
provide Starwood Lodging's representative, the Chief Financial Officer of the
Trust (or any successor representative identified by a notice given hereunder),
with telephonic notice at (602) 852-3900 along with a confirmation of such
notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional
addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice")
shall indicate the number of Stock Agreements Shares which such Restricted
Holder or Restricted Group has determined to Transfer in an Open Market Sale
(the "Proposed Disposition Shares") on such day or days and shall comply with
Section 3.5 hereof (if applicable). Such notice shall be deemed given on the
Business Day the telephonic notice described above is given so long as such
notice is given by 5:00 P.M., Eastern time, on such day; if given after that
time, it shall be deemed given on the next Business Day. In the event that, at
any time while this Section 3.1 is in effect, the Corporation
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or the Trust effects any reclassification, stock split or stock dividend with
respect to their stock, any change or conversion of stock into other securities,
or any other dividend or distribution with respect to the Paired Shares, other
than (i) dividends contemplated by the Starwood Lodging Disclosure as in effect
on December 30, 1997, or (ii) dividends in the aggregate not to exceed the
greater of (a) the current rate (as of December 30, 1997) of their dividends
(together with any increases in such rate in the ordinary course) and (b) the
Trust's "real estate investment taxable income" (as such term is defined for
purposes of the Internal Revenue Code) without regard to any net capital gains
or the deduction for dividends paid, appropriate and proportionate adjustments
shall be made to the numbers of Stock Agreements Shares set forth in the first
sentence of this Section 3.1.
3.2 No later than noon, Eastern time, on the second Business Day
after the Sale Notice is given as described above, Starwood Lodging may provide
the representative(s) of such Restricted Holder or Restricted Group with
telephonic notice, along with a confirmation of such notice to such
representatives by telefacsimile, that Starwood Lodging is irrevocably offering
to purchase or place all of the Proposed Disposition Shares at a price per share
equal to the average of the closing prices on the New York Stock Exchange on the
first and second Business Days following the giving of the Sale Notice. Such
notice shall be given as provided in Section 3.5 hereof. It shall be a condition
to such notice and the consummation of such transaction that such transaction
not constitute a violation of Regulation M promulgated by the SEC. If Starwood
Lodging fails to make such an offer within such period, it shall have no further
rights under this Section 3 with respect to any Orderly Market Disposition by
such Restricted Holder or Restricted Group of Stock Agreements Shares up to the
amount of the Proposed Disposition Shares that is commenced not later than the
seventh Business Day after the Sale Notice is given.
3.3 If Starwood Lodging duly makes such an offer, such Restricted
Holder or Restricted Group shall elect by telephonic notice to Starwood
Lodging's representative delivered and confirmed as described above, given by
8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood
Lodging's offer (such day is referred to herein as the "Response Date"), in
their sole and absolute discretion, to either (i) proceed with such proposed
disposition, in which instance Starwood Lodging shall purchase or place the
Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date,
with payment to be delivered (against delivery to Starwood Lodging of the
Proposed Disposition Shares free of all rights of other Persons) on the third
Business Day after the Response Date in cash or immediately available funds to
such account as such Restricted Holder may designate by notice to Starwood
Lodging, or (ii) not to proceed with such proposed disposition, in which
instance the Sale Notice shall be withdrawn and such Restricted Holder shall
continue to hold the Proposed Disposition Shares subject to the terms of this
Section 3 (to the extent applicable). If such Restricted Holder shall fail to so
elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be
deemed to have elected not to proceed with such proposed disposition.
3.4 On the first anniversary of the Settlement Date, the provisions
of this Section 3 shall automatically lapse and be of no further force or effect
with respect to each Restricted Holder that holds less than 500,000 Stock
Agreements Shares (except (i) to the extent that such Restricted Holder acts on
or after such date as a member of a Restricted Group that holds in the aggregate
500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted
Holder, either alone or as a member of a Restricted Group, has given or was
required to have given Starwood Lodging a Sale Notice prior to such date and as
to which the procedures in this Section 3 have not been fully performed).
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3.5 Any notice given by Starwood Lodging pursuant to Section 3.2
hereof to Stock Purchaser shall be given telephonically to Tarek Ayoubi at (310)
229-2929 and by telefacsimile at (310) 229-2927, or to such other telephone and
telefacsimile numbers as may be set forth for such purpose in the Sale Notice.
Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other
Restricted Holder or Restricted Group shall be given to the telephone and
telefacsimile numbers as may be set forth for such purpose in the Sale Notice,
and no Sale Notice from a Restricted Holder other than Stock Purchaser or from
any Restricted Group shall be deemed properly given in accordance with Section
3.1 unless such numbers are set forth in such Sale Notice.
3.6 Time is of the essence in the performance by the parties of
their obligations under this Section 3.
SECTION 4
TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES
4.1 Each Restricted Holder covenants and agrees that, as a condition
to any Transfer by a such Restricted Holder of Subject Shares in a transaction
that does not constitute an Open Market Sale, such Restricted Holder will obtain
and deliver to Starwood Lodging a Joinder Agreement duly executed by the
transferee or the intended transferee; and any purported Transfer of Subject
Shares made in breach of this provision shall be null and void ab initio.
4.2 Each Restricted Holder covenants and agrees that, prior to the
effectiveness of the Registration Statement, it will not "sell short" (as such
term is commonly understood in the brokerage industry) any Paired Shares,
whether "against the box" or otherwise.
SECTION 5
PAYMENT RIGHTS
On the Settlement Date, Starwood Lodging shall pay to Stock
Purchaser in cash or other immediately available funds an amount equal to the
amount, if any, by which the Lock Price exceeds the Market Price as of the
Settlement Date, multiplied by the number of Paired Shares delivered by Starwood
Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the
payments from Starwood Lodging described in this section are referred to herein
as the "Payment Rights." Pursuant to a written instrument a copy of which is
delivered to Starwood Lodging promptly following its execution by Stock
Purchaser, Stock Purchaser may distribute to its partners or their shareholders
or assign to any other Person all or any portion of the Payment Rights either
together with or separately from the Paired Shares delivered hereunder.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Stock Purchaser represents and warrants to Starwood Lodging as
follows:
(a) Stock Purchaser has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery hereof and thereof and the
performance by Stock Purchaser of its obligations
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hereunder and thereunder will not violate or constitute an event of default
under any material term or material provision of any agreement, document,
instrument, judgment, order or decree to which Stock Purchaser is a party or by
which it is bound, or violate any law, rule or regulation the violation of which
would have a material adverse effect upon the principal benefits intended to be
provided under this Agreement or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement on behalf of Stock Purchaser have the legal power, right and
actual authority to bind Stock Purchaser to the terms and conditions hereof and
thereof. Each of this Agreement and the Registration Rights Agreement is a valid
and binding obligation of Stock Purchaser, enforceable in accordance with its
terms, except as the same may be affected by bankruptcy, insolvency, moratorium
or similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Stock Purchaser is acquiring the Subject Shares to be issued to
it for investment, solely for the account of itself, on behalf of its partners
and Persons who are stockholders of such partners, or on behalf of certain
Persons each of whom is both an Affiliate of a partner of Stock Purchaser and a
creditor of Stock Purchaser (collectively, such partners and other Persons the
"Stock Purchaser Affiliates"). Neither Stock Purchaser nor any of the Affiliates
of Stock Purchaser is acquiring Subject Shares with a view to or for sale in
connection with any distribution of such Subject Shares in violation of
applicable securities laws.
(d) Stock Purchaser and each of the Stock Purchaser Affiliates is an
Accredited Investor.
(e) Stock Purchaser has obtained and reviewed the Starwood Lodging
Disclosure and the SEC Documents that have been filed with the SEC through the
date hereof.
6.2 By its execution of its Joinder Agreement, each Restricted
Holder other than Stock Purchaser shall be deemed to have represented and
warranted to Starwood Lodging, as of the date of its delivery of such Joinder
Agreement, as follows:
(a) Such Restricted Holder has the power and authority to enter into
this Agreement, the Registration Rights Agreement and its Joinder Agreement and
to perform its obligations hereunder and thereunder. The execution and delivery
hereof and thereof and the performance by such Restricted Holder of its
obligations hereunder and thereunder will not violate or constitute an event of
default under any material term or material provision of any agreement,
document, instrument, judgment, order or decree to which such Restricted Holder
is a party or by which it is bound, or violate any law, rule or regulation the
violation of which would have a material adverse effect upon the principal
benefits intended to be provided under this Agreement or the Registration Rights
Agreement.
(b) The individuals executing this Agreement, the Registration
Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder
have the legal power, right and actual authority to bind such Restricted Holder
to the terms and conditions hereof and thereof. Each of this Agreement, the
Registration Rights Agreement and its Joinder Agreement is a valid and binding
obligation of such Restricted Holder, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
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(c) Such Restricted Holder is acquiring the Subject Shares
Transferred or to be Transferred to it for investment, solely for the account of
itself and not with a view to or for sale in connection with any distribution of
such Subject Shares in violation of applicable securities laws; provided,
however, that if such Restricted Holder is Stock Purchaser Affiliate, such
Restricted Holder may acquire the Subject Shares on behalf of Persons who are
stockholders of such Restricted Holder if each of such Persons is an Accredited
Investor.
(d) Such Restricted Holder is an Accredited Investor.
(e) Such Restricted Holder has had the opportunity, prior to making
the determination to acquire any Subject Shares, to obtain and review the
Starwood Lodging Disclosure and the SEC Documents that have been filed with the
SEC through the date of the execution of such Restricted Holder's Joinder
Agreement.
6.3 The Trust hereby represents and warrants to Stock Purchaser as
follows:
(a) The Trust has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Trust, nor the performance
by the Trust of the Trust's obligations hereunder or thereunder will violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which the
Trust is a party or by which the Trust is bound, or violate any law, rule or
regulation the violation of which would have a material adverse effect upon the
principal benefits intended to be provided under this Agreement or the
Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the Trust have
the legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement and the Registration Rights Agreement is a
valid and binding obligation of Trust, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Trust has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Trust included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied
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on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented the consolidated financial
position of the Trust and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the SEC Documents or as
required by generally accepted accounting principles, the Trust has not, since
December 31, 1996, made any change in the accounting practices or policies
applied in the preparation of their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole, or
(ii) there has not been any split, combination or reclassification of any of the
capital stock or units of the Trust or its operating partnership or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of, or in substitution for shares of such capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Trust or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Trust or any of its subsidiaries, as
such, or any of its or their properties, assets or business that, individually
or in the aggregate, have had, or would reasonably be expected to have, a
material adverse change in or effect on the financial condition, properties,
business, results of operations or prospects of the Trust and its subsidiaries
taken as a whole; and there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
knowledge of the Trust, threatened against or involving the Trust or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole. As
of the date hereof, there are no actions, suits or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of its
subsidiaries or any of their officers, directors or employees, as such, or any
of their properties, assets or business relating to the transactions
contemplated by this Agreement and the Registration Rights Agreement.
6.4 The Corporation hereby represents and warrants to Stock Purchaser as
follows:
(a) The Corporation has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Corporation, nor the
performance by the Corporation of the Corporation's obligations hereunder or
thereunder will violate or constitute an event of default under any material
terms or material provisions of any agreement, document, instrument, judgment,
order or decree to which the Corporation is a party or by which the Corporation
is bound, or violate any law, rule or regulation the violation of which would
have a material adverse effect upon the principal benefits intended to be
provided under this Agreement or the Registration Rights Agreement.
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(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement and the
Registration Rights Agreement is a valid and binding obligation of Corporation,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Corporation has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Corporation included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as of their respective dates of filing, were prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Regulation S-X of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented the consolidated financial position of the
Corporation and its consolidated subsidiaries as of the respective dates thereof
and the consolidated results of their operations and their consolidated cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein). Except as disclosed in the SEC Documents or as required by generally
accepted accounting principles, the Corporation has not, since December 31,
1996, made any change in the accounting practices or policies applied in the
preparation of their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole, or (ii) there has not been any split, combination or reclassification of
any of the capital stock or units of the Corporation or its operating
partnership or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of, or in substitution for shares of such
capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Corporation or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Corporation or any of its subsidiaries,
as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole;
12
<PAGE> 14
and there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the knowledge of the
Corporation, threatened against or involving the Corporation or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole. As of the date hereof, there are no actions, suits or other litigation,
legal or administrative proceedings or governmental investigations pending or,
to the knowledge of the Corporation, threatened against or affecting the
Corporation or any of its subsidiaries or any of their officers, directors or
employees, as such, or any of their properties, assets or business relating to
the transactions contemplated by this Agreement and the Registration Rights
Agreement (other than those arising in connection with the Registration
Statement or the performance by the Corporation of its obligations under the
Registration Rights Agreement).
SECTION 7
NOTICES
7.1 Addresses. Except for the notices given pursuant to Section 3,
whenever any notice, demand or request is required or permitted hereunder, such
notice, demand or request shall be made in writing and shall be (a) sent via a
nationally recognized overnight courier service fully prepaid, (b) deposited in
the United States by mail, registered or certified, return receipt requested,
postage prepaid, or (c) sent via telefacsimile, provided that the original of
such notice, demand or request shall also be sent via one of the methods
described in (a) and (b) above, in each case to the addressees (and individuals)
set forth below:
As to Stock Purchaser:
c/o Al Anwa USA, Inc.
1925 Century Park East, Suite 1900
Los Angeles, CA 90067
Attn: Tarek Ayoubi
Telefacsimile: (310) 229-2927
With a copy to Stock Purchaser's additional addressees:
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
Gordon K. Eng, Esq.
19191 South Vermont Avenue, Suite 420
Torrance, California 90502
Telefacsimile: (310) 207-1066
13
<PAGE> 15
As to Starwood Lodging:
Starwood Hotels & Resorts Trust
2231 E. Camelback Rd., Suite 410
Phoenix, AZ 85016
Attn: Ronald C. Brown or Chief Financial Officer
Telefacsimile: (602) 852-0115
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Rd., Suite 400
Phoenix, AZ 85016
Attn: Alan M. Schnaid or Vice President
Telefacsimile: (602) 852-0115
With a copy to Starwood Lodging's additional addressees:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, CA 90013
Attn: Sherwin L. Samuels, Esq.
and Kenneth H. Levin, Esq.
Telefacsimile: (213) 896-6600
If to any Restricted Holder other than Stock Purchaser: to the address and
telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or
to any other address or telefacsimile number provided to Starwood Lodging in
writing pursuant to a notice given by such Restricted Holder pursuant to this
Section 7.1).
7.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Starwood Lodging and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Starwood Lodging
for all purposes hereunder, and any notice, demand or request that shall be
delivered to Stock Purchaser and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Stock Purchaser
for all purposes hereunder (i) the next business day following the day such
notice, demand or request is delivered by a nationally recognized overnight
courier service fully prepaid, to such party and its Additional Addressee, (ii)
if sent via registered or certified mail, at the time of receipt by such party
and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date
and time stated upon confirmation reports generated by the sending party's
telefacsimile machine confirming the delivery of such notice, demand or request
to such party and its Additional Addressee.
7.3 Refusal of Delivery. The inability to deliver any notice, demand
or request because the individual to whom it is properly addressed in accordance
with this Section 7 refused
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<PAGE> 16
delivery thereof or no longer can be located at that address shall constitute
delivery thereof to such individual.
7.4 Change of Address. Each party shall have the right from time to
time to designate by written notice to the other parties hereto such other
Person or Persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
SECTION 8
GENERAL PROVISIONS
8.1 Amendment. No provision of this Agreement or of any documents or
instrument entered into, given or made pursuant to this Agreement may be
amended, changed, waived, discharged or terminated except by an instrument in
writing, signed by the party against whom enforcement of the amendment, change,
waiver, discharge or termination is sought.
8.2 Time of Essence. All times provided for in this Agreement for
the performance of any act will be strictly construed, time being of the
essence.
8.3 Entire Agreement. This Agreement and other documents delivered
pursuant to this Agreement set forth the entire agreement and understanding of
the parties in respect of the transactions contemplated by this Agreement, and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof and thereof. No representation, promise, inducement or
statement of intention with respect to the subject matter hereof has been made
by Stock Purchaser or Starwood Lodging which is not embodied in this Agreement,
and neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for
any alleged representations, promise, inducement or statement of intention not
therein so set forth.
8.4 No Waiver. No failure of any party to exercise any power given
such party hereunder or to insist upon strict compliance by the other party with
its obligations hereunder shall constitute a waiver of any party's right to
demand strict compliance with the terms of this Agreement.
