<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the fiscal year ended December 31, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 1-9563
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AIRCOA HOTEL PARTNERS, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
State of Delaware 84-1042607
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5775 DTC Boulevard, Suite 300
Englewood, Colorado 80111
- ----------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 220-2000
--------------
Securities registered pursuant to Name of each exchange on which
Section 12(b) of the Act: registered:
Class A Depository Units American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--------- ---------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's 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. [ ]
The aggregate market value of the voting units held by non-affiliates of
the registrant, computed by reference to the price as of the close of trading on
February 13, 1995 was $4,540,106.
There were 5,340,214 units outstanding of the registrant's Class A Units as
of February 13, 1995.
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
1994 FORM 10-K ANNUAL REPORT
Table of Contents
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . I - 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . I - 3
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . I - 4
Item 4. Submission of Matters to a Vote of Security Holders. . . I - 4
PART II
Item 5. Market for the Registrant's Partnership Units and
Related Unitholder Matters . . . . . . . . . . . . . . II - 1
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . II - 2
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . II - 3
Item 8. Financial Statements and Supplementary Data . . . . . . II - 8
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . II - 8
PART III
Item 10. Directors and Executive Officers of the General Partner. III - 1
Item 11. Payments and Compensation to
General Partner and Affiliates . . . . . . . . . . . . III - 2
Item 12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . III - 3
Item 13. Certain Relationships and Related Transactions . . . . . III - 4
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . IV - 1
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
AIRCOA Hotel Partners, L.P., a Delaware limited partnership ("AHP" or
the "Partnership") was organized in December 1986, by AIRCOA
Hospitality Services, Inc. ("AHS" or the "General Partner") to acquire,
own, operate and sell hotels and resort properties. The Partnership
owns and operates six hotel and resort properties (the "Properties")
through operating partnerships (the "Operating Partnerships") which
were acquired in 1986.
The Partnership owns a 99% limited partner interest in each of the six
Operating Partnerships which hold title to the Properties and through
which the Partnership conducts all of its operations. AHS, a wholly
owned subsidiary of Richfield Hospitality Services, Inc. ("Richfield"),
is also the 1% general partner of each of the Operating Partnerships.
Richfield operates the Properties for the Partnership under certain
management agreements.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Partnership's operations have been in one industry segment since
formation. Revenue has been generated through the ownership and
operation of the Properties. The following table reflects the sources
of revenue and gross operating profit and total assets for each of the
three years ended December 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
(In thousands, except percentages)
1994 1993 1992
------ ------ ------
Revenue Percent Revenue Percent Revenue Percent
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Rooms $ 26,863 58.2% $ 26,693 59.0% $ 25,584 59.5%
Food and Beverage 12,274 26.6% 11,664 25.8% 11,349 26.4%
Other Property Operations 7,020 15.2% 6,911 15.2% 6,065 14.1%
-------- ------ -------- ------ -------- ------
Total Revenue $ 46,157 100.0% $ 45,268 100.0% $ 42,998 100.0%
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------
Gross Operating Profit $ 13,566 29.4% $ 13,739 30.4% $ 11,944 27.8%
-------- ------ -------- ------ -------- ------
-------- ------ -------- ------ -------- ------
Total Assets $ 73,542 $ 77,369 $ 78,589
-------- -------- --------
-------- -------- --------
</TABLE>
The gross operating profit percentage represents operating income of
the Partnership before depreciation and amortization, management fees
and fixed charges (rent, taxes and insurance). Gross operating profit
is indicative of the profitability from operations of the Properties.
Room revenue is significantly impacted by the rates obtained for rooms
and the level of occupancy of the Properties. Although not in the same
proportion, these factors also impact revenue generated from food and
beverage and other property operations. Average daily room rates of
the Properties were $59.42, $60.08, and $61.45 in 1994, 1993 and 1992,
respectively. Average occupancy levels for the Properties were 77.9%,
76.6% and 72.9% in 1994, 1993 and 1992, respectively. For a discussion
of the changes in various operating statistics, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
I-1
<PAGE>
NARRATIVE DESCRIPTION OF BUSINESS
BUSINESS
The principal business of the Partnerships is the ownership and
operation of six hotel and resort properties located in geographically
diverse areas of the continental United States. The Properties are
full service facilities serving the vacation, leisure, meetings,
convention and business segments of the hotel market. In addition to
lodging, various guest services are offered by the Properties including
restaurants, lounges, banquet, room, valet, concierge, parking and
shuttle services. Other services available at some of the Properties
include a marina, health and fitness facilities, swimming pools, tennis
courts, spas and retail facilities.
