UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ---------------------------
Commission file number
0-15771
GUARANTEED HOTEL INVESTORS 1985, L.P.
and
FFCA INVESTOR SERVICES CORPORATION 85-A
- --------------------------------------------------------------------------------
(Exact name of Co-Registrants as Specified in their
Organizational Documents)
Delaware 86-0537905
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0537910
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
------- ---------------------
GUARANTEED HOTEL INVESTORS 1985, L.P.
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995 (NOTE 1)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,846,795 $ 6,255,398
Accounts receivable 888,090 718,454
Other receivables 31,377 861,550
Prepaids and other 344,538 412,582
------------ ------------
Total current assets 10,110,800 8,247,984
------------ ------------
PROPERTY AND EQUIPMENT:
Land and improvements 5,396,153 5,396,153
Buildings and improvements 41,354,915 41,350,548
Furniture and equipment 7,951,016 8,038,759
------------ ------------
54,702,084 54,785,460
Less - Accumulated depreciation and amortization (9,636,494) (9,013,099)
------------ ------------
45,065,590 45,772,361
Operating stock 307,984 337,148
------------ ------------
45,373,574 46,109,509
------------ ------------
Total assets $ 55,484,374 $ 54,357,493
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Distribution payable to limited partners $ 1,002,104 $ 1,002,104
Distribution payable to general partner 10,101 10,101
Accounts payable and accrued liabilities 1,824,366 1,724,774
Property taxes payable 327,169 508,630
Current portion of capital lease obligations 89,410 111,689
------------ ------------
Total current liabilities 3,253,150 3,357,298
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner(312,645) (324,955)
Limited partners 52,543,869 51,325,150
------------ ------------
Total partners' capital 52,231,224 51,000,195
------------ ------------
Total liabilities and partners' capital $ 55,484,374 $ 54,357,493
============ ============
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENTS OF INCOME FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (NOTE 1)
(Unaudited)
1996 1995
---------- ----------
REVENUE:
Room $6,114,200 $5,264,916
Food and beverage 635,401 1,031,589
Other revenue 565,976 410,735
---------- ----------
Total revenue 7,315,577 6,707,240
---------- ----------
EXPENSES:
Property operating costs and expenses 1,824,749 2,074,636
General and administrative 1,067,125 890,984
Advertising and promotion 569,572 586,175
Utilities 292,053 293,185
Repairs and maintenance 251,126 273,552
Property taxes and insurance 374,612 429,297
Interest expense and other 19,695 28,401
Depreciation and amortization 623,395 624,330
Loss on disposition of property 52,120 975
---------- ----------
Total expenses 5,074,447 5,201,535
---------- ----------
NET INCOME $2,241,130 $1,505,705
========== ==========
NET INCOME ALLOCATED TO:
General partner $ 22,411 $ 15,057
Limited partners 2,218,719 1,490,648
---------- ----------
$2,241,130 $1,505,705
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on 200,000
units held by limited partners) $ 11.09 $ 7.45
========== ==========
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (NOTE 1)
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General -------------------------
Partner Number Total
Amount of Units Amount Amount
---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $(324,955) 200,000 $51,325,150 $51,000,195
Net income 22,411 - 2,218,719 2,241,130
Distribution to partners (10,101) - (1,000,000) (1,010,101)
--------- ------- ----------- -----------
BALANCE, March 3l, l996 $(312,645) 200,000 $52,543,869 $52,231,224
========= ======= =========== ===========
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (NOTE 1)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,241,130 $ 1,505,705
Adjustments to net income:
Depreciation and amortization 623,395 624,330
Loss on sale of property 52,120 975
Change in assets and liabilities:
Increase in accounts receivable (169,636) (104,681)
Decrease in other receivables 861,429 --
Decrease in prepaids and other 68,044 138,201
Increase in accounts payable and accrued liabilities 99,592 372,469
Decrease in property taxes payable (181,461) (305,648)
----------- -----------
Net cash provided by operating activities 3,594,613 2,231,351
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions and improvements -- (56,517)
Decrease (increase) in operating stock 29,164 (12,169)
----------- -----------
Net cash provided by (used in) investing activities 29,164 (68,686)
----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Distribution to partners (1,010,101) (1,010,101)
Payments on capital lease obligations (22,279) (43,721)
----------- -----------
Net cash used in financing activities (1,032,380) (1,053,822)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,591,397 1,108,843
CASH AND CASH EQUIVALENTS, beginning of period 6,255,398 5,652,192
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 8,846,795 $ 6,761,035
=========== ===========
</TABLE>
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1) EVENT SUBSEQUENT TO BALANCE SHEET DATE - SALE OF HOTELS:
-------------------------------------------------------
On April 26, 1996, the Partnership closed the sale of the three hotels for a
cash sales price of $73,250,000. Proceeds from the sale are held by the
Partnership in U.S. Treasury securities pending distribution to investors. The
General Partner has begun the process of winding down the affairs of the
Partnership, which includes the liquidation and distribution of assets to the
investors in accordance with the Partnership agreement. The liquidation is
expected to be completed in 1996.
Upon closing of the sale, a $2,500,000 trust fund was established by the
Partnership. The trust fund will be available only to satisfy claims made by the
buyer, arising from the Partnership's obligations under the sales agreement
during the eighteen-month period ending October 26, 1997. If, as of October 26,
1997, no claims have been made by the buyer or if final decisions have been
rendered for all disputed claims, the remaining balance of the trust fund will
be disbursed to the investors. If, however, there exist disputed claims as of
October 26, 1997, no disbursements will be made from the trust fund until a
final decision has been reached as to all disputed claims; provided, however,
that no later than April 26, 1999 the remaining balance of the trust fund will
be disbursed to the investors, and the buyer will have no further recourse as to
such disputed claims.
Set forth below is condensed historical and pro forma financial information of
the Partnership as if the sale of the hotels and liquidation of the Partnership
occurred on March 31, 1996. This financial information includes estimates of
costs to be incurred in connection with the liquidation of the Partnership.
Although management believes its estimates are reasonable, actual results could
differ from those estimates.
NET PRO FORMA EFFECT ON STATEMENT OF INCOME:
Sale Proceeds $73,250,000
Net Book Value of Assets Sold and Liabilities Assumed (45,284,164)
-----------
Gross gain from the sale of the hotels 27,965,836
Less: Transaction costs of the sale of the hotels, estimated
costs to liquidate the Partnership and related fees (3,815,120)(5)
-----------
Net pro forma effect on Statement of Income $24,150,716(1)
===========
<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET: Historical Pro Forma
March 31,1996 Adjustments March 31, 1996
------------- ----------- --------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 8,846,795 $ (703,078)(2) $8,143,717
Accounts receivable 888,090 - (3) 888,090
Receivable from General Partner - 71,138 (3) 71,138
Other assets 375,915 - (3) 375,915
Net property and equipment 45,373,574 (45,373,574)(4) -
------------ ------------- ----------
Total Assets $55,484,374 $(46,005,514) $9,478,860
=========== ============ ==========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities
Distribution payable $ 1,002,104 $ - $1,002,104
Payable to General Partner 10,101 - 10,101
General Partner fee - 982,620 (5) 982,620
Financial advisory fee payable - 732,500 (5) 732,500
Accounts payable and accrued liabilities 2,151,535 2,100,000 (5) 4,251,535
Capital lease obligations 89,410 (89,410)(5) -
------------- -------------- -----------
Total Liabilities 3,253,150 3,725,710 6,978,860
------------- -------------- -----------
Partners' Capital
General Partner (312,645) 312,645 (1) -
Limited Partners 52,543,869 (50,043,869)(1) 2,500,000 (6)
------------ ------------- -----------
Total Partners' Capital 52,231,224 (49,731,224) 2,500,000
------------ ------------- -----------
Total Liabilities and Partners' Capital $55,484,374 $(46,005,514) $9,478,860
=========== ============ ==========
</TABLE>
- -----------------------------
(1) The pro forma effects of the sale of the hotels and payment of the initial
estimated liquidating distributions on partners' capital are as follows:
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
Net pro forma effect on Statement of Income $241,507 $ 23,909,209 $ 24,150,716
Payment of the initial estimated liquidating
distributions - (73,953,078) (73,953,078)
General Partner contribution of deficit in
capital account 71,138 - 71,138
-------- ------------ -------------
Pro forma adjustments to Partners' Capital $312,645 $(50,043,869) $(49,731,224)
======== ============ ============
</TABLE>
(2) The pro forma adjustment to cash reflects the cash proceeds of $73,250,000
from the sale of the hotels net of the initial payments of approximately
$73,953,000 made directly to the Limited Partners. These initial payments are
estimated to be equal to the total cash held by the Partnership upon the sale of
the hotels less (a) the amount of cash required to pay the Partnership's
liabilities, including the costs of liquidating the Partnership and (b)
$2,500,000 to be held in trust and later distributed as described above.
(3) Accounts receivable, receivable from General Partner, and other assets are
not transferred to the buyer in connection with the $73,250,000 sales price of
the hotels. The receivable from the General Partner represents the General
Partner's negative capital account at March 31, 1996 which, pursuant to the
Partnership Agreement, must be contributed by the General Partner to the
Partnership as of the date of dissolution.
(4) Represents the net book value at March 31, 1996 of the hotels' assets to be
sold.
(5) The pro forma adjustments to liabilities reflect the accrual of estimated
costs relating to the sale of the hotels and the liquidation of the Partnership,
the accrual of financial advisory fees payable to Lehman Brothers for their
services in connection with the sale of the hotels and the accrual of the
General Partner's disposition fee, net of the liabilities related to the hotel
operations assumed by the buyer. The General Partner fee represents a fee
generated by the General Partner for additional services rendered to the
Partnership as a result of the acquisition and management of the Hotels
following the Woolley/Sweeney Partnerships' default. The following are the pro
forma adjustments to liabilities:
Transaction and liquidation costs and related fees:
Accrual of estimated costs of the sale of the
hotels and liquidation of the Partnership $ 500,000
Sales and other tax liabilities 1,000,000
Fees payable to hotel management company 600,000
Financial advisory fee 732,500
General Partner fee 982,620
------------
3,815,120
Capital lease obligations assumed by the buyer (89,410)
------------
Pro forma adjustment to liabilities $3,725,710
============
(6) The pro forma balance in the Partners' Capital Accounts represents funds to
be deposited in a $2,500,000 trust fund as discussed above.
<PAGE>
PART I - FINANCIAL INFORMATION
- --------------------------------
Item 2. Management's Discussion and Analysis of
- ------- ---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Liquidity and Capital Resources
On April 26, 1996, the Partnership closed a transaction with Starwood
Lodging Trust operating through its affiliate, SLT Realty Limited
Partnership (collectively, the "Buyer"), whereby the Buyer acquired fee
simple title to the Partnership's three hotels located in Irving, Texas;
Fort Lauderdale, Florida; and Tampa, Florida (the "Properties") from the
Partnership for a cash payment to the Partnership of $73,250,000. The
Buyer is not affiliated with the Partnership or its general partner, FFCA
Management Company Limited Partnership, a Delaware limited partnership
(the "General Partner"). The net cash proceeds from this sale are being
held in U.S. Treasury Securities pending distribution to investors. The
sale of the Properties represents the disposition of substantially all of
the Partnership's assets and the Partnership has no further liability in
connection with any of the Properties. The General Partner has begun the
process of winding down the affairs of the Partnership which includes
liquidation and distribution of assets to the investors in accordance with
the Partnership agreement. The liquidation of the Partnership is expected
to be completed in 1996. In conjunction with the sales transaction, the
investors of the Partnership also approved the payment of a fee in the
amount of $982,620 to the General Partner for substantial and
unanticipated services rendered to the Partnership from January 1, 1991 to
the date of liquidation of the Partnership.
As part of the purchase of the Properties, $2,500,000 of the sales price
has been deposited in trust (the "Trust Fund") with Norwest Bank Arizona,
NA. The Trust Fund (including interest income) will be available only to
satisfy claims made by the Buyer, arising from the Partnership's
obligations under the sales agreement during an eighteen-month period
commencing upon the sale date. If, at the end of such eighteen-month
period, no claims have been made by the Buyer or if final decisions have
been rendered for all disputed claims, the remaining balance of the Trust
Fund will be disbursed to the investors. If, however, there exist disputed
claims at the end of such eighteen-month period, no disbursements will be
made from the Trust Fund until a final decision has been reached as to all
disputed claims; provided, however, that no later than three years after
the acquisition of the hotels by the Buyer the remaining balance of the
Trust Fund will be disbursed to the investors, and the Buyer will have no
further recourse as to such disputed claims.
During the quarter ended March 31, 1996, the Partnership generated cash
from operating activities of $3,594,613 as compared to $2,231,351
generated during the same period in 1995. The difference between periods
is due primarily to a decrease in other receivables and an increase in net
income. The Partnership declared a cash distribution to the limited
partners of $1,000,000 for the quarter ended March 31, 1996 (the period).
Funds held by the Partnership during the period were invested in U.S.
Government Agency discount notes and bank repurchase agreements (which are
secured by United States Treasury and Government obligations).