8.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
8.6 Costs and Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of an alleged dispute, default, or misrepresentation in connection
with any of the provisions of this Agreement the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees, charges and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.7 Payments; Interests. Except as otherwise provided herein,
payment of all amounts required by the terms of this Agreement shall be made in
the United States and in immediately available funds of the United States of
America which, at the time of payment, is accepted for the payment of all public
and private obligations and debts. If any payment due under this Agreement is
not paid when due, it shall thereafter bear interest at a variable rate equal to
the rate announced from
15
<PAGE> 17
time to time by Citibank, N.A. as its prime or reference rate, plus five percent
(5%) per annum, but in no event more than the maximum rate, if any, allowed by
law to be charged by the party receiving the interest on such type of
indebtedness.
8.8 Parties in Interest. The rights and obligations of the parties
hereto shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and the legal representatives of
their respective estates. However, none of Stock Purchaser's rights under this
Agreement shall be assignable except (i) in the case of the Payment Rights, as
provided in Section 5 hereof, and (ii) in the case of all other rights of Stock
Purchaser or another Restricted Holder, to a transferee of Subject Shares in a
transaction not constituting an Open Market Sale if such transferee delivers a
Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement
is intended to confer any right or remedy under this Agreement on any Person
other than the parties to this Agreement and their respective successors and
assigns, or to relieve or discharge the obligation or liability of any Person to
any party to this Agreement or to give any Person any right of subrogation or
action over or against any party to this Agreement.
8.9 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict-of-law rules and principles of that state.
8.10 Incorporation of Recitals. The recitals of this Agreement are
incorporated into and made a part of this Agreement.
8.11 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Stock Purchaser" shall include the respective permitted
successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall
include the permitted successors and assigns of Starwood Lodging, if any.
8.12 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree
to execute upon the request of the other party such instruments and take such
actions as may be reasonably necessary to carry out the provisions of this
Agreement provided that no material additional cost or liability shall incurred
thereby by the party of whom such request is made.
8.14 Starwood Hotels & Resorts Trust. The parties hereto understand
and agree that the name "Starwood Hotels & Resorts Trust" is a designation of
the Trust and its trustees (as trustees but not personally) under the Trust's
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.
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<PAGE> 18
IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused
this Agreement to be executed as of the day and year first above written.
"Stock Purchaser"
N.Y. OVERNIGHT PARTNERS, L.P.,
a New York limited partnership
By: N.Y. OVERNIGHT, INC., a New York corporation,
its sole General Partner
By: /s/ Tarek Ayoubi
------------------------------
Tarek Ayoubi
President
"Starwood Lodging"
STARWOOD HOTELS & RESORTS TRUST,
a Maryland Real Estate Investment Trust
By: /s/ Steven R. Goldman
------------------------------
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland Corporation
By: /s/ Nir E. Margalit
------------------------------
Nir E. Margalit
Secretary
17
<PAGE> 19
ATTACHMENT A
to Stock Agreement
AGREEMENT TO BE BOUND
BY THE STOCK AGREEMENT
(JOINDER AGREEMENT)
The undersigned, being the transferee or the intended transferee of
_________ Paired Shares (the "Subject Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (together, the "Company"), as a
condition to the transfer to and acquisition by the undersigned of such Subject
Shares, acknowledges that certain sales or other transfers of such Subject
Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of
January 15, 1998, initially among the Company and N.Y. Overnight Partners, L.P.,
a New York limited partnership, and the undersigned hereby (1) acknowledges
receipt of a copy of the Stock Agreement, and (2) agrees to be bound as a
"Restricted Holder" by the terms of the Stock Agreement, as the same has been or
may be amended from time to time (including without limitation the
representations and warranties of the undersigned set forth therein that will be
deemed made by virtue hereof).
The undersigned is hereby advised that the Subject Shares have not
been registered under the Securities Act of 1933 and in such event cannot be
resold unless they are registered under said act or unless an exemption from
registration under said act is available.
The following is the undersigned's representative and such
representative's address, telephone number and fax number for all purposes under
the Stock Agreement:
_________________________________
_________________________________
_________________________________
Agreed to this ____ day of __________, ____.
---------------------------------
By: _____________________________
Its:
_____________________________
18
<PAGE> 1
STOCK AGREEMENT
by and among
D.C. OVERNIGHT PARTNERS, L.P.
a District of Columbia limited partnership
as Stock Purchaser
and
STARWOOD HOTELS & RESORTS TRUST,
a Maryland real estate investment trust
and
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland corporation,
Dated as of January 15, 1998
<PAGE> 2
STOCK AGREEMENT
THIS STOCK AGREEMENT (this "Agreement") is entered into as of
January 15, 1998 (the "Closing Date") by and between D.C. OVERNIGHT PARTNERS,
L.P., a District of Columbia limted partnership, ("Stock Purchaser"), STARWOOD
HOTELS & RESORTS TRUST, a Maryland real estate investment trust (the "Trust"),
and STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the
"Corporation", and, with the Trust, "Starwood Lodging").
R E C I T A L S
A. Stock Purchaser has agreed to acquire from Starwood Lodging, and
Starwood Lodging has agreed to issue and deliver to Stock Purchaser, Paired
Shares in partial consideration for certain assets owned by Stock Purchaser.
B. The parties desire to enter into this Agreement in order to set
forth certain terms and conditions under which the Paired Shares are to be
issued to and held by Stock Purchaser.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby mutually
acknowledged, Starwood Lodging and Stock Purchaser agree as follows:
SECTION 1
DEFINITIONS
1.1 Defined Terms.
"Accredited Investor" shall have the meaning ascribed to that term
in Rule 501 promulgated by the SEC under the Securities Act.
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by or is under common control with such first
Person.
"Applicable Percentage" shall mean: (a) if Starwood Lodging delivers
Registered Shares to Stock Purchaser pursuant to Section 2.1 hereof, 100% and
(b) if Starwood Lodging delivers Unregistered Shares pursuant to Section 2.1
hereof, 91.95%.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business.
"Closing Date" shall mean the date hereof.
"Equity Value" shall mean One Million Six Hundred Fifty-Five
Thousand One Hundred Dollars ($1,655,100), divided by the Applicable Percentage,
rounded to the nearest whole number.
"ITT Closing" shall have the meaning set forth in the Registration
Rights Agreement.
<PAGE> 3
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Attachment A hereto.
"LIBOR" means the average of the interbank offered rates for
three-month dollar deposits in the London market based on quotations at five (5)
major banks, as published from time to time in The Wall Street Journal. If The
Wall Street Journal ceases to publish such a compilation of interbank offered
rates, or if The Wall Street Journal ceases to be published, then Starwood
Lodging shall propose a substitute method of determining the interest rate
generally known as the three-month LIBOR rate, which method, absent manifest
error, shall be binding on all holders of the Subject Shares and Starwood
Lodging.
"Lock Price" shall mean the Market Price as of the Closing Date,
provided, however, that in the event that, at any time during the period between
December 30, 1997 and the Settlement Date, the Corporation or the Trust effects
any reclassification, stock split or stock dividend with respect to their stock,
any change or conversion of stock into other securities, or any other dividend
or distribution with respect to the Paired Shares, other than (i) dividends
contemplated by the Starwood Lodging Disclosure in effect as of December 30,
1997, or (ii) dividends in the aggregate not to exceed the greater of (a) the
current rate (as of December 30, 1997) of their dividends (together with any
increases in such rate in the ordinary course) and (b) the Trust's "real estate
investment taxable income" (as such term is defined for purposes of the Internal
Revenue Code) without regard to any net capital gains or the deduction for
dividends paid, appropriate and proportionate adjustments shall be made to the
Lock Price.
"Market Price" shall mean, as of any date, the average closing
prices of the Paired Shares on the New York Stock Exchange during the ten
consecutive Business Days immediately preceding such date.
"Open Market Sale" means one or more sales of Stock Agreements
Shares (including "short sales" initiated with the intention of delivering Stock
Agreements Shares) made or proposed to be made by placing one or more sale
orders or offers to sell with one or more securities brokers or dealers with a
view toward the consummation of one or more sale transactions that are required
to be, or that actually are, reported to the New York Stock Exchange or the
National Association of Securities Dealers.
"Orderly Market Disposition" means the sale of Stock Agreements
Shares by placing one or more sell orders with one or more securities brokers or
dealers with a view toward the disposition in the market of such Stock
Agreements Shares.
"Other Stock Agreements" shall mean, collectively, (i) that certain
Stock Agreement, dated as of January 15, 1998, among Savanah Limited
Partnership, as stock purchaser, and Starwood Lodging, (ii) that certain Stock
Agreement, dated as of January 15, 1998, among New Remington Partners, as stock
purchaser, and Starwood Lodging, and (iii) that certain Stock Agreement, dated
as of January 15, 1998, among N.Y. Overnight Partners, L.P., as stock purchaser,
and Starwood Lodging.
"Paired Shares" shall mean one 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 the Pairing Agreement.
For purposes of calculating the number of Paired Shares to be delivered
hereunder, each pair of the shares of the stock of the Trust and the Corporation
shall be considered one share.
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<PAGE> 4
"Pairing Agreement" shall mean 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 shares of the Corporation and
the Trust.
"Payment Rights" shall have the meaning set forth in Section 5
hereof.
"Person" shall have the meaning set forth in the Registration Rights
Agreement.
"Proposed Disposition Shares" shall have the meaning set forth in
Section 3 hereof.
"Put Price" and "Put Right" shall have the meaning set forth in
Section 2.4 hereof.
"Registered Shares" means Subject Shares the issuance of which to
Stock Purchaser has been registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among Stock Purchaser, the Trust and the Corporation in the
form of Attachment B hereto.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Required Effectiveness Date" shall have the meaning set forth in
the Registration Rights Agreement.
"Response Date" shall have the meaning set forth in Section 3
hereof.
"Restricted Group" shall mean two (2) or more Restricted Holders
acting in concert or under common direction.
"Restricted Holder" shall mean Stock Purchaser and any other Person
who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale. A Restricted Holder shall not include any
Person who shall have acquired any Stock Agreements Shares in a Transfer not
constituting an Open Market Sale if such Transfer occurs after the first Open
Market Sale of such Stock Agreements Shares.
"Sale Notice" shall have the meaning set forth in Section 3 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" means all documents required to have been filed by
the Trust or the Corporation with the SEC since January 1, 1996 and through the
date hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Settlement Date" shall mean, if Starwood Lodging shall deliver
Unregistered Shares pursuant to Section 2.1 hereof, the date on which Starwood
Lodging or its counsel shall notify Stock Purchaser that (i) the Registration
Statement has been declared effective by the SEC, (ii) that the Subject Shares
have been registered, on the terms and subject to the provisions of the
Registration Rights Agreement, for Transfer by the selling shareholders named
therein in Open Market Sales and in such other manner as is provided in the
Registration Statement, and (iii) that Starwood Lodging has
3
<PAGE> 5
completed all deliveries and other actions required to enable trading of the
Subject Shares on the New York Stock Exchange; provided, however, that if such
notice is given later than 1:00 PM Eastern Time, the Settlement Date shall be
deemed for all purposes to occur on the Business Day following the date of such
notice.
"Starwood Lodging Disclosure" shall mean, collectively, the Form S-3
filed by the Corporation and the Trust with the SEC on November 12, 1997, and
the Form S-4 filed by the Corporation and the Trust with the SEC on November 20,
1997, as the same has been or may hereafter be amended by any filing with the
SEC made by the Trust or the Corporation.
"Stock Agreements Shares" shall mean the aggregate of the Subject
Shares and the other Paired Shares delivered pursuant to the Other Stock
Agreements.
"Stock Purchaser Affiliates" shall have the meaning set forth in
Section 6.1 hereof.
"Subject Shares" means the 32,291 Paired Shares delivered by
Starwood Lodging pursuant to Section 2.1 hereof.
"Transfer" shall have the meaning set forth in the Registration
Rights Agreement.
"Transfer Agent" shall mean the transfer agent for the Paired
Shares.
"Unregistered Shares" means Subject Shares the issuance of which to
Stock Purchaser has not been registered under the Securities Act.
1.2 Other Definitional Provisions. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to this
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2
CALCULATION OF SUBJECT SHARES
2.1 Calculation of Subject Shares. Starwood Lodging shall deliver to
Stock Purchaser on the Closing Date Paired Shares in an amount equal to the
Equity Value divided by the Lock Price. Starwood Lodging shall have the option
to deliver Registered Shares or Unregistered Shares on the Closing Date.
2.2 Delivery Requirements for Paired Shares. The Paired Shares to
be delivered hereunder shall be properly endorsed and certificated Paired Shares
in the amount required to be delivered in accordance with the provisions of this
Agreement. If Registered Shares are delivered, such shares shall be unlegended
and fully and freely transferable without any consent of, registration with or
notice to any Person (except as provided for in Sections 3 and 4 hereof and in
the Pairing Agreement). If Unregistered Shares are issued, each certificate
evidencing Subject Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form (and no other restrictive legends):
4
<PAGE> 6
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE SALE, PLEDGE OR
OTHER TRANSFER OF THIS CERTIFICATE OR THE SHARES EVIDENCED HEREBY IS
SUBJECT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JANUARY 15, 1998 BETWEEN THE ISSUER AND THE HOLDER HEREOF.
There shall be no legend on the Paired Shares reflecting the restrictions in
Sections 3 or 4 hereof.
2.3 Other Deliveries. Concurrently with the delivery of the Paired
Shares, Starwood Lodging shall deliver to Stock Purchaser any statements, such
as a transfer or conveyance tax forms or returns required by applicable federal
or New York law to be executed by Starwood Lodging, as may reasonably be
requested by Stock Purchaser in order to effect the delivery of the Subject
Shares to Stock Purchaser.
2.4 Registration Rights and Requirements.
(a) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, Stock Purchaser and Starwood Lodging shall on the Closing
Date execute and deliver to each other the Registration Rights Agreement and the
parties thereto shall perform their respective obligations thereunder. If
Starwood Lodging delivers Registered Shares pursuant to Section 2.1 hereof, the
Registration Rights Agreement shall not be executed or delivered and none of the
parties shall have any obligations thereunder.
(b) If Starwood Lodging delivers Unregistered Shares pursuant to
Section 2.1 hereof, and if the Settlement Date shall not have occurred on or
before the seventh Business Day after the Required Effectiveness Date, Starwood
Lodging shall pay to each Restricted Holder, on the Settlement Date, an amount
equal to the "Interest Factor." For each Restricted Holder, the "Interest
Factor" shall be an amount equal to the product of (i) LIBOR plus 2% per annum
for each day after the seventh Business Day after the Required Effectiveness
Date to and including the earlier of the Settlement Date or the date that is 60
days after the Required Effectiveness Date, multiplied by (ii) the Market Price
multiplied by the number of Subject Shares held by such Restricted Holder on the
date of such payment.
(c) In the event that the Settlement Date shall not have occurred by
the date that is 60 days after the Required Effectiveness Date, each Person who
is a Restricted Holder as of such date shall have the non-transferrable right
(its "Put Right"), exercisable at any one time for each such Restricted Holder
after such 60th day and through the earlier to occur of (i) the Settlement Date,
and (ii) the day immediately prior to the first anniversary of the Closing, to
"put" some or all of the Subject Shares held by such Restricted Holder to
Starwood Lodging for an amount per share equal to the Put Price; provided,
however, that the Put Right shall not be exercisable by any Restricted Holder
for a number of Subject Shares that is less than the lesser of (i) 100,000, or
(ii) the number of Subject Shares then held by such Restricted Holder. Such
right shall be exercised by such Restricted Holder giving Starwood Lodging
notice of its election to exercise its Put Right and the number of Subject
Shares to be purchased by Starwood Lodging, whereupon Starwood Lodging shall
purchase such shares at
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9:00 a.m. (Eastern Time) on the second Business Day following its receipt of
such notice, with payment to be delivered (against delivery to Starwood Lodging
of such shares free of all rights of other Persons) on the third Business Day
thereafter in cash or immediately available funds to such account as such
Restricted Holder may designate in such notice. The Put Price shall be the
Market Price determined as of the date such notice is given. Starwood Lodging
shall have the right to satisfy its obligations under the Put Rights by
designating another Person as the purchaser of such shares, and such obligations
shall be deemed satisfied upon such other Person's purchase of such shares for
the Put Price and at the time and in the manner set forth herein. Such
designation shall not affect Starwood Lodging's obligation to pay the Interest
Factor as provided herein.
