SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 Partnership I.R.S. Employer
Organization) Identification No.)
Delaware 86-0537910
-------- ----------
(Corporation State of Corporation I.R.S. Employer
Incorporation) Identification No.)
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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of Class)
Assigned Limited Partnership Interests
--------------------------------------
(Title of Class)
Indicate by check mark whether the Co-Registrants (1) have 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
Co-Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of regulation S-K is not contained herein, and will not be contained,
to the best of the Co-Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the Co-Registrants: Not applicable.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Business.
Organization
Guaranteed Hotel Investors 1985, L.P. (the "Partnership") was formed on
July 22, 1985 under the Delaware Revised Uniform Limited Partnership Act to
acquire three parcels of land located in Irving, Texas; Fort Lauderdale,
Florida; and Tampa, Florida on which three hotels are situated. The Partnership
leased each of the parcels to the hotel owners (the "Woolley/Sweeney
Partnerships") under separate ground leases and made separate participating,
first mortgage loans for the permanent financing of the hotel buildings and the
hotel furniture, fixtures and equipment. As described below, the hotels provide
guest rooms and group meeting room facilities and currently operate as
Doubletree Guest Suites. Each hotel property includes a restaurant; one of the
hotels operates the restaurant within the hotel, whereas the other two hotels
lease the restaurant to a third party operator. The general partner of the
Partnership is FFCA Management Company Limited Partnership, a Delaware limited
partnership (the "General Partner").
FFCA Investor Services Corporation 85-A, a Delaware corporation and
wholly-owned subsidiary of Perimeter Center Management Company ("PCMC"), was
incorporated on June 28, 1985, to serve as the assignor and initial limited
partner of the Partnership and as the owner of record of the limited partnership
interests in the Partnership. The limited partnership interests are assigned by
FFCA Investor Services Corporation 85-A to investors in the Partnership. FFCA
Investor Services Corporation 85-A conducts no other business activity. The
Partnership and FFCA Investor Services Corporation 85-A are referred to
collectively as the "Co-Registrants."
Operations
During 1991, the Woolley/Sweeney Partnerships failed to comply with the
terms of their lease and financing agreements with the Partnership. In order to
obtain control of the hotel assets and, among other things, avoid prolonged
litigation, the Partnership executed a settlement agreement (the "Settlement
Agreement") dated as of April 8, 1992, with the Woolley/Sweeney Partnerships.
The Settlement Agreement provided that the Woolley/Sweeney Partnerships convey
to the Partnership the hotels and all personal property then owned by the
Woolley/Sweeney Partnerships related to the hotels. As a result, the Partnership
no longer receives interest and rent payments under the mortgage and lease
agreements related to the hotels, but owns the hotels and receives the actual
hotel operating income (since April 9, 1992).
Management agreements were also entered into as of April 8, 1992
between the Partnership and Crown Sterling Management, Inc. ("CSMI"), an
affiliate of the Woolley/Sweeney Partnerships. The management agreements
provided for management of the hotels for an eighteen-month period at which time
the agreements terminated with no provision for extension. The management fee
under the agreements was equal to 3% of revenue, as defined, and approximated
$445,000 for the period from January 1, 1993 through October 8, 1993.
The Partnership entered into repurchase agreements with the
Woolley/Sweeney Partnerships, dated as of April 8, 1992, for the repurchase of
the hotels (the "Repurchase Agreements") which were amended as of May 19, 1994.
The amended Repurchase Agreements granted the Partnership an option to require
the Woolley/Sweeney Partnerships to repurchase the hotels and the land on which
the hotels are located (the "Parcels") from the Partnership on or after October
20, 2001, and on or before April 20, 2002, at a price of $35,635,708 for the
Fort Lauderdale, Florida hotel, $35,068,174 for the Tampa, Florida hotel and
$41,425,776 for the Irving, Texas hotel, less any repurchase credits based upon
payments by the Woolley/Sweeney Partnerships under the Settlement Agreement.
In the opinion of the General Partner, the Settlement Agreement
allowed the Partnership to avoid extended and costly litigation at the time of
settlement while granting the Partnership the opportunity to obtain ownership
and control of the hotel properties. In addition, by entering into the
Settlement Agreement with the Woolley/Sweeney Partnerships, the Partnership
avoided the possibility of the Woolley/Sweeney Partnerships filing for relief
under Chapter 11 of the federal bankruptcy laws which would likely have resulted
in substantial delays in obtaining ownership of the hotels and the risks of
deterioration in the physical condition of the hotels.
In August 1993, CSMI and Messrs. Woolley and Sweeney, among others,
commenced litigation in state court in Dallas, Texas against the Partnership and
certain of its affiliates, Embassy Suites, Inc., and certain other individuals
and entities. In connection with that litigation, CSMI alleged that,
notwithstanding the October 8, 1993 expiration dates set forth in the written
management agreements, the expiration dates were extended by three and one-half
years through an oral agreement allegedly reached between representatives of
CSMI and the Partnership. CSMI asserted in its lawsuit that, pursuant to the
terms of the written management agreements, as allegedly extended, the
Partnership was responsible for the payment to CSMI of its payroll expenses and
management fees after October 8, 1993. The Partnership categorically denied the
existence of any oral agreements to extend the terms of the management
agreements beyond October 8, 1993, and contended that, since the management
agreements expired by their terms on such date, no sums were due to CSMI for
payroll, management fees or other expenses thereafter.
The Texas state court litigation was settled by the parties in 1994. In
connection with the settlement, the parties agreed that neither CSMI nor any of
its affiliates have any interest, legal or equitable, in any of the hotels, and
CSMI delivered possession of the hotels to the Partnership on May 19, 1994. All
agreements with CSMI have been terminated as of such date, except for the
Repurchase Agreements which have been amended (as discussed earlier). The
Partnership agreed to pay CSMI for management services through May 19, 1994 and
to reimburse or be reimbursed by CSMI for certain expenses subject to
verification and reconciliation by an outside independent accounting firm. At
that time, the Partnership had accrued disputed items totaling $1.1 million. The
independent accounting firm's report, in summary, concluded that no amount was
owed by the Partnership to CSMI. CSMI disputed these findings and filed a motion
to set aside the accounting firm's report. On June 10, 1995, the District Court
disallowed a major portion of the accounting firm's report and ordered that the
Partnership pay CSMI $772,043, at which time the Partnership reduced its
outstanding liability for disputed items to this amount. After depositing
approximately $850,000 into an escrow account with the Texas State court to
cover the liability to CSMI, including other costs, the Partnership was granted
its motion for a new trial on September 8, 1995. Thereafter, the Partnership
began negotiations with CSMI related to property taxes on the hotels that the
Partnership paid in 1991 which otherwise should have been paid by Woolley and
Sweeney. The 1992 settlement documents between the Partnership and Woolley and
Sweeney provided that, under certain circumstances, Woolley and Sweeney would be
obligated to reimburse the Partnership for the property taxes in 1996. CSMI has
agreed not to require the payment of the $772,043 to CSMI in exchange for the
Partnership's agreement not to seek reimbursement of the property taxes.
Accordingly, the Partnership reduced its liability by $772,043 which, together
with prior reductions, is reflected as other revenue in the statement of income
for the year ended December 31, 1995. Amounts recoverable from the Texas State
court escrow account related to settlement of this dispute were received by the
Partnership in February 1996. This concludes all outstanding items of dispute
with CSMI.
The General Partner determined that it was in the best interest of the
Partnership's investors that all three hotels be managed by Doubletree Hotels
Corporation (Doubletree) and licensed as "Doubletree Guest Suites." Management
of the hotels was transferred to Doubletree Partners, an affiliate of
Doubletree, on May 19, 1994 and the hotels currently operate as Doubletree Guest
Suites. Management, accounting and data processing fees paid to Doubletree
Partners for the year ended December 31, 1995 approximated $940,000 and for the
period from May 19, 1994 through December 31, 1994 approximated $750,000.
Proposed Sale of the Hotels
On March 15, 1996, the Partnership's investors approved the sale, to an
unaffiliated third party, of the three hotels owned by the Partnership. The
Partnership had entered into an agreement on October 27, 1995 to sell, subject
to the consent of the Partnership's investors and the satisfactory completion of
due diligence by the potential purchaser, fee simple title to the three hotels,
for a cash payment of $73,250,000. The general partner of the Partnership filed
a proxy statement with the Securities and Exchange Commission and sent each
investor in the Partnership a definitive proxy statement and consent card which
contained the details of the proposed transaction, including an estimate of the
amount and timing of cash distributions. Upon the sale of the hotels, which
represent substantially all of the Partnership's assets, the Partnership will
begin the process of liquidation and distribution of assets to the investors in
accordance with the Partnership agreement. The investors 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. The proposed sale and
subsequent liquidation of the Partnership are expected to be completed in 1996.
Industry
The hotel industry is highly competitive. The principal areas of
competition include the location of the hotel facility, the size and
configuration of rooms or suites, the daily room rental rate, the quality of the
furnishings, services and other amenities provided, public identification of the
hotel chain and convenience of reservation confirmation services. The success of
the Partnership is dependent upon the Partnership's and Doubletree Partners'
ability to implement asset management procedures that will facilitate the
professional management and control of the operations of the hotels. The success
of the Partnership may also depend on the ability of each hotel to remain
competitive in its room and occupancy rates, amenities, location and service,
among other factors.
As a result of improving conditions in the hotel industry, the General
Partner, on behalf of the Partnership, engaged a financial advisor in June 1995
to provide services to the Partnership in connection with a possible sale of the
hotels. These conditions included increased liquidity for the financing of hotel
acquisitions and the lack of substantial new construction of hotels. The market
for hotel sales has also recently improved, as reflected by an increasing number
of purchases of hotels and recent increases in both average daily room rates and
occupancy rates for many hotels throughout the United States.
In 1995, operating statistics for the United States hotel industry
indicated improvement over 1994. According to industry statistics as provided by
Smith Travel Research, increasing demand in the hotel industry resulted in an
average room occupancy for 1995 of 66%, an increase of 1% over the prior year.
The Partnership's hotels' average room occupancy of 72% for 1995 is somewhat
above the national average. The average room rate for all hotels in the United
States for 1995 was $67, a 5% increase over 1994. The Partnership's hotels'
average room rate decreased 2% in 1995 to $84.
The all-suite segment continues to be one of the top performing
segments with 1995 rate increases of 5% over 1994. By comparison, the upscale
segment showed rates increasing 4%. Reflecting both the change in occupancy and
daily room rate, the revenue per available room/suite ("Revpar") nationally
increased 6% in 1995 to $44. The Partnership's hotels' average Revpar in 1995
was $60, compared to the average Revpar of $65 for all-suite properties.
The Partnership does not segregate revenues or assets by geographic
region, and such a presentation is not applicable and would not be material to
an understanding of the Partnership's business taken as a whole.
Compliance with federal, state and local law regarding the discharge of
materials into the environment or otherwise relating to the protection of the
environment has not had, and is not expected to have, any material adverse
effect upon capital expenditures, earnings or the competitive position of the
Partnership. The Partnership is not presently a party to any litigation or
administrative proceeding with respect to its compliance with such environmental
standards. In addition, the Partnership does not anticipate being required to
expend any funds in the near future for environmental protection in connection
with its respective operations.
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.
No portion of the Partnership's business is subject to renegotiation of
profits or termination of contracts or subcontracts at the election of the
United States Government. The Partnership does not manufacture any products and
therefore does not require any raw materials in order to conduct its business.
The Partnership and FFCA Investor Services Corporation 85-A have no
employees. All personnel used to operate the hotels are employees of Doubletree.
The Partnership reimburses Doubletree for payroll costs.
Item 2. Properties.
As of December 31, 1995, the Partnership owned, unencumbered, a 7.14
acre parcel of land located in Irving, Texas, on which is situated a 312-unit,
all-suite hotel purchased by the Partnership on February 27, 1986; a 3.09 acre
parcel located in Tampa, Florida, on which is situated a 263-unit, all-suite
hotel purchased by the Partnership on May 16, 1986; and a 5.11 acre parcel
located in Fort Lauderdale, Florida, on which is situated a 258-unit, all-suite
hotel purchased by the Partnership on November 5, 1986. The hotels provide guest
rooms and group meeting facilities and currently operate as Doubletree Guest
Suites. Each hotel property includes a restaurant; one of the hotels operates
the restaurant within the hotel, whereas the other two hotels lease the
restaurant to a third party operator. As discussed in Item 1 above, the
Partnership entered into an agreement on October 27, 1995 to sell, subject to
the consent of the Partnership's investors and the satisfactory completion of
due diligence by the potential purchaser, fee simple title to the three hotels,
for a cash payment of $73,250,000. Upon the sale of the hotels, which represent
substantially all of the Partnership's assets, the Partnership will begin the
process of liquidation and distribution of assets to the investors in accordance
with the Partnership agreement. The proposed sale and subsequent liquidation of
the Partnership are expected to be completed in 1996.
Independent of the Partnership, FFCA Investor Services Corporation 85-A
has no interest in any real or personal property.
Item 3. Legal Proceedings.
The Co-Registrants and their properties are not parties to, or subject
to, any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the Holders through the
solicitation of proxies or otherwise during the fourth quarter of fiscal year
1995; however, a Consent Solicitation Statement dated January 29, 1996 was sent
to the Holders. Voting was completed March 15, 1996. The following table sets
forth each of the proposals that the Holders were asked to vote upon:
Proposal Results
1. Consent to sell the hotels owned by the For 150,420
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 For 106,132
unanticipated services to the Partnership Against 35,530
from January 1, 1991 to the date of Abstain 16,804
liquidation.
PART II
Item 5. Market for Co-Registrants' Units and Related Security Holder Matters.
During 1995, there was no established public trading market for the
Units, and it is unlikely that an established public trading market for the
Units will develop.
As of March 1, 1996, there were 13,661 record holders of the Units.
For the two most recent fiscal years, the Partnership made the
following cash distributions to the Holders:
1995
Per Unit
Distribution Total
------------ -----
Date of Number Cash From Cash From
Distribution of Units Operations Capital Operations Capital
- ------------ -------- ---------- ------- ---------- -------
March 31 200,000 $5.00 -- $1,000,000 --
June 30 200,000 5.00 -- 1,000,000 --
September 30 200,000 5.00 -- 1,000,000 --
December 31 200,000 5.00 -- 1,000,000 --
1994
Per Unit
Distribution Total
------------ -----
Date of Number Cash From Cash From
Distribution of Units Operations Capital Operations Capital
- ------------ -------- ---------- ------- ---------- -------
March 31 200,000 $5.00 -- $1,000,000 --
June 30 200,000 5.00 -- 1,000,000 --
September 30 200,000 5.00 -- 1,000,000 --
December 31 200,000 5.00 -- 1,000,000 --
Cash from operations, defined as cash return in the agreement of
limited partnership which governs the Partnership, is distributed to the
Holders. The Adjusted Capital Contribution per Unit of the Holders, as defined
in the agreement of limited partnership which governs the Partnership, was $500
as of December 31, 1995. The Adjusted Capital Contribution of a Holder is
generally the Holder's initial capital contribution reduced by cash
distributions to the Holder of proceeds from the sale of Partnership assets.
Any differences in the amounts of distributions set forth in the above
tables from the information contained in Item 6 below are due to rounding the
amount of distributions payable per Unit down to the nearest whole cent and
carrying any fractional cents forward from one period to the next.
The Partnership expects to continue making cash distributions to the
Holders pursuant to the provisions of the agreement of limited partnership which
governs the Partnership for each full quarter in 1996 until the proposed sale of
the hotels (as discussed above). Thereafter, in connection with the subsequent
liquidation of the Partnership, the Holders will receive an initial distribution
equal to the net proceeds from the sale of the hotels, plus other Partnership
cash, less (1) cash needed to pay the Partnership's liabilities and the costs of
liquidation and (2) a $2,000,000 cash reserve to be held in an interest bearing
trust fund to satisfy claims made by the buyer, arising from the Partnership's
obligations under the sales agreement during the one-year period commencing upon
the date the buyer acquires the hotels. If, at the end of such one-year 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 Holders. If, however, there exist disputed claims at the end of
such one-year 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 balance remaining in the trust fund after resolution of all disputed claims
will be disbursed to the Holders, and the buyer will have no further recourse as
to such disputed claims.
Item 6. Selected Financial Data.
The following selected financial data should be read in conjunction
with the Financial Statements and the related notes attached as an exhibit to
this Report.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995(1) 1994(1) 1993(1) 1992(1) 1991(2)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues $23,642,772 $21,643,113 $21,398,565 $15,303,309 $ 5,715,783
Net Income (Loss) 4,646,936 2,495,224 2,703,715 1,396,050 (29,919,776)
Net Income (Loss) Per Unit 23.00 12.35 13.38 6.91 (148.10)
Total Assets 54,357,493 54,708,957 56,668,675 56,454,251 58,040,451
Distributions of Cash from
Operations to Holders 4,000,000 4,000,000 3,937,500 3,079,737 3,143,466
Distributions of Cash from
Operations Per Unit 20.00 20.00 19.69 15.40 15.72
Return of Capital to Holders -- -- -- 420,263(3) 4,655,783(3)
Return of Capital Per Unit -- -- -- 2.10(3) 23.28(3)
</TABLE>
- ----------------------
(1) In 1992, a Settlement Agreement was reached with the Woolley/Sweeney
Partnerships whereby the hotels were conveyed to the Partnership. As a result,
the Partnership no longer receives interest and rent payments under the mortgage
and lease agreements related to the hotels, but owns the hotels and receives the
actual hotel operating income (since April 9, 1992).
(2) Operations in 1991 were impacted by the failure of the Woolley/Sweeney
Partnerships to make their land lease and mortgage loan payments in the third
quarter of 1991. A $33.5 million provision was made to write down mortgage loans
receivable and land subject to operating leases to estimated realizable value.