Results of Operations
Room revenue increased by $849,284 or 16% to $6,114,200 for the quarter
ended March 31, 1996 as compared to $5,264,916 for the same period of the
prior year. This increase is primarily attributable to the Irving, TX
hotel ($421,000) due to an increase in the average daily room rate from
$92 to $99 and an increase in the percentage of occupancy at the hotel
from 73% to 83%. To a lesser extent, increases in room revenue were
generated by the Tampa, FL hotel ($292,000) due to increases in the
average daily room rate and the percentage of occupancy and the Ft.
Lauderdale, FL hotel ($136,000) due to the increase in the average daily
room rate, somewhat offset by a decrease in the percentage of occupancy.
Food and beverage revenue decreased by $396,188 or 38% for the period as
compared to the same period of the prior year, with a corresponding
decrease in food and beverage expense of $325,000. The decrease primarily
related to the leasing of the Irving food and beverage facilities to a
third party in 1996 rather than operating the facilities directly, as was
done in the first quarter of 1995.
Other revenues of $565,976 for the period increased by $155,241 over the
same period of the prior year primarily due to an increase of
approximately $70,000 in space rental revenue at the Irving, TX hotel and
an increase of approximately $23,000 in investment income due to an
increase between quarters in the average cash balance invested.
General and administrative expenses increased to $1,067,125 for the period
from $890,984 for the same period in 1995. This increase primarily
resulted from an increase in legal fees of approximately $40,000, an
increase in fees payable to an affiliate of the General Partner for
maintenance of the books and records, and for computer, investor and other
services of approximately $38,000 and an increase in postage and printing
costs of approximately $20,000 resulting from the preparation for the sale
of the hotels that occurred on April 26, 1996 (as discussed above).
Property taxes and insurance during the period decreased to $374,612 from
$429,297 in the same period of the prior year. The Partnership appealed
the hotel property taxes which resulted in tax savings of approximately
$28,000. In addition, certain of the hotel insurance policies were renewed
under plans that Doubletree Hotels made available to the Partnership.
These policies provided broader coverage than the previous policies at a
reduced cost.
Certain key statistics and financial information related to the
Partnership's hotel operations were obtained from the unaudited financial
statements as reported by Doubletree Partners for the three months ended
March 31, 1996 as compared to the same period of the prior year.
ADR* - Qtr Ended % of Occupancy - Qtr Ended
---------------------- --------------------------
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
--------- --------- --------- ---------
Fort Lauderdale $102 $93 83% 85%
Tampa $103 $92 80% 77%
Irving $99 $92 83% 73%
* Average Daily Room Rate
The hotel business, in general, fluctuates seasonally depending on the
individual hotel's location and type of target market each property
serves. The Partnership's hotel located in Irving, Texas is situated near
an airport, primarily serves the business traveler market and its business
is fairly consistent throughout the year. The Ft. Lauderdale hotel is
impacted by the tourist market, while also focusing on the corporate
market, and its busiest season is January through April due to the Florida
climate. The hotel located in Tampa, Florida is also impacted cyclically
by the Florida climate, however, it is located near the Tampa
International Airport and therefore its cycles are less predominant.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
<PAGE>
PART II - OTHER INFORMATION
- -----------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
The following matters were submitted to a vote of the security holders
through the solicitation of consents during the first quarter of fiscal
year 1996. A Consent Solicitation Statement dated January 29, 1996 was
sent to the security holders. Voting was completed March 15, 1996 without
a meeting. The following table sets forth each of the proposals that the
security holders were asked to vote upon:
Proposal Results
-------- -------
1. Consent to sell the hotels owned by For 150,420
the Partnership Against 4,975
Abstain 3,071
2. Consent to pay a fee of $982,620 to the
General Partner upon completion of the
sale of the hotels and liquidation of the
Partnership for substantial and unanticipated For 106,132
services to the Partnership from January 1, Against 35,530
1991 to the date of liquidation. Abstain 16,804
Item 5. Other Information.
- ------- ------------------
On April 26, 1996, the Partnership closed the sale of the three hotels for
a cash sales price of $73,250,000. This transaction is described more
completely in Part I, Item 1, Note 1 Event Subsequent To Balance Sheet
Date Sale Of Hotels and in Part I, Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations under Liquidity
and Capital Resources. The required information disclosed pursuant to Part
II is hereby incorporated by reference from Part I of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
- ------- ---------------------------------
(a) The following is a complete list of exhibits filed as part of this
Form 10-Q. For electronic filing purposes only, this report contains Exhibit 27,
Financial Data Schedule. Exhibit numbers correspond to the numbers in the
Exhibit Table of Item 601 of Regulation S-K.
Exhibit No. Description
----------- -----------
10.8 Fourth Amendment to Purchase
Agreement Between the Partnership
and SLT Realty Limited Partnership
dated April 26, 1996.
10.9 First Amendment to Management
Agreement Among the Partnership,
Starwood Lodging Corporation and DT
Management, Inc., dated April 26,
1996.
10.10 First Amendment to Management
Agreement Among the Partnership,
Starwood Lodging Corporation and DT
Management, Inc., dated April 26,
1996.
10.11 First Amendment to Management
Agreement Among the Partnership,
SLC Operating Limited Partnership
and DT Management, Inc., dated
April 26, 1996.
10.12 Liquidating Trust and Escrow
Agreement Among the Partnership, SLT
Realty Limited Partnership and
Norwest Bank Arizona, National
Association, dated April 26, 1996.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form 10-K for the year ended
December 31, 1995, are incorporated herein by this reference.
10.1 Purchase Agreement Between the
Partnership and SLT Realty Limited
Partnership dated October 27, 1995.
10.2 First Amendment to Purchase
Agreement Between the Partnership
and SLT Realty Limited Partnership
dated November 7, 1995.
10.3 Second Amendment to Purchase
Agreement Between the Partnership
and SLT Realty Limited Partnership
dated December 13, 1995.
10.4 Third Amendment to Purchase
Agreement Between the Partnership
and SLT Realty Limited Partnership
dated December 22, 1995.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form 10-K/A-1 for the year ended
December 31, 1994, are incorporated herein by this reference.
10.5 Management Agreement, dated
November 3, 1993, by and between
the Partnership and Guest Quarters
Hotels Partnership, a Delaware
limited partnership.
10.6 Management Agreement, dated
February 16, 1994, by and between
the Partnership and Doubletree
Partners, a Delaware partnership.
10.7 Management Agreement, dated
February 16, 1994, by and between
the Partnership and Doubletree
Partners, a Delaware partnership.
(b) During the quarter covered by this report, the Co-Registrants did
not file any reports on Form 8-K.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 85-A
---------------------------------------
BALANCE SHEET - MARCH 31, 1996
------------------------------
ASSETS
Cash $100
Investment in Guaranteed Hotel Investors 1985, L.P., at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
Note: FFCA Investor Services Corporation 85-A (85-A) was organized on June
28, 1985 to act as the assignor limited partner in Guaranteed Hotel
Investors 1985, L.P. (GHI-85). The assignor limited partner is the
owner of record of the limited partnership units of GHI-85. All rights
and powers of 85-A have been assigned to the holders, who are the
registered and beneficial owners of the units. Other than to serve as
assignor limited partner, 85-A has no other business purpose and will
not engage in any other activity or incur any debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GUARANTEED HOTEL INVESTORS 1985, L.P.
By FFCA MANAGEMENT COMPANY, L.P.
General Partner
By PERIMETER CENTER MANAGEMENT COMPANY
Corporate General Partner
Date: May 10, 1996 By /s/ John R. Barravecchia
---------------------------------------------
John R. Barravecchia, Chief Financial Officer
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 85-A
Date: May 10, 1996 By /s/ John R. Barravecchia
---------------------------------------
John R. Barravecchia, President
<PAGE>
EXHIBIT INDEX
The following is a complete list of exhibits filed as part of this Form 10-Q.
For electronic filing purposes only, this report contains Exhibit 27, Financial
Data Schedule. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
10.8 Fourth Amendment to Purchase Agreement Between
the Partnership and SLT Realty Limited
Partnership dated April 26, 1996.
10.9 First Amendment to Management Agreement Among
the Partnership, Starwood Lodging Corporation
and DT Management, Inc., dated April 26, 1996.
10.10 First Amendment to Management Agreement Among
the Partnership, Starwood Lodging Corporation
and DT Management, Inc., dated April 26, 1996.
10.11 First Amendment to Management Agreement Among
the Partnership, SLC Operating Limited
Partnership and DT Management, Inc., dated
April 26, 1996.
10.12 Liquidating Trust and Escrow Agreement Among
the Partnership, SLT Realty Limited Partnership
and Norwest Bank Arizona, National Association,
dated April 26,1996.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form 10-K for the year ended
December 31, 1995, are incorporated herein by this reference.
10.1 Purchase Agreement Between the Partnership and SLT Realty
Limited Partnership dated October 27, 1995.
10.2 First Amendment to Purchase Agreement Between the Partnership
and SLT Realty Limited Partnership dated November 7, 1995.
10.3 Second Amendment to Purchase Agreement Between the Partnership
and SLT Realty Limited Partnership dated December 13, 1995.
10.4 Third Amendment to Purchase Agreement Between the Partnership
and SLT Realty Limited Partnership dated December 22, 1995.
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as
amended, the following documents, filed with the Securities and Exchange
Commission as exhibits to the Co-Registrants' Form 10-K/A-1 for the year ended
December 31, 1994, are incorporated herein by this reference.
10.5 Management Agreement, dated November 3, 1993, by and between
the Partnership and Guest Quarters Hotels Partnership, a
Delaware limited partnership.
10.6 Management Agreement, dated February 16, 1994, by and between
the Partnership and Doubletree Partners, a Delaware
partnership.
10.7 Management Agreement, dated February 16, 1994, by and between
the Partnership and Doubletree Partners, a Delaware
partnership.
FOURTH AMENDMENT TO PURCHASE AGREEMENT
THIS FOURTH AMENDMENT TO PURCHASE AGREEMENT (this "Fourth Amendment"),
is made and entered into as of the 26th day of April, 1996 by and between
GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited partnership
("Seller"), and SLT REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
("Buyer").
W I T N E S E T H:
WHEREAS, Seller and Buyer are parties to that certain Purchase
Agreement dated October 27, 1995, as amended (the "Agreement"); and
WHEREAS, Seller and Buyer have agreed to further amend the Agreement as
provided herein.
NOW THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties
hereto, Seller and Buyer hereby covenant and agree as follows:
1. In the event of any conflict between the terms and provisions of the
Agreement and this Fourth Amendment, then the terms and provisions of this
Fourth Amendment shall prevail. All capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the
Agreement.
2. The definition of "Trust Funds" set forth in Section 1 of the
Agreement is amended by deleting the reference to $2,000,000 and inserting in
its place $2,500,000.
3. Section 16 of the Agreement is amended by deleting all references to
"ONE YEAR" and inserting in their place "EIGHTEEN MONTH" or "EIGHTEEN MONTHS",
as the context requires.
4. Subsection 5(b)(i) of the Agreement is hereby deleted and the
following sentence is added to Section 5(b) of the Agreement following the first
sentence: "The prorations for real estate and ad valorem taxes for 1996 with
respect to the Hotel Properties shall be determined using the 1995 tax amounts
multiplied by 105%, it being the intent of the parties hereto that the parties
shall not reprorate the Taxes subsequent to the Closing and the prorations of
Taxes reflected on the settlement statement(s) executed by Seller and Buyer at
Closing shall be final and conclusive".
5. Buyer acknowledges and agrees that, notwithstanding that the Special
Warranty Deeds to be delivered at Closing do not include exceptions to title for
survey matters, transient guest and
<PAGE>
tenants pursuant to unrecorded leases, Seller's conveyance of title to the Hotel
Properties is subject to the survey matters exceptions, transient guests
exceptions and tenants pursuant to unrecorded leases exceptions described in the
Title Policies, and Buyer's fee simple title to the Hotel Properties shall be
subject to such matters.
6. Seller and Buyer agree that the portion of the Purchase Price
allocable to the motor vehicles included within the definition of Hotel
Properties is as set forth on the attached Schedule I. Buyer further
acknowledges that it shall be solely responsible for the payment of all sales
tax imposed on the sale of such motor vehicles from Seller to Buyer.
7. Buyer agrees to indemnify, protect, hold harmless and defend Seller
and its directors, officers, shareholders, affiliates, employees, successors and
assigns and agents, as applicable, from and against any and all losses, costs,
claims, liabilities, damages (exclusive of consequential and punitive damages)
and expenses, including, without limitation, Seller's reasonable attorneys'
fees, arising or accruing prior to the date hereof with respect to that certain
equipment lease dated April 14, 1985 with BellSouth Financial Services,
successor to Universal Communications Systems, Inc., with respect to the Fort
Lauderdale Hotel Property (the "BellSouth Lease"); provided, however, upon
delivery to Seller of an assumption and release agreement in the form attached
hereto as Exhibit A executed by BellSouth Financial Services, this indemnity,
protection and hold harmless provision shall terminate and be of no further
force and effect.