(d) The Interest Factor and the right of each Restricted Holder to
receive the Put Price in the event it elects to exercise its Put Right shall be
each Restricted Holder's sole and exclusive monetary remedies arising from
Starwood Lodging's failure to cause the Settlement Date to occur on or before
the seventh Business Day after the Required Effectiveness Date and shall be
deemed liquidated damages in respect of such failure; and each Restricted Holder
shall be deemed to have waived its other monetary remedies. However, from and
after the seventh Business Day after the Required Effectiveness Date, each
Holder shall at all times have such equitable remedies as may be available under
applicable law.
SECTION 3
NOTICE PROCEDURES REGARDING OPEN MARKET SALE
OF STOCK AGREEMENTS SHARES
3.1 If, at any time any Restricted Holder or Restricted Group elects
to Transfer, in an Open Market Sale, more than 100,000 Stock Agreements Shares
on any single Business Day (300,000 Stock Agreements Shares from and after the
first Business Day after the ITT Closing), prior to executing such Transfer the
designated representative of such Restricted Holder or Restricted Group shall
provide Starwood Lodging's representative, the Chief Financial Officer of the
Trust (or any successor representative identified by a notice given hereunder),
with telephonic notice at (602) 852-3900 along with a confirmation of such
notice by telefacsimile to Starwood Lodging and Starwood Lodging's additional
addressees as provided in Section 7.1 hereof. Such notice (the "Sale Notice")
shall indicate the number of Stock Agreements Shares which such Restricted
Holder or Restricted Group has determined to Transfer in an Open Market Sale
(the "Proposed Disposition Shares") on such day or days and shall comply with
Section 3.5 hereof (if applicable). Such notice shall be deemed given on the
Business Day the telephonic notice described above is given so long as such
notice is given by 5:00 P.M., Eastern time, on such day; if given after that
time, it shall be deemed given on the next Business Day. In the event that, at
any time while this Section 3.1 is in effect, the Corporation or the Trust
effects any reclassification, stock split or stock dividend with respect to
their stock, any change or conversion of stock into other securities, or any
other dividend or distribution with respect to the Paired Shares, other than (i)
dividends contemplated by the Starwood Lodging Disclosure as in effect on
December 30, 1997, or (ii) dividends in the aggregate not to exceed the greater
of (a) the current rate (as of December 30, 1997) of their dividends (together
with any increases in such rate in the ordinary course) and (b) the Trust's
"real estate investment taxable income" (as such term is defined for purposes of
the Internal Revenue Code) without regard to any net capital gains or the
deduction for dividends paid, appropriate and proportionate adjustments shall be
made to the numbers of Stock Agreements Shares set forth in the first sentence
of this Section 3.1.
3.2 No later than noon, Eastern time, on the second Business Day
after the Sale Notice is given as described above, Starwood Lodging may provide
the representative(s) of such
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Restricted Holder or Restricted Group with telephonic notice, along with a
confirmation of such notice to such representatives by telefacsimile, that
Starwood Lodging is irrevocably offering to purchase or place all of the
Proposed Disposition Shares at a price per share equal to the average of the
closing prices on the New York Stock Exchange on the first and second Business
Days following the giving of the Sale Notice. Such notice shall be given as
provided in Section 3.5 hereof. It shall be a condition to such notice and the
consummation of such transaction that such transaction not constitute a
violation of Regulation M promulgated by the SEC. If Starwood Lodging fails to
make such an offer within such period, it shall have no further rights under
this Section 3 with respect to any Orderly Market Disposition by such Restricted
Holder or Restricted Group of Stock Agreements Shares up to the amount of the
Proposed Disposition Shares that is commenced not later than the seventh
Business Day after the Sale Notice is given.
3.3 If Starwood Lodging duly makes such an offer, such Restricted
Holder or Restricted Group shall elect by telephonic notice to Starwood
Lodging's representative delivered and confirmed as described above, given by
8:30 a.m. (Eastern Time) on the Business Day following receipt of Starwood
Lodging's offer (such day is referred to herein as the "Response Date"), in
their sole and absolute discretion, to either (i) proceed with such proposed
disposition, in which instance Starwood Lodging shall purchase or place the
Proposed Disposition Shares at 9:00 a.m. (Eastern Time), on the Response Date,
with payment to be delivered (against delivery to Starwood Lodging of the
Proposed Disposition Shares free of all rights of other Persons) on the third
Business Day after the Response Date in cash or immediately available funds to
such account as such Restricted Holder may designate by notice to Starwood
Lodging, or (ii) not to proceed with such proposed disposition, in which
instance the Sale Notice shall be withdrawn and such Restricted Holder shall
continue to hold the Proposed Disposition Shares subject to the terms of this
Section 3 (to the extent applicable). If such Restricted Holder shall fail to so
elect by 8:30 a.m. (Eastern Time) on the Response Date, it shall irrevocably be
deemed to have elected not to proceed with such proposed disposition.
3.4 On the first anniversary of the Settlement Date, the provisions
of this Section 3 shall automatically lapse and be of no further force or effect
with respect to each Restricted Holder that holds less than 500,000 Stock
Agreements Shares (except (i) to the extent that such Restricted Holder acts on
or after such date as a member of a Restricted Group that holds in the aggregate
500,000 or more Stock Agreements Shares, and (ii) to the extent such Restricted
Holder, either alone or as a member of a Restricted Group, has given or was
required to have given Starwood Lodging a Sale Notice prior to such date and as
to which the procedures in this Section 3 have not been fully performed).
3.5 Any notice given by Starwood Lodging pursuant to Section 3.2
hereof to Stock Purchaser shall be given telephonically to Tarek Ayoubi at (310)
229-2929 and by telefacsimile to (310) 229-2927, or to such other telephone and
telefacsimile numbers as may be set forth for such purpose in the Sale Notice.
Any notice given by Starwood Lodging pursuant to Section 3.2 hereof to any other
Restricted Holder or Restricted Group shall be given to the telephone and
telefacsimile numbers as may be set forth for such purpose in the Sale Notice,
and no Sale Notice from a Restricted Holder other than Stock Purchaser or from
any Restricted Group shall be deemed properly given in accordance with Section
3.1 unless such numbers are set forth in such Sale Notice.
3.6 Time is of the essence in the performance by the parties of
their obligations under this Section 3.
SECTION 4
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TRANSFERS NOT CONSTITUTING AN OPEN MARKET SALE; SHORT SALES
4.1 Each Restricted Holder covenants and agrees that, as a condition
to any Transfer by a such Restricted Holder of Subject Shares in a transaction
that does not constitute an Open Market Sale, such Restricted Holder will obtain
and deliver to Starwood Lodging a Joinder Agreement duly executed by the
transferee or the intended transferee; and any purported Transfer of Subject
Shares made in breach of this provision shall be null and void ab initio.
4.2 Each Restricted Holder covenants and agrees that, prior to the
effectiveness of the Registration Statement, it will not "sell short" (as such
term is commonly understood in the brokerage industry) any Paired Shares,
whether "against the box" or otherwise.
SECTION 5
PAYMENT RIGHTS
On the Settlement Date, Starwood Lodging shall pay to Stock
Purchaser in cash or other immediately available funds an amount equal to the
amount, if any, by which the Lock Price exceeds the Market Price as of the
Settlement Date, multiplied by the number of Paired Shares delivered by Starwood
Lodging to Stock Purchaser hereunder. Stock Purchaser's right to receive the
payments from Starwood Lodging described in this section are referred to herein
as the "Payment Rights." Pursuant to a written instrument a copy of which is
delivered to Starwood Lodging promptly following its execution by Stock
Purchaser, Stock Purchaser may distribute to its partners or their shareholders
or assign to any other Person all or any portion of the Payment Rights either
together with or separately from the Paired Shares delivered hereunder.
SECTION 6
REPRESENTATIONS AND WARRANTIES
6.1 Stock Purchaser represents and warrants to Starwood Lodging as
follows:
(a) Stock Purchaser has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery hereof and thereof and the
performance by Stock Purchaser of its obligations hereunder and thereunder will
not violate or constitute an event of default under any material term or
material provision of any agreement, document, instrument, judgment, order or
decree to which Stock Purchaser is a party or by which it is bound, or violate
any law, rule or regulation the violation of which would have a material adverse
effect upon the principal benefits intended to be provided under this Agreement
or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement on behalf of Stock Purchaser have the legal power, right and
actual authority to bind Stock Purchaser to the terms and conditions hereof and
thereof. Each of this Agreement and the Registration Rights Agreement is a valid
and binding obligation of Stock Purchaser, enforceable in accordance with its
terms, except as the same may be affected by bankruptcy, insolvency, moratorium
or similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Stock Purchaser is acquiring the Subject Shares to be issued to
it for investment, solely for the account of itself, on behalf of its partners
and Persons who are stockholders
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of such partners, or on behalf of certain Persons each of whom is both an
Affiliate of a partner of Stock Purchaser and a creditor of Stock Purchaser
(collectively, such partners and other Persons the "Stock Purchaser
Affiliates"). Neither Stock Purchaser nor any of the Affiliates of Stock
Purchaser is acquiring Subject Shares with a view to or for sale in connection
with any distribution of such Subject Shares in violation of applicable
securities laws.
(d) Stock Purchaser and each of the Stock Purchaser Affiliates is an
Accredited Investor.
(e) Stock Purchaser has obtained and reviewed the Starwood Lodging
Disclosure and the SEC Documents that have been filed with the SEC through the
date hereof.
6.2 By its execution of its Joinder Agreement, each Restricted
Holder other than Stock Purchaser shall be deemed to have represented and
warranted to Starwood Lodging, as of the date of its delivery of such Joinder
Agreement, as follows:
(a) Such Restricted Holder has the power and authority to enter into
this Agreement, the Registration Rights Agreement and its Joinder Agreement and
to perform its obligations hereunder and thereunder. The execution and delivery
hereof and thereof and the performance by such Restricted Holder of its
obligations hereunder and thereunder will not violate or constitute an event of
default under any material term or material provision of any agreement,
document, instrument, judgment, order or decree to which such Restricted Holder
is a party or by which it is bound, or violate any law, rule or regulation the
violation of which would have a material adverse effect upon the principal
benefits intended to be provided under this Agreement or the Registration Rights
Agreement.
(b) The individuals executing this Agreement, the Registration
Rights Agreement and its Joinder Agreement on behalf of such Restricted Holder
have the legal power, right and actual authority to bind such Restricted Holder
to the terms and conditions hereof and thereof. Each of this Agreement, the
Registration Rights Agreement and its Joinder Agreement is a valid and binding
obligation of such Restricted Holder, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) Such Restricted Holder is acquiring the Subject Shares
Transferred or to be Transferred to it for investment, solely for the account of
itself and not with a view to or for sale in connection with any distribution of
such Subject Shares in violation of applicable securities laws; provided,
however, that if such Restricted Holder is Stock Purchaser Affiliate, such
Restricted Holder may acquire the Subject Shares on behalf of Persons who are
stockholders of such Restricted Holder if each of such Persons is an Accredited
Investor.
(d) Such Restricted Holder is an Accredited Investor.
(e) Such Restricted Holder has had the opportunity, prior to making
the determination to acquire any Subject Shares, to obtain and review the
Starwood Lodging Disclosure and the SEC Documents that have been filed with the
SEC through the date of the execution of such Restricted Holder's Joinder
Agreement.
6.3 The Trust hereby represents and warrants to Stock Purchaser as
follows:
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(a) The Trust has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Trust, nor the performance
by the Trust of the Trust's obligations hereunder or thereunder will violate or
constitute an event of default under any material terms or material provisions
of any agreement, document, instrument, judgment, order or decree to which the
Trust is a party or by which the Trust is bound, or violate any law, rule or
regulation the violation of which would have a material adverse effect upon the
principal benefits intended to be provided under this Agreement or the
Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the Trust have
the legal power, right and actual authority to bind the Trust to the terms and
conditions hereof. This Agreement and the Registration Rights Agreement is a
valid and binding obligation of Trust, enforceable in accordance with its terms,
except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Trust has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Trust included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of the Trust and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Trust has not, since December 31, 1996, made any
change in the accounting practices or policies applied in the preparation of
their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole, or
(ii) there has not been any split, combination or reclassification of any of the
capital stock or units of the Trust or its operating partnership or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of, or in substitution for shares of such capital stock.
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<PAGE> 12
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Trust or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Trust or any of its subsidiaries, as
such, or any of its or their properties, assets or business that, individually
or in the aggregate, have had, or would reasonably be expected to have, a
material adverse change in or effect on the financial condition, properties,
business, results of operations or prospects of the Trust and its subsidiaries
taken as a whole; and there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
knowledge of the Trust, threatened against or involving the Trust or any of its
subsidiaries or any of their directors, officers or employees, as such, or any
of its or their properties, assets or business that, individually or in the
aggregate, have had, or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Trust and its subsidiaries taken as a whole. As
of the date hereof, there are no actions, suits or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
knowledge of the Trust, threatened against or affecting the Trust or any of its
subsidiaries or any of their officers, directors or employees, as such, or any
of their properties, assets or business relating to the transactions
contemplated by this Agreement and the Registration Rights Agreement.
6.4 The Corporation hereby represents and warrants to Stock Purchaser as
follows:
(a) The Corporation has the power and authority to enter into this
Agreement and the Registration Rights Agreement and to consummate the
transactions herein contemplated; neither the execution and delivery of this
Agreement or the Registration Rights Agreement by the Corporation, nor the
performance by the Corporation of the Corporation's obligations hereunder or
thereunder will violate or constitute an event of default under any material
terms or material provisions of any agreement, document, instrument, judgment,
order or decree to which the Corporation is a party or by which the Corporation
is bound, or violate any law, rule or regulation the violation of which would
have a material adverse effect upon the principal benefits intended to be
provided under this Agreement or the Registration Rights Agreement.
(b) The individuals executing this Agreement and the Registration
Rights Agreement and the documents referenced herein on behalf of the
Corporation have the legal power, right and actual authority to bind the
Corporation to the terms and conditions hereof. This Agreement and the
Registration Rights Agreement is a valid and binding obligation of Corporation,
enforceable in accordance with its terms, except as the same may be affected by
bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
(c) All Paired Shares to be delivered in accordance with Section 2.1
hereof will, when so issued, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and will be paired with each other
in the same ratio as all other shares are paired with each other pursuant to the
Pairing Agreement.
(d) The Corporation has filed all of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of applicable law, and, at the respective times they were filed,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the
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Corporation included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as of their respective dates of
filing, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Regulation S-X of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
presented the consolidated financial position of the Corporation and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the SEC Documents or as required by generally accepted
accounting principles, the Corporation has not, since December 31, 1996, made
any change in the accounting practices or policies applied in the preparation of
their financial statements.
(e) Except as disclosed in the SEC Documents or the Starwood Lodging
Disclosure, since December 31, 1996 and through the date hereof, (i) there have
not been any events, changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have, a material adverse
change in or effect on the financial condition, properties, business, results of
operations or prospects of the Corporation and its subsidiaries taken as a
whole, or (ii) there has not been any split, combination or reclassification of
any of the capital stock or units of the Corporation or its operating
partnership or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of, or in substitution for shares of such
capital stock.
(f) Except as set forth in the SEC Documents or the Starwood Lodging
Disclosure or in a separate writing provided to Stock Purchaser on or before the
date hereof, as of the date hereof: there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against or involving
the Corporation or any of its subsidiaries, or against or involving any of the
directors, officers or employees of the Corporation or any of its subsidiaries,
as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole; and there are no actions, suits or claims or
legal, administrative or arbitrative proceedings or investigations pending or,
to the knowledge of the Corporation, threatened against or involving the
Corporation or any of its subsidiaries or any of their directors, officers or
employees, as such, or any of its or their properties, assets or business that,
individually or in the aggregate, have had, or would reasonably be expected to
have, a material adverse change in or effect on the financial condition,
properties, business, results of operations or prospects of the Corporation and
its subsidiaries taken as a whole. As of the date hereof, there are no actions,
suits or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of the Corporation, threatened
against or affecting the Corporation or any of its subsidiaries or any of their
officers, directors or employees, as such, or any of their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Registration Rights Agreement (other than those arising in connection with the
Registration Statement or the performance by the Corporation of its obligations
under the Registration Rights Agreement).