(3)Return of capital for financial reporting purposes is not determined in the
same manner as return of capital for purposes of determining a Holder's Adjusted
Capital Contribution.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The Partnership received $100,000,000 in gross proceeds from its public
offering of the Units. After deducting organizational and offering expenses,
including selling expenses, the Partnership had $89,000,000 in net proceeds for
investment in the hotels. The Partnership invested $86,538,035 of the net
proceeds in the three hotels, and the Partnership does not intend to invest in
any other properties. As of December 31, 1995, the Partnership had cash and
marketable securities generally collateralized by United States government
obligations aggregating $6,255,398 of which $1,000,000 was paid out to the
Holders in January 1996 as their fourth quarter distribution for fiscal year
1995, and the remainder of which will be held by the Partnership for reserves,
operations or future distributions. The Partnership generated net cash from
operations of $5,924,325 for the year ended December 31, 1995 as compared to
$5,082,390 for 1994, an increase of approximately $842,000. The difference
between periods is due primarily to an increase in net income of approximately
$2,152,000 from 1994 to 1995, partially offset by a decrease in disputed
liabilities of approximately $1,113,000 in 1995 related to the settlement with
Messrs. Woolley and Sweeney, discussed below. During 1995 and 1994, planned
remodeling was performed in the hotels resulting in expenditures of $1,095,827
and $1,197,094, respectively, and a loss of $62,709 and $47,068, respectively,
on the disposition of property during the remodeling. Cash used for financing
activities consisted primarily of payments made on capital lease obligations
totaling $184,888 and partner distributions of $4,040,404. Net cash flows for
the year ended December 31, 1995 resulted in a net increase in cash and cash
equivalents of approximately $603,000.
Subsequent to December 31, 1995, the Partnership's investors approved
the sale, to an unaffiliated third party, of the three hotels owned by the
Partnership for a cash payment of $73,250,000. Upon the sale of the hotels,
which represent substantially all of the Partnership's assets, the Partnership
will begin the process of liquidation and distribution of assets to the
investors in accordance with the Partnership agreement. The proposed sale and
subsequent liquidation of the Partnership are expected to be completed in 1996.
The Partnership expects to continue making cash distributions to the
Holders pursuant to the provisions of the limited partnership agreement of the
Partnership for each full quarter in 1996 until the proposed sale of the hotels.
Thereafter, in connection with the subsequent liquidation of the Partnership,
the Holders will receive an initial distribution equal to the net proceeds from
the sale of the hotels, plus other Partnership cash, less (1) cash needed to pay
the Partnership's liabilities and the costs of liquidation and (2) a $2,000,000
cash reserve to be held in an interest bearing trust fund to satisfy claims made
by the buyer, arising from the Partnership's obligations under the sales
agreement during the one-year period commencing upon the date the buyer acquires
the hotels. If, at the end of such one-year 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 Holders. If,
however, there exist disputed claims at the end of such one-year 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 balance remaining in
the trust fund after resolution of all disputed claims will be disbursed to the
Holders, and the buyer will have no further recourse as to such disputed claims.
During 1994, Doubletree Partners spent $1,425,000 for purposes of
management assumption, brand conversion, and renovation of the three hotels
owned by the Partnership in connection with the management agreements between
Doubletree Partners and the Partnership. The management agreements provide that
if the Partnership sells the hotels during years 1 through 5 of the agreements
and Doubletree Partners is not retained by the new owners as manager of the
hotels, all of the $1,425,000 is to be reimbursed to Doubletree Partners as a
sale termination fee, and if the sale were to occur in years 6 through 10, fifty
percent of the amount is to be reimbursed. In connection with the proposed sale
of the hotels, the purchaser has agreed to assume this contingent liability.
Except as described above, the General Partner knows of no trends,
demands, commitments, events or uncertainties that will result in or that are
reasonably likely to result in the Partnership's liquidity increasing or
decreasing in any material way.
FFCA Investor Services Corporation 85-A serves as the initial limited
partner of the Partnership and the owner of record of the limited partner
interests in the Partnership, the rights and benefits of which are assigned by
FFCA Investor Services Corporation 85-A to investors in the Partnership. FFCA
Investor Services Corporation 85-A has no other business activity and has no
capital resources.
Results of Operations
Fiscal Year Ended December 31, 1995 Compared to
Fiscal Year Ended December 31, 1994
Room revenue increased by $1,191,089 or 7% to $18,286,393 for the year
ended December 31, 1995 as compared to $17,095,304 for 1994. This increase is
primarily attributable to the Irving, TX hotel ($1,059,754). Percentage of
occupancy at that hotel increased from 68% in 1994 to 79% in 1995 as the hotel
began to regain some of the market share that was lost as a result of ongoing
construction, renovations and the temporary interruption of marketing efforts as
a result of the brand conversion of the hotel to Doubletree Guest Suites.
Food and beverage revenue decreased by approximately $148,000 or 5% in
1995, with a corresponding decrease in food and beverage expense of
approximately $90,000 or 4%. The decrease primarily related to the leasing of
the Irving food and beverage facilities to a third party in April 1995 rather
than operating the facilities directly, as was done for seven months in 1994.
Other revenues increased from $1,688,809 in 1994 to $2,645,049 in 1995
due to the reversal, during 1995, of the disputed liabilities as discussed below
under "Litigation".
General and administrative expenses decreased to $3,276,193 for the
year ended December 31, 1995 from $5,540,773 during 1994. This decrease
primarily resulted from disputed claims of approximately $2,345,000 included in
the 1994 amount related to the litigation discussed below. If these costs had
not been in dispute, this amount would have been included in property operating
costs and expenses, advertising and promotion, and repairs and maintenance in
1994. Also contributing to the decrease was a reduction in legal expenses of
approximately $400,000 as the litigation with CSMI was substantially over as of
June 30, 1995 (see "Litigation" below). General and administrative expenses also
include management, accounting and data processing fees paid to Doubletree
Partners, which for the year ended December 31, 1995 approximated $940,000 and
for the period from May 19, 1994 through December 13, 1994 approximated
$750,000.
Advertising and promotion increased by $1,053,007 from the prior year
to $2,154,845 for 1995 partially due to disputed costs in 1994 that were
included in general and administrative expense rather than in advertising and
promotion as discussed above. Doubletree Hotels instituted a national marketing
plan in 1995 and, accordingly, the hotels now pay a percentage of room revenue
for this new marketing program. Also, additional marketing personnel were hired
to cultivate the market share that was lost as a result of the hotel renovations
and brand conversion.
Property taxes and insurance decreased by $285,319 or 16% to $1,478,824
for 1995. The Partnership appealed the hotel property taxes which resulted in
tax savings of approximately $165,000. 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.
The average daily room rate ("ADR") and percent of occupancy for each
of the hotels for 1995 and 1994, obtained from the unaudited financial
statements of each of the hotels, were as follows:
ADR % of Occupancy
--- --------------
1995 1994 1995 1994
---- ---- ---- ----
Fort Lauderdale, FL $77 $82 72% 65%
Tampa, FL $84 $86 64% 63%
Irving, TX $91 $91 79% 68%
Litigation
In connection with the Texas state court litigation settlement in
1994, the Partnership agreed to pay CSMI for management services through May 19,
1994 and to reimburse or be reimbursed by CSMI for certain expenses subject to
verification and reconciliation by an outside independent accounting firm. At
that time, the Partnership had accrued disputed items totaling $1.1 million. The
independent accounting firm's report, in summary, concluded that no amount was
owed by the Partnership to CSMI. CSMI disputed these findings and filed a motion
to set aside the accounting firm's report. On June 10, 1995, the District Court
disallowed a major portion of the accounting firm's report and ordered that the
Partnership pay CSMI $772,043, at which time the Partnership reduced its
outstanding liability for disputed items to this amount. After depositing
approximately $850,000 into an escrow account with the Texas State court to
cover the liability to CSMI, including other costs, the Partnership was granted
its motion for a new trial on September 8, 1995. Thereafter, the Partnership
began negotiations with CSMI related to property taxes on the hotels that the
Partnership paid in 1991 which otherwise should have been paid by Woolley and
Sweeney. The 1992 settlement documents between the Partnership and Woolley and
Sweeney provided that, under certain circumstances, Woolley and Sweeney would be
obligated to reimburse the Partnership for the property taxes in 1996. CSMI has
agreed not to require the payment of the $772,043 to CSMI in exchange for the
Partnership's agreement not to seek reimbursement of the property taxes.
Accordingly, the Partnership reduced its liability by $772,043 which, together
with prior reductions, is reflected as other revenue in the statement of income
for the year ended December 31, 1995. Amounts recoverable from the Texas State
court escrow account related to settlement of this dispute are included in other
receivables in the balance sheet at December 31, 1995 and were received by the
Partnership in February 1996. This concludes all outstanding items of dispute
with CSMI.
Fiscal Year Ended December 31, 1994 Compared to
Fiscal Year Ended December 31, 1993
In connection with the termination of the CSMI hotel management
agreements, the General Partner determined that it was in the best interest of
the Partnership's investors that all three hotels be managed by Doubletree and
licensed as Doubletree Guest Suites. Management of the hotels was transferred to
Doubletree Partners, an affiliate of Doubletree, on May 19, 1994. The average
room rates of the three hotels rose approximately 3%, while the average
occupancy rates decreased approximately 10%, contributing to a decrease in room
revenues and expenses from 1993 to 1994. The lower occupancy levels resulted
from ongoing construction and renovations at the hotels and temporary
interruption of marketing efforts as a result of brand conversion of the hotels
to Doubletree Guest Suites during 1994. The lower occupancy levels contributed
to decreased telephone and other revenues.
Food and beverage revenues increased from $1,388,345 in 1993 to
$2,859,000 in 1994 due to the Partnership's operation of restaurants in two of
the hotels (as opposed to operating only one restaurant in 1993).
Administrative and general expenses of $5,540,773 in 1994 and
$4,446,456 in 1993 include accruals for expenses related to disputed claims
which arose during 1993 and 1994, as described under "Litigation" above.
The average daily room rate ("ADR") and percent of occupancy for each
of the hotels for 1994 and 1993, obtained from the unaudited financial
statements of each of the hotels, were as follows:
ADR % of Occupancy
--- --------------
1994 1993 1994 1993
---- ---- ---- ----
Fort Lauderdale, FL $82 $81 65% 75%
Tampa, FL $86 $82 63% 70%
Irving, TX $91 $89 68% 72%
Inflation
The rate of inflation has been moderate in recent years and,
accordingly, has not had a significant impact on the Partnership's business.
Item 8. Financial Statements and Supplementary Data.
The financial statements of the Co-Registrants required by Regulation
S-X are attached to this Report. Reference is made to Item 14 below for an index
to the financial statements and financial statement schedules.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Co-Registrants.
The Partnership and the General Partner have no directors or executive
officers. Perimeter Center Management Company ("PCMC") is the corporate general
partner and M. H. Fleischer is an individual general partner of the General
Partner. The General Partner has responsibility for all of the Partnership's
operations. The directors and executive officers of PCMC are as follows:
PCMC
Directors
Name Position Held Since
- ---- -------------------
M. H. Fleischer 1993
Officers
Associated With
Name Positions Held PCMC Since
- ---- -------------- ----------
M. H. Fleischer Chairman of the Board, President and
Chief Executive Officer 1993
John R. Barravecchia Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary 1993
Christopher H. Volk Executive Vice President, Chief Operating
Officer, Secretary and Assistant Treasurer 1993
Robin L. Roach Senior Vice President - Corporate Finance 1993
Dennis L. Ruben Senior Vice President and General Counsel 1994
Stephen G. Schmitz Senior Vice President - Corporate Finance 1995
Catherine F. Long Vice President - Finance and Principal
Accounting Officer, Assistant Secretary,
Assistant Treasurer 1993
FFCA INVESTOR SERVICES CORPORATION 85-A
Director
Name Position Held Since
- ---- -------------------
M. H. Fleischer, Chairman 1986
Officers
Position Held
Name Positions Held Since
- ---- -------------- -----
M. H. Fleischer Chairman of the Board of Directors 1986
John R. Barravecchia President, Secretary and Treasurer 1990
Christopher H. Volk Vice President, Assistant Secretary and 1994
Assistant Treasurer
All of the foregoing directors and executive officers have been elected
to serve a one year term and until their successors are elected and qualified.
There are no arrangements or understandings between or among any of the officers
or directors and any other person pursuant to which any officer or director was
selected as such. There are no family relationships among any directors and
officers.
Business Experience
The business experience during the past five years of each of the above
directors and executive officers is as follows:
Morton H. Fleischer, age 59, has served as a director, President and
Chief Executive Officer of PCMC since 1993, and as Chairman of the Board of FFCA
Investor Services Corporation 85-A since 1986. Mr. Fleischer also serves as
President, Chief Executive Officer and Chairman of the Board of Franchise
Finance Corporation of America, a Delaware corporation ("FFCA") having
previously served as a director, President and Chief Executive Officer of
Franchise Finance Corporation of America I ("FFCA I"), a predecessor of FFCA,
from 1980 to 1994. Mr. Fleischer is an individual general partner of the General
Partner, and is a general partner (or general partner of a general partner) of
the following limited partnerships: Participating Income Properties 86, L.P.,
Participating Income Properties II, L.P.; Participating Income Properties III
Limited Partnership; and Scottsdale Land Trust Limited Partnership. Mr.
Fleischer has been engaged in real estate development and corporate finance
since 1967 and conducted business under the name Fleischer & Co. from 1972 until
1985. Mr. Fleischer received his Bachelor of Science degree from Washington
University in 1958.
John R. Barravecchia, age 40, has served as President, Secretary and
Treasurer of FFCA Investor Services Corporation 85-A since 1990. He has served
as Chief Financial Officer of PCMC since 1993 and as Senior Vice President and
Treasurer since 1994. In 1995, Mr. Barravecchia was named Executive Vice
President of PCMC. Mr. Barravecchia currently serves as Executive Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary of FFCA
and served in various capacities for FFCA I from 1984 to 1994. He was appointed
Vice President and Chief Financial Officer of FFCA I in December 1986, and
Senior Vice President in October 1989. Mr. Barravecchia was elected as a
director of FFCA I in March 1993 and Treasurer in December 1993. Prior to
joining FFCA I, Mr. Barravecchia was associated with the international public
accounting firm of Arthur Andersen LLP. Mr. Barravecchia received his Bachelor
of Science degree from Fredonia State University in 1978.
Christopher H. Volk, age 39, has served as Vice President, Assistant
Secretary and Assistant Treasurer of FFCA Investor Services Corporation 85-A
since 1994, and has served as Secretary of PCMC since 1993 and Senior Vice
President--Underwriting and Research since 1994. In 1995, Mr. Volk was named
Executive Vice President and Chief Operating Officer of PCMC. Mr. Volk currently
serves as Executive Vice President, Chief Operating Officer, Secretary and
Assistant Treasurer of FFCA. He joined FFCA I in 1986 and served in various
capacities in FFCA I's capital preservation and underwriting areas prior to
being named Vice President Research in October 1989. In December 1993, he was
appointed Secretary and Senior Vice President/Underwriting and Research of FFCA
I, and he was elected as a director of FFCA I in March 1993. Prior to joining
FFCA I, Mr. Volk was employed for six years with the National Bank of Georgia,
where his last position was Assistant Vice President and Senior Correspondent
Banking Credit Officer. Mr. Volk is a member of the Association for Investment
Management and Research and the Phoenix Society of Financial Analysts. Mr. Volk
received his Bachelor of Arts degree from Washington and Lee University in 1979
and his Masters of Business Administration Degree in Finance from Georgia State
University in 1987.
Robin L. Roach, age 43, served as Vice President--Portfolio Management
and Operations of PCMC prior to being named Senior Vice President/Corporate
Finance. He served as Chief Operating Officer of PCMC from 1993 to 1994. Mr.
Roach currently serves as Senior Vice President--Corporate Finance for FFCA,
having previously served as an Executive Vice President of FFCA I from 1986 to
1993 and as Senior Vice President--Portfolio Management and Operations from 1993
to 1994. Prior to his association with FFCA I, Mr. Roach served as a commercial
loan officer with the American Bank of Commerce from 1978 to 1980, and served as
a commercial loan officer of the European-American Bank from 1976 to 1978. He
received a Bachelor of Arts degree from Wabash College in 1975. On March 13,
1992, Mr. Roach filed a petition for relief under the federal bankruptcy laws,
and an order of discharge was subsequently entered.
Dennis L. Ruben, age 43, has served as Senior Vice President and
General Counsel for PCMC since 1994. Mr. Ruben currently serves in the same
capacity for FFCA and served as attorney and counsel for FFCA I from 1991 to
1994. In December 1993, he was appointed Senior Vice President and General
Counsel of FFCA I. Prior to joining FFCA I, Mr. Ruben was associated with the
law firm of Kutak Rock from 1980 until March 1991. Mr. Ruben became a partner of
Kutak Rock in 1984. Mr. Ruben has been admitted to the Iowa, Nebraska and
Colorado bars. He received a Bachelor of Arts degree with high distinction from
the University of Iowa in 1974 and a Juris Doctor with distinction from the
University of Iowa in 1977.
Stephen G. Schmitz, age 41, has served as Senior Vice
President/Corporate Finance of PCMC since January 1996. He has served in the
same capacity for FFCA since 1995. Mr. Schmitz served in various positions as an
officer of FFCA I from 1986 to June 1, 1994. Prior to joining FFCA I, Mr.
Schmitz was a commercial lender with Mellon Bank in Pittsburgh, where his last
position was Vice-President and Section Manager. He received a Bachelor of
Science degree in business from Franklin University in 1979 and a Masters of
Business Administration from Pennsylvania State University in 1981.
Catherine F. Long, age 39, has served as Vice President--Finance and
Principal Accounting Officer of PCMC since 1994, and Vice President from 1993 to
1994. She currently serves as Vice President/Finance, Principal Accounting
Officer, Assistant Secretary and Assistant Treasurer of FFCA and served as Vice
President/Finance of FFCA I from 1990 to 1993. In December 1993, she was
appointed Principal Accounting Officer of FFCA I. From December 1978 to May
1990, Ms. Long was associated with the international public accounting firm of
Arthur Andersen LLP. Ms. Long is a certified public accountant and is a member
of the Arizona Society of Certified Public Accountants. She received her
Bachelor of Science degree in accounting from Southern Illinois University in
1978.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Co-registrants during fiscal year 1995 and Forms 5 and
amendments thereto furnished to the Co-Registrants with respect to fiscal year
ended December 31, 1995 (the "Forms"), and any written representations by the
directors and executive officers of PCMC, the Co-Registrants have not identified
herein any such person that failed to file on a timely basis the Forms required
by Section 16(a) of the Securities Exchange Act of 1934 for fiscal year 1995.
Item 11. Executive Compensation.
Pursuant to provisions contained in the agreement of limited
partnership which governs the Partnership, the officers and directors of PCMC
serve in such capacities without remuneration from the Partnership.