IMPORTANCE OF FRANCHISES AND TRADEMARKS
Four of the Properties are affiliated with national franchises and
operate under franchise agreements. The benefits of these franchise
agreements include national brand name recognition and world wide
central reservation systems, as well as operating quality standards and
extensive marketing programs. One of the Properties is licensed to use
the Regal trademark, which is sub-licensed to the hotel by an affiliate
of AHS. The Partnership considers such affiliations and license to be
important to the operations and success of the Properties in regard to
customer recognition and satisfaction.
SEASONALITY OF BUSINESS
Because of the Properties' locations, occupancy levels are generally
lower in the first and fourth quarters and higher in the second and
third quarters of the year. These fluctuations are consistent with the
normal recurring seasonal patterns of the industry.
INDUSTRY PRACTICES
The Properties periodically offer discounts to contract and group
customers and room rates generally fluctuate during peak and non-peak
times of the year. Deposits are often obtained in advance for facility
rentals and rooms. In addition, a certain level of capital
expenditures, repair and replacement of hotel property is required
under the Partnership's loan agreement.
The Properties are managed by Richfield in accordance with certain
management contracts. Management services provided under the contracts
include operations supervision, strategic business planning, yield
management, sales and marketing oversight, personnel management and
accounting and technical services.
MARKET INFORMATION AND COMPETITIVE CONDITIONS
The U.S. hospitality industry had growth in revenue, earnings and
occupancy levels in 1994. According to Smith Travel Research, room
occupancy exceeded 65% in 1994, a 3% increase over occupancy levels in
1993. This increase in occupancy was the result of an approximate 4.4%
increase in demand, offset by a modest 1.4% increase in room supply.
Average daily rates for the industry increased almost 4% in 1994 to
$63.54 from $61.17 in 1993. Industry trends reflect improvement in
U.S. room occupancy and average daily rates since 1991. These positive
trends are expected to continue with occupancy levels in the U.S.
projected at 67% for 1995.
The Partnership's occupancy levels have consistently exceeded the
industry averages noted above; however, average daily rates are
slightly below the industry levels. The Partnership's operations in
certain markets are price sensitive. The Partnership considers its
primary points of competition include, but are not limited to, room
rates, location, guest services and responsiveness, adequacy and
appearance of facilities and overall customer satisfaction. The demand
at a particular hotel of the Partnership may be adversely affected by
many factors, including changes in travel patterns, local and regional
economic conditions and the degree of competition with other hotels in
the area.
I-2
<PAGE>
REGULATION
The Operating Partnerships are subject to regulation in connection with
their business, including liquor licensing, occupational health and
safety regulation, food service regulation and labor laws. The
Operating Partnerships have not experienced significant difficulties
with regulation in these areas; however, failure to comply with those
regulations could result in loss of licenses, permits or other
authorizations which could adversely impact the Partnership's operating
revenue.
EMPLOYEES
All hotel personnel are employed by the respective Operating
Partnerships. Richfield processes the payroll on behalf of the
Operating Partnerships. The number of persons employed by the
Operating Partnerships, as of December 31, 1994, was approximately 970.
Management considers employee relations to be satisfactory.