SECTION 7
NOTICES
7.1 Addresses. Except for the notices given pursuant to Section 3,
whenever any notice, demand or request is required or permitted hereunder, such
notice, demand or request shall be
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made in writing and shall be (a) sent via a nationally recognized overnight
courier service fully prepaid, (b) deposited in the United States by mail,
registered or certified, return receipt requested, postage prepaid, or (c) sent
via telefacsimile, provided that the original of such notice, demand or request
shall also be sent via one of the methods described in (a) and (b) above, in
each case to the addressees (and individuals) set forth below:
As to Stock Purchaser:
c/o Al Anwa USA, Inc.
1925 Century Park East, Suite 1900
Los Angeles, CA 90067
Attn: Tarek Ayoubi
Telefacsimile: (310) 229-2927
With a copy to Stock Purchaser's additional addressees:
Morrison & Foerster LLP
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attn: Thomas R. Fileti, Esq.
Telefacsimile: (213) 892-5454
Gordon K. Eng, Esq.
19191 South Vermont Avenue, Suite 420
Torrance, California 90502
Telefacsimile: (310) 207-1066
As to Starwood Lodging:
Starwood Lodging Hotels & Resorts Trust
2231 E. Camelback Rd., Suite 410
Phoenix, AZ 85016
Attn: Ronald C. Brown or Chief Financial Officer
Telefacsimile: (602) 852-0115
Starwood Lodging Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Rd., Suite 400
Phoenix, AZ 85016
Attn: Alan M. Schnaid or Vice President
With a copy to Starwood Lodging's additional addressees:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Attn: Andrew E. Zobler, Esq.
Telefacsimile: (212) 223-7161
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Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, CA 90013
Attn: Sherwin L. Samuels, Esq.
and Kenneth H. Levin, Esq.
Telefacsimile: (213) 896-6600
If to any Restricted Holder other than Stock Purchaser: to the address and
telefacsimile number set forth in such Restricted Holder's Joinder Agreement (or
to any other address or telefacsimile number provided to Starwood Lodging in
writing pursuant to a notice given by such Restricted Holder pursuant to this
Section 7.1).
7.2 Receipt of Notices. Any notice, demand or request that shall be
delivered to Starwood Lodging and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Starwood Lodging
for all purposes hereunder, and any notice, demand or request that shall be
delivered to Stock Purchaser and its Additional Addressee in the manner
aforesaid shall be deemed sufficiently given to and received by Stock Purchaser
for all purposes hereunder (i) the next business day following the day such
notice, demand or request is delivered by a nationally recognized overnight
courier service fully prepaid, to such party and its Additional Addressee, (ii)
if sent via registered or certified mail, at the time of receipt by such party
and its Additional Addressee, or (iii) if sent via telefacsimile, as of the date
and time stated upon confirmation reports generated by the sending party's
telefacsimile machine confirming the delivery of such notice, demand or request
to such party and its Additional Addressee.
7.3 Refusal of Delivery. The inability to deliver any notice, demand
or request because the individual to whom it is properly addressed in accordance
with this Section 7 refused delivery thereof or no longer can be located at that
address shall constitute delivery thereof to such individual.
7.4 Change of Address. Each party shall have the right from time to
time to designate by written notice to the other parties hereto such other
Person or Persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
SECTION 8
GENERAL PROVISIONS
8.1 Amendment. No provision of this Agreement or of any documents or
instrument entered into, given or made pursuant to this Agreement may be
amended, changed, waived, discharged or terminated except by an instrument in
writing, signed by the party against whom enforcement of the amendment, change,
waiver, discharge or termination is sought.
8.2 Time of Essence. All times provided for in this Agreement for
the performance of any act will be strictly construed, time being of the
essence.
8.3 Entire Agreement. This Agreement and other documents delivered
pursuant to this Agreement set forth the entire agreement and understanding of
the parties in respect of the transactions contemplated by this Agreement, and
supersede all prior agreements, arrangements and understandings relating to the
subject matter hereof and thereof. No representation, promise, inducement or
statement of intention with respect to the subject matter hereof has been made
by Stock
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Purchaser or Starwood Lodging which is not embodied in this Agreement, and
neither Starwood Lodging nor Stock Purchaser shall be bound by or liable for any
alleged representations, promise, inducement or statement of intention not
therein so set forth.
8.4 No Waiver. No failure of any party to exercise any power given
such party hereunder or to insist upon strict compliance by the other party with
its obligations hereunder shall constitute a waiver of any party's right to
demand strict compliance with the terms of this Agreement.
8.5 Counterparts. This Agreement, any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as though all
signatures appeared on a single document. Any signature page of this Agreement
or of such an amendment, supplement, document or instrument may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
8.6 Costs and Attorneys' Fees. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of an alleged dispute, default, or misrepresentation in connection
with any of the provisions of this Agreement the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees, charges and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.7 Payments; Interests. Except as otherwise provided herein,
payment of all amounts required by the terms of this Agreement shall be made in
the United States and in immediately available funds of the United States of
America which, at the time of payment, is accepted for the payment of all public
and private obligations and debts. If any payment due under this Agreement is
not paid when due, it shall thereafter bear interest at a variable rate equal to
the rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
8.8 Parties in Interest. The rights and obligations of the parties
hereto shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and the legal representatives of
their respective estates. However, none of Stock Purchaser's rights under this
Agreement shall be assignable except (i) in the case of the Payment Rights, as
provided in Section 5 hereof, and (ii) in the case of all other rights of Stock
Purchaser or another Restricted Holder, to a transferee of Subject Shares in a
transaction not constituting an Open Market Sale if such transferee delivers a
Joinder Agreement in compliance with Section 4 hereof. Nothing in this Agreement
is intended to confer any right or remedy under this Agreement on any Person
other than the parties to this Agreement and their respective successors and
assigns, or to relieve or discharge the obligation or liability of any Person to
any party to this Agreement or to give any Person any right of subrogation or
action over or against any party to this Agreement.
8.9 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict-of-law rules and principles of that state.
8.10 Incorporation of Recitals. The recitals of this Agreement are
incorporated into and made a part of this Agreement.
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<PAGE> 17
8.11 Construction of Agreement. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto. Headings at the
beginning of sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. When required by the context,
whenever the singular number is used in this Agreement, the same shall include
the plural, and the plural shall include the singular, the masculine gender
shall include the feminine and neuter genders, and vice versa. As used in this
Agreement, the term "Stock Purchaser" shall include the respective permitted
successors and assigns of Stock Purchaser, and the term "Starwood Lodging" shall
include the permitted successors and assigns of Starwood Lodging, if any.
8.12 Severability. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and be
in force to the fullest extent permitted by law.
8.13 Further Assurances. Starwood Lodging and Stock Purchaser agree
to execute upon the request of the other party such instruments and take such
actions as may be reasonably necessary to carry out the provisions of this
Agreement provided that no material additional cost or liability shall incurred
thereby by the party of whom such request is made.
8.14 Starwood Hotels & Resorts Trust. The parties hereto understand
and agree that the name "Starwood Hotels & Resorts Trust" is a designation of
the Trust and its trustees (as trustees but not personally) under the Trust's
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.
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<PAGE> 18
IN WITNESS WHEREOF, Starwood Lodging and Stock Purchaser have caused
this Agreement to be executed as of the day and year first above written.
"Stock Purchaser"
D.C. OVERNIGHT PARTNERS, L.P.,
a District of Columbia limited partnership
By: D.C. OVERNIGHT, INC., a District of Columbia
corporation, its sole General Partner
By: /s/ Tarek Ayoubi
--------------------------------
Tarek Ayoubi
President
"Starwood Lodging"
STARWOOD HOTELS & RESORTS TRUST,
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
--------------------------------
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
a Maryland corporation
By: /s/ Nir E. Margalit
--------------------------------
Nir E. Margalit
Secretary
17
<PAGE> 19
ATTACHMENT A
to Stock Agreement
AGREEMENT TO BE BOUND
BY THE STOCK AGREEMENT
(JOINDER AGREEMENT)
The undersigned, being the transferee or the intended transferee of
________________ Paired Shares (the "Subject Shares") of Starwood Hotels &
Resorts Trust, a Maryland real estate investment trust, and Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation (together, the "Company"), as a
condition to the transfer to and acquisition by the undersigned of such Subject
Shares, acknowledges that certain sales or other transfers of such Subject
Shares are governed by the Stock Agreement (the "Stock Agreement"), dated as of
January 15, 1998, initially among the Company and D.C. Overnight Partners, L.P.,
and the undersigned hereby (1) acknowledges receipt of a copy of the Stock
Agreement, and (2) agrees to be bound as a "Restricted Holder" by the terms of
the Stock Agreement, as the same has been or may be amended from time to time
(including without limitation the representations and warranties of the
undersigned set forth therein that will be deemed made by virtue hereof).
The undersigned is hereby advised that the Subject Shares have not
been registered under the Securities Act of 1933 and in such event cannot be
resold unless they are registered under said act or unless an exemption from
registration under said act is available.
The following is the undersigned's representative and such
representative's address, telephone number and fax number for all purposes under
the Stock Agreement:
_________________________________
_________________________________
_________________________________
Agreed to this ____ day of __________, ____.
---------------------------------
By:
_____________________________
Its:
_____________________________
18
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate
investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (the "Corporation" and, together with the Trust, the
"Company"), and SAVANAH LIMITED PARTNERSHIP, a District of Columbia limited
partnership ("Shareholder").
RECITALS
WHEREAS, pursuant to a Stock Agreement of even date herewith and by
and among the parties hereto (the "Stock Agreement"), the Company is issuing and
delivering to Shareholder certain Paired Shares; and
WHEREAS, the Stock Agreement provides that if such Paired Shares are
Unregistered Shares, the Company shall effect the registration of such Paired
Shares under the Securities Act; and
WHEREAS, the parties desire to set forth their rights and
obligations with respect to such registration and certain other matters;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Each capitalized term used in this Agreement but not defined
herein shall have the meaning ascribed to such term in the Stock Agreement; and
as used in this Agreement the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder Information" means, with respect to a Selling Holder, (i)
such information regarding such Selling Holder as is required by Section 507 of
Regulation S-K promulgated by the Commission under the Securities Act, (ii)
information as to whether (and if so, in what manner) the intended method of
disposition of such Holder's Registrable Shares differs from the Plan of
Distribution, and (iii) any such additional information as may be required to be
included in the Registration Statement by a Selling Holder; in each case as
shall be required to effect the registration of such Registrable Shares pursuant
to the Registration Statement, the disclosures required in the Prospectus with
respect thereto and the offer and Transfer of such Registrable Shares pursuant
to the Prospectus.
"Holders" means (i) Shareholder, and (ii) any other Person who
acquires any of the Registrable Shares from Shareholder or another Holder if
(a) the Transferor and such Person shall have delivered to the Company a written
notice of such Transfer setting forth the name of such Person, and (b) such
Person shall have executed and delivered to the Company a properly completed
Joinder Agreement; in each case at such times as such Persons shall own
Registrable Shares.
"ITT Closing" means the consummation of the acquisition of ITT
Corporation by the Company.
"ITT Termination" means the issuance by the Company of a press
release stating that the Company will not consummate the acquisition of ITT
Corporation.
<PAGE> 2
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Annex A hereto.
"Paired Shares" means (i) "paired shares" (as such term is defined
in the Purchase and Sale Agreement), and (ii) shares of capital stock of the
Trust or the Corporation issued by the Trust or the Corporation in respect of or
in exchange for paired shares in connection with any stock dividend or
distribution, stock split-up, recapitalization, recombination or exchange by the
Trust or the Corporation generally of such paired shares.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or other entity, or government or other agency or
political subdivision thereof.
"Proposed Plan of Distribution" means a draft of the portion of the
Registration Statement that describes the intended methods of disposition of the
Registrable Shares by the Selling Holders.
"Prospectus" means, with respect to the Registration Statement and
each amendment thereto, the form of prospectus included therein.
"Registrable Shares" means, as of any date of determination, (i) the
Paired Shares that are Unregistered Shares and that constitute the Subject
Shares; (ii) any 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 or the Corporation generally for, or in replacement by the Trust or the
Corporation generally of, such Paired Shares; and (iii) any securities issued in
exchange for such Paired Shares in any merger or reorganization of the Company;
in each case that continue to be owned by a Holder on such date of
determination.
"Registration Statement" means a registration statement on Form S-3,
as amended from time to time, registering the offer and sale by the Selling
Holders of such Selling Holders' Registrable Shares included therein for offer
and Transfer on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
"Required Effectiveness Date" means the later of (i) the 30th day
after the Closing Date, or (ii) the earliest of:
(a) The 30th day after the date of the ITT Closing;
(b) The 30th day after the date of the ITT Termination; and
(c) If neither the ITT Closing nor the ITT Termination has occurred
prior to April 1, 1998, the 30th day after a demand for registration is made by
notice given by Shareholder to the Company on or after April 1, 1998;
provided, however, that in the event that, following the initial filing of the
Registration Statement, the Company is advised by the Commission that the
Registration Statement will be reviewed, each of the time periods set forth
above shall be extended for 20 days.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2
<PAGE> 3
"Selling Holders" means
(a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii)
who holds not less than 100,000 Subject Shares at the both at the time such
notice is given and the date the Registration Statement is declared effective
(or such lesser number as the Company, in its sole and absolute discretion,
shall determine for such Holder), and (iii) whose Registrable Shares are
included in the Registration Statement; and
(b) each Transferee of such a Holder who (x) provides such
Transferee's Holder Information promptly after its acquisition of Subject
Shares and prior to the Company's request for acceleration of the Registration
Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii)
above.
"Transfer" means 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).
"Transferee" means a Person to whom Registerable Shares are
Transferred.
"Violation" shall have the meaning set forth in Section 5.1 hereof.
2. Registration Obligations of the Company. The Company shall:
2.1 File the Registration Statement with the Commission not later
than 15 days rior to the Required Effectiveness Date (determined without
reference to the proviso included in the definition of such term) and thereafter
use its best efforts to cause the Registration Statement to be declared
effective on the Required Effectiveness Date.
2.2 Furnish to the Shareholder a copy of the Registration Statement
for its review and comment not later than concurrently with the filing of the
Registration Statement with the Commission.
2.3 The Company shall give notice to the Shareholder of the expected
effectiveness of the Registration Statement no later than the date acceleration
of such effectiveness is requested of the Commission; provided, however, that in
no event shall the Company have any liability for any failure to give such
notice.
2.4 Include in the Registration Statement the number of each
Holder's Registrable Shares for each Holder as shall be specified for such
Holder pursuant to Section 3.1 hereof.
2.5 Use its best efforts to keep the Registration Statement
effective until the earlier of (i) one year after the Closing Date, or (ii) such
date as of which all the Selling Holders have completed the distribution or
other disposition of the Registrable Shares registered under the Registration
Statement. If the Registration Statement is terminated pursuant to clause (i)
above, the Company shall timely file with the Commission all reports and other
information required to enable all holders of Registrable Shares to Transfer
such shares pursuant to Rule 144 promulgated by the Commission under the
Exchange Act, as amended.
2.6 During the effectiveness of the Registration Statement, upon
notice to the Company by a Selling Holder of a Transfer of Registrable Shares
pursuant to the Registration Statement and receipt
3
<PAGE> 4
(i) by the Company of a certificate from such Selling Holder in the form of
Annex B attached hereto, and (ii) by counsel for the Company of a certificate
from such Selling Holder in the form of Annex C attached hereto, in each case
representing that such Registrable Shares were offered and have been Transferred
by such Selling Holder in a manner consistent with the description set under the
caption "Plan of Distribution" in the Prospectus, the Company shall use its best
efforts to cause such Registrable Shares to be reissued as soon as practicable
(and not later than three Business Days following receipt by the Company and
such counsel of such certificates) in the name of the transferee free of any
restrictive legend under the Securities Act and to take all such actions as may
be reasonably required to cause its transfer agent to comply with the
undertakings set forth in this section.
2.7 Use its best efforts to amend the Registration Statement or
supplement the Prospectus so that they will remain current and in compliance
with the requirements of the Securities Act for the period specified in Section
2.4 hereof, and use its best efforts to give the Selling Holders notice of the
happening of any event or development as a result of which the Registration
Statement or Prospectus may 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 made therein not misleading. In the event that any Registrable
Shares included in the Registration Statement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of the Registration Statement, the Company may file a
post-effective amendment to the Registration Statement for the purpose of
de-registering such unsold Registrable Shares.
2.8 Furnish to each Selling Holder, without charge, such numbers of
copies of the Registration Statement, any pre-effective or post-effective
amendment thereto, the final Prospectus, and any amendments or supplements
thereto, in each case in conformity with the requirements of the Securities Act,
and such other related documents, as each Selling Holder may reasonably request
in order to facilitate the Transfer of the Registrable Shares owned by such
Selling Holder.