The Partnership is required to pay 1% of its cash flow to the General
Partner and the General Partner is entitled to an allocation of 1% of profits,
losses, deductions, credits and sale proceeds. The General Partner is also
entitled to a subordinated real estate disposition fee under certain
circumstances. Reference is made to Note (1) of the Notes to Financial
Statements of the Partnership which are filed with this Report for a description
of the fees and distributions paid in 1995.
FFCA Investor Services Corporation 85-A serves as assignor and initial
limited partner without compensation from the Partnership. It is not entitled to
any share of the profits, losses or cash distributions of the Partnership. The
director and officers of FFCA Investor Services Corporation 85-A serve without
compensation from FFCA Investor Services Corporation 85-A or the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of December 31, 1995, the only person or group known by the
Partnership to own directly or beneficially 5% or more of the outstanding Units
of the Partnership was Pitt & Co., a nominee of Minneapolis Employees'
Retirement Fund, P.O. Box 2444, Church Street Station, New York, New York 10008.
As of that date, Pitt & Co. owned 10,000 Units, or 5% of the total number of
Units.
The General Partner of the Partnership and its general partners owned
no Units as of December 31, 1995. The directors and officers of PCMC,
individually and as a group, owned less than 1% of the Units as of December 31,
1995. PCMC is owned 66.67% by M. H. Fleischer and 33.33% by R. W. Halliday.
FFCA Investor Services Corporation 85-A has an interest in the
Partnership as a limited partner and it serves as the owner of record of all of
the limited partnership interests assigned by it to the Holders. However, FFCA
Investor Services Corporation 85-A has no right to vote its interest on any
matter and it must vote the assigned interests as directed by the Holders.
Item 13. Certain Relationships and Related Transactions.
Since the beginning of the Co-Registrants' last fiscal year, there have
been no significant transactions or business relationships among the
Co-Registrants and PCMC, its affiliates or their management other than those
described in Items 10 and 11 above.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
The following documents are filed as part of this Report:
1. Financial Statements.
The Partnership
Report of independent public accountants
Balance Sheets as of December 31, 1995 and 1994
Statements of Income for the years ended
December 31, 1995, 1994 and 1993
Statements of Changes In Partners' Capital for the
years ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Financial Statements
FFCA Investor Services Corporation 85-A
Report of independent public accountants
Balance Sheet as of December 31, 1995
Notes to Balance Sheet
2. Financial Statement Schedules.
All schedules are omitted since they are not required, are
inapplicable, or the required information is included in the
financial statements or notes thereto.
3. Exhibits.
The following is a complete list of exhibits filed as part of
this Form 10-K. For electronic filing purposes only, this
report contains Exhibit 27, Financial Data Schedule.
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 for the year ended December 31,
1986, are incorporated herein by this reference.
1986 Form 10-K
Exhibit No.
The Second Amended and Restated 3-A
Certificate and Agreement of Limited
Partnership which governs the Partnership,
as filed with the Secretary of State of
Delaware on May 9, 1986.
The Certificate of Incorporation which 3-B
governs FFCA Investor Services Corporation
85-A, as filed with the Secretary of State
of Delaware on June 28, 1985.
Bylaws of FFCA Investor Services Corporation 85-A. 3-C
Reports on Form 8-K.
No reports on Form 8-K were filed by the Co-Registrants during
the last quarter of the fiscal year ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Partnership 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 LIMITED PARTNERSHIP,
General Partner
Date: March 28, 1996 By /s/ M. H. Fleischer
----------------------
M. H. Fleischer, General Partner
By PERIMETER CENTER MANAGEMENT COMPANY,
Corporate General Partner
Date: March 28, 1996 By /s/ M. H. Fleischer
----------------------
M. H. Fleischer, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Partnership and in the capacities and on the dates indicated.
SIGNATURES OF REQUIRED OFFICERS AND DIRECTORS OF PERIMETER CENTER
MANAGEMENT COMPANY, CORPORATE GENERAL PARTNER OF FFCA MANAGEMENT
COMPANY LIMITED PARTNERSHIP, GENERAL PARTNER OF GUARANTEED HOTEL
INVESTORS 1985, L.P.
Date: March 28, 1996 By /s/ M. H. Fleischer
----------------------
M. H. Fleischer, Chairman of the Board,
President, and Chief Executive Officer
Date: March 28, 1996 By /s/ John R. Barravecchia
-------------------------
John R. Barravecchia, Executive Vice
President, Chief Financial Officer, Treasurer
and Assistant Secretary
Date: March 28, 1996 By /s/ Catherine F. Long
----------------------
Catherine F. Long, Vice President-Finance
and Principal Accounting Officer, Assistant
Secretary, Assistant Treasurer
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, 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: March 28, 1996 By /s/ M. H. Fleischer
------------------------------
M. H. Fleischer, Sole Director
Date: March 28, 1996 By /s/ John R. Barravecchia
------------------------------------------
John R. Barravecchia, President, Secretary,
Principal Financial Officer and Principal
Accounting Officer
<PAGE>
[ARTHUR ANDERSEN LETTERHEAD]
Report of Independent Public Accountants
To Guaranteed Hotel Investors 1985, L.P.:
We have audited the accompanying balance sheets of GUARANTEED HOTEL
INVESTORS 1985, L.P. (a Delaware limited partnership) as of December 31, 1995
and 1994, and the related statements of income, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the partnership's general
partner. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Guaranteed Hotel
Investors 1985, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Phoenix, Arizona,
February 27, 1996.
<PAGE>
<TABLE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
-------------------------------------
BALANCE SHEETS - DECEMBER 31, 1995 AND 1994
-------------------------------------------
<CAPTION>
1995 1994
------------ ------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,255,398 $ 5,652,192
Accounts receivable, trade 718,454 745,923
Other receivables (Note 7) 861,550 --
Prepaids and other 412,582 760,672
------------ ------------
Total current assets 8,247,984 7,158,787
PROPERTY AND EQUIPMENT, net (Notes 3 and 4) 46,109,509 47,550,170
------------ ------------
Total assets $ 54,357,493 $ 54,708,957
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Distribution payable to limited partners $ 1,002,104 $ 1,002,104
Payable to general partner 10,101 10,101
Disputed liabilities (Note 7) -- 1,112,714
Accounts payable and accrued liabilities 1,724,774 1,232,650
Property taxes payable 508,630 661,148
Current portion of capital lease obligations (Note 4) 111,689 184,888
------------ ------------
Total current liabilities 3,357,298 4,203,605
CAPITAL LEASE OBLIGATIONS, less current portion -- 111,689
------------ ------------
Total liabilities 3,357,298 4,315,294
------------ ------------
CONTINGENCY (Note 8)
PARTNERS' CAPITAL (DEFICIT):
General partner (324,955) (331,020)
Limited partners 51,325,150 50,724,683
------------ ------------
Total partners' capital 51,000,195 50,393,663
------------ ------------
Total liabilities and partners' capital $ 54,357,493 $ 54,708,957
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
<TABLE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
-------------------------------------
STATEMENTS OF INCOME
--------------------
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
----------------------------------------------------
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Room $18,286,393 $17,095,304 $18,505,767
Food and beverage 2,711,330 2,859,000 1,388,345
Other revenue 2,645,049 1,688,809 1,504,453
----------- ----------- -----------
Total revenue 23,642,772 21,643,113 21,398,565
----------- ----------- -----------
EXPENSES (Note 7):
Property operating costs and expenses 7,172,670 6,003,014 6,052,930
General and administrative 3,276,193 5,540,773 4,446,456
Advertising and promotion 2,154,845 1,101,838 1,044,940
Utilities 1,191,628 1,210,982 1,192,896
Repairs and maintenance 1,058,664 877,951 974,542
Property taxes and insurance 1,478,824 1,764,143 1,787,363
Interest expense and other 126,524 79,736 145,644
Depreciation and amortization 2,473,779 2,522,384 2,822,728
Loss on disposition of property 62,709 47,068 227,351
----------- ----------- -----------
Total expenses 18,995,836 19,147,889 18,694,850
----------- ----------- -----------
NET INCOME $ 4,646,936 $ 2,495,224 $ 2,703,715
=========== =========== ===========
NET INCOME ALLOCATED TO (Note 1):
General partner $ 46,469 $ 24,952 $ 27,037
Limited partners 4,600,467 2,470,272 2,676,678
----------- ----------- -----------
$ 4,646,936 $ 2,495,224 $ 2,703,715
=========== =========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on 200,000
units held by limited partners) $ 23.00 $ 12.35 $ 13.38
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
-------------------------------------
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
----------------------------------------------------
General Limited
Partner Partners Total
------------ ------------ ------------
BALANCE, December 31, 1992 $ (302,830) $ 53,515,233 $ 53,212,403
Net income 27,037 2,676,678 2,703,715
Distributions to partners (39,775) (3,937,500) (3,977,275)
------------ ------------ ------------
BALANCE, December 31, 1993 (315,568) 52,254,411 51,938,843
Net income 24,952 2,470,272 2,495,224
Distributions to partners (40,404) (4,000,000) (4,040,404)
------------ ------------ ------------
BALANCE, December 31, 1994 (331,020) 50,724,683 50,393,663
Net income 46,469 4,600,467 4,646,936
Distributions to partners (40,404) (4,000,000) (4,040,404)
------------ ------------ ------------
BALANCE, December 31, 1995 $ (324,955) $ 51,325,150 $ 51,000,195
============ ============ ============
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
-------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
----------------------------------------------------
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,646,936 $ 2,495,224 $ 2,703,715
Adjustments to net income:
Depreciation and amortization 2,473,779 2,522,384 2,822,728
Loss on disposition of property 62,709 47,068 227,351
Change in assets and liabilities:
Decrease (increase) in accounts receivable 27,469 (41,696) (11,259)
Increase in other receivables (861,550) -- --
Decrease (increase) in prepaids and other 348,090 314,192 (599,124)
Increase (decrease) in disputed liabilities (1,112,714) 178,094 934,620
Increase (decrease) in accounts payable
and accrued liabilities 492,124 (437,368) 539,890
Increase (decrease) in property taxes payable (152,518) 4,492 157,904
----------- ----------- -----------
Net cash provided by operating activities 5,924,325 5,082,390 6,775,825
----------- ----------- -----------
CASH FLOWS FOR INVESTING ACTIVITIES:
Additions or improvement of property (1,095,827) (1,197,094) (2,713,872)
----------- ----------- -----------
CASH FLOWS FOR FINANCING ACTIVITIES:
Partner distributions declared (Note 1) (4,040,404) (4,040,404) (3,977,275)
Increase in distributions payable to partners -- -- 64,131
Payments on capital lease obligations (184,888) (159,756) (208,561)
----------- ----------- -----------
Net cash used in financing activities (4,225,292) (4,200,160) (4,121,705)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 603,206 (314,864) (59,752)
CASH AND CASH EQUIVALENTS, beginning of year 5,652,192 5,967,056 6,026,808
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 6,255,398 $ 5,652,192 $ 5,967,056
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE -
Cash paid during the year for interest $ 45,800 $ 76,312 $ 108,655
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
-------------------------------------
Notes to Financial Statements
-----------------------------
December 31, 1995 and 1994
--------------------------
1) ORGANIZATION AND OPERATIONS:
Guaranteed Hotel Investors 1985, L.P. (the Partnership) was formed on
July 22, 1985 under the Delaware Revised Uniform Limited Partnership Act to
acquire three parcels of land located in Irving, Texas; Fort Lauderdale,
Florida; and Tampa, Florida on which three hotels are situated. The Partnership
leased each of the parcels to the hotel owners (the Woolley/Sweeney
partnerships) under separate ground leases and made separate participating,
first mortgage loans for the permanent financing of the hotel buildings and the
hotel furniture, fixtures and equipment.
During 1991, the Woolley/Sweeney partnerships failed to comply with the
terms of their lease and financing agreements with the Partnership. In order to
obtain control of the hotel assets and, among other things, avoid prolonged
litigation, the Partnership entered into and executed a settlement agreement on
April 24, 1992 with the Woolley/Sweeney partnerships. This agreement provided
that the Woolley/Sweeney partnerships convey to the Partnership the hotels and
all personal property then owned by the Woolley/Sweeney partnerships related to
the hotels. As a result, the Partnership no longer receives interest and rent
payments under the mortgage and lease agreements related to the hotels, but owns
the hotels and receives the actual hotel operating income (since April 9, 1992).
Management agreements were also entered into and executed by the Partnership
with Crown Sterling Management, Inc. (CSMI), an affiliate of the Woolley/Sweeney
partnerships. The agreements provided for management of the hotels for an
eighteen-month period, which expired on October 8, 1993 with no provision for
extension (see Note 7). The management fee under the agreements approximated
$445,000 for the period from January 1, 1993 through October 8, 1993.
The management of the hotels was transitioned to Doubletree Partners on
May 19, 1994, and the hotels, which provide guest rooms and group meeting room
facilities, currently operate as Doubletree Guest Suites. Each hotel property
includes a restaurant; one of the hotels operates the restaurant within the
hotel, whereas the other two hotels lease the restaurant to a third party
operator. Management, accounting and data processing fees paid to Doubletree
Partners for the year ended December 31, 1995 approximated $940,000 and for the
period from May 19, 1994 through December 31, 1994 approximated $750,000.
Investors acquired units of assigned limited partnership interest (the
limited partnership units) in the Partnership from FFCA Investor Services
Corporation 85-A (the Initial Limited Partner), a Delaware corporation
wholly-owned by Perimeter Center Management Company. Holders of the units have
all of the economic benefits and substantially the same rights and powers as
limited partners, therefore, they are referred to herein as "limited partners".
The general partner of the Partnership is FFCA Management Company, L.P. (the
General Partner) an affiliate of Perimeter Center Management Company. The
Partnership will expire December 31, 2047, or sooner, in accordance with the
terms of the Partnership agreement (see Note 9).
The Partnership agreement provides that all profits, losses and cash
distributions be allocated 99% to the limited partners and 1% to the General
Partner. The following is a reconciliation of net income to cash distributions
from operations as defined in the Partnership agreement:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income $ 4,646,936 $ 2,495,224 $ 2,703,715
Adjustments to reconcile net income
to cash distributions declared:
Depreciation and amortization 2,473,779 2,522,384 2,822,728
Loss on disposition of property 62,709 47,068 227,351
Creation of cash reserves (3,143,020) (1,024,272) (1,776,519)
----------- ----------- -----------
Cash distributions declared from
operations $ 4,040,404 $ 4,040,404 $ 3,977,275
=========== =========== ===========
</TABLE>
2) SIGNIFICANT ACCOUNTING POLICIES:
Financial Statements - The financial statements of the Partnership are
prepared on the accrual basis of accounting. The preparation of the financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although
management believes its estimates are reasonable, actual results could differ
from those estimates.
Cash and Cash Equivalents - Investment securities that are highly
liquid and have maturities of three months or less at the date of purchase are
classified as cash equivalents. Cash equivalents include United States Treasury
securities of $3,786,686 and $4,006,266 at December 31, 1995 and 1994,
respectively. Short-term investments are recorded at cost plus accreted
discount, which approximates market value.
Depreciation - Depreciation on buildings, building improvements,
furniture and equipment is provided using the straight-line method based upon
the following estimated useful lives:
Buildings and improvements 5-34 years
Furniture and equipment 2-15 years
3) PROPERTY AND EQUIPMENT:
Property and equipment was recorded at its fair value on the settlement
date (see Note 1). There are no encumbrances on the property and equipment. The
following is an analysis of the Partnership's investment in property and
equipment by major class at December 31, 1995 and 1994:
1995 1994
------------ ------------
Land and improvements $ 5,396,153 $ 5,396,153
Buildings and improvements 41,350,548 40,870,254
Furniture and equipment 8,038,759 7,684,026
------------ ------------
54,785,460 53,950,433
Less-Accumulated depreciation
and amortization (9,013,099) (6,750,120)
------------ ------------
45,772,361 47,200,313
Operating stock 337,148 349,857
------------ ------------
$ 46,109,509 $ 47,550,170
============ ============
4) CAPITAL LEASE OBLIGATIONS:
For the years ended December 31, 1995, 1994 and 1993, amortization
expense and accumulated amortization for equipment under capital leases are as
follows:
1995 1994 1993
--------- -------- --------
Amortization expense $ 47,000 $113,000 $311,000
Accumulated amortization 824,000 777,000 664,000
5) INCOME TAXES:
The Partnership is not directly subject to income taxes; rather, each
partner is subject to income taxes on his distributable share of taxable income.
The Partnership tax returns and the amount of distributable partnership profits
or losses are subject to examination by Federal and state taxing authorities. If
examinations by taxing authorities result in changes to distributable
partnership profits or losses, the tax liabilities of the partners could be
changed accordingly.
The following is a reconciliation of net income for financial reporting
purposes to income reported for Federal income tax purposes for the years ended
December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income for financial reporting purposes $ 4,646,936 $ 2,495,224 $ 2,703,715
Differences for tax purposes in:
Depreciation expense (202,105) (260,422) (212,185)
Disposition of property (26,870) (5,051) (106,633)
Disputed liabilities (Note 7) (1,112,721) (588,474) 1,701,195
Deferred income (192,905) 192,905 --
Bad debt reserves (23,662) 44,279 --
----------- ----------- -----------
Taxable income to partners $ 3,088,673 $ 1,878,461 $ 4,086,092
=========== =========== ===========
For Federal income tax reporting purposes, taxable income to partners is
reported on the accrual basis of accounting and is classified as follows:
1995 1994 1993
----------- ----------- -----------
Ordinary income $ 3,178,082 $ 1,923,061 $ 4,404,918
Long-term capital loss (89,409) (44,600) (318,826)
----------- ----------- -----------
$ 3,088,673 $ 1,878,461 $ 4,086,092
=========== =========== ===========
</TABLE>
At December 31, 1995, the tax bases of the Partnership's assets and
liabilities exceed the amounts recorded for financial reporting purposes by
$11,847,528. This difference results primarily from differences in the treatment
of valuation reserves and the depreciation methods for financial reporting and
tax reporting purposes.
6) TRANSACTIONS WITH RELATED PARTIES:
An affiliate of the General Partner incurs expenses on behalf of the
Partnership for maintenance of the books and records, and for computer,
investor, legal and other services performed for the Partnership (including
certain legal services related to the disputed liabilities discussed in Note 7).
These expenses are reimbursable in accordance with the Partnership agreement and
are less than the amount which the Partnership would have paid to independent
parties for comparable services. The Partnership reimbursed the affiliate
$133,105 in 1995, $77,662 in 1994, and $263,224 in 1993 for such expenses.