ITEM 2. PROPERTIES
The six hotel and resort properties including the hotel buildings and
leasehold improvements are owned by the Operating Partnerships. Three
of the hotel properties are located on land owned by the Operating
Partnerships, while the other three hotel properties are located on
land leased by the Operating Partnerships on a long-term basis. The
following table presents certain information for each of the
Properties:
<TABLE>
<CAPTION>
NUMBER
PROPERTY PRIMARY MARKETS SERVED AREA SERVED OF
ROOMS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aurora Inn and Pine Lake Vacation, Business Greater Cleveland/Akron,
Trout Club ("Aurora") Ohio 69
- ------------------------------------------------------------------------------------------------------
Fourwinds/A Clarion Resort Destination Resort Bloomington/Indianapolis,
("Fourwinds") and Marina Indiana 126
- ------------------------------------------------------------------------------------------------------
Regal at McCormick Ranch Vacation, Meetings Phoenix/Scottsdale,
("McCormick") Arizona 125
- ------------------------------------------------------------------------------------------------------
Sheraton Inn-Buffalo Airport Business, Meetings Buffalo/Niagara Falls,
("Buffalo") and Leisure New York 293
- ------------------------------------------------------------------------------------------------------
Sheraton Lakeside Inn Vacation Orlando/Walt Disney World,
("Lakeside") Florida 651
- ------------------------------------------------------------------------------------------------------
Sheraton University Center Business, Meetings, Raleigh/Durham/
("University") Medical and Conventions Chapel Hill, North Carolina 322
- ------------------------------------------------------------------------------------------------------
TOTAL 1,586
----------------------------------------
</TABLE>
I-3
<PAGE>
The appraised value of the Properties is summarized below:
<TABLE>
<CAPTION>
Appraised Values
------------------------------------------------
December December December
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Aurora Inn & Pine Lake Trout Club $ 7,520,000 $ 7,240,000 $ 6,540,000
Fourwinds/A Clarion Resort 10,200,000 10,200,000 9,300,000
Regal at McCormick Ranch 9,015,000 7,900,000 7,400,000
Sheraton Inn-Buffalo Airport 17,730,000 18,140,000 18,800,000
Sheraton Lakeside Inn 34,000,000 39,000,000 42,000,000
Sheraton University Center 8,025,000 7,050,000 6,200,000
------------ ------------ ------------
Total appraised value $ 86,490,000 $ 89,530,000 $ 90,240,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The decline in the aggregate appraised value of the portfolio is the
result of decreases in the value of the Sheraton Lakeside Inn in 1994
and 1993 and the Sheraton Inn - Buffalo Airport in 1994 and 1993.
These declines are primarily attributable to these hotels being located
in markets with increases in the supply of available rooms and static
demand for hotel rooms. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Partnership or any of the Operating Partnerships is a party, except for
ordinary and routine litigation incidental to the business of the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of Unitholders during the
quarter ended December 31, 1994.
I-4
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED UNITHOLDER
MATTERS
Class A Units of AIRCOA Hotel Partners, L.P. are traded on the American
Stock Exchange under the symbol AHT. There is no established public
trading market for the Partnership's Class B Units, the majority of
which are held by affiliates of the General Partner. Under certain
circumstances (which have not been satisfied at any time since the
inception of the Partnership) described in the Partnership's limited
Partnership Agreement, the Class B Units may be converted into Class A
Units. The following table sets forth the range of high and low
closing prices of Class A Units for each full quarterly period for the
two most recent years, as reported by the American Stock Exchange.
----------------------------------------------------------------------
For the Quarter Ended High Low
----------------------------------------------------------------------
----------------------------------------------------------------------
March 31, 1993 1 7/16 1
----------------------------------------------------------------------
June 30, 1993 1 9/16 1
----------------------------------------------------------------------
September 30, 1993 4 1/2 1 1/4
----------------------------------------------------------------------
December 31, 1993 3 15/16 2 7/8
----------------------------------------------------------------------
----------------------------------------------------------------------
March 31, 1994 3 11/16 3
----------------------------------------------------------------------
June 30, 1994 3 5/8 2 1/2
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September 30, 1994 2 7/8 2 3/8
----------------------------------------------------------------------
December 31, 1994 3 1/4 2 5/8
----------------------------------------------------------------------
As of December 31, 1994 the Partnership had approximately 1,871 Class A
Unitholders.
The Class A Unitholders have not received any distributions since 1990.