2.9 Use its best efforts to register and qualify the Registrable
Shares covered by the Registration Statement under such securities laws of such
states or jurisdictions as shall be reasonably requested by the Selling Holders;
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 file a general consent to service of process in any such states or
jurisdictions.
2.10 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission or any of the jurisdictions referred
to in Section 2.9 hereof in connection with the Registration Statement (and use
its best efforts to prevent the entry of such stop order or to remove it if
entered as promptly as practicable).
2.11 Use its best efforts to cause the Registrable Shares covered by
the Registration Statement, 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.
3. The Holders' Obligations.
3.1 The obligations of the Company under Section 2 with respect to each
Holder are subject to the satisfaction of each of the following conditions:
3.1.1 Not later than 10 days after the later of (i) the date
hereof, or (ii) the date on which the Company delivers the Proposed Plan
of Distribution to the Shareholder (or such later
4
<PAGE> 5
date as the Company, in its sole and absolute discretion, shall
determine), such Holder shall furnish all of its Holder Information to the
Company, if such Holder Information discloses that such Holder holds not
less than 100,000 Subject Shares (or such lesser number as the Company, in
its sole and absolute discretion, shall determine for such Holder).
3.1.2 Prior to the effectiveness of the Registration
Statement, such Holder shall furnish to the Company by a notice such
amendments and supplements to its Holder Information provided pursuant to
Section 3.1.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for each Selling
Holder does not include 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.
3.1.3 Such Holder shall cooperate with the Company in the
preparation of the Registration Statement in the manner and to the extent
reasonably requested by the Company, including accurately and fully
completing, executing and delivering to the Company such documents as the
Company may reasonably request in order to permit the Company to obtain
the Holder Information or to otherwise comply with all applicable laws or
to obtain acceleration of the effectiveness of the Registration Statement.
3.1.4 Such Holder shall not have breached any of its
obligations to the Company set forth in this Section 3.1 or in Sections 3
or 4 of the Stock Agreement; provided, however, that if such breach is one
that is capable of being cured and is actually cured by such Holder in all
material respects, the obligations of the Company to such Holder that
arises, or which the Company is obligated to perform in whole or in part,
after such cure shall be reinstated on the terms and subject to the
conditions set forth herein. A Transferee of Subject Shares who is
otherwise entitled to have such shares included in the Registration
Statement shall be deemed not have breached its obligation to provide its
Holder Information to the Company if it provides such information promptly
after its acquisition of such shares and prior to the Company's request
for acceleration of the Registration Statement
3.1.5 Such Holder shall not have made any material
misrepresentation pursuant to Section 6 of the Stock Agreement.
3.2 No action taken or omitted to be taken by or on behalf of any
Holder shall adversely affect the rights of any other Holder hereunder.
3.3 After the effectiveness of the Registration Statement, each
Selling Holder (and each transferee thereof) shall furnish to the Company by a
notice such amendments and supplements to its Holder Information provided
pursuant to Section 3.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for such Holder does
not include 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.
4. Expenses of Registration. The Company shall pay all expenses incurred in
connection with the registration, filing and qualification of the Registrable
Shares, including all registration, filing and NASD or securities exchange fees;
all fees and expenses of complying with securities or blue sky laws; all word
processing, duplicating and printing expenses; and the fees and disbursements of
counsel and accountants for the Company; but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and all fees and expenses of counsel and accountants for the
Selling Holders.
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<PAGE> 6
5. Indemnification; Contribution.
5.1 To the extent permitted by applicable law, the Company 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 incurred by such party pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, to the extent such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following (collectively a "Violation"):
5.1.1 Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any final
Prospectus, or any amendments or supplements thereto;
5.1.2 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; or
5.1.3 Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 5.1 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
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or expense incurred by a Selling Holder (or any Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, or any
officer, director, partner and employee of such Selling Holder and such
controlling Person) to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with the Holder
Information or other information furnished to the Company by or on behalf of
such Selling Holder expressly for use in connection with the Registration
Statement.
5.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company; each of its directors, each of
its officers who shall have signed the Registration Statement; each Person, if
any, who controls the Company 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, 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, to the
extent such losses, claims, damages, liabilities and expenses arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with the
Holder Information or other information furnished to the Company by or on behalf
of that Selling Holder expressly for use in connection with the Registration
Statement.
5.3 Promptly after receipt by an indemnified party under this
Section 5 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 5, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement 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
6
<PAGE> 7
the parties. The failure of an Indemnified Party to deliver written notice to
the indemnifying party within a reasonable time following the commencement of
any such action shall not relieve such indemnifying party of any liability to
the indemnified party under this Section 5 unless such failure is prejudicial to
such indemnifying party's ability to defend such action. 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 30 days of written
notice thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses, or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding, or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest
would 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). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed.
5.4 If the indemnification required by this Section 5 from the
indemnifying party is determined by a court of competent jurisdiction to be
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 5:
5.4.1 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 5.1 and 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
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<PAGE> 8
5.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 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
5.4.1. 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 a fraudulent misrepre-
sentation.
5.5 If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 5 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 5.4.
5.6 The obligations of the Company and the Selling Holders under
this Section 5 shall survive the completion of any offering of Registrable
Shares pursuant to the Registration Statement and any termination of this
Agreement.
6. Amendment, Modification and Waivers; Further Assurances.
6.1 This Agreement may be amended with the consent of the Company
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it; in each case only if the Company
shall have obtained the written consent of Holders holding more than 50% of the
Registrable Shares. Such amendment, action or omission shall not require the
consent of any other Holder. In addition, the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
that affects the rights hereunder of a specific Holder with the written consent
of such Holder.
6.2 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.
6.3 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.
7. Miscellaneous.
7.1 Business Day. Whenever this Agreement requires that an action be
taken or a notice be given on a date that would otherwise not be a Business Day,
the time period for taking such action or giving such notice shall be extended
to the first day thereafter that is a Business Day.
7.2 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.
8
<PAGE> 9
7.3 Notices. All notices, requests, demands, consents, approvals,
designations and other deliveries and communications called for or contemplated
by this Agreement shall be in writing and shall be given (i) in the case of
Shareholder or the Company, to the address and in the manner set forth in
Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than
Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to
the address provided to the Company in such Holder's Joinder Agreement.
7.4 Entire Agreement; Integration. This Agreement, together with the
Stock 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.
7.5 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
7.6 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.
7.7 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.
7.8 Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 5
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Shares.
7.9 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
7.10 No Third Party Beneficiaries or Assignees. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or the Holders (to the extent expressly provided herein) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Neither this Agreement not the rights or obligations hereunder may be
assigned or otherwise transferred by any Holder except as permitted herein with
respect to a Transfer of Registrable Shares.
7.11 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 Trust's 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.
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<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
"Shareholder"
SAVANAH LIMITED PARTNERSHIP,
a District of Columbia limited partnership
By: ASPEN ENTERPRISES INTERNATIONAL, INC.,
a Colorado corporation, its General Partner
/s/ Mansor Dalaan
By: ____________________________
Mansor Dalaan
President
STARWOOD HOTELS & RESORTS TRUST
a Maryland real estate investment trust
/s/ Steven R. Goldman
By: _____________________________
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
a Maryland corporation
/s/ Nir E. Margalit
By: _____________________________
Nir E. Margalit
Secretary
10
<PAGE> 11
ANNEX A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee or the intended transferee of
_________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (together, the "Company"), as a
condition to the transfer to and acquisition by the undersigned of such
Registrable Shares, acknowledges that matters pertaining to the sale and
registration of such Registrable Shares are governed by the Registration Rights
Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998,
initially among the Company and Savanah Limited Partnership, a District of
Columbia limited partnership, and the undersigned hereby (1) acknowledges
receipt of a copy of such agreement, and (2) agrees to be bound as a "Holder" by
the terms of the Registration Rights Agreement, as the same has been or may be
amended from time to time.
Agreed to this ____ day of __________, ____.
____________________________________
By: _______________________________
Its: _______________________________
Address, telephone number and
telecopy number for notices:
____________________________________
____________________________________
____________________________________
____________________________________
<PAGE> 12
ANNEX B
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Starwood Hotels & Resorts Trust
2231 E. Camelback Road, Suite 410
Phoenix, Arizona 85016
Attention: Ronald C. Brown or Chief Financial Officer
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: Alan M. Schnaid or Vice President
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
___________ of the Paired Shares held by the undersigned were
offered for sale and have been sold by the undersigned in a manner consistent
with the description set under the caption "Plan of Distribution" in the
Prospectus. Thus, the undersigned requests that new certificates evidencing such
Paired Shares be issued in the name of _________________________, the
transferee, free of any restrictive legend under the Securities Act.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 13
ANNEX C
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels, Esq.,
Kenneth H. Levin, Esq. and
James V. Robertson, Esq.
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
The undersigned understands that you have been requested by the
Company to deliver an opinion to the Company's transfer agent that, upon the
sale by the undersigned of the Paired Shares, certificates evidencing such
shares may be issued to the transferee(s) without any restrictive legend under
the Securities Act. For the purpose of facilitating the delivery by you of such
opinion, the undersigned, hereby represents that _______ of the Paired Shares
held by the undersigned were offered for sale and have been sold in a manner
consistent with the description set under the caption "Plan of Distribution" in
the Prospectus.
The undersigned understands that you will be relying on the
foregoing representations in rendering your opinion, and the undersigned
consents to such reliance.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate
investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (the "Corporation" and, together with the Trust, the
"Company"), and NEW REMINGTON PARTNERS, a Texas general partnership
("Shareholder").
RECITALS
WHEREAS, pursuant to a Stock Agreement of even date herewith and by
and among the parties hereto (the "Stock Agreement"), the Company is issuing and
delivering to Shareholder certain Paired Shares; and
WHEREAS, the Stock Agreement provides that if such Paired Shares are
Unregistered Shares, the Company shall effect the registration of such Paired
Shares under the Securities Act; and
WHEREAS, the parties desire to set forth their rights and
obligations with respect to such registration and certain other matters;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Each capitalized term used in this Agreement but not defined
herein shall have the meaning ascribed to such term in the Stock Agreement; and
as used in this Agreement the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder Information" means, with respect to a Selling Holder, (i)
such information regarding such Selling Holder as is required by Section 507 of
Regulation S-K promulgated by the Commission under the Securities Act, (ii)
information as to whether (and if so, in what manner) the intended method of
disposition of such Holder's Registrable Shares differs from the Plan of
Distribution, and (iii) any such additional information as may be required to be
included in the Registration Statement by a Selling Holder; in each case as
shall be required to effect the registration of such Registrable Shares pursuant
to the Registration Statement, the disclosures required in the Prospectus with
respect thereto and the offer and Transfer of such Registrable Shares pursuant
to the Prospectus.
"Holders" means (i) Shareholder, and (ii) any other Person who
acquires any of the Registrable Shares from Shareholder or another Holder if
(a) the Transferor and such Person shall have delivered to the Company a written
notice of such Transfer setting forth the name of such Person, and (b) such
Person shall have executed and delivered to the Company a properly completed
Joinder Agreement; in each case at such times as such Persons shall own
Registrable Shares.
"ITT Closing" means the consummation of the acquisition of ITT
Corporation by the Company.
"ITT Termination" means the issuance by the Company of a press
release stating that the Company will not consummate the acquisition of ITT
Corporation.
<PAGE> 2
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Annex A hereto.
"Paired Shares" means (i) "paired shares" (as such term is defined
in the Purchase and Sale Agreement), and (ii) shares of capital stock of the
Trust or the Corporation issued by the Trust or the Corporation in respect of or
in exchange for paired shares in connection with any stock dividend or
distribution, stock split-up, recapitalization, recombination or exchange by the
Trust or the Corporation generally of such paired shares.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or other entity, or government or other agency or
political subdivision thereof.
"Proposed Plan of Distribution" means a draft of the portion of the
Registration Statement that describes the intended methods of disposition of the
Registrable Shares by the Selling Holders.
"Prospectus" means, with respect to the Registration Statement and
each amendment thereto, the form of prospectus included therein.
"Registrable Shares" means, as of any date of determination, (i) the
Paired Shares that are Unregistered Shares and that constitute the Subject
Shares; (ii) any 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 or the Corporation generally for, or in replacement by the Trust or the
Corporation generally of, such Paired Shares; and (iii) any securities issued in
exchange for such Paired Shares in any merger or reorganization of the Company;
in each case that continue to be owned by a Holder on such date of
determination.
"Registration Statement" means a registration statement on Form S-3,
as amended from time to time, registering the offer and sale by the Selling
Holders of such Selling Holders' Registrable Shares included therein for offer
and Transfer on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
"Required Effectiveness Date" means the later of (i) the 30th day
after the Closing Date, or (ii) the earliest of:
(a) The 30th day after the date of the ITT Closing;
(b) The 30th day after the date of the ITT Termination; and
(c) If neither the ITT Closing nor the ITT Termination has occurred
prior to April 1, 1998, the 30th day after a demand for registration is made by
notice given by Shareholder to the Company on or after April 1, 1998;
provided, however, that in the event that, following the initial filing of the
Registration Statement, the Company is advised by the Commission that the
Registration Statement will be reviewed, each of the time periods set forth
above shall be extended for 20 days.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2
<PAGE> 3
"Selling Holders" means
(a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii)
who holds not less than 100,000 Subject Shares at the both at the time such
notice is given and the date the Registration Statement is declared effective
(or such lesser number as the Company, in its sole and absolute discretion,
shall determine for such Holder), and (iii) whose Registrable Shares are
included in the Registration Statement; and
(b) each Transferee of such a Holder who (x) provides such
Transferee's Holder Information promptly after its acquisition of Subject
Shares and prior to the Company's request for acceleration of the Registration
Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii)
above.
"Transfer" means 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).
"Transferee" means a Person to whom Registerable Shares are
Transferred.
"Violation" shall have the meaning set forth in Section 5.1 hereof.
2. Registration Obligations of the Company. The Company shall:
2.1 File the Registration Statement with the Commission not later
than 15 days prior to the Required Effectiveness Date (determined without
reference to the proviso included in the definition of such term) and thereafter
use its best efforts to cause the Registration Statement to be declared
effective on the Required Effectiveness Date.
2.2 Furnish to the Shareholder a copy of the Registration Statement
for its review and comment not later than concurrently with the filing of the
Registration Statement with the Commission.
2.3 The Company shall give notice to the Shareholder of the expected
effectiveness of the Registration Statement no later than the date acceleration
of such effectiveness is requested of the Commission; provided, however, that in
no event shall the Company have any liability for any failure to give such
notice.
2.4 Include in the Registration Statement the number of each
Holder's Registrable Shares for each Holder as shall be specified for such
Holder pursuant to Section 3.1 hereof.
2.5 Use its best efforts to keep the Registration Statement
effective until the earlier of (i) one year after the Closing Date, or (ii) such
date as of which all the Selling Holders have completed the distribution or
other disposition of the Registrable Shares registered under the Registration
Statement. If the Registration Statement is terminated pursuant to clause (i)
above, the Company shall timely file with the Commission all reports and other
information required to enable all holders of Registrable Shares to Transfer
such shares pursuant to Rule 144 promulgated by the Commission under the
Exchange Act, as amended.
2.6 During the effectiveness of the Registration Statement, upon
notice to the Company by a Selling Holder of a Transfer of Registrable Shares
pursuant to the Registration Statement and receipt
3
<PAGE> 4
(i) by the Company of a certificate from such Selling Holder in the form of
Annex B attached hereto, and (ii) by counsel for the Company of a certificate
from such Selling Holder in the form of Annex C attached hereto, in each case
representing that such Registrable Shares were offered and have been Transferred
by such Selling Holder in a manner consistent with the description set under the
caption "Plan of Distribution" in the Prospectus, the Company shall use its best
efforts to cause such Registrable Shares to be reissued as soon as practicable
(and not later than three Business Days following receipt by the Company and
such counsel of such certificates) in the name of the transferee free of any
restrictive legend under the Securities Act and to take all such actions as may
be reasonably required to cause its transfer agent to comply with the
undertakings set forth in this section.
2.7 Use its best efforts to amend the Registration Statement or
supplement the Prospectus so that they will remain current and in compliance
with the requirements of the Securities Act for the period specified in Section
2.4 hereof, and use its best efforts to give the Selling Holders notice of the
happening of any event or development as a result of which the Registration
Statement or Prospectus may 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 made therein not misleading. In the event that any Registrable
Shares included in the Registration Statement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of the Registration Statement, the Company may file a
post-effective amendment to the Registration Statement for the purpose of
deregistering such unsold Registrable Shares.