8. Buyer and Seller agree that in order to obtain a release of Seller's
liabilities and obligations under the Management Agreements as required pursuant
to Section 4(d)(5) of the Agreement, Buyer has been required by Doubletree to
assume certain obligations of Seller thereunder. In connection therewith, Buyer
and Seller agree and acknowledge that Buyer shall have the right to make a claim
against the Trust Funds pursuant to Section 16 of the Agreement and in
accordance with the claims procedures set forth in the Trust and Escrow
Agreement for any loss, cost or expense incurred by Buyer, including, without
limitation reasonable attorneys' fees and costs, whether or not litigation is
commenced and, if commenced, through all appellate and bankruptcy proceedings,
as a result of any breach or default by Seller with respect to the payment and
performance of obligations and liabilities of Seller for the period prior to the
Closing Date or as a result of Buyer satisfying obligations of Seller under the
Management Agreements which accrued or arose prior to the Closing Date.
9. Buyer and Seller reconfirm, agree and acknowledge that Section 5(b)
of the Agreement provides that Seller is responsible for the payment of all
costs, expenses and obligations from the Hotel Properties accruing prior to the
Closing Date. In connection therewith, Buyer and Seller agree and acknowledge
the obligations and liabilities of Seller that Buyer is (i) assuming therefrom
or (ii) indemnifying Seller against claims made by third parties, for the period
prior to the Closing Date, including, without limitation, the obligations of
Seller described in Paragraphs 7 and 8 above, are included within the
obligations of Seller under the provisions of such Section 5(b) and,
accordingly, Buyer shall have the right to make a claim against the Trust Funds
pursuant to Section 16 of the Agreement and
2
<PAGE>
the Trust and Escrow Agreement for any loss, cost or expense incurred by Buyer ,
including, without limitation, reasonable attorneys' fees and costs, whether or
not litigation is commenced and, if commenced through all appellate and
bankruptcy proceedings, as a result of any breach or default by Seller with
respect to the payment and performance of obligations and liabilities of Seller
to which such assumption and indemnity relate or as a result of Buyer satisfying
obligations of Seller under the Management Agreements which accrued or arose
prior to the Closing Date.
10. Buyer and Seller agree that, in accordance with the provisions of
Paragraph 17(B) of the Agreement, Seller hereby assigns its right to receive the
stock of LSA Club One, Inc. to SLC Operating Limited Partnership, a Delaware
limited partnership.
11. Seller and Buyer agree that they will reconcile the credit card
receipts for the Hotel Properties that were credited to Buyer's account on
Monday, April 29, 1996, as soon thereafter as is practicable, based upon the
prorations for credit card receipts agreed upon by Buyer and Seller in
accordance with the terms and provisions of the Agreement.
12. Except as expressly amended and modified hereby, the Agreement is
and shall otherwise remain in full force and effect, and the parties hereto
hereby ratify and confirm the same.
13. This Fourth Amendment may be executed in one or more counterparts
and all such counterparts taken together shall constitute one agreement.
Executed copies of this Fourth Amendment received by telecopier shall be deemed
to be originals.
3
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have hereunder set their hands as
of the date first above written.
SELLER:
GUARANTEED HOTEL INVESTORS 1985, L.P.,
a Delaware limited partnership
By: FFCA Management Company, Limited, Partnership, a Delaware
limited partnership,
its general partner
By: Perimeter Center Management
Company, a Delaware corporation,
its general partner
By: /s/ Dennis L. Ruben
---------------------------
Name: Dennis L. Ruben
Title: Senior Vice President and General Counsel
BUYER:
SLT REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Starwood Lodging Trust, a Maryland real estate investment
trust, its general partner
By: /s/ Ronald C. Brown
--------------------------------
Name: Ronald C. Brown
Title: Vice President and Chief Financial Officer
4
<PAGE>
SCHEDULE I
MOTOR VEHICLE VALUE ALLOCATIONS
HOTEL LOCATION/VIN DESCRIPTION VALUE
------------------------------ -----
I. IRVING, TEXAS
(a) VIN 1FDJE37H8RHB75724 $26,000
(b) VIN 1FTHS24H9RHA16754 $13,500
(c) VIN 1FDHS24HOPH96762 $ 4,500
II. FORT LAUDERDALE, FLORIDA
VIN 1FDHS24H1PHA96768 $ 7,300
III. TAMPA, FLORIDA
VIN 1FDHS24HXPHA86787 $11,400
5
<PAGE>
EXHIBIT A
ASSUMPTION AND RELEASE AGREEMENT
This ASSUMPTION AND RELEASE AGREEMENT (this "Assumption and Release")
is made as of the ____ day of ______, 1996 by and between SLT REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership ("SLT") and BELLSOUTH FINANCIAL
SERVICES ("BellSouth").
WITNESSETH
WHEREAS, SLT and Guaranteed Hotel Investors 1985, L.P., a Delaware
limited partnership, ("GHI") have entered into that certain Purchase Agreement
(the "Purchase Agreement"), dated October 27, 1996, for the purchase and sale of
the Doubletree Guest Suites Hotel located at 555 N.W. 62nd Street, Fort
Lauderdale, Florida (the "Hotel"); and
WHEREAS, GHI, as successor to Woolley/Sweeney Hotel Number 5, and
BellSouth, as successor to Universal Communication Systems, Inc., are parties to
those certain Master Lease Agreements (the "Agreements") for the lease of
equipment at the Hotel; and
WHEREAS, as a condition of the closing of the purchase and sale of the
Hotel by SLT under the Purchase Agreement (the "Closing"), GHI has requested a
release of liability from BellSouth under the Agreements for the period from and
after the Closing; and
WHEREAS, as a condition of the Closing, SLT has requested certain
estoppel information from BellSouth.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions contained herein, SLT and
BellSouth agree as follows:
1. Bell South hereby consents to GHI's assignment of the
Agreements to SLT.
2. SLT hereby assumes and agrees to perform and abide by and be
bound by all of the duties, obligations and responsibilities imposed by the
terms of the Agreements upon GHI concerning the Hotel, from and after the date
of Closing, and hereafter all rights of GHI by and under the Agreements shall be
fully enforceable by SLT, its successors and assigns, against BellSouth, its
successors and assigns, as if SLT had been a party to the Agreements from its
commencement. BellSouth hereby ratifies and affirms the terms, conditions and
provisions of the Agreements.
3. BellSouth hereby forever releases, acquits, satisfies,
dismisses and discharges GHI and/or its employees, officers, directors,
attorneys, stockholders or agents and any of their respective successors and
assigns, of and from any and all obligations (including, without limitation, the
indemnity contained in Paragraph 9 of the Agreements) GHI may have under the
Agreements from and after the date of Closing.
6
<PAGE>
4. BellSouth hereby acknowledges and agrees that, as of the date
hereof, all of the terms, conditions and provisions of the Agreements on the
part of GHI and BellSouth to be performed thereunder have been duly and timely
performed, and all monies, outstanding liabilities or charges due or payable to
BellSouth by GHI under the Agreements have been paid through ___________ (if no
date is inserted, such date shall be deemed to be the date hereof). BellSouth
agrees to look solely to: (a) GHI for any amounts due it for the period prior to
the Closing and (b) SLT for the period after the Closing. BellSouth hereby
agrees that, as of the date hereof, there are no amounts due or payable to GHI
by BellSouth under the Agreements and there are no deposits or advance payments
under the Agreements except as noted: ______________________________________ (if
blank, then BellSouth agrees that there are no deposits or advance payments
under the Agreements).
5. BellSouth hereby acknowledges and agrees that, as of the date
hereof, there are no defaults or claims of defaults under the Agreements by
either GHI or BellSouth and no event has occurred which, with notice, lapse of
time, or both, would constitute a default under the Agreements by either GHI or
BellSouth, and neither GHI, nor BellSouth has any charge, lien, claim, defense,
set-off or counterclaim against the other, or under the Agreements.
6. This Assumption and Release represents the complete and
entire understanding and agreement among SLT and BellSouth with regard to the
assumption and release of GHI's rights and obligations under the Agreements. The
Agreements shall remain in full force and effect without modification, and
BellSouth shall remain fully obligated under the Agreements. If for any reason
GHI does not convey title to the Hotel to SLT, BellSouth shall remain solely
obligated under the terms and conditions of the Agreements, without regard to
the terms of this Assumption and Release.
IN WITNESS WHEREOF, the parties hereto have executed this Assumption
and Release under the hand of their officers duly authorized in that behalf as
of the day and year first above written.
WITNESSES: SLT REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
_____________________________ By: _______________________________________
Name: _____________________________________
Title: ____________________________________
BELLSOUTH FINANCIAL SERVICES
_____________________________ By: _______________________________________
Name: _____________________________________
Title: ____________________________________
FT. LAUDERDALE
- --------------
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment"), is
made and entered into as of this 26th day of April, 1996 by and between STARWOOD
LODGING CORPORATION, a Maryland corporation ("Starwood"), Guaranteed Hotel
Investors 1985, L.P., a Delaware limited partnership ("GHI"), and DT MANAGEMENT,
INC., an Arizona corporation ("Manager") (successor by assignment to Doubletree
Partners ("Doubletree") which is formerly known as Guest Quarters Hotel
Partnership).
WITNESSETH
A. SLT Realty Limited Partnership ("SLT"), as buyer, and GHI, as
seller, have entered into that certain Purchase Agreement (the "Purchase
Agreement"), dated October 27, 1995, for the purchase and sale of the Doubletree
Guest Suites Hotel located at 555 N.W. 62nd Street, Fort Lauderdale, Florida
(the "Hotel").
B. GHI and Doubletree are parties to that certain Management Agreement
(the "Agreement"), dated February 16, 1994, which grants Doubletree the right to
supervise and direct the management and operation of the Hotel for GHI under
Doubletree's tradename.
C. By execution of this Amendment where indicated below, Doubletree is
assigning all of its right, title and interest as the manager under the
Agreement to Manager.
D. SLT has acquired the Hotel pursuant to the Purchase Agreement on the
date hereof.
E. SLT, as lessor, and SLC Operating Limited Partnership ("SLC"), as
lessee, have entered into that certain Lease Agreement of even date herewith,
for the Hotel.
F. SLC, as lessee, and Starwood, as manager, have entered into that
certain Management Agreement of even date herewith for the management of the
Hotel.
G. In connection with SLT's acquisition of the Hotel from GHI under the
Purchase Agreement: (i) GHI has agreed to assign its rights as Owner under the
Agreement to Starwood; (ii) Starwood has agreed to assume the rights and
obligations of GHI as Owner under the Agreement; and (iii) Manager has agreed to
consent to such assignment and otherwise amend the Agreement as provided for
herein.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties
hereto, GHI, Starwood and Manager hereby covenant and agree as follows:
1. In the event of any conflict between the terms and provisions of the
Agreement and this Amendment, then the terms and provisions of this Amendment
shall prevail. All
<PAGE>
capitalized terms used but not otherwise defined in this Amendment shall
have the meanings assigned to the same in the Agreement.
2. GHI hereby assigns all of its right, title and interest, as Owner,
in and to the Agreement to Starwood effective from and after the date hereof.
3. Starwood hereby assumes and agrees to perform and abide by and be
bound by all of the duties, obligations and responsibilities imposed upon the
Owner under the Agreement that arise and accrue from and after the date hereof
for events that occur from and after the date hereof, it being understood and
agreed that, except as set forth in the immediately succeeding sentence below,
Starwood shall have no liability whatsoever for any events, obligations or
liabilities that occurred, arose or accrued prior to the date hereof; and
hereafter all rights of GHI as Owner by and under the Agreement shall be fully
enforceable by Starwood, its successors and assigns, against Manager, its
successors and assigns. Notwithstanding the foregoing, Starwood agrees to
assume: (a) the obligations of the Owner under Article 14 of the Agreement for
the period prior to the closing and thereafter, except for the third (3rd)
Paragraph of Article 14.01 which Starwood does not agree to assume; and (b) all
accrued and earned vacation due to the employees of the Hotel for the period
prior to the date hereof and thereafter. In the event that Starwood is obligated
to pay any amounts due to any employees under Article 14 of the Agreement for
the period prior to the date hereof, such as back wages, overtime, vacation pay,
sick pay or any other similar amounts as to which Starwood did not receive a
credit against the purchase price of the Hotel at the closing, then Manager
shall reconcile with Starwood the Incentive Management Fee, if any, payable for
such period that such amounts accrued and pay any refund thereof to Starwood. In
connection with the foregoing the parties hereto acknowledge that any amounts
due by the Owner in connection with the worker's compensation claims listed on
that certain memorandum dated April 25, 1996 from Cherl Ewing to Bob Provost,
which are listed on Schedule 2 attached hereto, have been paid in full by GHI
and, notwithstanding anything herein to the contrary, Starwood is not assuming
any obligations of the Owner with respect thereto.
4. Manager hereby consents to GHI's assignment of all of its right,
title and interest as Owner under the Agreement to Starwood and agrees that the
provisions of Articles 3.03, 18.01 and 18.02 of the Agreement are hereby waived
with respect thereto and Manager shall have no right to terminate the Agreement
as a result of such assignment. Notwithstanding the foregoing, or anything else
contained herein, or in the Agreement, Starwood acknowledges and agrees that the
Sale Termination Fee shall be payable as provided in Paragraph 9 hereof.