7) SETTLEMENT OF DISPUTED LIABILITIES:
In connection with the Texas State court litigation settlement in 1994,
the Partnership agreed to pay CSMI for management services through May 19, 1994
and to reimburse or be reimbursed by CSMI for certain expenses subject to
verification and reconciliation by an outside independent accounting firm. At
that time, the Partnership had accrued disputed items totaling $1.1 million. The
independent accounting firm's report, in summary, concluded that no amount was
owed by the Partnership to CSMI. CSMI disputed these findings and filed a motion
to set aside the accounting firm's report. On June 10, 1995, the District Court
disallowed a major portion of the accounting firm's report and ordered that the
Partnership pay CSMI $772,043, at which time the Partnership reduced its
outstanding liability for disputed items to this amount. After depositing
approximately $850,000 into an escrow account with the Texas State court to
cover the liability to CSMI, including other costs, the Partnership was granted
its motion for a new trial on September 8, 1995. Thereafter, the Partnership
began negotiations with CSMI related to property taxes on the hotels that the
Partnership paid in 1991 which otherwise should have been paid by Woolley and
Sweeney. The 1992 settlement documents between the Partnership and Woolley and
Sweeney provided that, under certain circumstances, Woolley and Sweeney would be
obligated to reimburse the Partnership for the property taxes in 1996. CSMI has
agreed not to require the payment of the $772,043 to CSMI in exchange for the
Partnership's agreement not to seek reimbursement of the property taxes.
Accordingly, the Partnership reduced its liability by $772,043 which, together
with prior reductions, is reflected as other revenue in the accompanying
statement of income. Amounts recoverable from the Texas State court escrow
account related to settlement of this dispute are included in other receivables
in the accompanying balance sheet. This concludes all outstanding items of
dispute with CSMI.
8) CONTINGENCY:
During 1994, Doubletree Partners, the hotels' management company, spent
$1,425,000 for purposes of management assumption, brand conversion, and
renovation of the three hotels owned by the Partnership in connection with the
management agreements between Doubletree Partners and the Partnership. The
management agreements provide that if the Partnership sells the hotels during
years 1 through 5 of the agreements and Doubletree Partners is not retained by
the new owners as manager of the hotels, all of the $1,425,000 is to be
reimbursed to Doubletree Partners as a sale termination fee, and if the sale
occurs in years 6 through 10, fifty percent of the amount is to be reimbursed.
In connection with the proposed sale of the hotels referred to below, the
purchaser has agreed to assume this contingent liability.
9) EVENT SUBSEQUENT TO THE DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Unaudited) -- INVESTOR APPROVAL OF SALE OF HOTELS:
On March 15, 1996, the Partnership's investors approved the sale, to an
unaffiliated third party, of the three hotels owned by the Partnership. The
Partnership had entered into an agreement on October 27, 1995 to sell, subject
to the consent of the Partnership's investors and the satisfactory completion of
due diligence by the potential purchaser, fee simple title to the three hotels,
for a cash payment of $73,250,000. Upon the sale of the hotels, which represent
substantially all of the Partnership's assets, the Partnership will begin the
process of liquidation and distribution of assets to the investors in accordance
with the Partnership agreement. The investors 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. The proposed sale and subsequent
liquidation of the Partnership are expected to be completed in 1996.
Set forth below is condensed historical and unaudited pro forma
financial information of the Partnership as of December 31, 1995. The unaudited
pro forma balance sheet information has been prepared assuming the sale of the
hotels and liquidation of the Partnership occurred on December 31, 1995 and
includes estimates of transaction costs and other costs to be incurred in
connection with the liquidation of the Partnership.
The preparation of the unaudited pro forma information requires
management to make estimates and assumptions that affect the reported pro forma
amounts of assets and liabilities at December 31, 1995. Although management
believes its estimates are reasonable, actual results could differ from those
estimates.
<TABLE>
<CAPTION>
NET PRO FORMA EFFECT ON STATEMENT OF INCOME:
<S> <C>
Sale Proceeds $73,250,000
-----------
Net Book Value of Assets to be Sold and Liabilities to be Assumed:
Property and equipment 45,772,361
Operating stock 337,148
Capital lease obligations assumed by the buyer (111,689)
-----------
45,997,820
-----------
Gross gain from the proposed sale of the hotels 27,252,180
Less: Transaction costs of the proposed sale of the hotels,
costs to liquidate the Partnership and related fees (2,215,120)(5)
-----------
Net pro forma effect on Statement of Income $25,037,060 (1)
===========
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET: Historical Pro Forma
December 31,1995 Adjustments December 31, 1995
---------------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 6,255,398 $ (861,839)(2) $5,393,559
Accounts receivable 718,454 - (3) 718,454
Receivable from General Partner - 74,584 (3) 74,584
Other assets 1,274,132 - (3) 1,274,132
Net property and equipment 45,772,361 (45,772,361)(4) -
Operating stock 337,148 (337,148)(4) -
----------- ------------ ----------
Total Assets $54,357,493 $(46,896,764) $7,460,729
=========== ============ ==========
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 1,724,774 500,000 (5) 2,224,774
Property taxes payable 508,630 - 508,630
Capital lease obligations 111,689 (111,689)(5) -
----------- ------------ ----------
Total Liabilities 3,357,298 2,103,431 5,460,729
----------- ------------ ----------
Partners' Capital
General Partner (324,955) 324,955 (1) -
Limited Partners 51,325,150 (49,325,150)(1) 2,000,000 (6)
----------- ------------ ----------
Total Partners' Capital 51,000,195 (49,000,195) 2,000,000
----------- ------------ ----------
Total Liabilities and Partners' Capital $54,357,493 $(46,896,764) $7,460,729
=========== ============ ==========
</TABLE>
- -----------------------------
(1) The pro forma effects of the proposed sale of the hotels and payment of the
initial estimated liquidating distribution 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 $250,371 $ 24,786,689 $ 25,037,060
Payment of the initial estimated liquidating
distribution - (74,111,839) (74,111,839)
General Partner contribution of deficit in
capital account 74,584 - 74,584
-------- ------------ ------------
Pro forma adjustments to Partners' Capital $324,955 $(49,325,150) $(49,000,195)
======== ============ ============
</TABLE>
(2) The pro forma adjustment to cash reflects the cash proceeds of $73,250,000
from the sale of the hotels net of an initial payment of approximately
$74,112,000 made directly to the Limited Partners. This initial payment is
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)
$2,000,000 to be held and later distributed as described in footnote (6) below.
(3) Accounts receivable, receivable from General Partner, and other assets will
not be transferred to the buyer in connection with the sale of the hotels. The
receivable from the General Partner represents the General Partner's negative
capital account at December 31, 1995 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 of the hotels' assets to be sold.
(5) The pro forma adjustments to liabilities reflect the accrual of costs
relating to the proposed 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 transaction and liquidation costs of the sale
of the hotels and liquidation of the Partnership $ 500,000
Financial advisory fee 732,500
General Partner fee 982,620
----------
2,215,120
Capital lease obligations assumed by the buyer (111,689)
----------
Pro forma adjustment to liabilities $2,103,431
==========
(6) The pro forma balance in the Partners' Capital Accounts represents funds to
be deposited in a $2,000,000 trust fund established by the Partnership
immediately after closing of the proposed sale of the hotels. The Partnership
and the buyer have agreed that 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 one-year period commencing upon the date the buyer
acquires the hotels. If, at the end of such one-year 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 Limited
Partners. If, however, there exist disputed claims at the end of such one-year
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 Limited Partners, and the
buyer will have no further recourse as to such disputed claims.
<PAGE>
[ARTHUR ANDERSEN LETTERHEAD]
Report of Independent Public Accountants
To FFCA Investor Services Corporation 85-A:
We have audited the accompanying balance sheet of FFCA INVESTOR
SERVICES CORPORATION 85-A (a Delaware corporation) as of December 31, 1995. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of FFCA Investor Services
Corporation 85-A as of December 31, 1995, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Phoenix, Arizona,
February 27, 1996.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 85-A
---------------------------------------
BALANCE SHEET - DECEMBER 31, 1995
---------------------------------
ASSETS
Cash
$100
Investment in Guaranteed Hotel Investors 1985, L.P.,
at cost 100
---
Total Assets $200
====
LIABILITY
Payable to Parent (Note 2) $100
----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
---
Liability and Stockholder's Equity $200
====
The accompanying notes are an integral part of this balance sheet.
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 85-A
---------------------------------------
NOTES TO BALANCE SHEET
----------------------
DECEMBER 3l, l995
-----------------
(l) Operations:
FFCA Investor Services Corporation 85-A (a Delaware corporation) (85-A)
was organized on June 28, l985 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.
(2) Related Parties:
Perimeter Center Management Company (a Delaware corporation) (PCMC) is
the sole stockholder of 85-A. The general partner of GHI-85 is an affiliate of
PCMC.
<PAGE>
GUARANTEED HOTEL INVESTORS 1985, L.P.
and
FFCA INVESTOR SERVICES CORPORATION 85-A
- --------------------------------------------------------------------------------
Exhibit Index
- --------------------------------------------------------------------------------
Exhibit
-------
The following is a complete list of exhibits filed as part of
this Form 10-K. For electronic filing purposes only, this
report contains Exhibit 27, Financial Data Schedule.
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 for the year ended December 31,
1986, are incorporated herein by this reference.
1986 Form 10-K
Exhibit No.
-----------
The Second Amended and Restated 3-A
Certificate and Agreement of Limited
Partnership which governs the Partnership,
as filed with the Secretary of State of
Delaware on May 9, 1986.
The Certificate of Incorporation which 3-B
governs FFCA Investor Services Corporation
85-A, as filed with the Secretary of State
of Delaware on June 28, 1985.
Bylaws of FFCA Investor Services 3-C
Corporation 85-A.
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of October 27,
1995, by and between GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited
partnership ("Seller"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, and SLT REALTY LIMITED PARTNERSHIP, a Delaware
limited partnership ("Buyer"), whose address is Three Pickwick Plaza, Suite 250,
Greenwich, CT 06830.
PRELIMINARY STATEMENT
Seller is the owner of the Hotel Properties. Buyer desires to purchase
the Hotel Properties from Seller, and Seller desires to sell the Hotel
Properties to Buyer, on the terms and conditions set forth in this Agreement.
Unless otherwise expressly provided herein, all defined terms used in this
Agreement shall have the meanings set forth in Section 1.
AGREEMENT
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. Definitions. The following terms shall have meanings set forth in
this Section 1 for all purposes of this Agreement:
"Additional Earnest Money" means the sum of $500,000.00 which is to be
deposited in immediately available funds by Buyer with Title Company pursuant to
Section 3.
"Affiliate" means any entity or person, as applicable, controlling,
controlled by or under common control with any other person or entity.
"Assignment Agreements" means, collectively, the assignment agreements
to be executed and delivered by Buyer and Seller for each of the Hotel
Properties. The Assignment Agreements will provide for the assignment to and
assumption by Buyer of Seller's rights and obligations accruing under the
Documents from and after the Closing Date, and all other rights of Seller in the
Hotel Properties which will not otherwise be transferred to Buyer by the Special
Warranty Deeds or Bills of Sale. The Assignment Agreements shall be in a form
reasonably acceptable to Seller and Buyer, but in any event subject to the
limitation of liability set forth in Section 16.
"Bills of Sale" means, collectively, the special warranty bills of sale
to be executed and delivered by Seller for the Hotel Properties providing for
the conveyance to Buyer of all of the Fort Lauderdale Personal Property, Irving
Personal Property and Tampa Personal Property AS IS and without representation
or warranty other than Seller's special warranty as to title to such personal
property (which special warranty shall be as to matters created by Seller, but
none other), which Bills of Sale shall be in a form reasonably acceptable to
Seller and Buyer. The Bills of Sale shall be subject to the limitation of
liability set forth in Section 16.
"Closing" shall have the meaning set forth in Section 4.
"Closing Date" means the date specified as the closing date in Section
4.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Confidential Information" means this Agreement and the terms and
conditions of this Agreement, the information described in that certain
Confidentiality Agreement previously executed between Seller and Buyer with
respect to the Hotel Properties, the Purchase Price or other material terms of
this transaction, and all information and reports produced by Buyer in
connection with its examinations and investigations of the Hotel Properties.
"Documents" means, collectively, the Fort Lauderdale Documents, the
Irving Documents and the Tampa Documents.
"Doubletree" means Doubletree Partners (fka Guest Quarters Hotels
Partnership), a Delaware partnership.
"Due Diligence Period" means the period commencing with the date of
this Agreement and ending at 5 P.M. (Phoenix time) on the thirtieth business day
following the date of this Agreement.
"Earnest Money" means the Initial Earnest Money and the Additional
Earnest Money actually received by Title Company pursuant to Section 3. The
definition of Earnest Money shall include all interest accruing on the Initial
Earnest Money and the Additional Earnest Money. Buyer shall be solely
responsible for instructing Title Company to invest the Earnest Money in an
interest bearing account and for taking all actions and paying all charges
resulting from such investment.
"Fort Lauderdale Documents" means those contracts, documents and
instruments listed and/or described on the list to be delivered by Seller to
Buyer within five business days after the date of this Agreement.
"Fort Lauderdale Hotel Property" means, collectively, the Fort
Lauderdale Real Property, the Fort Lauderdale Personal Property and the Fort
Lauderdale Intangible Property.
"Fort Lauderdale Intangible Property" means all of Seller's right,
title and interest, to the extent assignable, in all trade names, trademarks and
all other intangible property used in connection with the operation or use of
the Fort Lauderdale Hotel Property, including, without limitation, the list of
intangible property to be reasonably agreed to by Seller and Buyer during the
Due Diligence Period; provided, however, that the foregoing shall not include
the trade names or trademarks of the franchisor/manager of the Hotel Properties.
"Fort Lauderdale Personal Property" means all of Seller's right, title
and interest in all of the:
(i) equipment, trade fixtures, inventory, supplies,
furnishings and other items of tangible personal property situated on
or about or used in connection with the Fort Lauderdale Hotel Property,
including, without limitation, the list of items of tangible personal
property to be reasonably agreed to by Seller and Buyer during the Due
Diligence Period;
(ii) motor vehicles used in connection with the Fort
Lauderdale Hotel Property, including, without limitation, the list of
vehicles to be reasonably agreed to by Seller and Buyer during the Due
Diligence Period;
(iii) to the extent assignable, warranties, guaranties,
indemnities, claims and governmental licenses and permits pertaining to
the current ownership, operation or use of the Fort Lauderdale Hotel
Property, including, without limitation, the list of licenses,
guarantees, warranties and permits to be reasonably agreed to by Seller
and Buyer during the Due Diligence Period; and
(iv) deposits in the form of cash or receivables, including,
without limitation, credit card receivables, held by Seller as of the
Closing Date with respect to the rental of guest rooms and meeting
rooms and food service for periods of time from and after the Closing
Date.
"Fort Lauderdale Real Property" means the parcel or parcels of real
estate located in Fort Lauderdale, Broward County, Florida, legally described in
Exhibit A-1 attached hereto, all rights, privileges and appurtenances associated
therewith, and all buildings, fixtures and other improvements now located
thereon.
"Hotel Properties" means, collectively, the Fort Lauderdale Hotel
Property, the Irving Hotel Property and the Tampa Hotel Property.
"Initial Earnest Money" means the sum of $200,000.00 which is to be
deposited in immediately available funds by Buyer with Title Company pursuant to
Section 3.
"Irving Documents" means those contracts, documents and instruments
listed and/or described on the list to be delivered by Seller to Buyer within
five business days after the date of this Agreement.
"Irving Hotel Property" means, collectively, the Irving Real Property,
the Irving Personal Property and the Irving Intangible Property.
"Irving Intangible Property" means all of Seller's right, title and
interest, to the extent assignable, in all trade names, trademarks and all other
intangible property used in connection with the operation or use of the Irving
Hotel Property, including, without limitation, the list of intangible property
to be reasonably agreed to by Seller and Buyer during the Due Diligence Period;
provided, however, that the foregoing shall not include the trade names or
trademarks of the franchisor/manager of the Hotel Properties.
"Irving Personal Property" means all of Seller's right, title and
interest in all of the:
(i) equipment, trade fixtures, inventory, supplies,
furnishings and other items of tangible personal property situated on
or about or used in connection with the Irving Hotel Property,
including, without limitation, the list of items of tangible personal
property to be reasonably agreed to by Seller and Buyer during the Due
Diligence Period;
(ii) motor vehicles used in connection with the Irving Hotel
Property, including, without limitation, the list of vehicles to be
reasonably agreed to by Seller and Buyer during the Due Diligence
Period;
(iii) to the extent assignable, warranties, guaranties,
indemnities, claims and governmental licenses and permits pertaining to
the current ownership, operation or use of the Irving Hotel Property,
including, without limitation, the list of licenses, guarantees,
warranties and permits to be reasonably agreed to by Seller and Buyer
during the Due Diligence Period; and
(iv) deposits in the form of cash or receivables, including,
without limitation, credit card receivables, held by Seller as of the
Closing Date with respect to the rental of guest rooms and meeting
rooms and food service for periods of time from and after the Closing
Date.
"Irving Real Property" means the parcel or parcels of real estate
located in Irving, Dallas County, Texas, legally described in Exhibit A-2
attached hereto, all rights, privileges and appurtenances associated therewith,
and all buildings, fixtures and other improvements now located thereon.
"Management Agreements" means those certain Management Agreements for
each of the Hotel Properties between Seller and Doubletree dated as of February
16, 1994 with respect to the Irving Hotel Property and the Fort Lauderdale Hotel
Property and November 3, 1993 with respect to the Tampa Hotel Property.
"Non-Foreign Seller Certificate" means the certificate to be delivered
by Seller prior to or at the Closing pursuant to which Seller shall certify to
Buyer that Seller is neither a nonresident alien, a foreign partnership, a
foreign trust or a foreign estate, as those terms are used in the Internal
Revenue Code.
"Permitted Exceptions" has the meaning set forth in Section 9.
"Purchase Price" means the amount specified in Section 3.
"Sale Termination Fee" has the meaning set forth in each of the
Management Agreements.