2.8 Furnish to each Selling Holder, without charge, such numbers of
copies of the Registration Statement, any pre-effective or post-effective
amendment thereto, the final Prospectus, and any amendments or supplements
thereto, in each case in conformity with the requirements of the Securities Act,
and such other related documents, as each Selling Holder may reasonably request
in order to facilitate the Transfer of the Registrable Shares owned by such
Selling Holder.
2.9 Use its best efforts to register and qualify the Registrable
Shares covered by the Registration Statement under such securities laws of such
states or jurisdictions as shall be reasonably requested by the Selling Holders;
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 file a general consent to service of process in any such states or
jurisdictions.
2.10 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission or any of the jurisdictions referred
to in Section 2.9 hereof in connection with the Registration Statement (and use
its best efforts to prevent the entry of such stop order or to remove it if
entered as promptly as practicable).
2.11 Use its best efforts to cause the Registrable Shares covered by
the Registration Statement, 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.
3. The Holders' Obligations.
3.1 The obligations of the Company under Section 2 with respect to each
Holder are subject to the satisfaction of each of the following conditions:
3.1.1 Not later than 10 days after the later of (i) the date
hereof, or (ii) the date on which the Company delivers the Proposed Plan
of Distribution to the Shareholder (or such later
4
<PAGE> 5
date as the Company, in its sole and absolute discretion, shall
determine), such Holder shall furnish all of its Holder Information to the
Company, if such Holder Information discloses that such Holder holds not
less than 100,000 Subject Shares (or such lesser number as the Company, in
its sole and absolute discretion, shall determine for such Holder).
3.1.2 Prior to the effectiveness of the Registration
Statement, such Holder shall furnish to the Company by a notice such
amendments and supplements to its Holder Information provided pursuant to
Section 3.1.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for each Selling
Holder does not include 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.
3.1.3 Such Holder shall cooperate with the Company in the
preparation of the Registration Statement in the manner and to the extent
reasonably requested by the Company, including accurately and fully
completing, executing and delivering to the Company such documents as the
Company may reasonably request in order to permit the Company to obtain
the Holder Information or to otherwise comply with all applicable laws or
to obtain acceleration of the effectiveness of the Registration Statement.
3.1.4 Such Holder shall not have breached any of its
obligations to the Company set forth in this Section 3.1 or in Sections 3
or 4 of the Stock Agreement; provided, however, that if such breach is one
that is capable of being cured and is actually cured by such Holder in all
material respects, the obligations of the Company to such Holder that
arises, or which the Company is obligated to perform in whole or in part,
after such cure shall be reinstated on the terms and subject to the
conditions set forth herein. A Transferee of Subject Shares who is
otherwise entitled to have such shares included in the Registration
Statement shall be deemed not have breached its obligation to provide its
Holder Information to the Company if it provides such information promptly
after its acquisition of such shares and prior to the Company's request
for acceleration of the Registration Statement
3.1.5 Such Holder shall not have made any material
misrepresentation pursuant to Section 6 of the Stock Agreement.
3.2 No action taken or omitted to be taken by or on behalf of any
Holder shall adversely affect the rights of any other Holder hereunder.
3.3 After the effectiveness of the Registration Statement, each
Selling Holder (and each transferee thereof) shall furnish to the Company by a
notice such amendments and supplements to its Holder Information provided
pursuant to Section 3.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for such Holder does
not include 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.
4. Expenses of Registration. The Company shall pay all expenses incurred in
connection with the registration, filing and qualification of the Registrable
Shares, including all registration, filing and NASD or securities exchange fees;
all fees and expenses of complying with securities or blue sky laws; all word
processing, duplicating and printing expenses; and the fees and disbursements of
counsel and accountants for the Company; but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and all fees and expenses of counsel and accountants for the
Selling Holders.
5
<PAGE> 6
5. Indemnification; Contribution.
5.1 To the extent permitted by applicable law, the Company 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 incurred by such party pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, to the extent such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following (collectively a "Violation"):
5.1.1 Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any final
Prospectus, or any amendments or supplements thereto;
5.1.2 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; or
5.1.3 Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 5.1 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
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or expense incurred by a Selling Holder (or any Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, or any
officer, director, partner and employee of such Selling Holder and such
controlling Person) to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with the Holder
Information or other information furnished to the Company by or on behalf of
such Selling Holder expressly for use in connection with the Registration
Statement.
5.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company; each of its directors, each of
its officers who shall have signed the Registration Statement; each Person, if
any, who controls the Company 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, 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, to the
extent such losses, claims, damages, liabilities and expenses arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with the
Holder Information or other information furnished to the Company by or on behalf
of that Selling Holder expressly for use in connection with the Registration
Statement.
5.3 Promptly after receipt by an indemnified party under this
Section 5 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 5, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement 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
6
<PAGE> 7
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure of an Indemnified Party to
deliver written notice to the indemnifying party within a reasonable time
following the commencement of any such action shall not relieve such
indemnifying party of any liability to the indemnified party under this Section
5 unless such failure is prejudicial to such indemnifying party's ability to
defend such action. 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 30 days of written notice thereof to the indemnifying
party (regardless of whether it is ultimately determined that an indemnified
party is not entitled to indemnification hereunder). Any such indemnified party
shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, or (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding, or (iii) the named parties to any such action,
claim or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party and that the assertion of such defenses would create a
conflict of interest such that counsel employed by the indemnifying party could
not faithfully represent the indemnified party (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest
would 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). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed.
5.4 If the indemnification required by this Section 5 from the
indemnifying party is determined by a court of competent jurisdiction to be
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 5:
5.4.1 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 5.1 and 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
7
<PAGE> 8
5.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 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
5.4.1. 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 a fraudulent
misrepresentation.
5.5 If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 5 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 5.4.
5.6 The obligations of the Company and the Selling Holders under
this Section 5 shall survive the completion of any offering of Registrable
Shares pursuant to the Registration Statement and any termination of this
Agreement.
6. Amendment, Modification and Waivers; Further Assurances.
6.1 This Agreement may be amended with the consent of the Company
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it; in each case only if the Company
shall have obtained the written consent of Holders holding more than 50% of the
Registrable Shares. Such amendment, action or omission shall not require the
consent of any other Holder. In addition, the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
that affects the rights hereunder of a specific Holder with the written consent
of such Holder.
6.2 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.
6.3 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.
7. Miscellaneous.
7.1 Business Day. Whenever this Agreement requires that an action be
taken or a notice be given on a date that would otherwise not be a Business Day,
the time period for taking such action or giving such notice shall be extended
to the first day thereafter that is a Business Day.
7.2 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.
8
<PAGE> 9
7.3 Notices. All notices, requests, demands, consents, approvals,
designations and other deliveries and communications called for or contemplated
by this Agreement shall be in writing and shall be given (i) in the case of
Shareholder or the Company, to the address and in the manner set forth in
Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than
Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to
the address provided to the Company in such Holder's Joinder Agreement.
7.4 Entire Agreement; Integration. This Agreement, together with the
Stock 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.
7.5 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
7.6 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.
7.7 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.
7.8 Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 5
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Shares.
7.9 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
7.10 No Third Party Beneficiaries or Assignees. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or the Holders (to the extent expressly provided herein) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Neither this Agreement not the rights or obligations hereunder may be
assigned or otherwise transferred by any Holder except as permitted herein with
respect to a Transfer of Registrable Shares.
7.11 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 Trust's 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.
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<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
"Shareholder"
NEW REMINGTON PARTNERS,
a Texas general partnership
By: REMINGTON VENTURERS, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
-----------------------------
Mansor Dalaan
President
By: REMINGTON VENTURERS II, INC.,
a Texas corporation,
a General Partner
By: /s/ Mansor Dalaan
-----------------------------
Mansor Dalaan
President
STARWOOD HOTELS & RESORTS TRUST
a Maryland real estate investment trust
By: /s/ Steven R. Goldman
-----------------------------
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
a Maryland corporation
By: /s/ Nir E. Margalit
-----------------------------
Nir E. Margalit
Secretary
10
<PAGE> 11
ANNEX A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee or the intended transferee of
_________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Lodging
Corporation, a Maryland corporation (together, the "Company"), as a condition to
the transfer to and acquisition by the undersigned of such Registrable Shares,
acknowledges that matters pertaining to the sale and registration of such
Registrable Shares are governed by the Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of January 15, 1998, initially among
the Company and New Remington Partners, a Texas general partnership, and the
undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2)
agrees to be bound as a "Holder" by the terms of the Registration Rights
Agreement, as the same has been or may be amended from time to time.
Agreed to this ____ day of __________, ____.
---------------------------------
By:
-----------------------------
Its: ----------------------------
Address, telephone number and telecopy number
for notices:
_________________________________
_________________________________
_________________________________
_________________________________
<PAGE> 12
ANNEX B
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Starwood Hotels & Resorts Trust
2231 E. Camelback Road, Suite 410
Phoenix, Arizona 85016
Attention: Ronald C. Brown or Chief Financial Officer
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: Alan M. Schnaid or Vice President
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
___________ of the Paired Shares held by the undersigned were
offered for sale and have been sold by the undersigned in a manner consistent
with the description set under the caption "Plan of Distribution" in the
Prospectus. Thus, the undersigned requests that new certificates evidencing such
Paired Shares be issued in the name of _________________________, the
transferee, free of any restrictive legend under the Securities Act.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 13
ANNEX C
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels, Esq.,
Kenneth H. Levin, Esq. and
James V. Robertson, Esq.
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
The undersigned understands that you have been requested by the
Company to deliver an opinion to the Company's transfer agent that, upon the
sale by the undersigned of the Paired Shares, certificates evidencing such
shares may be issued to the transferee(s) without any restrictive legend under
the Securities Act. For the purpose of facilitating the delivery by you of such
opinion, the undersigned, hereby represents that _______ of the Paired Shares
held by the undersigned were offered for sale and have been sold in a manner
consistent with the description set under the caption "Plan of Distribution" in
the Prospectus.
The undersigned understands that you will be relying on the
foregoing representations in rendering your opinion, and the undersigned
consents to such reliance.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate
investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (the "Corporation" and, together with the Trust, the
"Company"), and N.Y. OVERNIGHT PARTNERS, L.P., a New York limited partnership
("Shareholder").
RECITALS
WHEREAS, pursuant to a Stock Agreement of even date herewith and by
and among the parties hereto (the "Stock Agreement"), the Company is issuing and
delivering to Shareholder certain Paired Shares; and
WHEREAS, the Stock Agreement provides that if such Paired Shares are
Unregistered Shares, the Company shall effect the registration of such Paired
Shares under the Securities Act; and
WHEREAS, the parties desire to set forth their rights and
obligations with respect to such registration and certain other matters;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Each capitalized term used in this Agreement but not defined
herein shall have the ribed to such term in the Stock Agreement; and as used in
this Agreement the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder Information" means, with respect to a Selling Holder, (i)
such information regarding such Selling Holder as is required by Section 507 of
Regulation S-K promulgated by the Commission under the Securities Act, (ii)
information as to whether (and if so, in what manner) the intended method of
disposition of such Holder's Registrable Shares differs from the Plan of
Distribution, and (iii) any such additional information as may be required to be
included in the Registration Statement by a Selling Holder; in each case as
shall be required to effect the registration of such Registrable Shares pursuant
to the Registration Statement, the disclosures required in the Prospectus with
respect thereto and the offer and Transfer of such Registrable Shares pursuant
to the Prospectus.
"Holders" means (i) Shareholder, and (ii) any other Person who
acquires any of the Registrable Shares from Shareholder or another Holder if
(a) the Transferor and such Person shall have delivered to the Company a written
notice of such Transfer setting forth the name of such Person, and (b) such
Person shall have executed and delivered to the Company a properly completed
Joinder Agreement; in each case at such times as such Persons shall own
Registrable Shares.
<PAGE> 2
"ITT Closing" means the consummation of the acquisition of ITT
Corporation by the Company.
"ITT Termination" means the issuance by the Company of a press
release stating that the Company will not consummate the acquisition of ITT
Corporation.
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Annex A hereto.
"Paired Shares" means (i) "paired shares" (as such term is defined
in the Purchase and Sale Agreement), and (ii) shares of capital stock of the
Trust or the Corporation issued by the Trust or the Corporation in respect of or
in exchange for paired shares in connection with any stock dividend or
distribution, stock split-up, recapitalization, recombination or exchange by the
Trust or the Corporation generally of such paired shares.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or other entity, or government or other agency or
political subdivision thereof.
"Proposed Plan of Distribution" means a draft of the portion of the
Registration Statement that describes the intended methods of disposition of the
Registrable Shares by the Selling Holders.
"Prospectus" means, with respect to the Registration Statement and
each amendment thereto, the form of prospectus included therein.
"Registrable Shares" means, as of any date of determination, (i) the
Paired Shares that are Unregistered Shares and that constitute the Subject
Shares; (ii) any 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 or the Corporation generally for, or in replacement by the Trust or the
Corporation generally of, such Paired Shares; and (iii) any securities issued in
exchange for such Paired Shares in any merger or reorganization of the Company;
in each case that continue to be owned by a Holder on such date of
determination.
"Registration Statement" means a registration statement on Form S-3,
as amended from time to time, registering the offer and sale by the Selling
Holders of such Selling Holders' Registrable Shares included therein for offer
and Transfer on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
"Required Effectiveness Date" means the later of (i) the 30th day
after the Closing Date, or (ii) the earliest of:
(a) The 30th day after the date of the ITT Closing;
(b) The 30th day after the date of the ITT Termination; and
2
<PAGE> 3
(c) If neither the ITT Closing nor the ITT Termination has occurred
prior to April 1, 1998, the 30th day after a demand for registration is made by
notice given by Shareholder to the Company on or after April 1, 1998;
provided, however, that in the event that, following the initial filing of the
Registration Statement, the Company is advised by the Commission that the
Registration Statement will be reviewed, each of the time periods set forth
above shall be extended for 20 days.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Holders" means
(a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii)
who holds not less than 100,000 Subject Shares at the both at the time such
notice is given and the date the Registration Statement is declared effective
(or such lesser number as the Company, in its sole and absolute discretion,
shall determine for such Holder), and (iii) whose Registrable Shares are
included in the Registration Statement; and
(b) each Transferee of such a Holder who (x) provides such
Transferee's Holder Information promptly after its acquisition of Subject
Shares and prior to the Company's request for acceleration of the Registration
Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii)
above.
"Transfer" means 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).
"Transferee" means a Person to whom Registerable Shares are
Transferred.
"Violation" shall have the meaning set forth in Section 5.1 hereof.
2. Registration Obligations of the Company. The Company shall:
2.1 File the Registration tatement with the Commission not later
than 15 days prior to the Required Effectiveness Date (determined without
reference to the proviso included in the definition of such term) and thereafter
use its best efforts to cause the Registration Statement to be declared
effective on the Required Effectiveness Date.
2.2 Furnish to the Shareholder a copy of the Registration Statement
for its review and comment not later than concurrently with the filing of the
Registration Statement with the Commission.
2.3 The Company shall give notice to the Shareholder of the expected
effectiveness of the Registration Statement no later than the date acceleration
of such effectiveness is requested of the Commission; provided, however, that in
no event shall the Company have any liability for any failure to give such
notice.
3
<PAGE> 4
2.4 Include in the Registration Statement the number of each
Holder's Registrable Shares for each Holder as shall be specified for such
Holder pursuant to Section 3.1 hereof.
2.5 Use its best efforts to keep the Registration Statement
effective until the earlier of (i) one year after the Closing Date, or (ii) such
date as of which all the Selling Holders have completed the distribution or
other disposition of the Registrable Shares registered under the Registration
Statement. If the Registration Statement is terminated pursuant to clause (i)
above, the Company shall timely file with the Commission all reports and other
information required to enable all holders of Registrable Shares to Transfer
such shares pursuant to Rule 144 promulgated by the Commission under the
Exchange Act, as amended.
2.6 During the effectiveness of the Registration Statement, upon
notice to the Company by a Selling Holder of a Transfer of Registrable Shares
pursuant to the Registration Statement and receipt (i) by the Company of a
certificate from such Selling Holder in the form of Annex B attached hereto, and
(ii) by counsel for the Company of a certificate from such Selling Holder in the
form of Annex C attached hereto, in each case representing that such Registrable
Shares were offered and have been Transferred by such Selling Holder in a manner
consistent with the description set under the caption "Plan of Distribution" in
the Prospectus, the Company shall use its best efforts to cause such Registrable
Shares to be reissued as soon as practicable (and not later than three Business
Days following receipt by the Company and such counsel of such certificates) in
the name of the transferee free of any restrictive legend under the Securities
Act and to take all such actions as may be reasonably required to cause its
transfer agent to comply with the undertakings set forth in this section.