The Class B Units do not receive distributions until the Class A
Unitholders receive Minimum Annual Distributions, as defined in the
Partnership Agreement. The existing mortgage loan imposes significant
restriction on distributions to partners under the Partnership
Agreement, including Minimum Annual Distributions to Class A
Unitholders. On April 4, 1995, the Partnership signed a commitment
letter with a new bank to refinance the existing mortgage loan. The
new mortgage loan allows, under certain conditions, distributions to
Class A Unitholders of up to 75% of Annual Excess Cash Flow, as defined
under the terms of the commitment letter. See Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
II-1
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(In thousands, except per unit amounts)
<S> <C> <C> <C> <C> <C>
Consolidated Operations Data
- ----------------------------
Revenue $ 46,157 $ 45,268 $ 42,998 $ 42,990 $ 45,425
Operating income 5,122 5,556 4,331 3,848 6,056
Net income (loss) 627 1,120 113 (1,923) (1,656)
Income (loss) per unit:
Class A: Net loss (.10) (.02) (.22) (.66) (.72)
Class B: Net income 1.25 1.27 1.17 1.00 .60
Distributions per Class A Unit
- ------------------------------
From operations (includes support
contributions)(1) $ -- $ -- $ -- $ -- $ 1.83
Weighted average number of units outstanding
Class A 5,340,214 5,340,214 4,490,214 4,297,954 3,021,080
Class B 950,000 950,000 950,000 950,000 950,000
Consolidated Balance Sheet Data
- -------------------------------
Working capital (deficit)(2) $ (7,178) $(48,180) $ (48,771) $ (5,963) $ (736)
Total assets 73,542 77,369 78,589 79,029 81,811
Long-term debt and affiliate notes payable (2) 46,180 6,000 8,715 53,650 60,550
Partners' capital 15,173 14,546 13,426 12,378 14,123
Appraised values of properties 86,490 89,530 90,240 106,000 122,300
Consolidated Operations Data
- ----------------------------
Gross operating profit (3) $ 13,566 $ 13,739 $ 11,944 $ 11,581 $ 13,555
Capital expenditures 2,049 2,353 2,530 1,799 3,376
Net cash provided by operating activities 5,568 5,841 4,080 2,665 3,603
Net cash used in investing activities (1,944) (2,394) (2,433) (1,513) (4,020)
Net cash provided (used) by financing activities (5,279) (3,612) (1,391) 449 (139)
<FN>
(1) AHS and an affiliate were required to supplement distributable cash
flow to the extent that such amounts were not sufficient to make
Minimum Annual Distributions under the Partnership Agreement (support
contributions) for a three-year period following the initial offering
of Class A units. 1990 distributions include certain support
contributions.
(2) Certain of the Partnership's indebtedness to unaffiliated financial
institutions was classified as current at December 31, 1993 and 1992.
See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(3) Gross operating profit represents operating income before rent, taxes,
insurance, management fees and depreciation and amortization.
</TABLE>
II-2
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table reflects certain historical financial information
and operating statistics for the years ended December 31, 1994, 1993
and 1992.
<TABLE>
<CAPTION>
Historical Financial Information
--------------------------------
(in thousands, except operating statistics)
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Rooms $ 26,863 $ 26,693 $ 25,584
Food and beverage 12,274 11,664 11,349
Other property operations 7,020 6,911 6,065
-------- -------- --------
Total revenue 46,157 45,268 42,998
Expenses:
Hotel operations 32,591 31,529 31,054
-------- -------- --------
Gross operating profit 13,566 13,739 11,944
Other operating expenses (1) 8,444 8,183 7,613
-------- -------- --------
Operating income 5,122 5,556 4,331
Other income (expense) net (2) (4,495) (4,436) (4,218)
-------- -------- --------
Net income $ 627 $ 1,120 $ 113
-------- -------- --------
-------- -------- --------
<CAPTION>
Operating Statistics
--------------------
<S> <C> <C> <C>
Average Daily Rate $59.42 $60.08 $61.45
Average occupancy percent 77.9% 76.6% 72.9%
Number of available rooms 1,586 1,586 1,586
<FN>
(1) Includes rent, taxes, insurance, management fees, depreciation
and amortization.
(2) Principally comprised of interest expense.
</TABLE>
II-3
<PAGE>
REVENUE
Total revenue increased $889,000 or 2.0% in 1994, compared to an increase of
$2,270,000 or 5.3% in 1993. Of the total revenue in 1994, 1993 and 1992, rooms
comprised 58.2%, 59.0% and 59.5%, respectively; food and beverage comprised
26.6%, 25.8% and 26.4%, respectively, and other property operations comprised
15.2%, 15.2% and 14.1%, respectively.
Rooms revenue is primarily a function of the Properties' occupancy levels and
room rates. Rooms revenue increased $170,000 in 1994 due to an increase in
occupancy from 76.6% to 77.9% offset by a decrease in average room rates of
$0.66. Rooms revenue increased $1,109,000 in 1993 due to an increase in
occupancy from 72.9% to 76.6% offset in part by a decrease in average room rates
of $1.37. Rooms revenue increases in 1994 and 1993 are attributable to
increased sales to group and contract customers at the Regal McCormick Ranch,
Sheraton University Center and Sheraton Inn Buffalo Airport. These rooms
revenue increases were offset in part by decreases in rooms revenue at the
Sheraton Lakeside which continues to be impacted by significant competitive
pressures in the leisure market. These competitive pressures combined with
discounts offered to attract more group and contract business resulted in the
decreases in average room rates in 1994 and 1993.