5. Except as provided in the last sentence of this Section, Manager and
GHI hereby forever release, acquit, satisfy, dismiss and discharge each other
and their respective general partners, limited partners, successors, assigns and
agents, and the shareholders, directors, officers, employees and agents of each
party and their general partners, limited partners and respective successors and
assigns of all of the foregoing (collectively, the "Released Parties" and,
individually, the "GHI Released Parties and Manager Released Parties", as
applicable), of and from any and all obligations the GHI Released Parties may
have to Manager and the Manager Released Parties may have to GHI under the
Agreement whether or not such obligations are for the period of time prior to or
from and after the date hereof, including, without limitation, the obligations
of the GHI Released Parties to Manager, if any, (i) under Article 14 of the
Agreement,
2
<PAGE>
(ii) with respect to worker's compensation claims, including, without
limitation, those claims described on Schedule 2 attached hereto, and (iii) with
respect to WARN Act liabilities. Notwithstanding the foregoing, GHI shall remain
liable and obligated to Manager for any amounts due under the third (3rd)
paragraph of Article 14.01 of the Agreement.
6. Manager and GHI hereby agree that:
(a) All of the terms, conditions and provisions of the Agreement
on the part of GHI and Manager to be performed thereunder have
been duly and timely performed through the date hereof under
the Agreement, as such Agreement has been amended by this
Amendment.
(b) GHI agrees that Manager and/or its affiliates shall be
entitled to: (i) retain all sums (including, without
limitation, Basic Management Fees, Incentive Management Fees,
expense reimbursements and Chain Services payments (if any))
heretofore received by Manager and/or its affiliates under the
Agreements; (ii) retain all sums necessary to satisfy GHI's
obligations with respect to payments due to, on behalf or
otherwise in connection with the employees of the Hotel prior
to the date hereof, except for all earned and accrued vacation
as described in Paragraph 3(b) hereof, (iii) retain all sums
(including, without limitation, Basic Management Fees,
Incentive Management Fees, expense reimbursements and Chain
Services payments (if any)) due and owing to Manager and/or
its affiliates under the Agreement through the date hereof, it
being understood that Incentive Management Fees, if any, due
Manager for the calendar year 1996 shall be calculated in a
pro rata manner based on the number of days in such year
through the date hereof. Manager has estimated the expenses
payable with respect to A/P Billouts and Innco at $20,000,
which sum is being paid to Manager by GHI as of the date
hereof. On or before May 31, 1996, GHI and Manager shall
reconcile the actual amounts of such expenses, and Manager
shall promptly refund any overpayment, to GHI, provided,
however, that GHI shall have no obligation or liability to pay
any additional sums in excess of the $20,000 paid as of the
date hereof.
(c) Manager shall look solely to Starwood for the Basic Management
Fee and Incentive Management Fee, if any, earned for the
period from and after the date hereof and shall also look
solely to Starwood for the Sale Termination Fee, to the extent
the same may be due and payable by Starwood under the terms of
the Agreement, as amended hereby, and Manager hereby releases
GHI from any liability with respect thereto. Manager
acknowledges that the Sale Termination Fee is not due in
connection with the assignment of the Agreement from GHI to
Starwood and the execution and delivery of this Amendment by
the parties hereto.
(d) The computation of the Basic Management Fee, Incentive
Management Fee and all other fees and costs due under the
Agreement from and after the date hereof, shall commence from
the date hereof and none of such fees
3
<PAGE>
or costs shall be computed by utilizing the performance or
cash flow of the Hotel prior to the date hereof; provided,
however: (i) the period of April 26, 1995 through December 31,
1995 shall be the base period for determining the Incentive
Management Fee for the period from and after the date hereof
through December 31, 1996; and (ii) the period of January 1,
1996 through December 31, 1996 shall be the base period for
computing the Incentive Management Fee for the period of
January 1, 1997 through December 31, 1997.
(e) Starwood shall be solely responsible for the payment of all
WARN Act liabilities arising under the Agreement, and Starwood
shall indemnify and hold harmless the Released Parties from
and against all losses, costs, claims, liabilities, damages
(exclusive of consequential and punitive damages) and
expenses, including, without limitation, reasonable attorneys'
fees, incurred by the Released Parties, and/or arising, with
respect to WARN Act liabilities of the "Owner" under the
Agreement. The foregoing indemnity shall be deemed to include
any WARN Act liabilities arising as a result of the conversion
of the Agreement to the Franchise Agreement as set forth in
Paragraph 10 hereof.
7. Manager represents and warrants that there are no suits, proceedings
or investigations pending or threatened against Manager with respect to the
Hotel or, to the best of Manager's actual knowledge based upon the attached
Schedule 2 attached hereto, the Hotel or GHI, at law or in equity, or before any
governmental or administrative agency or instrumentality, except as set forth in
Schedule 2 attached hereto.
8. Manager hereby acknowledges and agrees that, as of the date hereof:
(a) no notice of an Event of Default has been given by Manager to GHI nor
received by Manager from GHI; (b) to the best of Manager's knowledge (i) there
are no defaults or claims of defaults under the Agreement by either GHI or
Manager and (ii) no event has occurred which, with notice, lapse of time, or
both, would constitute a default under the Agreement by either GHI or Manager;
and (c) neither GHI, nor Manager has any charge, lien, claim, defense, set-off
or counterclaim against the other arising under the Agreement or under any other
basis.
4
<PAGE>
9. Effective as of the date hereof, Starwood and Manager hereby agree
that the table of the Sale Termination Fees set forth in Article 3.03 (iv) of
the Agreement is hereby deleted and replaced with the following:
Sale Termination Fees:
----------------------
From the date hereof through
April 25, 2000 $450,000
April 26, 2000 through
April 25, 2001 $225,000
April 26, 2001 through
April 25, 2002 $175,000
April 26, 2002 through
April 25, 2003 $125,000
April 26, 2003 through
April 25, 2004 $ 75,000
April 26, 2004 through
April 25, 2005 $ 25,000
April 26, 2005 through
February 16, 2014 $ 0
The Sale Termination Fee shall be the only amount due
to Manager in the event of a termination of this Agreement
under this Article 3 and the same shall constitute Manager's
sole and exclusive remedy for such termination which shall be
retained by Manager as and for liquidated damages with respect
thereto.
10. Effective as of the date hereof, Starwood and Manager hereby agree
that the following articles are hereby added to Article 3 of the Agreement:
3.08 Additional Termination Rights. Notwithstanding anything
contained in this Agreement to the contrary, including,
without limitation, Article 3 hereof, Manager and Owner agree
that Owner shall have the right to terminate this Agreement,
in Owner's sole and absolute discretion with or without cause,
at any time by providing no less than sixty (60) days written
notice of such termination to Manager (such notice is herein
called the "Termination Notice" and such sixty (60) day period
is herein called the "Termination Period"). In the event that
a Termination Notice is given under this Article 3.08, the
Sale Termination Fee (if any) and any other sums due Manager,
which are unrelated to the termination and which are otherwise
due pursuant to the Agreement, shall be paid on or before the
effective date of termination of this Agreement and shall be a
condition to termination.
3.09 Transition Upon Termination. In the event of a
termination of this Agreement under this Article 3 or any
other provision of this Agreement, then Manager shall
cooperate in executing any and all documentation necessary to
transfer all licenses and permits required for the operation
of the Hotel, including, without limitation, all documentation
necessary for the transfer of the liquor license
5
<PAGE>
therefor. Owner shall be responsible for payment of all of
Manager's out-of-pocket expenses incurred in connection
therewith. In addition, Manager shall execute such other
documentation and perform such other acts as are necessary to
effectuate the transition of management of the Hotel. In the
event of a termination of this Agreement, Owner and Manager
shall enter into a Termination Agreement substantially in the
form attached hereto as Exhibit A, which shall provide among
other things that in the event of a termination of this
Agreement Owner shall not be obligated to pay Manager for all
accrued and earned vacation pay for the employees of the
Hotel, but shall indemnify Manager with respect to the same.
3.10 Conversion to Franchise Agreement.
(a) Owner may, at its option and at any time, convert
this Agreement into a franchise agreement ("Franchise
Agreement") with Manager or its appropriate affiliate for the
operation of the Hotel under Manager's tradename of
"Doubletree Guest Suites", which Franchise Agreement shall:
(A) provide for franchise fees of 1 1/2% of gross room
revenues for the first (1st) year of operation under the
Franchise Agreement, 2 1/2% of gross room revenues for the
second (2nd) year of operation under the Franchise Agreement
and 4% of gross room revenues for the third (3rd) year of
operation under the Franchise Agreement and for each year
thereafter; (B) be for a term of seven and one-half years (7
1/2); (C) provide for termination on sixty (60) days prior
written notice as set forth in this Agreement; (D) contain the
same schedule of Sale Termination Fees (with the same dates)
as this Agreement and, in the event that the term of the
Franchise Agreement expires when a Sale Termination Fee would
still be due, then Owner shall be obligated to pay such Sale
Termination Fee upon the expiration of the term thereof; and
(E) otherwise be in form and substance similar to the
franchise agreement that Starwood (or its affiliate) has
negotiated with Manager for its Doubletree Suites Hotel
located in Lexington, Kentucky.
(b) Owner shall exercise its right to convert this
Agreement into a Franchise Agreement by sending Manager
written notice that Owner has elected to convert this
Agreement into a Franchise Agreement, which notice shall be
sent to Manager at least ten (10) days prior to the conversion
date and accompanied by a Franchise Agreement that has been
executed by Owner which contains the terms and conditions set
forth in clause (a) above. Upon the delivery of such notice
together with the executed Franchise Agreement, this Agreement
shall be deemed to have been terminated and replaced by the
Franchise Agreement, provided, however, that no Sale
Termination Fee shall be payable as a result of the
termination of this Agreement as such fees shall be carried
over into the Franchise Agreement and shall be payable in
accordance with the terms thereof. In the event that Owner
converts this Agreement to a Franchise Agreement as set forth
herein, then: (a) Owner shall not be obligated to pay any fees
or charges in connection with such conversion, including,
without limitation, application fees and shall not be
obligated to participate in, commence or otherwise pay any
amounts in connection with any product improvement plan or
similar arrangement; and (b)
6
<PAGE>
Manager shall counter-execute and deliver a fully-executed
Franchise Agreement to Owner within ten (10) days after
receipt thereof by Manager from Owner.
11. Manager acknowledges that even though Starwood is referred to as
the "Owner" under the Agreement, Starwood is not the owner of the Hotel, but
merely a manager thereof and that, by execution hereof, the Agreement has become
a submanagement agreement. In no event shall SLT or SLC have any liability or
obligation for any amounts or other obligations due or required to be performed
by Starwood under the Agreement.
12. This Amendment represents the complete and entire understanding and
agreement among GHI, Starwood and Manager with regard to the matters set forth
herein. Except as expressly amended and modified hereby, the Agreement is
unmodified and in full force and effect, and the parties hereto hereby ratify
and confirm the same.
13. This Amendment may be executed in one or more counterparts and all
such counterparts taken together shall constitute one agreement. Executed copies
of this Amendment received by telecopier shall be deemed to be originals.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
7
<PAGE>
IN WITNESS WHEREOF, Starwood and Manager have hereunder set their hands
and seals as of the date first above written.
GHI:
GUARANTEED HOTEL INVESTORS 1985, L.P., a
Delaware limited partnership
By: FFCA Management Company, L.P., a
Delaware limited partnership,
its general partner
By: Perimeter Center Management Company, a
Delaware corporation, its general partner
By: /s/ Dennis L. Ruben
-----------------------------
Name: Dennis L. Ruben
Title: SR. VP and General
Counsel
STARWOOD:
STARWOOD LODGING CORPORATION, a Maryland corporation
By: /s/ Steven R. Goldman
-----------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
MANAGER:
DT MANAGEMENT, INC, an Arizona corporation
By: /s/ David Heuck
-----------------------------------
Name: David Heuck
Title: Vice President
8
<PAGE>
ASSIGNMENT
By execution hereof, Doubletree Partners, a Delaware general
partnership, hereby assigns all of its right, title and interest as the manager
in and to the Agreement to DT Management, Inc., an Arizona corporation, and DT
Management, Inc., hereby agrees to assume, be bound by and perform all of the
obligations of Doubletree Partners as manager under the Agreement.
ASSIGNOR:
DOUBLETREE PARTNERS, a Delaware general partnership
By: Samantha Hotel Corporation, a Delaware
corporation
By: /s/ Sandra L. Ravel
------------------------------
Name: Sandra L. Ravel
Title: Assistant Secretary
ASSIGNEE:
DT MANAGEMENT, INC., an Arizona corporation
By: /s/ David Heuck
------------------------------------
Name: David Heuck
Title: Vice President
9
<PAGE>
LIST OF SCHEDULES
-----------------
SCHEDULE 1 TERMINATION AMOUNTS
SCHEDULE 2 PENDING LITIGATION
LIST OF EXHIBITS
----------------
EXHIBIT A TERMINATION AGREEMENT
---------
10
<PAGE>
TAMPA
- -----
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment"), is
made and entered into as of this 26th day of April, 1996 by and between STARWOOD
LODGING CORPORATION, a Maryland corporation ("Starwood"), Guaranteed Hotel
Investors 1985, L.P., a Delaware limited partnership ("GHI"), and DT MANAGEMENT,
INC., an Arizona corporation ("Manager") (successor by assignment to Doubletree
Partners ("Doubletree") which is formerly known as Guest Quarters Hotel
Partnership).