"Special Warranty Deeds" means the special or limited warranty deeds
(limited to matters created by Seller, but none other) to be executed and
delivered by Seller at the Closing for each of the Hotel Properties, which
Special Warranty Deeds shall be subject to the Permitted Exceptions and
otherwise in a form to be reasonably agreed to by Seller, Buyer and Title
Company. The Special Warranty Deeds shall be subject to the limitation of
liability set forth in Section 16.
"Tampa Documents" means those contracts, documents and instruments
listed and/or described on the list to be delivered by Seller to Buyer within
five business days after the date of this Agreement.
"Tampa Hotel Property" means, collectively, the Tampa Real Property,
the Tampa Personal Property and the Tampa Intangible Property.
"Tampa Intangible Property" means all of Seller's right, title and
interest, to the extent assignable, in all trade names, trademarks and all other
intangible property used in connection with the operation or use of the Tampa
Hotel Property, including, without limitation, the list of intangible property
to be reasonably agreed to by Seller and Buyer during the Due Diligence Period;
provided, however, that the foregoing shall not include the trade names or
trademarks of the franchisor/manager of the Hotel Properties.
"Tampa Personal Property" means all of Seller's right, title and
interest in all of the:
(i) equipment, trade fixtures, inventory, supplies,
furnishings and other items of tangible personal property situated on
or about the Tampa Hotel Property, including, without limitation, the
list of items of tangible personal property to be reasonably agreed to
by Seller and Buyer during the Due Diligence Period;
(ii) motor vehicles used in connection with the Tampa Hotel
Property, including, without limitation, the list of vehicles to be
reasonably agreed to by Seller and Buyer during the Due Diligence
Period;
(iii) to the extent assignable, warranties, guaranties,
indemnities, claims and governmental licenses and permits pertaining to
the current ownership, operation or use of the Tampa Hotel Property,
including, without limitation, the list of licenses, guarantees,
warranties and permits to be reasonably agreed to by Seller and Buyer
during the Due Diligence Period; and
(iv) deposits in the form of cash or receivables, including,
without limitation, credit card receivables, held by Seller as of the
Closing Date with respect to the rental of guest rooms and meeting
rooms and food service for periods of time from and after the Closing
Date.
"Tampa Real Property" means the parcel or parcels of real estate
located in Tampa, Hillsborough County, Florida, legally described in Exhibit A-3
attached hereto, all rights, privileges and appurtenances associated therewith,
and all buildings, fixtures and other improvements now located thereon.
"Title Company" means Lawyers Title Insurance Corporation, Phoenix
National Division, 40 E. Mitchell Drive, Phoenix, Arizona, 85012, Attention: M.
Duane Smith.
"Trust and Escrow Agreement" means that certain Trust and Escrow
Agreement to be entered into among Seller, Buyer and Trustee with respect to the
disposition of the Trust Funds.
"Trust Funds" means the sum of $2,000,000 from the proceeds of the
Purchase Price to be deposited by Seller into an interest bearing trust account
with Trustee pursuant to the Trust and Escrow Agreement. The term "Trust Funds"
shall include all interest accruing thereon.
"Trustee" means Norwest Bank Arizona, N.A., 3300 North Central Avenue,
Phoenix, Arizona 85012.
2. Transaction. On the terms and subject to the conditions set forth
herein, Seller shall sell and Buyer shall purchase the Hotel Properties and
Seller shall assign and Buyer shall assume the liabilities and obligations of
Seller accruing under the Documents from and after the Closing Date. The sale
and purchase of the Hotel Properties and the assignment and assumption of the
liabilities and obligations of Seller accruing under the Documents from and
after the Closing Date are intended to be an integrated and simultaneous
transaction, and Seller's obligations under this Agreement are contingent upon
all of the Hotel Properties, and all of the obligations under the Documents
accruing from and after the Closing Date, being purchased and assumed,
respectively, by Buyer and Seller being released from further liabilities and
obligations under the Documents. The transaction described in this Agreement
involves only the sale of the Hotel Properties and the assumption of liabilities
and obligations of Seller accruing under the Documents from and after the
Closing Date and does not include any assets of Seller not expressly included
within the definitions of Hotel Properties and Documents. Without limiting the
foregoing, Seller shall not transfer to Buyer any of Seller's cash, except that
Buyer shall receive a credit at Closing for the deposits included within the
definitions of Hotel Properties. Seller's liability to Buyer in connection with
the sale and conveyance of the Hotel Properties shall be limited as set forth in
Section 16.
3. Purchase Price. The purchase price for the Hotels (the "Purchase
Price") shall be in the aggregate amount of $73,250,000.00, which amount shall
be allocated among the Hotel Properties (including an allocation with respect to
each of the Hotel Properties between the real property and the personal
property) in good faith by Seller and Buyer during the Due Diligence Period. If
Seller and Buyer are unable to agree in good faith during the Due Diligence
Period as to such allocations, such failure shall not be a basis for terminating
this Agreement, but Seller and Buyer shall submit the matter 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 a panel of
two arbitrators not having an interest in the transaction contemplated by this
Agreement, one selected by Seller and one selected by Buyer. The determination
of such arbitrators shall be final and conclusive upon the parties, and a
judgment based upon that determination may be entered in the appropriate court.
If the two chosen arbitrators are unable to reach a decision as to the
allocations, they shall select a third arbitrator, who shall review the matter
and make a decision. The determination of such arbitrator shall be final and
conclusive upon the parties, and a judgment based upon that determination may be
entered in the appropriate court. The parties will bear the expenses of the
arbitration equally.
The Purchase Price shall be net to Seller except as otherwise provided
herein, and shall be paid as follows:
(i) on or prior to the date of this Agreement, Buyer shall
deliver to Title Company the Initial Earnest Money;
(ii) if this Agreement is not terminated by Buyer prior to the
expiration of the Due Diligence Period, within three business days
after the expiration of the Due Diligence Period Buyer shall deliver to
Title Company the Additional Earnest Money. If the transaction
described in this Agreement is consummated, the Earnest Money shall be
paid to Seller at the Closing; otherwise, the Earnest Money shall be
paid to Seller or Buyer as contemplated by this Agreement; and
(iii) the remaining balance of the Purchase Price shall be
paid by Buyer to Seller at the Closing in immediately available funds,
subject to any prorations and adjustments required by this Agreement.
4. Closing; Escrow Agent. (a) The purchase and sale of the Hotel
Properties shall be closed (the "Closing") within 15 days after the satisfaction
or waiver of all of the conditions and requirements set forth in this Agreement,
including, without limitation, the Proxy Consent (as defined in Section 10(b)
below), but in no event later than April 30, 1996, or such later date mutually
agreed to by the parties (the "Closing Date"). The Closing shall occur at the
offices of Kutak Rock, 3300 North Central Avenue, Phoenix, Arizona 85012. The
Closing documents shall be dated as of the Closing Date.
(b) On or prior to the Closing Date, the parties hereto shall deposit
with Title Company all documents and moneys necessary to comply with their
obligations under this Agreement. Title Company shall not cause the transaction
to close unless and until it has received written instructions from Buyer and
Seller to do so. Seller and Buyer hereby engage Title Company to act as escrow
agent in connection with this transaction. Seller and Buyer will deliver to
Title Company all documents, pay to Title Company all sums and do or cause to be
done all other things necessary or required by this Agreement, in the reasonable
judgment of Title Company, to enable Title Company to comply herewith and to
enable any title insurance policy provided for herein to be issued. Title
Company is authorized to pay, from any funds held by it for Buyer's or Seller's
respective credit, all amounts necessary to procure the delivery of such
documents and to pay, on behalf of Buyer and Seller, all charges and obligations
payable by them, respectively. Seller and Buyer will pay all charges payable by
them to Title Company. Title Company is authorized, in the event any conflicting
demand is made upon it concerning these instructions or the escrow, at its
election, to hold any documents and/or funds deposited hereunder until an action
shall be brought in a court of competent jurisdiction to determine the rights of
Seller and Buyer or to interplead such documents and/or funds in an action
brought in any such court. Deposit by Title Company of such documents and funds,
after deducting therefrom its charges and its expenses and attorneys' fees
incurred in connection with any such court action, shall relieve Title Company
of all further liability and responsibility for such documents and funds. Title
Company's receipt of this Agreement and opening of an escrow pursuant to this
Agreement shall be deemed to constitute conclusive evidence of Title Company's
agreement to be bound by the terms and conditions of this Agreement pertaining
to Title Company. Disbursement of any funds shall be made by check, certified
check or wire transfer, as directed by Buyer and Seller. Title Company shall be
under no obligation to disburse any funds represented by check or draft, and no
check or draft shall be payment to Title Company in compliance with any of the
requirements hereof, until it is advised by the bank in which such check or
draft is deposited that such check or draft has been honored. Title Company is
authorized to act upon any statement furnished by the holder or payee, or a
collection agent for the holder or payee, of any lien on or charge or assessment
in connection with the Premises, concerning the amount of such charge or
assessment or the amount secured by such lien without liability or
responsibility for the accuracy of such statement. The engagement of Title
Company as escrow agent shall not affect any rights of subrogation under the
terms of any title insurance policy issued pursuant to the provisions thereof.
(c) At the Closing, Seller shall deliver to Title Company or Buyer, as
applicable, or cause Title Company to issue, as applicable, the following:
(1) a Special Warranty Deed for each of the Hotel Properties;
(2) a Bill of Sale for each of the Hotel Properties;
(3) an Assignment Agreement for each of the Hotel Properties;
(4) Title Company's unconditional commitment (which may take
the form of "marked-up commitments" to issue an Owner's Policy of Title
Insurance for each of the Hotel Properties (collectively, the "Title
Policies")) in the standard state form, dated as of the Closing Date,
insuring Buyer's fee simple title to the Fort Lauderdale Real Property,
Irving Real Property and Tampa Real Property, respectively, as good and
indefeasible, deleting all exceptions and requirements, except the
Permitted Exceptions, in the full amount of the Purchase Price as
allocated pursuant to Schedule I among the Fort Lauderdale Hotel
Property, the Irving Hotel Property and the Tampa Hotel Property;
(5) possession of the Hotel Properties, subject only to the
rights of transient rental guests of the Hotel Properties and the third
parties to the Documents, and the Permitted Exceptions;
(6) the Non-Foreign Seller Certificate as required by Section
1445(b)(2), Internal Revenue Code of 1986, as amended;
(7) evidence of its capacity and authority for the closing of
this transaction;
(8) all other documents reasonably required by Buyer or Title
Company to close this transaction;
(9) estoppel letters from tenants of the Hotel Properties
pursuant to the Documents, if any, which letters shall be in form and
substance reasonably acceptable to Buyer and Seller; provided, however,
Seller shall only be obligated to deliver such letters to the extent
the applicable Documents obligate the tenants thereunder to deliver
such letters;
(10) if Buyer elects as contemplated by Section 9 to assume
the Management Agreements, estoppel letters from Doubletree with
respect to the Management Agreements in form and substance reasonably
acceptable to Buyer and Seller; and
(11) letters to tenants under the Documents, as applicable,
and other applicable entities under the Documents advising them of the
sale of the Hotel Properties and the new address to remit payments due
under such Documents, if applicable.
(d) At the Closing, Buyer shall deliver to Title Company the following:
(1) the Purchase Price in immediately available funds (reduced
by the amount of the Earnest Money), adjusted for prorations and
credits as provided for in this Agreement;
(2) an Assignment Agreement for each of the Hotel Properties;
(3) evidence of its capacity and authority for the closing of
the transaction contemplated herein;
(4) evidence satisfactory to Seller that the third party or
parties to each Document acknowledge(s) that Buyer, from and after the
Closing Date, is solely responsible for the payment and performance of
the obligations which were previously those of Seller under the
Documents, and that Seller is released from further liability or
obligation under such Documents;
(5) either the Sale Termination Fee for each of the Hotel
Properties, a receipt from Doubletree evidencing the payment of the
Sale Termination Fee for each of the Hotel Properties, or an agreement
in form and substance satisfactory to Seller executed by Buyer and
Doubletree pursuant to which Buyer assumes all of Seller's obligations
accruing under the Management Agreements from and after the Closing
Date and Doubletree acknowledges such assumption and releases Seller
from all liabilities and obligations under the Management Agreements
(the "Doubletree Agreement"). Seller shall execute the Doubletree
Agreement at the Closing to evidence its assignment of the Management
Agreements to Buyer; and
(6) all other documents reasonably required by Seller or Title
Company to close this transaction.
(e) Upon receipt of the foregoing items, Title Company shall pay (i)
the Purchase Price, including the Earnest Money, to Seller, (ii) the Sale
Termination Fees, if any, deposited with it pursuant to this Section to
Doubletree, and (iii) all other sums deposited with Title Company by Buyer to
those third-parties or Title Company entitled to payment as set forth in the
settlement statements prepared by Title Company and signed by Seller and Buyer,
respectively, in connection with the Closing, and record the Special Warranty
Deeds in the applicable real property records.
5. Closing Costs; Prorations. (a) Except as otherwise provided in this
Agreement, Buyer shall be responsible for the payment of all costs and expenses
of the transaction described in this Agreement, including, without limitation:
(i) the cost of all analyses of the Hotel Properties
conducted by Buyer, including, without limitation, all environmental
assessments (including the Reports (as defined in Section 9)),
engineering assessments and mechanical assessments;
(ii) the fees and expenses of Buyer's attorneys;
(iii) the premiums for the Title Policies, including, without
limitation, all title search charges, the premium for all endorsements
to the Title Policies, all lender's policies, the cost of the
modification of the survey exception, if applicable, and UCC search
charges;
(iv) all applicable documentary stamps taxes, filing, mortgage
and/or recording taxes, except that Seller shall pay for the cost of
removing from the real property records all liens for which it is
required pursuant to this Agreement to remove;
(v) the cost of the Surveys (as defined below);
(vi) the fees and charges imposed by third-parties in
connection with obtaining all required consents and approvals to the
assignment to and assumption by Buyer of the Documents; and
(vii) the fees and charges of Title Company in its capacity as
escrow agent;
provided, however, if Buyer terminates this Agreement prior to the end
of the Due Diligence Period as contemplated by Section 9 or pursuant to
Section 11(b), Seller shall be responsible for the payment of the costs
and expenses described in sub-items (iii)(with respect to the Title
Policies, Seller shall be responsible for payment of all cancellation
and termination fees, if any), (v) and (vii) and the costs and expenses
of the Reports; otherwise, the foregoing costs and expenses shall be
paid by Buyer whether or not the transaction described in this
Agreement closes. Seller shall be solely responsible for the payment of
its attorneys's fees and expenses and all costs and expenses incurred
in connection with soliciting the Proxy Consent, whether or not the
transaction described in the Agreement closes.
(b) All income, rent (to the extent paid), costs, expenses, Taxes (as
defined in sub-item (i) below) and obligations relating to the operation of the
business conducted at the Hotel Properties and/or the Hotel Properties
themselves shall be prorated between Seller and Buyer as of midnight of the day
preceding the Closing Date. Seller shall receive all income from the Hotel
Properties accruing prior to the Closing Date and Buyer shall receive all income
accruing from and after the Closing Date. Seller shall be responsible for the
payment of all costs, expenses and obligations from the Hotel Properties
accruing prior to the Closing Date and Buyer shall assume such costs, expenses
and obligations accruing from and after the Closing Date. The Assignment
Agreements shall contain the agreement of (i) Seller to indemnify and hold
harmless Buyer with respect to such costs, expenses and obligations accruing
prior to the Closing Date, subject, however, to the limitation of Seller's
liability set forth in Section 16; and (ii) Buyer to indemnify and hold harmless
Seller with respect to such costs, expenses and obligations accruing from and
after the Closing Date. Seller may retain, and Buyer shall promptly upon receipt
pay over to Seller, any credits or refunds of, or contractual rights to receive
reimbursements for, any real estate taxes, assessments and water, sewer and
utility charges that were paid by Seller prior to the Closing and are
attributable to the period of time prior to the Closing Date. Without limiting
the generality of the foregoing, the following items shall be prorated, adjusted
or paid as of the Closing Date in the manner indicated:
(i) any and all real estate, personal property, ad valorem and
related taxes, levies and charges and those assessments which are of
record ("Taxes") shall be prorated by and between Seller and Buyer at
and as of the Closing. The parties shall reprorate the Taxes, if
necessary, upon issuance of the final tax bill (if same are not
available at the Closing);
(ii) all charges for utilities used at the Hotel Properties
shall be paid by Seller up to and including the day immediately prior
to the Closing Date. In such event, if necessary and obtainable, final
meter readings shall be made on the day immediately prior to the
Closing Date. Seller shall be entitled to receive all security deposits
it has made with utility companies and third-party vendors (other than
as contemplated with respect to the Documents in subitem (iv));
(iii) any and all installments of general or special
assessments due and payable on or prior to the Closing Date , whether
or not such assessments are of record as of the Closing Date, shall be
paid by Seller prior to or at Closing. Buyer shall be responsible for
all other general or special assessments imposed against the Hotel
Properties; and
(iv) security deposits (and accrued interest to the extent
such security deposits are required by the applicable Documents to be
held in interest bearing accounts) held by Seller under the applicable
Documents, if any, shall be credited against the Purchase Price, and
Buyer shall reimburse Seller for all security deposits made by Seller
under the Documents which will continue to be held by the applicable
third-parties as security deposits subsequent to the Closing.
A final closing adjustment shall be made by Buyer and Seller within
forty-five (45)) days after the Closing, and to the extent that any additional
payment or repayment is indicated on the final closing adjustment, the payment
or repayment shall be made within five (5) days after the final adjustment is
made. The terms of this Section shall survive Closing.
6. Representations and Warranties of Buyer. The representations and
warranties of Buyer contained in this Section are being made to induce Seller to
enter into this Agreement and consummate the transaction contemplated herein,
and Seller has relied, and will continue to rely, upon such representations and
warranties. Buyer represents and warrants to Seller as follows:
A. Organization of Buyer. Buyer has been duly formed, is
validly existing and has taken all necessary action to authorize the
execution, delivery and performance by Buyer of this Agreement and the
other documents, instrument and agreements provided for herein.
B. Authority of Buyer. The person who has executed this
Agreement on behalf of Buyer is duly authorized so to do.
C. Enforceability. Upon execution by Buyer, this Agreement and
the other documents, instruments and agreements to be executed in
connection with this Agreement shall constitute the legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms.
D. Consents. Buyer has obtained all necessary consents and
approvals required to execute this Agreement and to undertake all of
the obligations of Buyer arising prior to the end of the Due Diligence
Period.