Food and beverage revenue increased $610,000 or 5.2% in 1994 and $315,000 or
2.8% in 1993. Food and beverage revenue is impacted by room occupancy and the
mix of room sales between leisure, group, contract and business customers. The
primary increases in occupancy in 1994 and 1993 were from group and contract
customers which typically have a favorable impact on food and beverage revenue.
Other property operations consist of marina sales and rentals (at Fourwinds),
gift shops, food marts, lease income, phone charges and other miscellaneous
guest services. Other property operations increased $109,000 or 1.6% in 1994
and $846,000 or 13.9% in 1993. The 1994 increase in other property operations
was primarily due to the overall increase in occupancy. The 1993 increase in
other property operations was primarily due to the increases in overall room
occupancy, villa rentals at Regal McCormick Ranch and marina sales and rentals
at Fourwinds. The portion of the increase in other revenue primarily
attributable to increased occupancy in 1993 was approximately $357,000 or 5.9%.
Regal McCormick Ranch's increase in villa rentals was similar to its increase in
rooms revenue. The increase in marina sales and rentals was the result of new
product lines, improved facilities and excellent summer weather.
While the hotel industry continues to be very competitive, the Properties have
outperformed the industry when measuring revenue per available room (occupancy
percent times average room rate). The Properties revenue per available room was
$46.29, $46.02 and $44.80 in 1994, 1993 and 1992, respectively. Revenue per
available room for the United States hotel industry, accumulated by Smith Travel
Research, was $41.49, $38.85 and $36.29 in 1994, 1993 and 1992, respectively.
II-4
<PAGE>
COSTS AND OPERATING EXPENSES
Total operating expenses increased $1,323,000 or 3.3% in 1994. This increase is
attributable to an increase in hotel operating expenses of $1,062,000 and an
increase in other operating expenses of $261,000. Hotel operating expenses
increased in 1994 primarily as a result of the overall increases in occupancy
and revenue, food and beverage costs and marketing expenses. As a result of
increased food costs, food and beverage costs as a percent of food and beverage
revenue increased to 71.4% in 1994 from 70.2% in 1993. Marketing expenses
increased 6.9% in 1994 primarily as a result of increases in franchise fee rates
at two of the three Sheraton properties. The increase in other operating
expenses in 1994 is due to a 6.0% increase in depreciation and amortization from
renovations completed in June 1993 on the Sheraton Inn - Buffalo Airport and
other capital additions.
Total operating expenses increased $1,045,000 or 2.7% in 1993. This increase is
attributable to an increase in hotel operating expenses of $475,000 and an
increase in other operating expenses of $570,000. Hotel operating expenses
increased in 1993 primarily as a result of overall increases in occupancy and
revenue. The increase in other operating expenses in 1993 is due to an increase
of 15.1% in rent, taxes and insurance from increases in property taxes and an
increase of 3.8% in depreciation and amortization from capital additions.
Other income and expense remained relatively consistent in 1994 as compared to
1993. Interest expense increased 3.7% in 1994 primarily as a result of
increases in the interest rate offset by decreases in the total indebtedness
level. The increase in interest expense in 1994 was offset in part by a gain of
$105,000 recognized in 1994 on an insurance settlement.
Other income and expense increased $218,000 or 5.2% in 1993. The components of
this increase include a decrease of $351,000 in interest expense in 1993
primarily due to a decrease in interest rates offset by a $569,000 gain on an
insurance settlement recognized in 1992.
In the fourth quarter of 1994, the Partnership recorded an adjustment for
accrued vacation in the amount of $150,000.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Net cash provided by operating activities was $5,568,000 in 1994, a decrease of
$273,000 from 1993. This decrease is the result of an increase in cash paid to
suppliers and vendors for increased costs and expenses of $2,096,000, offset in
part by increases in cash received from customers for increased hotel revenue of
$1,403,000, increased other cash receipts of $145,000 and decreases in cash paid
to employees of $186,000 and interest paid of $89,000. Net cash provided by
operating activities was $5,841,000 in 1993, an increase of $1,761,000 from
1992. This increase is the result of increases in cash received from customers
from increased hotel revenue of $2,200,000, increased other cash receipts of
$98,000 and decreased interest paid of $637,000 from the non-payment of interest
on notes payable to an affiliate, offset in part by an increase in cash paid to
suppliers and vendors for increased costs and expenses of $942,000, increase in
cash paid to employees of $207,000 and a decrease in insurance proceeds of
$25,000.