2.7 Use its best efforts to amend the Registration Statement or
supplement the Prospectus so that they will remain current and in compliance
with the requirements of the Securities Act for the period specified in Section
2.4 hereof, and use its best efforts to give the Selling Holders notice of the
happening of any event or development as a result of which the Registration
Statement or Prospectus may 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 made therein not misleading. In the event that any Registrable
Shares included in the Registration Statement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of the Registration Statement, the Company may file a
post-effective amendment to the Registration Statement for the purpose of
deregistering such unsold Registrable Shares.
2.8 Furnish to each Selling Holder, without charge, such numbers of
copies of the Registration Statement, any pre-effective or post-effective
amendment thereto, the final Prospectus, and any amendments or supplements
thereto, in each case in conformity with the requirements of the Securities Act,
and such other related documents, as each Selling Holder may reasonably request
in order to facilitate the Transfer of the Registrable Shares owned by such
Selling Holder.
2.9 Use its best efforts to register and qualify the Registrable
Shares covered by the Registration Statement under such securities laws of such
states or jurisdictions as shall be reasonably requested by the Selling Holders;
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 file a general consent to service of process in any such states or
jurisdictions.
4
<PAGE> 5
2.10 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission or any of the jurisdictions referred
to in Section 2.9 hereof in connection with the Registration Statement (and use
its best efforts to prevent the entry of such stop order or to remove it if
entered as promptly as practicable).
2.11 Use its best efforts to cause the Registrable Shares covered by
the Registration Statement, 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.
3. The Holders' Obligations.
3.1 The obligations of the Company under Section 2 with respect to each
Holder are subject to the satisfaction of each of the following conditions:
3.1.1 Not later than 10 days after the later of (i) the date
hereof, or (ii) the date on which the Company delivers the Proposed Plan
of Distribution to the Shareholder (or such later date as the Company, in
its sole and absolute discretion, shall determine), such Holder shall
furnish all of its Holder Information to the Company, if such Holder
Information discloses that such Holder holds not less than 100,000 Subject
Shares (or such lesser number as the Company, in its sole and absolute
discretion, shall determine for such Holder).
3.1.2 Prior to the effectiveness of the Registration
Statement, such Holder shall furnish to the Company by a notice such
amendments and supplements to its Holder Information provided pursuant to
Section 3.1.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for each Selling
Holder does not include 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.
3.1.3 Such Holder shall cooperate with the Company in the
preparation of the Registration Statement in the manner and to the extent
reasonably requested by the Company, including accurately and fully
completing, executing and delivering to the Company such documents as the
Company may reasonably request in order to permit the Company to obtain
the Holder Information or to otherwise comply with all applicable laws or
to obtain acceleration of the effectiveness of the Registration Statement.
3.1.4 Such Holder shall not have breached any of its
obligations to the Company set forth in this Section 3.1 or in Sections 3
or 4 of the Stock Agreement; provided, however, that if such breach is one
that is capable of being cured and is actually cured by such Holder in all
material respects, the obligations of the Company to such Holder that
arises, or which the Company is obligated to perform in whole or in part,
after such cure shall be reinstated on the terms and subject to the
conditions set forth herein. A Transferee of Subject Shares who is
otherwise entitled to have such shares included in the Registration
Statement shall be deemed not have breached its obligation to provide its
Holder Information to the Company if it provides such information promptly
after its acquisition of such shares and prior to the Company's request
for acceleration of the Registration Statement
5
<PAGE> 6
3.1.5 Such Holder shall not have made any material
misrepresentation pursuant to Section 6 of the Stock Agreement.
3.2 No action taken or omitted to be taken by or on behalf of any
Holder shall adversely affect the rights of any other Holder hereunder.
3.3 After the effectiveness of the Registration Statement, each
Selling Holder (and each transferee thereof) shall furnish to the Company by a
notice such amendments and supplements to its Holder Information provided
pursuant to Section 3.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for such Holder does
not include 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.
4. Expenses of Registration. The Company shall pay all expenses incurred in
connection with the registration, filing and qualification of the Registrable
Shares, including all registration, filing and NASD or securities exchange fees;
all fees and expenses of complying with securities or blue sky laws; all word
processing, duplicating and printing expenses; and the fees and disbursements of
counsel and accountants for the Company; but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and all fees and expenses of counsel and accountants for the
Selling Holders.
5. Indemnification; Contribution.
5.1 To the extent permitted by applicable law, the Company 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 incurred by such party pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, to the extent such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following (collectively a "Violation"):
5.1.1 Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any final
Prospectus, or any amendments or supplements thereto;
5.1.2 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; or
5.1.3 Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 5.1 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
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or expense incurred by a Selling Holder (or any Person, if any, who
controls such Selling Holder within the meaning of the
6
<PAGE> 7
Securities Act, or any officer, director, partner and employee of such Selling
Holder and such controlling Person) to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with the
Holder Information or other information furnished to the Company by or on behalf
of such Selling Holder expressly for use in connection with the Registration
Statement.
5.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company; each of its directors, each of
its officers who shall have signed the Registration Statement; each Person, if
any, who controls the Company 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, 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, to the
extent such losses, claims, damages, liabilities and expenses arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with the
Holder Information or other information furnished to the Company by or on behalf
of that Selling Holder expressly for use in connection with the Registration
Statement.
5.3 Promptly after receipt by an indemnified party under this
Section 5 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 5, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement 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. The failure of an Indemnified Party to deliver
written notice to the indemnifying party within a reasonable time following the
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section 5 unless such failure is
prejudicial to such indemnifying party's ability to defend such action. 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 30 days
of written notice thereof to the indemnifying party (regardless of whether it is
ultimately determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party shall have the right to
employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the indemnifying
party has agreed to pay such fees and expenses, or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding, or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim
7
<PAGE> 8
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 would 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).
No indemnifying party shall be liable to an indemnified party for any settlement
of any action, proceeding or claim without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld or delayed.
5.4 If the indemnification required by this Section 5 from the
indemnifying party is determined by a court of competent jurisdiction to be
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 5:
5.4.1 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 5.1 and 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
5.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 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
5.4.1. 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 a fraudulent misrepre-
sentation.
5.5 If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 5 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 5.4.
5.6 The obligations of the Company and the Selling Holders under
this Section 5 shall survive the completion of any offering of Registrable
Shares pursuant to the Registration Statement and any termination of this
Agreement.
8
<PAGE> 9
6. Amendment, Modification and Waivers; Further Assurances.
6.1 This Agreement may be amended with the consent of the Company
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it; in each case only if the Company
shall have obtained the written consent of Holders holding more than 50% of the
Registrable Shares. Such amendment, action or omission shall not require the
consent of any other Holder. In addition, the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
that affects the rights hereunder of a specific Holder with the written consent
of such Holder.
6.2 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.
6.3 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.
7. Miscellaneous.
7.1 Business Day. Whenever this Agreement requires that an action be
taken or a notice be given on a date that would otherwise not be a Business Day,
the time period for taking such action or giving such notice shall be extended
to the first day thereafter that is a Business Day.
7.2 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.
7.3 Notices. All notices, requests, demands, consents, approvals,
designations and other deliveries and communications called for or contemplated
by this Agreement shall be in writing and shall be given (i) in the case of
Shareholder or the Company, to the address and in the manner set forth in
Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than
Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to
the address provided to the Company in such Holder's Joinder Agreement.
7.4 Entire Agreement; Integration. This Agreement, together with the
Stock 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.
9
<PAGE> 10
7.5 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
7.6 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.
7.7 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.
7.8 Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 5
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Shares.
7.9 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
7.10 No Third Party Beneficiaries or Assignees. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or the Holders (to the extent expressly provided herein) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Neither this Agreement not the rights or obligations hereunder may be
assigned or otherwise transferred by any Holder except as permitted herein with
respect to a Transfer of Registrable Shares.
7.11 Starwood Hotels & Resorts Trust. The parties hereto understand
and agree that the name "Starwood Hotels & Resorts Trust" is a designation of
the Trust and its trustees (as trustees but not personally) under the Trust's
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.
10
<PAGE> 11
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
"Shareholder"
N.Y. OVERNIGHT PARTNERS, L.P.,
a New York limited partnership
By: N.Y. OVERNIGHT, INC. a New York corporation,
its sole General Partner
/s/ Tarek Ayoubi
By: _____________________________
Tarek Ayoubi
President
STARWOOD HOTELS & RESORTS TRUST
a Maryland real estate investment trust
/s/ Steven R. Goldman
By: _____________________________,
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
a Maryland corporation
/s/ Nir E. Margalit
By: _____________________________,
Nir E. Margalit
Secretary
11
<PAGE> 12
ANNEX A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee or the intended transferee of
_________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (together, the "Company"), as a
condition to the transfer to and acquisition by the undersigned of such
Registrable Shares, acknowledges that matters pertaining to the sale and
registration of such Registrable Shares are governed by the Registration Rights
Agreement (the "Registration Rights Agreement"), dated as of January 15, 1998
initially among the Company and N.Y. Overnight Partners, L.P., and the
undersigned hereby (1) acknowledges receipt of a copy of such agreement, and (2)
agrees to be bound as a "Holder" by the terms of the Registration Rights
Agreement, as the same has been or may be amended from time to time.
Agreed to this ____ day of __________, ____.
____________________________________
By: _______________________________
Its: _______________________________
Address, telephone number and
telecopy number for notices:
____________________________________
____________________________________
____________________________________
____________________________________
<PAGE> 13
ANNEX B
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Starwood Hotels & Resorts Trust
2231 E. Camelback Road, Suite 410
Phoenix, Arizona 85016
Attention: Ronald C. Brown or Chief Financial Officer
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: Alan M. Schnaid or Vice President
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
___________ of the Paired Shares held by the undersigned were
offered for sale and have been sold by the undersigned in a manner consistent
with the description set under the caption "Plan of Distribution" in the
Prospectus. Thus, the undersigned requests that new certificates evidencing such
Paired Shares be issued in the name of _________________________, the
transferee, free of any restrictive legend under the Securities Act.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 14
ANNEX C
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels, Esq.,
Kenneth H. Levin, Esq. and
James V. Robertson, Esq.
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
The undersigned understands that you have been requested by the
Company to deliver an opinion to the Company's transfer agent that, upon the
sale by the undersigned of the Paired Shares, certificates evidencing such
shares may be issued to the transferee(s) without any restrictive legend under
the Securities Act. For the purpose of facilitating the delivery by you of such
opinion, the undersigned, hereby represents that _______ of the Paired Shares
held by the undersigned were offered for sale and have been sold in a manner
consistent with the description set under the caption "Plan of Distribution" in
the Prospectus.
The undersigned understands that you will be relying on the
foregoing representations in rendering your opinion, and the undersigned
consents to such reliance.
Very truly yours,
<PAGE> 15
[Name and signature of Selling Holder]
15
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 15, 1998 among STARWOOD HOTELS & RESORTS TRUST, a Maryland real estate
investment trust (the "Trust"), STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a
Maryland corporation (the "Corporation" and, together with the Trust, the
"Company"), and D.C. OVERNIGHT PARTNERS, L.P., a District of Columbia limited
partnership ("Shareholder").
RECITALS
WHEREAS, pursuant to a Stock Agreement of even date herewith and by
and among the parties hereto (the "Stock Agreement"), the Company is issuing and
delivering to Shareholder certain Paired Shares; and
WHEREAS, the Stock Agreement provides that if such Paired Shares are
Unregistered Shares, the Company shall effect the registration of such Paired
Shares under the Securities Act; and
WHEREAS, the parties desire to set forth their rights and
obligations with respect to such registration and certain other matters;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Each capitalized term used in this Agreement but not defined
herein shall have the meaning ascribed to such term in the Stock Agreement; and
as used in this Agreement the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder Information" means, with respect to a Selling Holder, (i)
such information regarding such Selling Holder as is required by Section 507 of
Regulation S-K promulgated by the Commission under the Securities Act, (ii)
information as to whether (and if so, in what manner) the intended method of
disposition of such Holder's Registrable Shares differs from the Plan of
Distribution, and (iii) any such additional information as may be required to be
included in the Registration Statement by a Selling Holder; in each case as
shall be required to effect the registration of such Registrable Shares pursuant
to the Registration Statement, the disclosures required in the Prospectus with
respect thereto and the offer and Transfer of such Registrable Shares pursuant
to the Prospectus.
"Holders" means (i) Shareholder, and (ii) any other Person who
acquires any of the Registrable Shares from Shareholder or another Holder if
(a) the Transferor and such Person shall have delivered to the Company a written
notice of such Transfer setting forth the name of such Person, and (b) such
Person shall have executed and delivered to the Company a properly completed
Joinder Agreement; in each case at such times as such Persons shall own
Registrable Shares.
"ITT Closing" means the consummation of the acquisition of ITT
Corporation by the Company.
"ITT Termination" means the issuance by the Company of a press
release stating that the Company will not consummate the acquisition of ITT
Corporation.
<PAGE> 2
"Joinder Agreement" means an agreement to be bound by this Agreement
in the form of Annex A hereto.
"Paired Shares" means (i) "paired shares" (as such term is defined
in the Purchase and Sale Agreement), and (ii) shares of capital stock of the
Trust or the Corporation issued by the Trust or the Corporation in respect of or
in exchange for paired shares in connection with any stock dividend or
distribution, stock split-up, recapitalization, recombination or exchange by the
Trust or the Corporation generally of such paired shares.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or other entity, or government or other agency or
political subdivision thereof.
"Proposed Plan of Distribution" means a draft of the portion of the
Registration Statement that describes the intended methods of disposition of the
Registrable Shares by the Selling Holders.
"Prospectus" means, with respect to the Registration Statement and
each amendment thereto, the form of prospectus included therein.
"Registrable Shares" means, as of any date of determination, (i) the
Paired Shares that are Unregistered Shares and that constitute the Subject
Shares; (ii) any 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 or the Corporation generally for, or in replacement by the Trust or the
Corporation generally of, such Paired Shares; and (iii) any securities issued in
exchange for such Paired Shares in any merger or reorganization of the Company;
in each case that continue to be owned by a Holder on such date of
determination.
"Registration Statement" means a registration statement on Form S-3,
as amended from time to time, registering the offer and sale by the Selling
Holders of such Selling Holders' Registrable Shares included therein for offer
and Transfer on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
"Required Effectiveness Date" means the later of (i) the 30th day
after the Closing Date, or (ii) the earliest of:
(a) The 30th day after the date of the ITT Closing;
(b) The 30th day after the date of the ITT Termination; and
(c) If neither the ITT Closing nor the ITT Termination has occurred
prior to April 1, 1998, the 30th day after a demand for registration is made by
notice given by Shareholder to the Company on or after April 1, 1998;
provided, however, that in the event that, following the initial filing of the
Registration Statement, the Company is advised by the Commission that the
Registration Statement will be reviewed, each of the time periods set forth
above shall be extended for 20 days.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2
<PAGE> 3
"Selling Holders" means
(a) each Holder (i) who complies with Sections 3.1.1 hereof, (ii)
who holds not less than 100,000 Subject Shares at the both at the time such
notice is given and the date the Registration Statement is declared effective
(or such lesser number as the Company, in its sole and absolute discretion,
shall determine for such Holder), and (iii) whose Registrable Shares are
included in the Registration Statement; and
(b) each Transferee of such a Holder who (x) provides such
Transferee's Holder Informa tion promptly after its acquisition of Subject
Shares and prior to the Company's request for acceleration of the Registration
Statement, and (y) satisfies the conditions set forth in clauses (ii) and (iii)
above.
"Transfer" means 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).
"Transferee" means a Person to whom Registerable Shares are
Transferred.
"Violation" shall have the meaning set forth in Section 5.1 hereof.
2. Registration Obligations of the Company. The Company shall:
2.1 File the Registration Statement with the Commission not later
than 15 days prior to the Required Effectiveness Date (determined without
reference to the proviso included in the definition of such term) and thereafter
use its best efforts to cause the Registration Statement to be declared
effective on the Required Effectiveness Date.
2.2 Furnish to the Shareholder a copy of the Registration Statement
for its review and comment not later than concurrently with the filing of the
Registration Statement with the Commission.