E. Availability of Funds. Buyer has sufficient funds to
consummate the transaction described in this Agreement.
All representations and warranties of Buyer made in this Agreement
shall be and will remain true and complete as of the Closing Date as if made and
restated in full as of such date, and shall survive Closing. As of Closing,
Buyer represents and warrants that it has obtained all necessary consents and
approvals required to perform Buyer's obligations hereunder.
7. Representations and Warranties of Seller. The representations and
warranties of Seller contained in this Section are being made to induce Buyer to
enter into this Agreement and consummate the transaction contemplated herein,
and Buyer has relied, and will continue to rely, upon such representations and
warranties. Seller represents and warrants to Buyer as follows:
A. Organization of Seller. Seller is duly formed, validly
existing and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the other documents,
instruments and agreements provided for herein.
B. Authority of Seller. Subject to receipt of the Proxy
Consent, the persons who have executed this Agreement on behalf of
Seller are duly authorized so to do.
C. Enforceability of Documents. Subject to receipt of the
Proxy Consent, upon execution by Seller, this Agreement and the other
documents, instruments and agreements to be executed in connection with
this Agreement, shall constitute the legal, valid and binding
obligations of Seller enforceable against Seller in accordance with
their respective terms.
D. Consents. Subject to receipt of the Proxy Consent, Seller
has obtained all consents and approvals required to execute this
Agreement and perform Seller's obligations hereunder.
E. Title to Hotel Properties. Seller owns the Hotel Properties
free and clear of all monetary liens created by Seller, but none other.
F. Notices. Seller has not received written notice of (i) any
pending improvement liens to be made by any governmental authority with
respect to the Hotel Properties; (ii) except as disclosed by Seller to
Buyer in writing, any violations of building codes and/or zoning
ordinances or other governmental regulations with respect to the Hotel
Properties and their current use; (iii) any pending or threatened
lawsuits, administrative actions, claims or investigations with respect
to the Hotel Properties and their current use, except those which will
be satisfied or bonded at or prior to Closing; or (iv) any pending or
threatened condemnation proceedings with respect to the Hotel
Properties. Except as disclosed in writing by Seller to Buyer within
five business days after the date of this Agreement, Seller has not
received any written notices from any governmental or
quasi-governmental authorities or agencies with respect to a violation
of or failure to comply with any applicable federal, state or local
law, rule, regulation, court or administrative order or decree of any
governmental or quasi-governmental authority, instrumentality or agency
or any private agreement pertaining to environmental matters or
hazardous substances/materials or environmental issues affecting the
Hotel Properties. In the event Seller receives any of the foregoing
described notices prior to the Closing, Seller shall, upon receipt,
promptly deliver such notice to Buyer.
G. No Other Contracts, Options or Preferential Rights. Seller
has not entered into any other contracts for the sale of the Hotel
Properties and no other person or entity has any options or other
preferential rights to purchase the Hotel Properties.
H. Employees. All employees currently employed under the
Management Agreements are employed by Doubletree under the terms
thereof. In connection with the operation of the Hotel Properties,
Seller, to the extent applicable to Seller, has complied in all
material respects with all applicable laws, rules and regulations
relating to the employment of labor, including those relating to wages,
hours, collective bargaining and the payment and withholding of taxes
and other sums as required by appropriate governmental authorities.
I. Document Obligations. All reasonably anticipated
obligations of Seller arising and/or accruing under the Documents have
been paid in the ordinary course of business, and all accrued but
unpaid obligations of Seller under the Documents as of the Closing Date
will be prorated between Seller and Buyer as contemplated by Section 5.
Seller has not received any written notice that the terms of any of the
liquor licenses issued with respect to the Hotel Properties , or any of
the laws, rules and regulations pertaining thereto, have been violated.
Seller has not entered into any employment agreements, service
contracts, maintenance agreements, management agreements, leases or
other written agreements in effect with respect to the Hotel Properties
that cannot be assigned to Buyer or terminated on thirty days prior
written notice, except for the Documents and the Management Agreements.
J. Management Agreements. The Management Agreements are in
full force and effect. FFCA has not received any written notices of
default from Doubletree with respect to the Management Agreements, nor
has FFCA delivered any written notices of default to Doubletree with
respect to the Management Agreement. FFCA has no knowledge of any
events which, with the passage of time, may result in a default by
Doubletree under the Management Agreements.
All representations and warranties of Seller made in this Agreement
shall be and will remain true and complete as of the Closing Date as if made and
restated in full as of such date, and shall survive Closing for a period of one
year only; provided, however, Buyer's sole recourse as a result of a breach of
the foregoing representations and warranties shall be as set forth in Section
16.
8. "As Is" Nature of Sale. BUYER AGREES THAT IT WILL EXAMINE AND
INVESTIGATE THE HOTEL PROPERTIES PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE
PERIOD AND THAT BUYER WILL RELY SOLELY UPON SUCH EXAMINATIONS AND
INVESTIGATIONS, AND NOT ON ANY REPRESENTATIONS OR WARRANTIES OF SELLER AS TO THE
CONDITION OF THE HOTEL PROPERTIES, IN PURCHASING THE HOTEL PROPERTIES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IT IS
EXPRESSLY UNDERSTOOD AND AGREED THAT BUYER IS PURCHASING THE HOTEL PROPERTIES
"AS IS", AND THAT SELLER IS MAKING NO REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, WITH RESPECT TO THE
QUALITY, PHYSICAL CONDITION OR VALUE OF THE HOTEL PROPERTIES, OR THE INCOME OR
EXPENSES FROM OR OF THE HOTEL PROPERTIES. WITHOUT LIMITING THE FOREGOING, IT IS
UNDERSTOOD AND AGREED THAT SELLER MAKES NO WARRANTY OF HABITABILITY,
SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SELLER MAKES
NO REPRESENTATION OR WARRANTY REGARDING ENVIRONMENTAL MATTERS OR THE AMERICANS
WITH DISABILITIES ACT OR STATE DISABILITIES LAWS, OR OTHER REPRESENTATION OR
WARRANTY REGARDING THE HOTEL PROPERTIES, THE CONDITION THEREOF, THE SUITABILITY
OF THE HOTEL PROPERTIES FOR ANY PARTICULAR USE, OR OTHERWISE, EXCEPT AS SET
FORTH IN SECTION 7 OF THIS AGREEMENT.
BUYER REPRESENTS AND WARRANTS TO SELLER THAT BUYER HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BUYER TO EVALUATE THE
MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT. FURTHERMORE,
BUYER ACKNOWLEDGES THAT IT IS NOT IN A DISPARATE BARGAINING POSITION RELATIVE TO
SELLER WITH RESPECT TO THIS AGREEMENT. TO THE EXTENT APPLICABLE AND PERMITTED BY
LAW, BUYER HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41,
INCLUSIVE.
9. Inspection; Title/Survey Review. (a) Inspection of Hotel Properties.
Buyer shall have until the end of the Due Diligence Period within which to, at
Buyer's sole expense, make such physical investigations and examinations of the
Hotel Properties as Buyer deems appropriate, including, without limitation,
those dealing with the condition of the Hotel Properties and any environmental
hazards relating to the Hotel Properties (the "Physical Investigations"). Buyer
shall have until the end of the fifteenth business day after the delivery by
Seller to Buyer of the last of the lists of the Fort Lauderdale Documents,
Irving Documents and Tampa Documents (the "Document Review Period") to review
and approve or disapprove the Documents, the Management Agreements (Buyer
acknowledges that Seller has delivered to Buyer the Documents and Management
Agreements prior to or as of the date of this Agreement, with the Management
Agreements certified to be true, correct and complete by Seller) and the books
and records of and other financial information pertaining to the Hotel
Properties (which Seller agrees to make immediately available at FFCA's offices
in Scottsdale, Arizona). Buyer acknowledges that Seller shall be responsible for
ordering Phase I Environmental Reports (individually, a "Report") for each of
the Hotel Properties and that Buyer shall have seven business days following the
delivery of each report to approve or disapprove such Report (the "Phase I
Review Period"). Buyer or its designated agents may enter upon the Hotel
Properties during normal business hours (9:00 a.m. to 5:00 p.m., Monday through
Friday) during the Due Diligence Period for purposes of analysis or other tests
and inspections which may be deemed necessary or desirable by Buyer to conduct
its examinations and investigations of the Hotel Properties. Buyer must be
accompanied by Seller's manager for the respective Hotel Property, or other
representative authorized by Seller, prior to entering upon the Hotel Property
in connection with Buyer's due diligence. Seller agrees to cooperate with Buyer
in enabling Buyer to carry out such tests and inspections. Seller also agrees to
promptly provide such due diligence materials with respect to the Hotel
Properties and the Documents reasonably requested by Buyer which Seller has in
its possession; provided, however, Seller shall not be required to incur any
financial obligations in delivering such due diligence materials. Buyer shall
not materially alter the physical condition of the Hotel Properties without
notifying Seller of its requested tests and obtaining the written consent of
Seller to any material physical alteration of the Hotel Properties. All
investigations and examinations by Buyer of the Hotel Properties shall be done
so as to minimize the disruption of business at the Hotel Properties.
Buyer may elect to terminate this Agreement at any time prior to the
expiration of the (i) Due Diligence Period, if Buyer is not satisfied in its
sole discretion with the outcome of the Physical Investigations, (ii) the
Document Review Period, if Buyer is not satisfied in its sole discretion with
its review of the Documents, Management Agreements (but only if Buyer will
assume such Management Agreements) and books and records and other financial
information pertaining to the Hotel Properties, or (iii) Phase I Review Period
for each of the Hotel Properties, if Buyer is not satisfied in its sole
discretion with the Report for such Hotel Property. Buyer's election to
terminate this Agreement pursuant to the preceding sentence shall be exercised
by delivering a notice of termination to Seller, and upon such termination this
Agreement shall be of no further force and effect, neither party shall have any
further obligation to the other except with respect to the indemnity obligations
of Buyer set forth in this Section, and Title Company shall immediately return
the Initial Earnest Money to Buyer. In the absence of any such notice of
termination prior to the expiration of the Due Diligence Period, (i) Buyer shall
be deemed to have approved the condition of the Hotel Properties and waived its
right to terminate this Agreement pursuant to this Section, (ii) Buyer shall
deposit the Additional Earnest Money as contemplated by Section 3, and (iii) the
Initial Earnest Money, and the Additional Earnest Money upon deposit with Title
Company, shall be nonrefundable to Buyer except as otherwise expressly
contemplated by this Agreement. If Buyer does not terminate this Agreement,
prior to the end of the Due Diligence Period Buyer shall notify Seller whether
Buyer intends to assume the Management Agreements as of the Closing.
In the event this Agreement shall not close, Buyer shall restore the
Hotel Properties to its original condition if damaged or changed due to the
tests and inspections performed by Buyer, free of any mechanic's or
materialman's liens or other encumbrances arising out of any of the inspections
or tests, and shall provide Seller with a copy (which reasonable copy charges
shall be paid by Seller) of the results of all studies, tests and inspections of
the Hotel Properties made by Buyer, its agents, independent contractors,
servants and/or employees (collectively, "Buyer's Related Parties"). Buyer shall
keep confidential the results of all studies, tests and inspections made by
Buyer and Buyer's Related Parties and shall not disclose said results to any
third parties, other than Buyer's partners, employees and agents who shall
similarly keep such information confidential. Buyer shall indemnify and hold
Seller, its Affiliates and the partners, shareholders, employees, officers,
directors and agents of Seller and its Affiliates harmless from and against any
and all claims, costs, liabilities, losses, damages and expenses, including
attorneys' fees and expenses, incurred by Seller as a result of Buyer's
investigations and examinations of the Hotel Properties; provided, however, that
the foregoing indemnity shall not include claims, costs, liabilities, losses,
damages and expenses, arising solely as a result of Buyer merely discovering any
defective conditions in the Hotel Properties or the operation thereof.
(b) Title and Survey Review. Buyer acknowledges that Seller has
delivered to Buyer a current commitment for title insurance for each of the
Hotel Properties, including copies of all documents constituting exceptions to
Seller's title to the Hotel Properties (the "Commitments"), and ALTA surveys of
the Hotel Properties prepared for Seller at the time of Seller's acquisition of
the Hotel Properties (the "Surveys"). Buyer shall have until the end of the
tenth business days following the date of this Agreement (the "Title Review
Period") to review and to give Seller and the Title Company written notice of
any matter shown on the Commitments or the Surveys which is unacceptable to
Buyer, in Buyer's sole judgment (the "Title Notice"). Seller shall have no
obligation to cure any items to which Buyer may object. If Seller or Title
Company have not agreed in writing prior to the end of the tenth day following
the end of the Title Review Period (the "Cure Period") to satisfy and/or remove
any material title matter objected to by Buyer in the Title Notice, Buyer shall
have until 5:00 p.m. (Phoenix time) on the fifth day following the end of the
Cure Period to terminate this Agreement by delivering a notice of termination to
Seller, and upon such termination this Agreement shall be of no further force
and effect, neither party shall have any further obligation to the other except
with respect to the indemnity obligations of Buyer set forth in this Section,
and Title Company shall immediately return the Earnest Money to Buyer. If Buyer
does not elect to terminate this Agreement prior to the end of the Title Review
Period or the Due Diligence Period, the Hotel Properties shall be conveyed to
Buyer subject to those items set forth in the Commitments which the Seller or
Title Company have not agreed in writing to cause to be removed (the "Permitted
Exceptions"); provided, however, at or prior to Closing, Seller shall provide
for the release of all monetary liens encumbering the Hotel Properties other
than for taxes not yet delinquent and liens created by, through or under Buyer.
Seller shall cause each of the Surveys to be brought current and recertified to
Buyer. If the updated Surveys reveal title matters not previously depicted on
the Survey, and such title matters would have a material adverse affect on
Buyer's use and/or operation of the Hotel Properties, as determined by Buyer in
its reasonable discretion, Buyer shall have a period of five business days after
its receipt of each updated Survey to notify Seller and Title Company of its
objection to such matters, which objection shall be deemed a Title Notice and
solely for purposes of the objection(s) set forth in such Title Notice, the Cure
Period and Seller's rights following such Cure Period as described above shall
be applicable.
10. Conditions Precedent to Closing. (a) The obligation of Buyer to
consummate the transaction contemplated by this Agreement is subject to the
fulfillment or waiver of the condition that all obligations of Seller under this
Agreement shall have been fully performed and complied with, and no event shall
have occurred or condition shall exist which, would upon the Closing Date, or,
upon the giving of notice and/or passage of time, constitute a breach or default
by Seller hereunder.
(b) The obligation of Seller to consummate the transaction contemplated
by this Agreement is subject to the fulfillment or waiver of each of the
following conditions:
(i) Compliance With Representations, Warranties and Covenants;
Certification. All obligations of Buyer under this Agreement shall have
been fully performed and complied with, and no event shall have
occurred or condition shall exist which, would upon the Closing Date,
or, upon the giving of notice and/or passage of time, constitute a
breach or default by Buyer hereunder.
(ii) Proxy. Seller shall have received the consent to sell the
Hotel Properties from more than 50% of the interests in Seller held by
limited partners of Seller (the "Proxy Consent"). Such Proxy Consent
shall be received pursuant to a definitive proxy statement filed with
the Securities and Exchange Commission pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended. Seller shall undertake in
good faith to obtain such Proxy Consent and shall promptly notify Buyer
upon Seller's receipt of such Proxy Consent. If such Proxy Consent is
not received by Seller before April 30, 1996, Seller shall have the
right to terminate this Agreement by delivering notice of the exercise
of such termination right to Buyer. Upon such termination, this
Agreement shall be of no further force and effect, neither party shall
have any further obligation to the other except with respect to the
indemnity obligations of Buyer set forth in Section 9, and Title
Company shall immediately return the Earnest Money to Buyer.
(c) In consideration of the substantial time and effort to be spent by
Buyer in performing its due diligence with respect to the Hotel Properties,
Seller does hereby acknowledge, agree and covenant as follows:
(i) that the General Partner of Seller has reviewed the terms
of the purchase and sale transaction governed by this Agreement and has
determined that it shall recommend approval of this Agreement to the
limited partners of Seller;
(ii) that Seller shall suspend the solicitation of offers to
purchase the Hotel Properties and formally reject any other offers to
acquire the Hotel Properties which were received prior to execution of
this Agreement;
(iii) that in the event the Proxy Consent is not obtained on
or before April 30, 1996, Buyer shall be entitled to terminate this
Agreement and receive the return of the Earnest Money;
(iv) in the event that a competing offer to acquire the Hotel
Properties is received by Seller prior to obtaining the Proxy Consent,
then, as a condition precedent to the right of Seller to accept such
offer, Seller shall advise Buyer in writing of the manner in which the
terms of such offer are more favorable to Seller than those offered by
Buyer and shall allow Buyer a fifteen day period to agree to match the
terms offered pursuant to such subsequent offer, in which event Seller
shall submit Buyer's amended offer to the limited partners of Seller
for approval. In the event that Buyer does not agree to match such
subsequent offer, Seller shall be entitled to enter into a contract
with respect to such offer (the "Other Contract") upon the giving of
notice to Buyer. Promptly after Seller enters into such Other Contract,
Seller shall cause Title Company to return the Earnest Money to Buyer
and this Agreement shall be deemed terminated and of no further force
and effect. At the time of the closing of the Other Contract, Seller
shall pay to Buyer a sum of money in an amount equal to 3% of the
Purchase Price (the "Break-up Fee") as Buyer's sole and exclusive
remedy as a result of the termination of this Agreement due to the
Other Contract. The parties acknowledge that the lost opportunity costs
for Buyer as a result of the closing of the Other Contract is
substantial and, in certain respects, unremediable, and that the
calculation of actual damages to be incurred in such event would be
extremely difficult; therefore, the parties agree that the Break-up Fee
constitutes reasonable compensation in lieu of such actual damages and
shall be in the nature of liquidated damages and shall not constitute a
penalty. Notwithstanding the foregoing, if the Other Contract is
terminated and the Hotel Properties are not conveyed by Seller to the
buyer under the Other Contract, Seller shall promptly notify Buyer in
accordance with the notice provision of this Agreement of such
termination, and Buyer shall have a period of ten (10) business days
after receipt of Seller's notice to notify Seller and Title Company in
accordance with the notice provision of this Agreement of Buyer's
election to enter into a purchase agreement with Seller for the
purchase of the Hotel Properties on the terms and conditions set forth
in this Agreement, but with such adjustments to the time periods for
deliveries, reviews and closing as the parties shall in good faith
require. In the absence of Buyer's election to enter into such a
purchase agreement, Seller and Buyer shall have no further contractual
obligations with each other with respect to the Hotel Properties, other
than Buyer's indemnity obligation set forth in Section 9, Buyer shall
have no rights or interests with respect to the Hotel Properties, and
Seller shall be free to enter into any agreement with any other persons
or entities with respect to the Hotel Properties without any action or
acknowledgment by Buyer.