WITNESSETH
A. SLT Realty Limited Partnership ("SLT"), as buyer, and GHI, as
seller, have entered into that certain Purchase Agreement (the "Purchase
Agreement"), dated October 27, 1995, for the purchase and sale of the Doubletree
Guest Suites Hotel located at 4400 West Cypress Street, Tampa, Florida (the
"Hotel").
B. GHI and Doubletree are parties to that certain Management Agreement
(the "Agreement"), dated November 3, 1993, which grants Doubletree the right to
supervise and direct the management and operation of the Hotel for GHI under
Doubletree's tradename.
C. By execution of this Amendment where indicated below, Doubletree is
assigning all of its right, title and interest as the manager under the
Agreement to Manager.
D. SLT has acquired the Hotel pursuant to the Purchase Agreement on the
date hereof.
E. SLT, as lessor, and SLC Operating Limited Partnership ("SLC"), as
lessee, have entered into that certain Lease Agreement of even date herewith,
for the Hotel.
F. SLC, as lessee, and Starwood, as manager, have entered into that
certain Management Agreement of even date herewith for the management of the
Hotel.
G. In connection with SLT's acquisition of the Hotel from GHI under the
Purchase Agreement: (i) GHI has agreed to assign its rights as Owner under the
Agreement to Starwood; (ii) Starwood has agreed to assume the rights and
obligations of GHI as Owner under the Agreement; and (iii) Manager has agreed to
consent to such assignment and otherwise amend the Agreement as provided for
herein.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties
hereto, GHI, Starwood and Manager hereby covenant and agree as follows:
1. In the event of any conflict between the terms and provisions of the
Agreement and this Amendment, then the terms and provisions of this Amendment
shall prevail. All
<PAGE>
capitalized terms used but not otherwise defined in this Amendment shall have
the meanings assigned to the same in the Agreement.
2. GHI hereby assigns all of its right, title and interest, as Owner,
in and to the Agreement to Starwood effective from and after the date hereof.
3. Starwood hereby assumes and agrees to perform and abide by and be
bound by all of the duties, obligations and responsibilities imposed upon the
Owner under the Agreement that arise and accrue from and after the date hereof
for events that occur from and after the date hereof, it being understood and
agreed that, except as set forth in the immediately succeeding sentence below,
Starwood shall have no liability whatsoever for any events, obligations or
liabilities that occurred, arose or accrued prior to the date hereof; and
hereafter all rights of GHI as Owner by and under the Agreement shall be fully
enforceable by Starwood, its successors and assigns, against Manager, its
successors and assigns. Notwithstanding the foregoing, Starwood agrees to
assume: (a) the obligations of the Owner under Article 14 of the Agreement for
the period prior to the closing and thereafter; and (b) all accrued and earned
vacation due to the employees of the Hotel for the period prior to the date
hereof and thereafter. In the event that Starwood is obligated to pay any
amounts due to any employees under Article 14 of the Agreement for the period
prior to the date hereof, such as back wages, overtime, vacation pay, sick pay
or any other similar amounts as to which Starwood did not receive a credit
against the purchase price of the Hotel at the closing, then Manager shall
reconcile with Starwood the Incentive Management Fee, if any, payable for such
period that such amounts accrued and pay any refund thereof to Starwood.
4. Manager hereby consents to GHI's assignment of all of its right,
title and interest as Owner under the Agreement to Starwood and agrees that the
provisions of Articles 3.03, 18.01 and 18.02 of the Agreement are hereby waived
with respect thereto and Manager shall have no right to terminate the Agreement
as a result of such assignment. Notwithstanding the foregoing, or anything else
contained herein, or in the Agreement, Starwood acknowledges and agrees that the
Sale Termination Fee shall be payable as provided in Paragraph 9 hereof.
5. Except as provided, in the last sentence of this Section, Manager
and GHI hereby forever release, acquit, satisfy, dismiss and discharge each
other and their respective general partners, limited partners, successors,
assigns and agents, and the shareholders, directors, officers, employees and
agents of each party and their general partners, limited partners and respective
successors and assigns of all of the foregoing (collectively, the "Released
Parties" and, individually, the "GHI Released Parties and Manager Released
Parties", as applicable), of and from any and all obligations the GHI Released
Parties may have to Manager and the Manager Released Parties may have to GHI
under the Agreement whether or not such obligations are for the period of time
prior to or from and after the date hereof, including, without limitation, the
obligations of the GHI Released Parties to Manager, if any, (i) under Article 14
of the Agreement, (ii) with respect to worker's compensation claims, including,
without limitation, those claims described on Schedule 2 attached hereto, and
(iii) with respect to WARN Act liabilities.
6. Manager and GHI hereby agree that:
2
<PAGE>
(a) All of the terms, conditions and provisions of the Agreement
on the part of GHI and Manager to be performed thereunder have
been duly and timely performed through the date hereof under
the Agreement, as such Agreement has been amended by this
Amendment.
(b) GHI agrees that Manager and/or its affiliates shall be
entitled to: (i) retain all sums (including, without
limitation, Basic Management Fees, Incentive Management Fees,
expense reimbursements and Chain Services payments (if any))
heretofore received by Manager and/or its affiliates under the
Agreements; (ii) retain all sums necessary to satisfy GHI's
obligations with respect to payments due to, on behalf or
otherwise in connection with the employees of the Hotel prior
to the date hereof, except for all earned and accrued vacation
as described in Paragraph 3(b) hereof, (iii) retain all sums
(including, without limitation, Basic Management Fees,
Incentive Management Fees, expense reimbursements and Chain
Services payments (if any)) due and owing to Manager and/or
its affiliates under the Agreement through the date hereof, it
being understood that Incentive Management Fees, if any, due
Manager for the calendar year 1996 shall be calculated in a
pro rata manner based on the number of days in such year
through the date hereof. Manager has estimated the expenses
payable with respect to A/P Billouts and Innco at $20,000,
which sum is being paid to Manager by GHI as of the date
hereof. On or before May 31, 1996, GHI and Manager shall
reconcile the actual amounts of such expenses and Manager
shall promptly refund any overpayment to GHI, provided,
however, that GHI shall have no obligation or liability to pay
any additional sums in excess of the $20,000 paid as of the
date hereof.
(c) Manager shall look solely to Starwood for the Basic Management
Fee and Incentive Management Fee, if any, earned for the
period from and after the date hereof and shall also look
solely to Starwood for the Sale Termination Fee, to the extent
the same may be due and payable by Starwood under the terms of
the Agreement, as amended hereby, and Manager hereby releases
GHI from any liability with respect thereto. Manager
acknowledges that the Sale Termination Fee is not due in
connection with the assignment of the Agreement from GHI to
Starwood and the execution and delivery of this Amendment by
the parties hereto.
(d) The computation of the Basic Management Fee, Incentive
Management Fee and all other fees and costs due under the
Agreement from and after the date hereof, shall commence from
the date hereof and none of such fees or costs shall be
computed by utilizing the performance or cash flow of the
Hotel prior to the date hereof; provided, however: (i) the
period of April 26, 1995 through December 31, 1995 shall be
the base period for determining the Incentive Management Fee
for the period from and after the date hereof through December
31, 1996; and (ii) the period of January 1, 1996 through
December 31, 1996 shall be the base period for computing
3
<PAGE>
the Incentive Management Fee for the period of January 1, 1997
through December 31, 1997.
(e) Starwood shall be solely responsible for the payment of all
WARN Act liabilities arising under the Agreement, and Starwood
shall indemnify and hold harmless the Released Parties from
and against all losses, costs, claims, liabilities, damages
(exclusive of consequential and punitive damages) and
expenses, including, without limitation, reasonable attorneys'
fees, incurred by the Released Parties, and/or arising, with
respect to WARN Act liabilities of the "Owner" under the
Agreement. The foregoing indemnity shall be deemed to include
any WARN Act liabilities arising as a result of the conversion
of the Agreement to the Franchise Agreement as set forth in
Paragraph 10 hereof.
7. Manager represents and warrants that there are no suits, proceedings
or investigations pending or threatened against Manager with respect to the
Hotel or, to the best of Manager's actual knowledge based upon the attached
Schedule 2 attached hereto, the Hotel or GHI, at law or in equity, or before any
governmental or administrative agency or instrumentality, except as set forth in
Schedule 2 attached hereto.
8. Manager hereby acknowledges and agrees that, as of the date hereof:
(a) no notice of an Event of Default has been given by Manager to GHI nor
received by Manager from GHI; (b) to the best of Manager's knowledge (i) there
are no defaults or claims of defaults under the Agreement by either GHI or
Manager and (ii) no event has occurred which, with notice, lapse of time, or
both, would constitute a default under the Agreement by either GHI or Manager;
and (c) neither GHI, nor Manager has any charge, lien, claim, defense, set-off
or counterclaim against the other arising under the Agreement or under any other
basis.
4
<PAGE>
9. Starwood and Manager hereby agree that the table of the Sale
Termination Fees set forth in Article 3.03 (iv) of the Agreement is hereby
deleted and replaced with the following:
Sale Termination Fees:
----------------------
From the date hereof through
April 25, 2000 $425,000
April 26, 2000 through
April 25, 2001 $212,500
April 26, 2001 through
April 25, 2002 $162,500
April 26, 2002 through
April 25, 2003 $112,500
April 26, 2003 through
April 25, 2004 $ 62,500
April 26, 2004 through
April 25, 2005 $ 12,500
April 26, 2005 through
November 3, 2013 $ 0
The Sale Termination Fee shall be the only amount due
to Manager in the event of a termination of this Agreement
under this Article 3 and the same shall constitute Manager's
sole and exclusive remedy for such termination which shall be
retained by Manager as and for liquidated damages with respect
thereto.
10. Effective as of the date hereof, Starwood and Manager hereby agree
that the following articles are hereby added to Article 3 of the Agreement:
3.08 Additional Termination Rights. Notwithstanding anything
contained in this Agreement to the contrary, including,
without limitation, Article 3 hereof, Manager and Owner agree
that Owner shall have the right to terminate this Agreement,
in Owner's sole and absolute discretion with or without cause,
at any time by providing no less than sixty (60) days written
notice of such termination to Manager (such notice is herein
called the "Termination Notice" and such sixty (60) day period
is herein called the "Termination Period"). In the event that
a Termination Notice is given under this Article 3.08, the
Sale Termination Fee (if any) and any other sums due Manager,
which are unrelated to the termination and which are otherwise
due pursuant to the Agreement, shall be paid on or before the
effective date of termination of this Agreement and shall be a
condition to termination.
3.09 Transition Upon Termination. In the event of a
termination of this Agreement under this Article 3 or any
other provision of this Agreement, then Manager shall
cooperate in executing any and all documentation necessary to
transfer all licenses and permits required for the operation
of the Hotel, including, without limitation, all documentation
necessary for the transfer of the liquor license therefor.
Owner shall be responsible for payment of all of Manager's
out-of-pocket
5
<PAGE>
expenses incurred in connection therewith. In addition,
Manager shall execute such other documentation and perform
such other acts as are necessary to effectuate the transition
of management of the Hotel. In the event of a termination of
this Agreement, Owner and Manager shall enter into a
Termination Agreement substantially in the form attached
hereto as Exhibit A, which shall provide among other things
that in the event of a termination of this Agreement Owner
shall not be obligated to pay Manager for all accrued and
earned vacation pay for the employees of the Hotel, but shall
indemnify Manager with respect to the same.
3.10 Conversion to Franchise Agreement.
(a) Owner may, at its option and at any time, convert
this Agreement into a franchise agreement ("Franchise
Agreement") with Manager or its appropriate affiliate for the
operation of the Hotel under Manager's tradename of
"Doubletree Guest Suites", which Franchise Agreement shall:
(A) provide for franchise fees of 2% of gross room revenues
for the first (1st) year of operation under the Franchise
Agreement, 3% of gross room revenues for the second (2nd) year
of operation under the Franchise Agreement and 4% of gross
room revenues for the third (3rd) year of operation under the
Franchise Agreement and for each year thereafter; (B) be for a
term of seven and one-half years (7 1/2); (C) provide for
termination on sixty (60) days prior written notice as set
forth in this Agreement; (D) contain the same schedule of Sale
Termination Fees (with the same dates) as this Agreement and,
in the event that the term of the Franchise Agreement expires
when a Sale Termination Fee would still be due, then Owner
shall be obligated to pay such Sale Termination Fee upon the
expiration of the term thereof; and (E) otherwise be in form
and substance similar to the franchise agreement that Starwood
(or its affiliate) has negotiated with Manager for its
Doubletree Suites Hotel located in Lexington, Kentucky.
(b) Owner shall exercise its right to convert this
Agreement into a Franchise Agreement by sending Manager
written notice that Owner has elected to convert this
Agreement into a Franchise Agreement, which notice shall be
sent to Manager at least ten (10) days prior to the conversion
date and accompanied by a Franchise Agreement that has been
executed by Owner which contains the terms and conditions set
forth in clause (a) above. Upon the delivery of such notice
together with the executed Franchise Agreement, this Agreement
shall be deemed to have been terminated and replaced by the
Franchise Agreement, provided, however, that no Sale
Termination Fee shall be payable as a result of the
termination of this Agreement as such fees shall be carried
over into the Franchise Agreement and shall be payable in
accordance with the terms thereof. In the event that Owner
converts this Agreement to a Franchise Agreement as set forth
herein, then: (a) Owner shall not be obligated to pay any fees
or charges in connection with such conversion, including,
without limitation, application fees and shall not be
obligated to participate in, commence or otherwise pay any
amounts in connection with any product improvement plan or
similar arrangement; and (b) Manager shall counter-execute and
deliver a fully-executed Franchise Agreement to Owner within
ten (10) days after receipt thereof by Manager from Owner.