2.3 The Company shall give notice to the Shareholder of the expected
effectiveness of the Registration Statement no later than the date acceleration
of such effectiveness is requested of the Commission; provided, however, that in
no event shall the Company have any liability for any failure to give such
notice.
2.4 Include in the Registration Statement the number of each
Holder's Registrable Shares for each Holder as shall be specified for such
Holder pursuant to Section 3.1 hereof.
2.5 Use its best efforts to keep the Registration Statement
effective until the earlier of (i) one year after the Closing Date, or (ii) such
date as of which all the Selling Holders have completed the distribution or
other disposition of the Registrable Shares registered under the Registration
Statement. If the Registration Statement is terminated pursuant to clause (i)
above, the Company shall timely file with the Commission all reports and other
information required to enable all holders of Registrable Shares to Transfer
such shares pursuant to Rule 144 promulgated by the Commission under the
Exchange Act, as amended.
2.6 During the effectiveness of the Registration Statement, upon
notice to the Company by a Selling Holder of a Transfer of Registrable Shares
pursuant to the Registration Statement and receipt
3
<PAGE> 4
(i) by the Company of a certificate from such Selling Holder in the form of
Annex B attached hereto, and (ii) by counsel for the Company of a certificate
from such Selling Holder in the form of Annex C attached hereto, in each case
representing that such Registrable Shares were offered and have been Transferred
by such Selling Holder in a manner consistent with the description set under the
caption "Plan of Distribution" in the Prospectus, the Company shall use its best
efforts to cause such Registrable Shares to be reissued as soon as practicable
(and not later than three Business Days following receipt by the Company and
such counsel of such certificates) in the name of the transferee free of any
restrictive legend under the Securities Act and to take all such actions as may
be reasonably required to cause its transfer agent to comply with the
undertakings set forth in this section.
2.7 Use its best efforts to amend the Registration Statement or
supplement the Prospectus so that they will remain current and in compliance
with the requirements of the Securities Act for the period specified in Section
2.4 hereof, and use its best efforts to give the Selling Holders notice of the
happening of any event or development as a result of which the Registration
Statement or Prospectus may 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 made therein not misleading. In the event that any Registrable
Shares included in the Registration Statement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of the Registration Statement, the Company may file a
post-effective amendment to the Registration Statement for the purpose of
deregistering such unsold Registrable Shares.
2.8 Furnish to each Selling Holder, without charge, such numbers of
copies of the Registration Statement, any pre-effective or post-effective
amendment thereto, the final Prospectus, and any amendments or supplements
thereto, in each case in conformity with the requirements of the Securities Act,
and such other related documents, as each Selling Holder may reasonably request
in order to facilitate the Transfer of the Registrable Shares owned by such
Selling Holder.
2.9 Use its best efforts to register and qualify the Registrable
Shares covered by the Registration Statement under such securities laws of such
states or jurisdictions as shall be reasonably requested by the Selling Holders;
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 file a general consent to service of process in any such states or
jurisdictions.
2.10 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission or any of the jurisdictions referred
to in Section 2.9 hereof in connection with the Registration Statement (and use
its best efforts to prevent the entry of such stop order or to remove it if
entered as promptly as practicable).
2.11 Use its best efforts to cause the Registrable Shares covered by
the Registration Statement, 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.
3. The Holders' Obligations.
3.1 The obligations of the Company under Section 2 with respect to each
Holder are subject to the satisfaction of each of the following conditions:
3.1.1 Not later than 10 days after the later of (i) the date
hereof, or (ii) the date on which the Company delivers the Proposed Plan
of Distribution to the Shareholder (or such later
4
<PAGE> 5
date as the Company, in its sole and absolute discretion, shall
determine), such Holder shall furnish all of its Holder Information to the
Company, if such Holder Information discloses that such Holder holds not
less than 100,000 Subject Shares (or such lesser number as the Company, in
its sole and absolute discretion, shall determine for such Holder).
3.1.2 Prior to the effectiveness of the Registration
Statement, such Holder shall furnish to the Company by a notice such
amendments and supplements to its Holder Information provided pursuant to
Section 3.1.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for each Selling
Holder does not include 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.
3.1.3 Such Holder shall cooperate with the Company in the
preparation of the Registration Statement in the manner and to the extent
reasonably requested by the Company, including accurately and fully
completing, executing and delivering to the Company such documents as the
Company may reasonably request in order to permit the Company to obtain
the Holder Information or to otherwise comply with all applicable laws or
to obtain acceleration of the effectiveness of the Registration Statement.
3.1.4 Such Holder shall not have breached any of its
obligations to the Company set forth in this Section 3.1 or in Sections 3
or 4 of the Stock Agreement; provided, however, that if such breach is one
that is capable of being cured and is actually cured by such Holder in all
material respects, the obligations of the Company to such Holder that
arises, or which the Company is obligated to perform in whole or in part,
after such cure shall be reinstated on the terms and subject to the
conditions set forth herein. A Transferee of Subject Shares who is
otherwise entitled to have such shares included in the Registration
Statement shall be deemed not have breached its obligation to provide its
Holder Information to the Company if it provides such information promptly
after its acquisition of such shares and prior to the Company's request
for acceleration of the Registration Statement
3.1.5 Such Holder shall not have made any material
misrepresentation pursuant to Section 6 of the Stock Agreement.
3.2 No action taken or omitted to be taken by or on behalf of any
Holder shall adversely affect the rights of any other Holder hereunder.
3.3 After the effectiveness of the Registration Statement, each
Selling Holder (and each transferee thereof) shall furnish to the Company by a
notice such amendments and supplements to its Holder Information provided
pursuant to Section 3.1 hereof as may be necessary in order to assure that the
Holder Information included in the Registration Statement for such Holder does
not include 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.
4. Expenses of Registration. The Company shall pay all expenses incurred in
connection with the registration, filing and qualification of the Registrable
Shares, including all registration, filing and NASD or securities exchange fees;
all fees and expenses of complying with securities or blue sky laws; all word
processing, duplicating and printing expenses; and the fees and disbursements of
counsel and accountants for the Company; but excluding all discounts,
commissions or fees of selling brokers or similar securities industry
professionals and all fees and expenses of counsel and accountants for the
Selling Holders.
5
<PAGE> 6
5. Indemnification; Contribution.
5.1 To the extent permitted by applicable law, the Company 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 incurred by such party pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, to the extent such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following (collectively a "Violation"):
5.1.1 Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any final
Prospectus, or any amendments or supplements thereto;
5.1.2 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; or
5.1.3 Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 5.1 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
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or expense incurred by a Selling Holder (or any Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, or any
officer, director, partner and employee of such Selling Holder and such
controlling Person) to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with the Holder
Information or other information furnished to the Company by or on behalf of
such Selling Holder expressly for use in connection with the Registration
Statement.
5.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company; each of its directors, each of
its officers who shall have signed the Registration Statement; each Person, if
any, who controls the Company 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, 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, to the
extent such losses, claims, damages, liabilities and expenses arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with the
Holder Information or other information furnished to the Company by or on behalf
of that Selling Holder expressly for use in connection with the Registration
Statement.
5.3 Promptly after receipt by an indemnified party under this
Section 5 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 5, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement 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
6
<PAGE> 7
the parties. The failure of an Indemnified Party to deliver written notice to
the indemnifying party within a reasonable time following the commencement of
any such action shall not relieve such indemnifying party of any liability to
the indemnified party under this Section 5 unless such failure is prejudicial to
such indemnifying party's ability to defend such action. 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 30 days of written
notice thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses, or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding, or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest
would 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). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed.
5.4 If the indemnification required by this Section 5 from the
indemnifying party is determined by a court of competent jurisdiction to be
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 5:
5.4.1 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 5.1 and 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
7
<PAGE> 8
5.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 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
5.4.1. 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 a fraudulent misrepre-
sentation.
5.5 If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 5 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 5.4.
5.6 The obligations of the Company and the Selling Holders under
this Section 5 shall survive the completion of any offering of Registrable
Shares pursuant to the Registration Statement and any termination of this
Agreement.
6. Amendment, Modification and Waivers; Further Assurances.
6.1 This Agreement may be amended with the consent of the Company
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it; in each case only if the Company
shall have obtained the written consent of Holders holding more than 50% of the
Registrable Shares. Such amendment, action or omission shall not require the
consent of any other Holder. In addition, the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
that affects the rights hereunder of a specific Holder with the written consent
of such Holder.
6.2 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.
6.3 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.
7. Miscellaneous.
7.1 Business Day. Whenever this Agreement requires that an action be
taken or a notice be given on a date that would otherwise not be a Business Day,
the time period for taking such action or giving such notice shall be extended
to the first day thereafter that is a Business Day.
7.2 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.
8
<PAGE> 9
7.3 Notices. All notices, requests, demands, consents, approvals,
designations and other deliveries and communications called for or contemplated
by this Agreement shall be in writing and shall be given (i) in the case of
Shareholder or the Company, to the address and in the manner set forth in
Section 7 of the Stock Agreement, and (ii) in the case of any Holder other than
Shareholder, in the manner set forth in Section 7 of the Stock Agreement and to
the address provided to the Company in such Holder's Joinder Agreement.
7.4 Entire Agreement; Integration. This Agreement, together with the
Stock 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.
7.5 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
7.6 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.
7.7 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.
7.8 Termination. This Agreement may be terminated at any time by a
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 5
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Shares.
7.9 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
7.10 No Third Party Beneficiaries or Assignees. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or the Holders (to the extent expressly provided herein) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Neither this Agreement not the rights or obligations hereunder may be
assigned or otherwise transferred by any Holder except as permitted herein with
respect to a Transfer of Registrable Shares.
7.11 Starwood Hotels & Resorts Trust. The parties hereto understand
and agree that the name "Starwood Hotels & Resorts Trust" is a designation of
the Trust and its trustees (as trustees but not personally) under the Trust's
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.
9
<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
"Shareholder"
D.C. OVERNIGHT PARTNERS, L.P.,
a District of Columbia limited partnership
By: D.C. OVERNIGHT, INC., a District of Columbia
corporation, its sole General Partner
/s/ Tarek Ayoubi
_____________________________
Tarek Ayoubi
President
STARWOOD HOTELS & RESORTS TRUST
a Maryland real estate investment trust
/s/ Steven R. Goldman
By: _____________________________
Steven R. Goldman
Senior Vice President
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
a Maryland corporation
/s/ Nir E. Margalit
By: _____________________________
Nir E. Margalit
Secretary
10
<PAGE> 11
ANNEX A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee or the intended transferee of
_________ Paired Shares (the "Registrable Shares") of Starwood Hotels & Resorts
Trust, a Maryland real estate investment trust, and Starwood Lodging
Corporation, a Maryland corporation (together, the "Company"), as a condition to
the transfer to and acquisition by the undersigned of such Registrable Shares,
acknowledges that matters pertaining to the sale and registration of such
Registrable Shares are governed by the Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of January 15, 1998, initially among
the Company and D.C. Overnight Partners, L.P., a District of Columbia limited
partnership, and the undersigned hereby (1) acknowledges receipt of a copy of
such agreement, and (2) agrees to be bound as a "Holder" by the terms of the
Registration Rights Agreement, as the same has been or may be amended from time
to time.
Agreed to this ____ day of __________, _____.
____________________________________
By: _______________________________
Its: _______________________________
Address, telephone number and
telecopy number for notices:
____________________________________
____________________________________
____________________________________
____________________________________
<PAGE> 12
ANNEX B
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Starwood Hotels & Resorts Trust
2231 E. Camelback Road, Suite 410
Phoenix, Arizona 85016
Attention: Ronald C. Brown or Chief Financial Officer
Starwood Hotels & Resorts Worldwide, Inc.
2231 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: Alan M. Schnaid or Vice President
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
___________ of the Paired Shares held by the undersigned were
offered for sale and have been sold by the undersigned in a manner consistent
with the description set under the caption "Plan of Distribution" in the
Prospectus. Thus, the undersigned requests that new certificates evidencing such
Paired Shares be issued in the name of _________________________, the
transferee, free of any restrictive legend under the Securities Act.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 13
ANNEX C
to Registration
Rights Agreement
[Letterhead of Selling Holder]
____________, 199__
BY TELECOPIER
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
Attention: Sherwin L. Samuels, Esq.,
Kenneth H. Levin, Esq. and
James V. Robertson, Esq.
Re: Starwood Hotels & Resorts
Ladies and Gentlemen:
Reference is made to the prospectus (the "Prospectus") included in
the Registration Statement on Form S-3 (Registration No. ___________) filed by
Starwood Hotels & Resorts Trust (the "Trust") and Starwood Hotels & Resorts
Worldwide, Inc. (the "Corporation" and, together with the Trust, the "Company")
with the Securities and Exchange Commission on _________, 1998, under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration for resale by the shareholders named therein of certain shares of
beneficial interest, par value $.01 per share, of the Trust, and shares of
common stock, par value $.01 per share, of the Corporation (the "Paired
Shares"), including _______ Paired Shares held by the undersigned.
The undersigned understands that you have been requested by the
Company to deliver an opinion to the Company's transfer agent that, upon the
sale by the undersigned of the Paired Shares, certificates evidencing such
shares may be issued to the transferee(s) without any restrictive legend under
the Securities Act. For the purpose of facilitating the delivery by you of such
opinion, the undersigned, hereby represents that _______ of the Paired Shares
held by the undersigned were offered for sale and have been sold in a manner
consistent with the description set under the caption "Plan of Distribution" in
the Prospectus.
The undersigned understands that you will be relying on the
foregoing representations in rendering your opinion, and the undersigned
consents to such reliance.
Very truly yours,
[Name and signature of Selling Holder]
<PAGE> 1
POWER OF ATTORNEY
The undersigned, Sheikh Abdulaziz bin Ibrahim Al Ibrahim,
hereby constitutes and appoints Tarek Ayoubi, with full power of substitution,
his true and lawful attorney-in-fact and agent, in any and all capacities, with
full power and authority to execute, deliver and file any reports to be filed
with the United States Securities and Exchange Commission pursuant to Section
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, with respect
to the acquisition, ownership or disposition of shares of Starwood Hotels &
Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc., granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or other substitutes, may lawfully do or cause to be done.
Polestar Limited
/s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim
-------------------------------------------
Name: Sheik Abdulaziz bin Ibrahim Al Ibraham
Title: Authorized Signatory
Date: January 24, 1998
<PAGE> 2
POWER OF ATTORNEY
The undersigned, Aspen Enterprises International Holdings,
Ltd., a Cayman Islands corporation, hereby constitutes and appoints Tarek
Ayoubi, with full power of substitution, its true and lawful attorney-in-fact
and agent, in any and all capacities, with full power and authority to execute,
deliver and file any reports to be filed with the United States Securities and
Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, with respect to the acquisition, ownership or
disposition of shares of Starwood Hotels & Resorts Trust and Starwood Hotels &
Resorts Worldwide, Inc., granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or other substitutes, may lawfully do or
cause to be done.
Aspen Enterprises International Holdings, Ltd.
By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim
------------------------------------------------
Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim
Title: Authorized Signatory
Date: January 24, 1998
<PAGE> 3
POWER OF ATTORNEY
The undersigned, Polestar Limited, a Cayman Islands
corporation, hereby constitutes and appoints Tarek Ayoubi, with full power of
substitution, its true and lawful attorney-in-fact and agent, in any and all
capacities, with full power and authority to execute, deliver and file any
reports to be filed with the United States Securities and Exchange Commission
pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as
amended, with respect to the acquisition, ownership or disposition of shares of
Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts Worldwide, Inc.,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as it might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or other substitutes, may lawfully do or cause to be done.
Polestar Limited
By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim
------------------------------------------
Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim
Title: Authorized Signatory
Date: January 24, 1998
<PAGE> 4
POWER OF ATTORNEY
The undersigned, Moonbeam Enterprises International, Ltd., a
Cayman Islands corporation, hereby constitutes and appoints Tarek Ayoubi, with
full power of substitution, its true and lawful attorney-in-fact and agent, in
any and all capacities, with full power and authority to execute, deliver and
file any reports to be filed with the United States Securities and Exchange
Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of
1934, as amended, with respect to the acquisition, ownership or disposition of
shares of Starwood Hotels & Resorts Trust and Starwood Hotels & Resorts
Worldwide, Inc., granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as it
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or other substitutes, may lawfully do or cause to be
done.
Moonbeam Enterprises International, Ltd.
By: /s/ Sheikh Abdulaziz bin Ibrahim Al Ibrahim
--------------------------------------------
Name: Sheikh Abdulaziz bin Ibrahim Al Ibrahim
Title: Authorized Signatory
Date: January 24, 1998