11. Default and Remedies. (a) In the event of a material breach by
Buyer of its representations, warranties or covenants set forth in this
Agreement, and Buyer fails to cure the same within ten days after Buyer's
receipt of notice of such material breach, and/or in the event that all of the
conditions to Buyer's obligation to close have been satisfied and Buyer fails to
close its purchase of the Hotel Properties, the Earnest Money (to the extent
paid) shall be paid to Seller and retained by it as liquidated damages as
Seller's sole and exclusive remedy hereunder; provided, however, such limitation
of damages shall not apply to Buyer's obligations to Seller pursuant to the
indemnity set forth in Section 9. The parties acknowledge that Seller's damages
caused by Buyer's material breach of its representations, warranties or
covenants set forth in this Agreement and/or Buyer's failure to close hereunder
would be difficult to determine, and agree that the amount of the Earnest Money
represents a reasonable estimate of Seller's damages.
(b) In the event of a material breach by Seller of its representations,
warranties or covenants set forth in this Agreement, and Seller fails to cure
the same within ten days after Seller's receipt of notice of such material
breach, and/or in the event that all conditions to Seller's obligation to close
have been satisfied and Seller fails to close its sale of the Hotel Properties
hereunder, Buyer, as its exclusive remedies, may either seek specific
performance of Seller's obligations under this Agreement or terminate this
Agreement, upon which termination Title Company shall immediately return the
Earnest Money to Buyer and Seller shall assume responsibility for the payment of
the costs of the Commitments and the Surveys. The parties acknowledge that
Buyer's damages caused by Seller's material breach of its representations,
warranties or covenants set forth in this Agreement and/or Seller's failure to
close hereunder would be difficult to determine, and agree that the exclusive
remedies contained herein are reasonable.
12. Operation of Hotel Properties Prior to Closing. From the date of
this Agreement until Closing, Seller shall (i) maintain and operate the Hotel
Properties in their current state and condition, ordinary wear and tear
excepted, (ii) continue all insurance policies relative to the Hotel Properties
in full force and effect, (iii) not remove any item of personal property unless
replaced by a comparable item of personal property, other than in the ordinary
course of business, (iv) not enter into any service contracts, leases,
maintenance agreements or other contracts affecting the Hotel Properties that
may not be terminated within 30 days after notice without penalty, and shall not
in any way amend or modify the Documents or the Management Agreements, (v) pay
and discharge its liabilities in the ordinary course of business, and (vi)
perform, when due, all of Seller's obligations under the existing licenses,
permits, contracts and agreements relating to the Hotel Properties and as
otherwise required by all applicable laws, statutes, ordinances, codes, rules
and regulations affecting the Hotel Properties. If Buyer elects to assume the
Management Agreements, Seller shall maintain the inventory and supplies in the
Hotel Properties at ordinary levels in order to operate such properties in the
ordinary course of business as of the Closing Date; if Buyer does not elect to
assume the Management Agreements, Seller shall only be obligated to maintain
such inventory and supplies at the Hotel Properties as is reasonably necessary
to facilitate on or about the Closing Date the change from Doubletree as the
operator/property manager to Buyer's operator/property manager.
Seller agrees to cooperate with Buyer on or before the Closing Date in
order to complete all applications and allow for all inspections required in
order to transfer all of the licenses and permits issued in connection with the
Hotel Properties, including, without limitation, the liquor licenses for each
Hotel Property, and shall promptly execute and return to Buyer all documentation
reasonably required in connection therewith.
Seller shall deliver the Hotel Properties at Closing in substantially
the same condition as existed on the date of this Agreement.
13. Condemnation. (a) If, prior to the Closing Date, condemnation
proceedings are commenced against any material portion of any of the Hotel
Properties and this Agreement has not terminated pursuant to an express
provision herein, then in such event Buyer may, at its option, elect to
terminate this Agreement by written notice to Seller within 20 days after
Seller's notification to Buyer of the commencement of such condemnation
proceedings, or at the Closing, whichever is earlier, in which case the Earnest
Money shall be refunded to Buyer, and neither party shall have any further
rights or obligations hereunder, other than Buyer's indemnity obligation as set
forth in Section 9. If Buyer does not make its election to terminate this
Agreement, then the Closing shall take place as provided herein without
reduction of the Purchase Price, and at Closing Seller shall assign to Buyer its
interest in and to any condemnation award.
(b) If, prior to the Closing Date, condemnation proceedings are
commenced against less than a material portion of any of the Hotel Properties,
then in any such event neither Buyer nor Seller shall have any right to
terminate its obligations under this Agreement, but, at Closing, Seller shall
assign to Buyer its interest in and to any condemnation award, and the Purchase
Price shall not be reduced.
(c) For the purposes of Section 13(a) and (b) above, "material portion"
of any Hotel Property shall mean any structural portion of the building located
on the Hotel Property, such portion of the parking areas which would render the
remaining parking areas insufficient under applicable ordinances or regulations
for the Hotel Property to lawfully operate, or such other portion of the Hotel
Property which, if taken, would, in the reasonable judgment of Buyer, have an
adverse effect on the ability of Buyer to use the Hotel Property for its
intended purpose.
(d) If, prior to the Closing Date, condemnation proceedings are
commenced, Seller shall notify Buyer of such proceedings. During the term of
this Agreement, Seller shall notify Buyer of material developments in such
condemnation proceedings and consult with Buyer regarding major decisions by
Seller in such proceedings; provided, however, Seller will have no obligation to
accept Buyer's counsel, but Seller shall not make any decisions which would have
a material adverse effect on the Hotel Properties.
14. Casualty. Seller agrees to give Buyer prompt notice of any fire or
other casualty affecting the Hotel Properties between the date of this Agreement
and the Closing. In the event of such fire or other casualty, Buyer shall, at
its option, elect one of the following:
(a) Accept an assignment of all insurance proceeds and accept
the Hotel Property in its existing condition, if the loss, as
determined by Seller's insurance adjuster, is FIVE MILLION DOLLARS
($5,000,000) or less, so long as Buyer reasonably determines that the
insurance proceeds are adequate to completely restore and repair the
Hotel Property to the condition prior to the damage, the Hotel Property
retains its non-conforming use status (if applicable) and Buyer
receives a credit against the Purchase Price of the amount of any
deductibles under the applicable insurance policies; or
(b) If the loss, as determined by Seller's insurance adjuster,
is greater than FIVE MILLION DOLLARS ($5,000,000), or less than such
amount but any of the conditions in the preceding subsection are not
satisfied, Buyer, in its sole and absolute discretion, shall have a
right to accept all of Seller's insurance proceeds and receive a credit
against the Purchase Price of the amount of any deductibles under the
applicable insurance policies, or terminate this Agreement within
twenty days of receipt of written notice of the damage or destruction,
in which event the Earnest Money shall be refunded to Buyer and this
Agreement shall be deemed terminated, other than Buyer's indemnity
obligation set forth in Section 9.
15. Nonrefundable Consideration. Contemporaneously with the execution
and delivery of this Agreement, Buyer has delivered to Seller and Seller hereby
acknowledges the receipt of a check in the amount of $100.00 ("Independent
Contract Consideration"), which amount the parties bargained for and agreed to
as consideration for Buyer's exclusive right to inspect and purchase the Hotel
Properties pursuant to this Agreement and for Seller's execution, delivery and
performance of this Agreement. The Independent Contract Consideration is in
addition to and independent of any other consideration or payment provided in
this Agreement, is nonrefundable and is fully earned and shall be retained by
Seller notwithstanding any other provision of this Agreement.
16. Trust and Escrow Agreement; Limitations on Liability. SELLER, BUYER
AND TRUSTEE SHALL NEGOTIATE AND ENTER INTO THE TRUST AND ESCROW AGREEMENT DURING
THE DUE DILIGENCE PERIOD, WITH SELLER AND BUYER AGREEING TO NEGOTIATE SUCH TRUST
AND ESCROW AGREEMENT IN GOOD FAITH. THE PURPOSE OF THE TRUST AND ESCROW
AGREEMENT SHALL BE TO ESTABLISH THE SOLE AND EXCLUSIVE SOURCE OF FUNDS TO WHICH
BUYER SHALL LOOK SUBSEQUENT TO CLOSING FOR RECOURSE IN THE EVENT OF A BREACH OR
DEFAULT BY SELLER OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS UNDER THIS AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED BY
SELLER AS CONTEMPLATED BY THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
SPECIAL WARRANTY DEEDS, BILLS OF SALE AND ASSIGNMENT AGREEMENTS, AND/OR THE
TRUST AND ESCROW AGREEMENT. THE TRUST AND ESCROW AGREEMENT SHALL PROVIDE FOR THE
DEPOSIT, IMMEDIATELY AFTER CLOSING, OF THE TRUST FUNDS IN TRUST WITH TRUSTEE AND
SHALL SET FORTH THE PROCEDURE FOR BUYER TO FILE A CLAIM AGAINST THE TRUST FUNDS
SUBSEQUENT TO CLOSING. THE TRUST AND ESCROW AGREEMENT SHALL PROVIDE THAT BUYER
MAY FILE A CLAIM AGAINST THE TRUST FUNDS FOR A PERIOD OF ONE YEAR FOLLOWING THE
CLOSING DATE. IF BUYER HAS NOT FILED ANY CLAIMS AGAINST THE TRUST FUNDS DURING
SUCH ONE YEAR PERIOD, OR IF ALL CLAIMS FILED AGAINST THE TRUST FUNDS HAVE BEEN
RESOLVED PRIOR TO THE EXPIRATION OF SUCH ONE YEAR PERIOD, TRUSTEE SHALL
IMMEDIATELY DELIVER TO SELLER OR ITS DESIGNEE THE REMAINING BALANCE OF THE TRUST
FUNDS. IF ANY CLAIMS ARE PENDING AGAINST THE TRUST FUNDS AT THE TIME OF THE
EXPIRATION OF SUCH ONE YEAR PERIOD, THE REMAINING BALANCE OF THE TRUST FUNDS
SHALL CONTINUE TO BE HELD IN TRUST BY TRUSTEE PURSUANT TO THE TRUST AND ESCROW
AGREEMENT PENDING RESOLUTION OF SUCH CLAIMS, AND UPON SUCH RESOLUTION, THE
BALANCE OF THE TRUST FUNDS, AFTER PAYMENT TO BUYER OF ALL SUMS DUE WITH RESPECT
TO CLAIMS RESOLVED IN BUYER'S FAVOR, SHALL BE DELIVERED TO SELLER OR ITS
DESIGNEE. IN THE ABSENCE OF THE EXECUTION AND DELIVERY BY SELLER, BUYER AND
TRUSTEE OF THE TRUST AND ESCROW AGREEMENT PRIOR TO THE END OF THE DUE DILIGENCE
PERIOD, THIS AGREEMENT SHALL BE DEEMED TERMINATED, THE INITIAL DEPOSIT SHALL BE
RETURNED TO BUYER AND SELLER AND BUYER SHALL HAVE NO FURTHER OBLIGATIONS TO EACH
OTHER WITH RESPECT TO THE HOTEL PROPERTIES OTHER THAN BUYER'S INDEMNITY
OBLIGATION SET FORTH IN SECTION 9. THE TRUST FUNDS SHALL BE HELD AND DISTRIBUTED
BY THE TRUSTEE IN ACCORDANCE WITH THE TRUST AND ESCROW AGREEMENT. TRUSTEE'S FEES
AND EXPENSES SHALL BE PAID OUT OF THE TRUST FUNDS DISTRIBUTED TO SELLER;
PROVIDED, HOWEVER, IF THE REMAINING TRUST FUNDS ARE INSUFFICIENT TO PAY SUCH
FEES AND EXPENSES, SELLER AND ITS GENERAL PARTNER(S) SHALL BE SOLELY RESPONSIBLE
FOR PAYING SUCH FEES AND EXPENSES.
Notwithstanding anything to the contrary provided in this Agreement,
any other document or instrument to be executed and delivered as contemplated in
this Agreement in connection with the sale of the Hotel Properties by Seller to
Buyer, including, without limitation, the Special Warranty Deeds, Bills of Sale
and Assignment Agreements, and/or the Trust and Escrow Agreement, it is
specifically understood and agreed, such agreement being a primary consideration
for the execution of this Agreement by Seller and Buyer, that:
(i) there shall be absolutely no personal liability on the
part of any partner (or any partner of any partner) of Seller or Buyer,
any shareholder, director, officer or employee of a partner (or any
partner of any partner) of Seller or Buyer, or their Affiliates, with
respect to any of the terms, covenants and conditions of this
Agreement, the documents to be executed and delivered as contemplated
by this Agreement, including, without limitation, the Special Warranty
Deeds, Bills of Sale and Assignment Agreements, and/or the Trust and
Escrow Agreement;
(ii) Seller and Buyer waive all claims, demands and causes of
action against the partners (and the partners of the partners) of
Seller and Buyer and the shareholders, officers, directors, employees
and agents of the partners (and the partners of the partners) of Seller
and Buyer and of their Affiliates in the event of any breach by the
other party of any of the terms, covenants and conditions of this
Agreement, the documents and instruments to be executed and delivered
as contemplated by this Agreement, including, without limitation, the
Special Warranty Deeds, Bills of Sale and Assignment Agreements, and/or
the Trust and Escrow Agreement;
(iii) prior to Closing, Buyer's sole and exclusive remedies
for a breach or default by Seller of this Agreement shall be as set
forth in Section 11, and subsequent to Closing, Buyer shall look solely
to the Trust Funds in accordance with the terms and conditions of the
Trust and Escrow Agreement for the satisfaction of each and every
remedy of Buyer in the event of any breach or default by Seller of any
of its representations, warranties, covenants and obligations under
this Agreement, the documents to be executed and delivered by Seller as
contemplated by this Agreement, including, without limitation, the
Special Warranty Deeds, Bills of Sale and Assignment Agreements, and/or
the Trust and Escrow Agreement. The exculpation of liability set forth
in this subsection is absolute and without any exception whatsoever;
and
(iv) prior to Closing, Seller's sole and exclusive remedy for
a breach or default by Buyer of this Agreement shall be as set forth in
Section 11, and subsequent to Closing, Seller shall look solely to the
assets of Buyer for the satisfaction of each and every remedy of Seller
in the event of any breach by Buyer of any of the terms and conditions
of this Agreement, the documents to be executed and delivered by Buyer
as contemplated by this Agreement, including, without limitation, the
Assignment Agreements, and/or the Trust and Escrow Agreement. The
exculpation of liability set forth in this subsection is absolute and
without any exception whatsoever.
17. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party pursuant
to this Agreement shall be in writing and given by (i) hand delivery,
(ii) facsimile, (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, (c) the next business day, if
delivered by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with the
United States Postal Service, if sent by certified or registered mail,
return receipt requested. Attorneys may send or receive notices on
behalf of their respective clients. Notices 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
B. Assignment. Seller and Buyer shall not, without the prior
written consent of the other party, sell, assign, transfer or convey
this Agreement, whether voluntarily or involuntarily or by operation of
law or otherwise, including, without limitation, by merger,
consolidation or dissolution or a transfer of a majority of the equity
interests of Seller or Buyer; provided, however, that Buyer may assign
its interest in this Agreement to an Affiliate or subsidiary of Buyer
with Seller's prior consent thereto, which consent shall be conditioned
upon Buyer documenting to Seller the proposed assignee's financial
ability to perform the obligations of "Buyer" under this Agreement,
Buyer shall remain obligated to perform all of the obligations of
"Buyer" under this Agreement, and the form of the assignment agreement
shall be subject to Seller's reasonable approval. Notwithstanding
anything in this Agreement to the contrary, Seller acknowledges that
Buyer may assign its rights under this Agreement to receive title to
all or a portion of the Fort Lauderdale Personal and Intangible
Property, Irving Personal and Intangible Property and Tampa Personal
and Intangible Property to an operating company designated by Buyer. In
such event, the Bills of Sale and Assignment Agreements may be in favor
of such operating company as the purchaser of such rights thereunder;
provided, however, Buyer shall be liable to Seller for all obligations
of the purchaser thereunder.
C. Commission. Except for the fee payable by Seller to Lehman
Brothers, Buyer and Seller represent and warrant to each other that
they have dealt with no real estate broker, agent, finder or other
intermediary in connection with the transaction contemplated by this
Agreement. Buyer and Seller shall indemnify and hold each other
harmless from and against any costs, claims or expenses, including
attorneys' fees, arising out of the breach of their respective
representations and warranties contained within this Section.
D. 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.
E. 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.
F. 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.
G. Construction Generally. This is an agreement between
parties who are experienced in sophisticated and complex matters
similar to the transaction contemplated by this Agreement and is
entered into by both parties in reliance upon the economic and legal
bargains contained herein and shall be interpreted and construed in a
fair and impartial manner without regard to such factors as the party
which prepared the instrument, the relative bargaining powers of the
parties or the domicile of any party. Seller and Buyer were each
represented by legal counsel competent in advising them of their
obligations and liabilities hereunder. Words of any gender used in this
Agreement shall be held and construed to include any other gender, and
words in the singular number shall be held to include the plural, and
vice versa, unless the context requires otherwise.
H. Other Documents. Each of the parties agrees to sign such
other and further documents as may be appropriate to carry out the
intentions expressed in this Agreement.
I. Attorneys' Fees. In the event of any judicial or other
adversarial proceeding between the parties concerning this Agreement,
the prevailing party shall be entitled to recover all of its attorneys'
fees and other costs in addition to any other relief to which it may be
entitled, including fees and expenses paid to the Title Company in
connection with this Agreement.
J. Entire Agreement. This Agreement, together with any other
certificates, instruments or agreements to be delivered hereunder,
constitute the entire agreement between the parties with respect to the
subject matter hereof, and there are no other representations,
warranties or agreements, written or oral, between Seller and Buyer
with respect to the subject matter of this Agreement.