6
<PAGE>
11. Manager acknowledges that even though Starwood is referred to as
the "Owner" under the Agreement, that Starwood is not the owner of the Hotel,
but merely a manager thereof and that, by execution hereof, the Agreement has
become a submanagement agreement. In no event shall SLT or SLC have any
liability or obligation for any amounts or other obligations due or required to
be performed by Starwood under the Agreement.
12. This Amendment represents the complete and entire understanding and
agreement among GHI, Starwood and Manager with regard to the matters set forth
herein. Except as expressly amended and modified hereby, the Agreement is
unmodified and in full force and effect, and the parties hereto hereby ratify
and confirm the same.
13. This Amendment may be executed in one or more counterparts and all
such counterparts taken together shall constitute one agreement. Executed copies
of this Amendment received by telecopier shall be deemed to be originals.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Starwood and Manager have hereunder set their hands
and seals as of the date first above written.
GHI:
GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited
partnership
By: FFCA Management Company, L.P., a Delaware limited
partnership, its general partner
By: Perimeter Center Management Company, a
Delaware corporation, its general partner
By: /s/ Dennis L. Ruben
---------------------------------------
Name: Dennis L. Ruben
Title: SR. V.P. and General
Counsel
STARWOOD:
STARWOOD LODGING CORPORATION, a Maryland corporation
By: /s/ Steven R. Goldman
---------------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
MANAGER:
DT MANAGEMENT, INC, an Arizona corporation
By: /s/ David Heuck
------------------------------------------
Name: David Heuck
Title: Vice President
8
<PAGE>
ASSIGNMENT
----------
By execution hereof, Doubletree Partners, a Delaware general
partnership, hereby assigns all of its right, title and interest as the manager
in and to the Agreement to DT Management, Inc., an Arizona corporation, and DT
Management, Inc., hereby agrees to assume, be bound by and perform all of the
obligations of Doubletree Partners as manager under the Agreement.
ASSIGNOR:
DOUBLETREE PARTNERS, a Delaware general partnership
By: Samantha Hotel Corporation, a Delaware
corporation
By: /s/ Sandra L. Ravel
---------------------------------------
Name: Sandra L. Ravel
Title: Assistant Secretary
ASSIGNEE:
DT MANAGEMENT, INC., an Arizona corporation
By: /s/ David Heuck
-------------------------------------------
Name: David Heuck
Title: Vice President
9
<PAGE>
LIST OF SCHEDULES
-----------------
SCHEDULE 1 TERMINATION AMOUNTS
SCHEDULE 2 PENDING LITIGATION
LIST OF EXHIBITS
----------------
EXHIBIT A TERMINATION AGREEMENT
---------
IRVING
- ------
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment"), is
made and entered into as of this 26th day of April, 1996 by and between SLC
OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership ("SLC"),
Guaranteed Hotel Investors 1985, L.P., a Delaware limited partnership ("GHI"),
and DT MANAGEMENT, INC., an Arizona corporation ("Manager") (successor by
assignment to Doubletree Partners ("Doubletree") which is formerly known as
Guest Quarters Hotel Partnership).
WITNESSETH
A. SLT Realty Limited Partnership ("SLT"), as buyer, and GHI, as
seller, have entered into that certain Purchase Agreement (the "Purchase
Agreement"), dated October 27, 1995, for the purchase and sale of the Doubletree
Guest Suites Hotel located at 4650 West Airport Freeway, Irving, Texas (the
"Hotel").
B. GHI and Manager are parties to that certain Management Agreement
(the "Agreement"), dated February 16, 1994, which grants Manager the right to
supervise and direct the management and operation of the Hotel for GHI under the
Manager's tradename.
C. SLT has acquired the Hotel pursuant to the Purchase Agreement on the
date hereof.
D. By execution of this Amendment where indicated below, Doubletree is
assigning all of its right, title and interest as the manager under the
Agreement to Manager.
E. SLT, as lessor, and SLC, as lessee, have entered into that certain
Lease Agreement of even date herewith, for the Hotel.
F. In connection with SLT's acquisition of the Hotel from GHI under the
Purchase Agreement: (i) GHI has agreed to assign its rights as Owner under the
Agreement to SLC; (ii) SLC has agreed to assume the rights and obligations of
GHI as Owner under the Agreement; and (iii) Manager has agreed to consent to
such assignment and otherwise amend the Agreement as provided for herein.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties
hereto, GHI, SLC and Manager hereby covenant and agree as follows:
1. In the event of any conflict between the terms and provisions of the
Agreement and this Amendment, then the terms and provisions of this Amendment
shall prevail. All capitalized terms used but not otherwise defined in this
Amendment shall have the meanings assigned to the same in the Agreement.
<PAGE>
2. GHI hereby assigns all of its right, title and interest, as Owner,
in and to the Agreement to SLC effective from and after the date hereof.
3. SLC hereby assumes and agrees to perform and abide by and be bound
by all of the duties, obligations and responsibilities imposed upon the Owner
under the Agreement that arise and accrue from and after the date hereof for
events that occur from and after the date hereof, it being understood and agreed
that, except as set forth in the immediately succeeding sentence below, SLC
shall have no liability whatsoever for any events, obligations or liabilities
that occurred, arose or accrued prior to the date hereof; and hereafter all
rights of GHI as Owner by and under the Agreement shall be fully enforceable by
SLC, its successors and assigns, against Manager, its successors and assigns.
Notwithstanding the foregoing, SLC agrees to assume: (a) the obligations of the
Owner under Article 14 of the Agreement for the period prior to the closing and
thereafter, except for the third (3rd) Paragraph of Article 14.01 which SLC does
not agree to assume; and (b) all accrued and earned vacation due to the
employees of the Hotel for the period prior to the date hereof and thereafter.
In the event that SLC is obligated to pay any amounts due to any employees under
Article 14 of the Agreement for the period prior to the date hereof, such as
back wages, overtime, vacation pay, sick pay or any other similar amounts as to
which SLC did not receive a credit against the purchase price of the Hotel at
the closing, then Manager shall reconcile with SLC the Incentive Management Fee,
if any, payable for such period that such amounts accrued and pay any refund
thereof to SLC.
4. Manager hereby consents to GHI's assignment of all of its right,
title and interest as Owner under the Agreement to SLC and agrees that the
provisions of Articles 3.03, 18.01 and 18.02 of the Agreement are hereby waived
with respect thereto and Manager shall have no right to terminate the Agreement
as a result of such assignment. Notwithstanding the foregoing, or anything else
contained herein, or in the Agreement, SLC acknowledges and agrees that the Sale
Termination Fee shall be payable as provided in Paragraph 9 hereof.
5. Except as provided, in the last sentence of this Section, Manager
and GHI hereby forever release, acquit, satisfy, dismiss and discharge each
other and their respective general partners, limited partners, successors,
assigns and agents, and the shareholders, directors, officers, employees and
agents of each party and their general partners, limited partners and respective
successors and assigns of all of the foregoing (collectively, the "Released
Parties" and, individually, the "GHI Released Parties and Manager Released
Parties", as applicable), of and from any and all obligations the GHI Released
Parties may have to Manager and the Manager Released Parties may have to GHI
under the Agreement whether or not such obligations are for the period of time
prior to or from and after the date hereof, including, without limitation, the
obligations of the GHI Released Parties to Manager, if any, (i) under Article 14
of the Agreement, (ii) with respect to worker's compensation claims, including,
without limitation, those claims described on Schedule 2 attached hereto, and
(iii) with respect to WARN Act liabilities. Notwithstanding the foregoing, GHI
shall remain liable and obligated to Manager for any amounts due under the third
(3rd) paragraph of Article 14.01 of the Agreement.
6. Manager and GHI hereby agree that:
2
<PAGE>
(a) All of the terms, conditions and provisions of the Agreement
on the part of GHI and Manager to be performed thereunder have
been duly and timely performed through the date hereof under
the Agreement, as such Agreement has been amended by this
Amendment.
(b) GHI agrees that Manager and/or its affiliates shall be
entitled to: (i) retain all sums (including, without
limitation, Basic Management Fees, Incentive Management Fees,
expense reimbursements and Chain Services payments (if any))
heretofore received by Manager and/or its affiliates under the
Agreements; (ii) retain all sums necessary to satisfy GHI's
obligations with respect to payments due to, on behalf or
otherwise in connection with the employees of the Hotel prior
to the date hereof, except for all earned and accrued vacation
as described in Paragraph 3(b) hereof, (iii) retain all sums
(including, without limitation, Basic Management Fees,
Incentive Management Fees, expense reimbursements and Chain
Services payments (if any)) due and owing to Manager and/or
its affiliates under the Agreement through the date hereof, it
being understood that Incentive Management Fees, if any, due
Manager for the calendar year 1996 shall be calculated in a
pro rata manner based on the number of days in such year
through the date hereof. Manager has estimated the expenses
payable with respect to A/P Billouts and Innco at $20,000,
which sum is being paid to Manager by GHI as of the date
hereof. On or before May 31, 1996, GHI and Manager shall
reconcile the actual amounts of such expenses, and Manager
shall promptly refund any overpayment to GHI, provided,
however, that GHI shall have no obligation or liability to pay
any additional sums in excess of the $20,000 paid as of the
date hereof.
(c) Manager shall look solely to SLC for the Basic Management Fee
and Incentive Management Fee, if any, earned for the period
from and after the date hereof and shall also look solely to
SLC for the Sale Termination Fee, to the extent the same may
be due and payable by SLC under the terms of the Agreement, as
amended hereby, and Manager hereby releases GHI from any
liability with respect thereto. Manager acknowledges that the
Sale Termination Fee is not due in connection with the
assignment of the Agreement from GHI to SLC and the execution
and delivery of this Amendment by the parties hereto.
(d) The computation of the Basic Management Fee, Incentive
Management Fee and all other fees and costs due under the
Agreement from and after the date hereof, shall commence from
the date hereof and none of such fees or costs shall be
computed by utilizing the performance or cash flow of the
Hotel prior to the date hereof; provided, however: (i) the
period of April 26, 1995 through December 31, 1995 shall be
the base period for determining the Incentive Management Fee
for the period from and after the date hereof through December
31, 1996; and (ii) the period of January 1, 1996 through
December 31, 1996 shall be the base period for computing
3
<PAGE>
the Incentive Management Fee for the period of January 1, 1997
through December 31, 1997.
(e) SLC shall be solely responsible for the payment of all WARN
Act liabilities arising under the Agreement, and SLC shall
indemnify and hold harmless the Released Parties from and
against all losses, costs, claims, liabilities, damages
(exclusive of consequential and punitive damages) and
expenses, including, without limitation, reasonable attorneys'
fees, incurred by the Released Parties, and/or arising, with
respect to WARN Act liabilities of the "Owner" under the
Agreement. The foregoing indemnity shall be deemed to include
any WARN Act liabilities arising as a result of the conversion
of the Agreement to the Franchise Agreement as set forth in
Paragraph 10 hereof.
7. Manager represents and warrants that there are no suits, proceedings
or investigations pending or threatened against Manager with respect to the
Hotel or, to the best of Manager's actual knowledge based upon the attached
Schedule 2 attached hereto, the Hotel or GHI, at law or in equity, or before any
governmental or administrative agency or instrumentality, except as set forth in
Schedule 2 attached hereto.
8. Manager hereby acknowledges and agrees that, as of the date hereof:
(a) no notice of an Event of Default has been given by Manager to GHI nor
received by Manager from GHI; (b) to the best of Manager's knowledge (i) there
are no defaults or claims of defaults under the Agreement by either GHI or
Manager and (ii) no event has occurred which, with notice, lapse of time, or
both, would constitute a default under the Agreement by either GHI or Manager;
and (c) neither GHI, nor Manager has any charge, lien, claim, defense, set-off
or counterclaim against the other arising under the Agreement or under any other
basis.
4
<PAGE>
9. SLC and Manager hereby agree that the table of the Sale Termination
Fees set forth in Article 3.03 (iv) of the Agreement is hereby deleted and
replaced with the following:
Sale Termination Fees:
----------------------
From the date hereof through
April 25, 2000 $550,000
April 26, 2000 through
April 25, 2001 $225,000
April 26, 2001 through
April 25, 2002 $175,000
April 26, 2002 through
April 25, 2003 $125,000
April 26, 2003 through
April 25, 2004 $ 75,000
April 26, 2004 through
April 25, 2005 $ 25,000
April 26, 2005 through
February 16, 2014 $ 0
The Sale Termination Fee shall be the only amount due
to Manager in the event of a termination of this Agreement
under this Article 3 and the same shall constitute Manager's
sole and exclusive remedy for such termination which shall be
retained by Manager as and for liquidated damages with respect
thereto.
10. Effective as of the date hereof, SLC and Manager hereby agree that
the following articles are hereby added to Article 3 of the Agreement:
3.08 Additional Termination Rights. Notwithstanding anything
contained in this Agreement to the contrary, including,
without limitation, Article 3 hereof, Manager and Owner agree
that Owner shall have the right to terminate this Agreement,
in Owner's sole and absolute discretion with or without cause,
at any time by providing no less than sixty (60) days written
notice of such termination to Manager (such notice is herein
called the "Termination Notice" and such sixty (60) day period
is herein called the "Termination Period"). In the event that
a Termination Notice is given under this Article 3.08, the
Sale Termination Fee (if any) and any other sums due Manager,
which are unrelated to the termination and which are otherwise
due pursuant to the Agreement, shall be paid on or before the
effective date of termination of this Agreement and shall be a
condition to termination.
3.09 Transition Upon Termination. In the event of a
termination of this Agreement under this Article 3 or any
other provision of this Agreement, then Manager shall
cooperate in executing any and all documentation necessary to
transfer all licenses and permits required for the operation
of the Hotel, including, without limitation, all documentation
necessary for the transfer of the liquor license
5
<PAGE>
therefor. Owner shall be responsible for payment of all of
Manager's out-of-pocket expenses incurred in connection
therewith. In addition, Manager shall execute such other
documentation and perform such other acts as are necessary to
effectuate the transition of management of the Hotel. In the
event of a termination of this Agreement, Owner and Manager
shall enter into a Termination Agreement substantially in the
form attached hereto as Exhibit A, which shall provide among
other things that in the event of a termination of this
Agreement Owner shall not be obligated to pay Manager for all
accrued and earned vacation pay for the employees of the
Hotel, but shall indemnify Manager with respect to the same.
3.10 Conversion to Franchise Agreement.
(a) Owner may, at its option and at any time, convert
this Agreement into a franchise agreement ("Franchise
Agreement") with Manager or its appropriate affiliate for the
operation of the Hotel under Manager's tradename of
"Doubletree Guest Suites", which Franchise Agreement shall:
(A) provide for franchise fees of 1 1/2% of gross room
revenues for the first (1st) year of operation under the
Franchise Agreement, 2 1/2% of gross room revenues for the
second (2nd) year of operation under the Franchise Agreement
and 4% of gross room revenues for the third (3rd) year of
operation under the Franchise Agreement and for each year
thereafter; (B) be for a term of seven and one-half years (7
1/2); (C) provide for termination on sixty (60) days prior
written notice as set forth in this Agreement; (D) contain the
same schedule of Sale Termination Fees (with the same dates)
as this Agreement and, in the event that the term of the
Franchise Agreement expires when a Sale Termination Fee would
still be due, then Owner shall be obligated to pay such Sale
Termination Fee upon the expiration of the term thereof; and
(E) otherwise be in form and substance similar to the
franchise agreement that SLC (or its affiliate) has negotiated
with Manager for its Doubletree Suites Hotel located in
Lexington, Kentucky.
(b) Owner shall exercise its right to convert this
Agreement into a Franchise Agreement by sending Manager
written notice that Owner has elected to convert this
Agreement into a Franchise Agreement, which notice shall be
sent to Manager at least ten (10) days prior to the conversion
date and accompanied by a Franchise Agreement that has been
executed by Owner which contains the terms and conditions set
forth in clause (a) above. Upon the delivery of such notice
together with the executed Franchise Agreement, this Agreement
shall be deemed to have been terminated and replaced by the
Franchise Agreement, provided, however, that no Sale
Termination Fee shall be payable as a result of the
termination of this Agreement as such fees shall be carried
over into the Franchise Agreement and shall be payable in
accordance with the terms thereof. In the event that Owner
converts this Agreement to a Franchise Agreement as set forth
herein, then: (a) Owner shall not be obligated to pay any fees
or charges in connection with such conversion, including,
without limitation, application fees and shall not be
obligated to participate in, commence or otherwise pay any
amounts in connection with any product improvement plan or
similar arrangement; and (b)
6
<PAGE>
Manager shall counter-execute and deliver a fully-executed
Franchise Agreement to Owner within ten (10) days after
receipt thereof by Manager from Owner.
11. Manager acknowledges that even though SLC is referred to as the
"Owner" under the Agreement, SLC is not the owner of the Hotel, but the lessee
thereof. In no event shall SLT have any liability or obligation for any amounts
or other obligations due or required to be performed by SLC under the Agreement.
12. This Amendment represents the complete and entire understanding and
agreement among GHI, SLC and Manager with regard to the matters set forth
herein. Except as expressly amended and modified hereby, the Agreement is
unmodified and in full force and effect, and the parties hereto hereby ratify
and confirm the same.
13. This Amendment may be executed in one or more counterparts and all
such counterparts taken together shall constitute one agreement. Executed copies
of this Amendment received by telecopier shall be deemed to be originals.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, GHI, SLC and Manager have hereunder set their hands
and seals as of the date first above written.
GHI:
GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited
partnership
By: FFCA Management Company, L.P., a Delaware limited
partnership, its general partner
By: Perimeter Center Management Company, a
Delaware corporation, its general partner
By: /s/ Dennis L. Ruben
--------------------------------------
Name: Dennis L. Ruben_
Title: SR V.P. and General
Counsel
SLC:
SLC OPERATING LIMITED PARTNERSHIP, a Delaware limited
partnership
By: Starwood Lodging Corporation, a Maryland
corporation, its general partner
By: /s/ Steven R. Goldman
------------------------------------
Name: Steven R. Goldman
Title: Senior Vice President
MANAGER:
DT MANAGEMENT, INC, an Arizona corporation
By: /s/ David Heuck
----------------------------------------
Name: David Heuck
Title: Vice President
8
<PAGE>
ASSIGNMENT
----------
By execution hereof, Doubletree Partners, a Delaware general
partnership, hereby assigns all of its right, title and interest as the manager
in and to the Agreement to DT Management, Inc., an Arizona corporation, and DT
Management, Inc., hereby agrees to assume, be bound by and perform all of the
obligations of Doubletree Partners as manager under the Agreement.
ASSIGNOR:
DOUBLETREE PARTNERS, a Delaware general partnership
By: Samantha Hotel Corporation, a Delaware
corporation
By: /s/ Sandra L. Ravel
---------------------------------------
Name: Sandra L. Ravel
Title: Assistant Secretary
ASSIGNEE:
DT MANAGEMENT, INC., an Arizona corporation
By: /s/ David Heuck
--------------------------------------------
Name: David Heuck
Title: Vice President
9
<PAGE>
LIST OF SCHEDULES
-----------------
SCHEDULE 1 TERMINATION AMOUNTS
SCHEDULE 2 PENDING LITIGATION
LIST OF EXHIBITS
----------------
EXHIBIT A TERMINATION AGREEMENT
---------
10
LIQUIDATING TRUST AND ESCROW AGREEMENT
THIS LIQUIDATING TRUST AND ESCROW AGREEMENT (this "Agreement") is
entered into and effective as of April 26, 1996 (the "Effective Date"), which
Effective Date shall be the date of the Closing (as defined below), by and among
SLT REALTY LIMITED PARTNERSHIP, a Delaware limited partnership ("Buyer"),
GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited partnership
("Seller"), and NORWEST BANK ARIZONA, NATIONAL ASSOCIATION, a national banking
association principally located in the State of Arizona ("Escrow Agent").
PRELIMINARY STATEMENTS
Unless otherwise expressly provided herein, all defined terms used in
this Agreement shall have the meanings set forth in Section 1 of this Agreement.
Seller has agreed to sell to Buyer the Hotel Properties pursuant to the terms of
the Purchase Agreement.
Seller and Buyer desire to enter into this Agreement for the purpose of
appointing Escrow Agent to receive and hold the Escrow Funds in escrow and
disburse such Escrow Funds as contemplated by this Agreement.
This Agreement shall govern the terms upon which Escrow Agent shall
distribute the Escrow Funds.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. The following terms shall have meanings set forth in
this Section 1 for all purposes of this Agreement:
"Closing" shall have the meaning set forth in Section 4 of the Purchase
Agreement.
"Escrow Funds" means the sum of $2,500,000 from the proceeds of the
Purchase Price to be deposited by Seller into an interest bearing trust account
with Escrow Agent pursuant to this Agreement immediately after the Effective
Date. The term "Escrow Funds" shall include all interest accruing thereon.
<PAGE>
"General Partner" means FFCA Management Company Limited Partnership, a
Delaware limited partnership, whose general partner is Perimeter Center
Management Company, a Delaware corporation.
"Hotel Properties" has the meaning set forth in the Purchase Agreement.
"Investors" means each person who holds one or more Units in Seller and
is reflected as an Investor on the books and records of Seller on the Effective
Date.
"Purchase Agreement" means that certain Purchase Agreement dated as of
October 27, 1995, as amended.
"Purchase Price" means the amount of $73,250,000.00 to be paid by Buyer
to Seller at the Closing, subject to adjustment and prorations as set forth in
the Purchase Agreement.
"Unit" means one or more units of assigned limited partnership
interests in Seller.
2. Appointment of Escrow Agent. (a) Effective as of the Effective Date,
Escrow Agent is appointed escrow agent to hold and disburse the Escrow Funds in
accordance with the instructions set forth herein. Escrow Agent agrees, upon
such appointment, to act as escrow agent under this Agreement.
(b) Escrow Agent shall have no powers or rights with respect to
holding, investing and disbursing the Escrow Funds other than as expressly set
forth in this Agreement.
(c) Escrow Agent shall be responsible for providing to each Investor
periodic reports containing unaudited financial statements and certain other
information and will file such reports on Forms 10-K and 8-K with the Securities
and Exchange Commission in accordance with applicable securities laws. Such
reports shall include, without limitation, an annual written report, certified
by Escrow Agent, setting forth:
(i) an unaudited balance sheet of the Escrow Fund account as
of the end of the calendar year and the investment status of any funds
held in the Escrow Fund account;
(ii) the amount of all liabilities discharged during such
calendar year;
(iii) the amount of all distributions, if any, made to
Investors during such calendar year; and
(iv) any action taken by Escrow Agent in the performance of
its duties not previously reported that materially effect the Escrow
Funds.
2
<PAGE>
In preparing the periodic reports, Escrow Agent will rely on
information provided by General Partner. Seller also agrees to indemnify Escrow
Agent in accordance with the provisions set forth in Section 9 of this Agreement
for all losses, costs and expenses arising from and related to the preparation
and distribution of the periodic reports to investors.
(d) Escrow Agent may resign upon 30-days advance written notice to
Seller and Buyer. If a successor escrow agent is not appointed by Seller and
Buyer within the 30-day period following such notice, Escrow Agent may petition
any court of competent jurisdiction to name a successor escrow agent.
3. Purpose of Agreement. This Agreement is being executed, and the
Escrow Funds are being deposited with Escrow Agent, for the purpose of
liquidating and distributing the Escrow Funds.
4. Deposit of Escrow Funds. Immediately after the Effective Date,
Seller agrees to deposit with Escrow Agent the Escrow Funds. The Escrow Funds
shall be credited by Escrow Agent and recorded in a separate, segregated
account. Escrow Agent is directed and is hereby authorized to deposit, transfer,
hold and invest all funds received in the Escrow Funds account, including
principal and interest, in the account described on the attached Exhibit A (the
"Fund"), during the period of escrow. The Escrow Agent may sell all or any
interest in the Fund only to the extent necessary to make any disbursement to
Buyer under the terms of Section 5 of this Agreement or to the extent necessary
to make any distribution to Investors under the terms of Section 7 of this
Agreement. Escrow Agent shall not otherwise sell, transfer or convey all or any
interest in the Fund.
5. Disbursement of Escrow Funds. (a) The Escrow Funds shall be the sole
and exclusive source of funds to which Buyer shall look subsequent to the
Effective Date for recourse in the event of a breach or default by Seller of any
of its representations, warranties, covenants or obligations under the Purchase
Agreement, any other document or instrument executed by Seller as contemplated
by the Purchase Agreement, including, without limitation, the Special Warranty
Deeds, Bills of Sale and Assignment Agreements (all as defined in the Purchase
Agreement), and/or this Agreement (collectively, the "Documents"). Escrow Agent
shall not disburse any Escrow Funds to (i) Buyer unless Seller shall have
consented to such disbursement as contemplated in subsection (b) below or there
has been a Final Decision (as defined below) with respect to a Disputed Claim
(as defined below), or (ii) Seller, except that Escrow Agent shall disburse
Escrow Funds to Investors as contemplated by Section 7.
(b) Subsequent to the Effective Date, Buyer may, from time to time, but
in no event more than 18 months after the Effective Date, make a claim to some
or all of the Escrow Funds (a "Claim") by delivering to Escrow Agent and Seller
a certificate (a "Claim Certificate") signed by the president or a vice
president of Buyer's general partner stating:
(i) That Buyer has or will incur damages in the aggregate of
at least $10,000 as a result of one or more breaches or defaults by
Seller under one or more of the Documents (the "Default"), exclusive,
however, of Claims previously made;
3
<PAGE>
(ii) The basis for the Default, set forth in reasonable
detail; and
(iii) Buyer's reasonable estimate of the damages which Buyer
has or will incur or sustain as a result of such Default.
The Claim Certificate delivered to each of Escrow Agent and Seller shall be
accompanied by copies of all relevant third-party documentation supporting such
alleged Default, including, without limitation, pleadings and petitions,
environmental reports and notices asserting liability.