K. Forum Selection; Jurisdiction; Venue; Choice of Law. Buyer
acknowledges that this Agreement was substantially negotiated in the
State of Arizona, the Agreement was signed by Seller and Buyer in the
State of Arizona and delivered by Seller and Buyer 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. To the extent a court
of competent jurisdiction finds Arizona law inapplicable with respect
to any provisions hereof, then, as to those provisions only, the laws
of the states where the Hotel Properties are located, as applicable,
shall be deemed to apply. Nothing contained in this subsection shall
limit or restrict the right of Seller to commence any proceeding in the
federal or state courts located in the states where the Hotel
Properties are located to the extent Seller or Buyer deems such
proceeding necessary or advisable to exercise remedies available under
this Agreement.
L. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
M. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Seller and Buyer and their respective
successors and permitted assigns, including, without limitation, any
United States trustee, any debtor-in-possession or any trustee
appointed from a private panel.
N. Survival. Except for the conditions of Closing set forth in
Section 10, which shall be satisfied or waived as of the Closing Date,
all representations, warranties and agreements of Seller and Buyer set
forth in this Agreement shall survive the Closing.
O. 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.
P. Waiver of Jury Trial and Consequential and Punitive
Damages. SELLER AND BUYER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST
THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED
HEREIN OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, SELLER AND BUYER EACH
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO SEEK CONSEQUENTIAL AND PUNITIVE DAMAGES FROM THE OTHER WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT BY ONE PARTY AGAINST THE OTHER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THE WAIVER BY SELLER AND BUYER OF ANY RIGHT THEY MAY HAVE TO
SEEK CONSEQUENTIAL AND PUNITIVE DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
Q. Confidentiality of Information. Seller and Buyer agree to
keep strictly confidential all Confidential Information and not to
disclose such Confidential Information other than (i) to such of their
respective (A) Affiliates and partners and the officers, directors,
shareholders, employees and agents of their respective Affiliates and
partners, (B) regulatory agencies, (C) rating agencies with a bona fide
need to know and/or (D) attorneys, accountants, engineers, consultants
or agents of the foregoing, (ii) in response to a subpoena or court
order to disclose such Confidential Information, or (iii) as otherwise
required by law.
R. Nonrecordation. The parties agree that neither this
Agreement nor any notice or memorandum thereof shall be recorded in any
public records, and a breach of this provision shall constitute a
default by the breaching party.
S. No Offer; Effective Date. The distribution of this
Agreement by Seller to Buyer shall not constitute an offer by Seller to
Buyer to convey the Hotel Properties and shall not be binding upon and
enforceable against Seller until such time as Seller and Buyer have
both executed and acknowledged this Agreement. The "date of this
Agreement" shall be the date an original of this Agreement (or original
counterparts of this Agreement) executed by both Seller and Buyer
together with the Initial Earnest Money described in Section 3(i) are
delivered to the Title Company.
T. Radon. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels
of radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit. This
disclosure is being given in connection with the Fort Lauderdale Hotel
Property and the Tampa Hotel Property in accordance with the Florida
Statutes.
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have entered into this Agreement
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/ Morton Fleischer
Printed Name: Morton H. Fleischer
Its President and Chief Executive Officer
BUYER:
SLT REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership
By Starwood Lodging Trust, a
Maryland real estate investment trust,
its general partner
By /s/ Barry S. Sternlicht
Printed Name: Barry S. Sternlicht
Its Chairman and Chief Executive Officer
BUYER'S COUNSEL
By ______________________________________________________
Name ____________________________________________________
Title ___________________________________________________
Date:______________, 1995
Counsel for Buyer, signing only for purposes of meeting
the statutory requirements of Article 17.42 of the Texas
Deceptive Trade PracticesAConsumer Protection Act.
TITLE COMPANY:
Receipt of $200,000 Initial Earnest Money is
acknowledged.
LAWYERS TITLE INSURANCE
CORPORATION
By /s/ Irma Hickman
--------------------
Name: Irma Hickman
Title: Manager National Accounts
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on November 13,
1995 by Morton H. Fleischer, President and Chief Executive Officer of Perimeter
Center Management Company, a Delaware corporation, general partner of FFCA
Management Company, Limited Partnership, a Delaware limited partnership, general
partner of Guaranteed Hotel Investors 1985, L.P., a Delaware limited
partnership, on behalf of the corporation and partnerships.
/s/ Mary E. Leeland
-------------------
Notary Public
My Commission Expires:
December 9, 1996
- ----------------
STATE OF CONNECTICUT ]
] SS.
COUNTY OF FAIRFIELD ]
The foregoing instrument was acknowledged before me on November 3, 1995
by Barry S. Sternlicht, Chairman and CEO of Starwood Lodging Trust, a Maryland
real estate investment trust, the general partner of SLT Realty Limited
Partnership, a Delaware limited partnership, on behalf of the trust and
partnership.
/s/ Beth Van Nostrand
---------------------
Notary Public
My Commission Expires:
2/28/99
<PAGE>
EXHIBIT A-1
LEGAL DESCRIPTION
FORT LAUDERDALE PROPERTY
Lot 22, CORPORATE PARK AT CYPRESS CREEK, according to the Plat thereof, as
recorded in Plat Book 108, at Page 11, of the Public Records of Broward County,
Florida; LESS AND EXCEPT therefrom that certain parcel being more particularly
described as follows:
BEGINNING at the Northeast corner of Lot 23 of said CORPORATE PARK AT CYPRESS
CREEK; thence North 00 degrees 01 minutes 06 seconds West on a Northerly
projection of the Easterly boundary of said Lot 23, a distance of 67.67 feet;
thence South 89 degrees 58 minutes 54 seconds West, a distance of 166.11 feet to
an intersection of an arc of a circular curve to the left; thence Southwesterly
along the arc of said curve, having a radius of 555.0 feet, whose radius point
bears South 54 degrees 12 minutes 57 seconds East from the last described point,
an arc distance of 79.60 feet; said last mentioned course being coincident with
the right-of-way of Northwest Sixth Way; (as shown on Plat of CORPORATE PARK AT
CYPRESS CREEK, according to the Plat thereof, as recorded in Plat Book 108, at
Page 11, of the Public Records of Broward County, Florida); thence North 89
degrees 58 minutes 54 seconds East along the North line of said Lot 23, a
distance of 207.90 feet to the POINT OF BEGINNING of this description; also,
LESS AND EXCEPT therefrom the following described parcel, being more
particularly described as follows:
BEGINNING at the Southeast corner of Lot 21, CORPORATE PARK AT CYPRESS
CREEK; thence South 89 degrees 26 minutes 35 seconds West, a distance of 250.00
feet; thence North 45 degrees 32 minutes 07 seconds West, a distance of 102.91
feet, the last two described courses being more particularly described as being
the South line of said Lot 21; thence South 44 degrees 27 minutes 53 seconds
West, a distance of 67.00 feet; thence south 45 degrees 32 minutes 07 seconds
East, a distance of 130.68 feet; thence North 89 degrees 26 minutes 35 seconds
East, a distance of 262.52 feet to a point on the East line of said Lot 22;
thence North 12 degrees 15 minutes 54 seconds East along the East line of Lot
22, a distance of 68.71 feet to the POINT OF BEGINNING of this description.
AND ALSO LESS AND EXCEPT:
That portion of Lot 22 of CORPORATE PARK AT CYPRESS CREEK, as shown on the Plat
recorded in Plat Book 108, Page 11 of the Public Records of Broward County,
Florida described as follows:
COMMENCE at the Southeast corner of said Lot 22 and run thence North
10(degree)47'53" East along the Easterly boundary of said Lot 22, a distance of
12.28 feet for a POINT OF BEGINNING; thence South 88(degree)30'53" West along an
Easterly extension of a Southerly boundary of Lot 23 of said CORPORATE PARK AT
CYPRESS CREEK, a distance of 456.62 feet to an intersection with a Westerly
boundary of said Lot 22; thence North 1(degree)29'07" West along said Westerly
boundary, a distance of 16.50 feet; thence North 88(degree)13'20" East, a
distance of 276.74 feet; thence South 87(degree)58'15" East, a distance of
165.64 feet; thence North 88(degree)30'53" East, distance of 16.24 feet to an
intersection with the Easterly boundary of said Lot 22; thence South
10(degree)47'53" West along said Easterly boundary, a distance of 7.94 feet to
the POINT OF BEGINNING.
Said lands situate, lying and being in Broward Country, Florida.
<PAGE>
EXHIBIT A-2
LEGAL DESCRIPTION
IRVING PROPERTY
BEING 6.646 acres of land located in Lot 1, Block 1, TOWNE LAKE, Phase I, an
addition to the City of Irving, Dallas County, Texas, according to the plat
recorded in Volume 83091, Page 1067 of the Deed Records of Dallas County, Texas,
and being more particularly described by metes and bounds, as follows:
BEGINNING at a 1/2" iron rod at the Northwest corner of said Lot 1, Block 1,
lying at the intersection of the East right-of-way line of Valley View Lane (a
100 foot wide right-of-way) and the new South right-of-way line of State Highway
No. 183, as conveyed to the State of Texas, by the deed recorded in Volume
88189, Page 1985 of the Deed Records of Dallas County, Texas;
THENCE S 83(degree) 17' 58" E 488.20 feet along the new South right-of-way line
of said State Highway No. 183 and the North boundary line of said Lot 1, Block
1, TOWNE LAKE to a 1/2" iron rod at the Northeast corner of said Lot 1;
THENCE S 13(degree) 16' 12" W 612.11 feet along the East boundary line of said
Lot 1 to a 1/2" iron rod in the East boundary line of a tract of land conveyed
to Texas Power & Light Company by the deed recorded in Volume 75244, Page 1690
of the Deed Records of Dallas County, Texas;
THENCE N 01(degree) 02' 53" E 74.89 feet along the East boundary line of Said
Texas Power & Light Company Tract to a 1/2" iron rod at the Northeast corner
thereof;
THENCE N 89(degree) 55' 23" W along the South boundary line of said Lot 1, Block
1 and the North boundary line of said Texas Power & Light Company tract at
141.40 feet passing the Northwest corner of said Texas Power & Light Company
Tract, and in all 157.40 feet to a 1/2" iron rod;
THENCE S 01(degree) 15' 42" W 125.00 feet to a point;
THENCE S 46(degree)10' 28" W 22.00 feet to a 1/2" iron rod at the back of a
concrete curb;
THENCE S 01(degree) 16' 14" W 151.50 feet to a point in the South boundary line
of said Lot 1, Block 1, TOWNE LAKE, Phase I;
THENCE S 89(degree) 52' 34" W 187.91 feet along the South boundary line of said
Lot 1 to an "X" cut in a concrete driveway at the Southwest corner of said Lot
1, and lying in the East right-of-way line of aforesaid Valley View Lane;
THENCE along the West boundary line of said Lot 1, Block 1, TOWNE LAKE, and the
East right-of-way line of said Valley View Lane, as follows:
1. NORTHEASTERLY 229.62 feet along a curve to the Left, having a
radius of 1482.40 feet, a central angle of 08(degree) 52' 30"
and a chord bearing N 04(degree) 41' 24" E 229.39 feet to a
1/2" iron rod at the end of said curve;
2. N 00(degree)15' 06" E 641.09 feet to THE PLACE OF BEGINNING,
containing 6.646 acres (289,482 square feet) of land.
<PAGE>
EXHIBIT A-3
TAMPA PROPERTY
LEGAL DESCRIPTION:
Lot 1, Block 4, Less the South 190 feet thereof, of Tampania Subdivision,
according to the map or plat thereof, as recorded in Plat Book 8, page 71,
Hillsborough County, Florida, and Less that part described in order of taking in
Official Records Book 3237, page 206, of the Public Records of Hillsborough
County, Florida; together with the West 1/2 of closed right-of-way known as
Manhattan Avenue abutting that portion of Lot 1, described above, as vacated by
Ordinance No. 8419A as recorded in Official Records Book 4235, page 1615, of the
Public Records of Hillsborough County, Florida.
FIRST AMENDMENT TO PURCHASE AGREEMENT
-------------------------------------
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (this "First Amendment"), is
made and entered into as of the 7th day of November, 1995 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 S E T H:
--------------------
WHEREAS, Seller and Buyer are parties to that certain Purchase
Agreement dated October 27, 1995 (the "Agreement"); and
WHEREAS, Seller and Buyer have agreed to 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 First Amendment, then the terms and provisions of this First
Amendment shall prevail. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to the same in the Agreement.
2. Seller and Buyer hereby agree that the expiration date of the Phase
I Review Period shall be extended from November 7, 1995 to the expiration date
of the Due Diligence Period.
3. Seller and Buyer hereby agree that: (a) the Due Diligence Period
expires on December 12, 1995; (b) the Document Review Period expires on November
27, 1995; and (c) the Phase I Review Period expires on December 12, 1995.
4. 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.
5. This First Amendment may be executed in one or more counterparts and
all such counterparts taken together shall constitute one agreement. Executed
copies of this First Amendment received by telecopier shall be deemed to be
originals.
[TEXT AND SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have hereunder set their hands and
seals 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/ Morton H. Fleischer
-----------------------
Morton H. Fleischer, President
and Chief Executive Officer
BUYER:
SLT REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Starwood Lodging Trust, a Maryland real
estate investment trust, its general partner
By:/s/ Jeff Lapin
-----------------
Jeff Lapin
SECOND AMENDMENT TO PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO PURCHASE AGREEMENT (the "Second Amendment") is
made and entered into this 13th day of December 1995 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 S E T H:
WHEREAS, Seller and Buyer are parties to that certain Purchase
Agreement dated October 27, 1995, as amended and modified by that certain First
Amendment to Purchase Agreement between Seller and Buyer (collectively, the
"Agreement"); and
WHEREAS, Seller and Buyer have agreed to 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 Second Amendment, then the terms and provisions of this
Second Amendment shall prevail. All capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to the same in the Agreement.
2. Seller and Buyer hereby agree to extent the time period in which
Buyer has to decide to terminate the Management Agreements with Doubletree to
January 12, 1996. Seller and Buyer hereby agree to extend the Closing to
accommodate any WARN Act notice periods in the event of a termination of
Doubletree under the Management Agreements, provided and on the condition that
Buyer pays the additional Earnest Money as provided in Paragraph 3 below.
3. Notwithstanding anything contained in the Agreement to the contrary,
Buyer shall have the right to extend the Closing Date to no later than April 30,
1996, which right may be exercised in connection with Paragraph 2 above or
otherwise, provided and on the condition that Buyer pays additional Earnest
Money (to be credited against the Purchase Price) in the amount of $100,000 to
the Title Company on or before the Closing Date that would otherwise be
scheduled pursuant to the provisions of Paragraph 4(a) of the Agreement without
regard to the extension set forth in this Paragraph 3.
4. On or before December 22, 1995, Seller shall advise Buyer as to
which Documents Buyer must obtain a release of Seller's liability in accordance
with the provisions of Paragraph 4(d)(4) of the Agreement. With respect to the
remaining Documents as to which Buyer does not obtain a specific release as set
forth in the immediately preceding sentence, Buyer agrees to indemnify Seller
from any and all loss, cost or expense incurred by Seller as a result of any
claims arising under such remaining Documents for the period commencing from and
after the Closing. The foregoing indemnity shall be evidenced by a document, in
form and substance acceptance to Buyer and Seller, to be delivered at the
Closing.
5. Seller and Buyer hereby agree to extend the date to agree upon the
form of the Trust and Escrow Agreement to December 15, 1995.
6. Seller and Buyer agree to extend the period in which to agree upon
an allocation of the Purchase Price under Paragraph 3 of the Agreement to
December 15, 1995.
7. Except as expressly amended and modified hereby, this Agreement is
and shall otherwise remain in full force and effect, and the parties hereto
ratify and confirm the same.
8. This Second Amendment may be executed in one or more counterparts
and all such counterparts taken together shall constitute one agreement.
Executed copies of this Second Amendment received by telecopier shall be deemed
to be originals.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have hereunder set their hands and
seals 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, General Partner
By: Perimeter Center Management Company, a Delaware
corporation, Managing General Partner
By: /s/ Dennis L. Ruben
-------------------
Dennis L. Ruben, 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/ Jeff Lapin
-----------------
Jeff Lapin
THIRD AMENDMENT TO PURCHASE AGREEMENT
THIS THIRD AMENDMENT TO PURCHASE AGREEMENT (the "Third Amendment"), is
made and entered into this 22nd day of December, 1995 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 S E T H:
--------------------
WHEREAS, Seller and Buyer are parties to that certain Purchase
Agreement dated October 27, 1995, as amended and modified by those certain First
and Second Amendments to the Purchase Agreement between Seller and Buyer,
(collectively, the "Agreement"); and
WHEREAS, Seller and Buyer have agreed to 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 Third Amendment, then the terms and provisions of this Third
Amendment shall prevail. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to the same in the Agreement.
2. Seller and Buyer hereby agree to extend the date to agree upon the
form of the Trust and Escrow Agreement referred to in Paragraph 16 of the
Agreement to December 20, 1995. In addition, Seller and Buyer hereby agree that:
(a) the requirement that the Trust and Escrow Agreement be executed on or before
December 20, 1995, is hereby waived; and (b) the executed Trust and Escrow
Agreement shall be delivered at the Closing.
3. 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.
4. This Third Amendment may be executed in one or more counterparts and
all such counterparts taken together shall constitute one agreement. Executed
copies of this Third Amendment received by telecopier shall be deemed to be
originals.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have hereunder set their hands and
seals 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
----------------------
Dennis L. Ruben, 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/ Jeff Lapin
-----------------
Jeff Lapin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF DECEMBER 31, 1995 AND
THE STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 773933
<NAME> GUARANTEED HOTEL INVESTORS 1985, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 6,255,398
<SECURITIES> 0
<RECEIVABLES> 718,454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,247,984
<PP&E> 54,785,460
<DEPRECIATION> 9,013,099
<TOTAL-ASSETS> 54,357,493
<CURRENT-LIABILITIES> 3,357,298
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 51,000,195
<TOTAL-LIABILITY-AND-EQUITY> 54,357,493
<SALES> 0
<TOTAL-REVENUES> 23,642,772
<CGS> 0
<TOTAL-COSTS> 18,995,836
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,646,936
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,646,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,646,936
<EPS-PRIMARY> 23.00
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF DECEMBER 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH BALANCE
SHEET.
</LEGEND>
<CIK> 778969
<NAME> FFCA INVESTOR SERVICES CORPORATION 85-A
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<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>