(c) Within twenty days after Seller's receipt of a Claim, Seller shall
notify Escrow Agent and Buyer whether Seller approves or disputes or objects to
such Claim (the "Notice"). With respect to Claims which are approved by Seller,
the Notice shall identify the Defaults which Seller agrees have occurred, to the
extent more than one Default is alleged in the Claim Certificate, and the amount
of damages which General Partner agrees that Buyer has or will incur or sustain
as a result of such Defaults (an "Approved Claim"). Escrow Agent shall, within
seven days after its receipt of the Notice, promptly pay to Buyer from the
Escrow Funds an amount equal to the amount of all Approved Claims. If the Escrow
Funds are not sufficient to pay in full any Approved Claim, Escrow Agent shall
pay to Buyer such Escrow Funds as are available, but in no event shall Seller,
General Partner or the Investors have any obligation or liability for that
portion of the Approved Claims which exceed the amount of Escrow Funds.
With respect to Claims which are disapproved by Seller, the Notice
shall state in reasonable detail the reasons why Seller disputes or objects to
the Claim (a "Disputed Claim"). In the event of a Disputed Claim, Seller and
Buyer shall submit the Disputed Claim to binding arbitration in Phoenix, Arizona
pursuant to the Uniform Arbitration Act then in effect in the State of Arizona.
Such determination shall be made by an arbitrator selected by Seller and Buyer
within 10 days after delivery of the Notice with respect to the Disputed Claim.
Such arbitrator shall make a decision as to the Disputed Claim within 20 days
after delivery of the Notice. If Seller and Buyer are unable to agree upon an
arbitrator within 10 days after the delivery of the Notice, Seller and Buyer
shall each select an arbitrator not having an interest in the transaction
contemplated by this Agreement within 20 days after the delivery of the Notice,
and those two arbitrators shall in turn select a third arbitrator within 30 days
after the delivery of the Notice, who shall, within 45 days after the delivery
of the Notice make a determination as to the Disputed Claim. The determination
of the arbitrator agreed to by Seller and Buyer, or the arbitrator selected by
arbitrators on behalf of Seller and Buyer, shall be final and conclusive upon
the parties, and a judgment based upon that determination may be entered in the
appropriate court. The determination of the arbitrator shall be referred to as a
"Final Decision".
Notwithstanding the foregoing, if any Disputed Claims which have been
submitted to arbitration as described above have not been resolved to Final
Decisions on or before 90 days preceding the third anniversary of the Effective
Date (the "Final Arbitration Date"), within 30 days after the Final Arbitration
Date Seller and Buyer shall each submit to the arbitrator(s) selected above with
respect to such unresolved Disputed Claim(s) their proposals for Final
Decisions. Such arbitrator(s)
4
<PAGE>
shall then determine, within 45 days after the Final Arbitration Date, the Final
Decision for each unresolved Disputed Claim within the range of the two
applicable Final Decisions proposed by Seller and Buyer. The determination of
the arbitrator(s) with respect to each unresolved Disputed Claim shall be a
Final Decision.
Escrow Agent shall not have the right to withhold payment of any Final
Decision, and Seller shall not have the right to instruct Escrow Agent to
withhold the payment of any Final Decision. Escrow Agent shall pay Buyer the
amount of all Final Decisions from the Escrow Funds, to the extent available,
without the necessity of obtaining any further document or authorization from
Seller. The expenses of all arbitrations, including the out-of-pocket attorneys'
fees and expenses of Seller but excluding the attorneys' fees and expenses of
Buyer, shall be paid out of the available Escrow Funds before such Escrow Funds
are distributed to Buyer or the Investors.
6. Appointment of General Partner with Power of Attorney. Effective
upon the dissolution of Seller, Seller appoints General Partner as its true and
lawful attorney-in-fact to respond to all Claims and otherwise exercise Seller's
rights under this Agreement. General Partner shall notify Buyer of the effective
date of Seller's dissolution, and all actions to be taken by Seller, or
deliveries to be made to Seller, pursuant to this Agreement subsequent to such
dissolution shall be exercised by, or directed to, General Partner pursuant to
the power of attorney set forth in this Section. The power of attorney set forth
in this Section is coupled with an interest and is irrevocable. Notwithstanding
the appointment by Seller of General Partner as its attorney-in-fact, General
Partner and its officers, directors, shareholders, employees and agents shall
have no personal liability to Escrow Agent, Buyer or, to the extent permitted by
applicable law, the Investors as a result of such appointment and/or General
Partner responding to Claims and/or otherwise exercising Seller's rights under
this Agreement.
7. Termination of Escrow. (a) If no Claims have been made by Buyer, or
if Final Decisions have been rendered for all Disputed Claims, within 18 months
after the Effective Date, all of the remaining Escrow Funds held by Escrow Agent
pursuant to the terms of this Agreement shall be promptly paid by Escrow Agent
to the Investors in proportion to their respective Units. If, however, within 18
months after the Effective Date there are Disputed Claims for which a Final
Decision has not been made, Escrow Agent shall continue to hold the Escrow Funds
in escrow pending a Final Decision with respect to all Disputed Claims;
provided, however, in no event shall Escrow Agent hold such Escrow Funds later
than three years after the Effective Date, and all remaining Escrow Funds held
by Escrow Agent at the time of the third anniversary of the Effective Date shall
be paid by Escrow Agent to the Investors in proportion to their respective
Units, and Buyer shall have no recourse with respect to such Disputed Claims.
All disbursements by Escrow Agent to Investors shall be delivered to the
addresses for such Investors provided to Escrow Agent by Seller or General
Partner.
(b) The beneficial interest of the Investors in the Escrow Funds are
non-transferable, except by will, intestate succession or operation of law.
Accordingly, in the absence of the foregoing circumstances, all disbursements of
Escrow Funds other than to Buyer, if any, shall be made and delivered to the
Investors.
5
<PAGE>
(c) This Agreement shall terminate upon the earlier of (i) the
disbursement of all remaining Escrow Funds or (ii) the time frame set forth in
Section 7(a) above.
8. Notices. All notices (including Notices), certificates (including
Claim Certificates), and distributions required or permitted to be given or
delivered hereunder (other than distributions to Investors, which distributions
shall be delivered as described in Section 7) shall be in writing, as
applicable, and given by (i) hand delivery, (ii) facsimile, as applicable, (iii)
express overnight delivery service or (iv) certified or registered mail, return
receipt requested, and shall be deemed to have been delivered upon (a) receipt,
if hand delivered, (b) transmission, if delivered by facsimile or (c) the next
business day, if delivered by express overnight delivery service. Attorneys may
send or receive notices and certificates on behalf of their respective clients.
Notices and certificates shall be provided to the parties and addresses (or
facsimile numbers, as applicable) specified below:
If to Seller: Dennis L. Ruben, Esq.
Senior Vice President and General Counsel
Franchise Finance Corporation of America
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
If to Buyer: Mr. Jonathan D. Eilian
Principal
Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, CT 06830
Telephone: (203) 861-2100
Telecopy: (203) 861-2101
with a copy to: Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
Suite 1400
500 East Broward Boulevard
Fort Lauderdale, Florida 33394
Telephone: (305) 462-2000
Telecopy: (305) 523-1722
If to Escrow Agent: Norwest Bank Arizona, National Association
Fourth Floor, MS 9030
3300 N. Central Avenue
Phoenix, Arizona 85012
Attention: Administrator
Telephone: (602) 248-2344
Telecopy: (602) 248-1200
6
<PAGE>
or to such other address as a party shall designate by written notice to all
other parties to this Agreement.
9. Reliance. Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to be signed or presented by the
proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own willful default or gross negligence. Buyer, Seller and General Partner
shall, jointly and severally, indemnify and save harmless Escrow Agent for all
losses, costs, and expenses which may be incurred by it without negligence or
bad faith on the part of Escrow Agent, arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder.
10. Fees and Expenses. Escrow Agent shall be entitled to compensation
for its services as agreed to by Seller and Escrow Agent. The fee agreed upon
for the services rendered hereunder shall be paid by Seller within 10 days after
the Effective Date of this Agreement and is intended as full compensation for
Escrow Agent's services as contemplated by this Agreement. Escrow Agent shall
not render any material services not contemplated in this Agreement without the
prior consent of Seller and Buyer.
11. Waiver and Amendment. No provisions of this Agreement shall be
deemed waived or amended except by a written instrument unambiguously setting
forth the matter waived or amended and signed by the party against which
enforcement of such waiver or amendment is sought. Waiver of any matter shall
not be deemed a waiver of the same or any other matter on any future occasion.
12. Captions. Captions are used throughout this Agreement for
convenience of reference only and shall not be considered in any manner in the
construction or interpretation hereof.
13. Severability. The provisions of this Agreement shall be deemed
severable. If any part of this Agreement shall be held unenforceable, the
remainder shall remain in full force and effect, and such unenforceable
provision shall be reformed by such court so as to give maximum legal effect to
the intention of the parties as expressed therein.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
15. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Seller, Investors, Buyer and Escrow Agent and their respective
successors and assigns, including, without limitation, any United States
trustee, any debtor-in-possession or any trustee appointed from a private panel.
The Investors are third-party beneficiaries of this Agreement.
7
<PAGE>
16. Time of the Essence. Time is of the essence with respect to each
provision of this Agreement; provided, however, whenever any determination is to
be made or action to be taken on a date specified in this Agreement, if such
date shall fall upon a Saturday, Sunday or holiday observed by federal banks in
the State of Arizona, the date for such determination or action shall be
extended to the first business day immediately thereafter.
17. Forum Selection; Jurisdiction; Venue; Choice of Law. Each of the
parties acknowledges that this Agreement was substantially negotiated in the
State of Arizona, the Agreement was signed by Seller and Escrow Agent in the
State of Arizona and delivered by each of the parties in the State of Arizona
and there are substantial contacts between the parties and the transaction
contemplated herein and the State of Arizona. For purposes of any action or
proceeding arising out of this Agreement, the parties hereto hereby expressly
submit to the jurisdiction of all federal and state courts located in the State
of Arizona and Buyer consents that it may be served with any process or paper by
registered mail or by personal service within or without the State of Arizona in
accordance with applicable law. Furthermore, Buyer waives and agrees not to
assert in any such action, suit or proceeding that it is not personally subject
to the jurisdiction of such courts, that the action, suit or proceeding is
brought in an inconvenient forum or that venue of the action, suit or proceeding
is improper. It is the intent of the parties hereto that all provisions of this
Agreement shall be governed by and construed under the laws of the State of
Arizona.
18. Federal Income Tax Matters. Buyer, Seller and Escrow Agent agree
that the Investors shall be treated as the owners of the corpus of the trust
created under this Agreement, excluding any funds disbursed to Buyer under the
terms of Section 5 of this Agreement, and shall file all of their respective
returns, reports and similar information in a manner consistent with such
ownership.
8
<PAGE>
In witness whereof, the parties hereto have caused this Agreement to be
signed as of the day and year first above written.
GUARANTEED HOTEL INVESTORS 1985, L.P.,
a Delaware limited partnership
By FFCA Management Company Limited
Partnership, a Delaware limited partnership,
its general partner
By Perimeter Center Management Company
a Delaware corporation, its general partner
By /s/ Dennis L. Rubin
Printed Name Dennis L. Rubin
Its Senior Vice President and General Counsel
SLT REALTY LIMITED PARTNERSHIP, a Delaware limited
Partnership
By Starwood Lodging Trust, a
Maryland real estate investment trust,
its general partner
By /s/ Jeffery C. Lapin
Printed Name Jeffery C. Lapin
Its President
NORWEST BANK ARIZONA,
National Association
By: /s/ Charlotte D. Grant-Cobb
Printed Name: Charlotte D. Grant-Cobb
Its: Vice President
9
<PAGE>
EXHIBIT A
---------
The Escrow Agent is directed and is hereby authorized to deposit, transfer, and
invest all funds received in the Escrow Funds account, including principal and
interest, in Government Obligations, i.e., U.S. Treasury Bills, in accordance
with the following investment strategy:
$500,000 30-day T-Bills
$500,000 60-day T-Bills
$500,000 90-day T-Bills
$500,000 120-day T-Bills
Further, the Escrow Agent is directed and is hereby authorized to deposit,
transfer and hold any funds temporarily uninvested in the Norwest Advantage
Funds Treasury Fund (a money-market "sweep" vehicle).
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31,
1996 AND THE STATEMENT OF INCOME FOR THE THREE
MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000773933
<NAME> GUARANTEED HOTEL INVESTORS 1985, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 8,846,795
<SECURITIES> 0
<RECEIVABLES> 888,090
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,110,800
<PP&E> 54,702,084
<DEPRECIATION> 9,636,494
<TOTAL-ASSETS> 55,484,374
<CURRENT-LIABILITIES> 3,253,150
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 52,231,224
<TOTAL-LIABILITY-AND-EQUITY> 55,484,374
<SALES> 0
<TOTAL-REVENUES> 7,315,577
<CGS> 0
<TOTAL-COSTS> 2,742,540
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,695
<INCOME-PRETAX> 2,241,130
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,241,130
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,241,130
<EPS-PRIMARY> 11.09
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH BALANCE SHEET.
</LEGEND>
<CIK> 0000778969
<NAME> FFCA INVESTOR SERVICES CORPORATION 85-A
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