Net cash used in investing activities decreased $450,000 in 1994 due to
decreases in capital expenditures and cash paid for other assets. Net cash used
in investing activities decreased
II-5
<PAGE>
$39,000 in 1993 due to decreases in capital expenditures and cash received from
insurance proceeds.
Net cash used in financing activities increased $1,667,000 in 1994 primarily due
to increases in principal payments on the Partnership's indebtedness. Net cash
used in financing activities increased $2,221,000 in 1993, primarily due to
increases in principal payments on the Partnership's indebtedness, increases in
refinancing costs paid and decreases in cash received from partner contributions
and the sale of Class A Units to affiliates. The proceeds from the Class A
Units sold in 1992 were used to pay indebtedness.
INDEBTEDNESS
On April 4, 1995 the Partnership signed a commitment letter with a new lender to
provide a $45,000,000 first mortgage loan and a $1,000,000 revolving credit
line. The proceeds of the $45,000,000 first mortgage loan will be used to pay
off the existing mortgage loan and the note payable to bank as well as provide
funds for certain property renovations and the payment of a facility fee and
closing costs. The Partnership expects to complete the refinancing by June 1995.
The new financing provides long-term financing, more favorable interest rates
and less restrictive loan covenants as compared to the existing mortgage loan.
The new financing was obtained by the General Partner and an affiliate, Regal
Hotels International Holdings Limited ("RHL"). RHL has agreed to provide a
limited guarantee for the new first mortgage loan. The Partnership expects to
pay a fee to RHL for the limited guarantee. While the amount of the fee has not
been determined, in no event will the amount exceed what an unaffiliated
guarantor would be paid.
The refinancing includes a variety of interest rate options, the most favorable
of which is LIBOR plus 2% (7.85% at December 31, 1994). This compares to the
existing mortgage loan rate of 9% at December 31, 1994. Repayment of the new
first mortgage loan is based on a twenty-year amortization with a balloon
payment at the end of the fifth year while the revolving credit line is
renewable annually at the option of the lender.
The commitment letter contains a number of conditions which are different than
those contained in the Partnership's existing mortgage loan. Some of the more
significant differences include a new maturity date in 2000, a change in the
maximum loan to value ratio based on the appraised value of the Properties from
60% to 65%, the allowance of distributions to Class A Unitholders in certain
circumstances, the removal of the restriction on payments to AHS on the
Partnership's affiliated notes payable by allowing principal and interest
payments in certain circumstances, the removal of the requirement to offer any
of the Properties for sale and the added requirement that affiliates of the
General Partner maintain their present level of ownership in the Partnership.
The commitment letter also requires the maintenance of a capital reserve account
equal to 4% of gross revenue in 1995 and 5% of gross revenue thereafter. Based
on this requirement and with the loan proceeds, the Partnership expects to
expend approximately $7,300,000 for capital expenditures over the next two
years.
The commitment letter contains certain conditions precedent that the Partnership
considers normal due diligence procedures typically conducted in connection with
making such a loan. The Partnership believes that none of these conditions are
significant contingencies for making the loan. As a result of the lender's firm
commitment, the Partnership has classified the indebtedness currently
outstanding under the mortgage loan payable and note payable to bank as long-
term.
II-6
<PAGE>
The Partnership had indebtedness at December 31, 1994 in the amount of
$48,365,000. Such indebtedness includes a mortgage loan payable of $40,450,000
due July 31, 1995, a note payable to bank of $1,915,000 due October 31, 1995 and
affiliate notes payable of $6,000,000 which were due January 1995. During 1994,
the Partnership extended the mortgage loan payable and the note payable to bank
to July 31, 1995 and October 31, 1995, respectively. These extensions required
principal reductions of $2,000,000 and the payment of $311,000 in fees.
The existing mortgage loan contains numerous covenants requiring, among other
matters, the maintenance of specified cash flow levels for the Partnership and
at each hotel property, a maximum loan to value ratio of 60% based on the
Partnership's secured debt to aggregate appraised values of the Properties,
limitations on additional borrowings, restrictions on payments to AHS on the
Partnership's affiliated notes payable, restrictions on distributions to
partners under the Partnership Agreement, including Minimum Annual Distributions
to Class A Unitholders, the expenditure or reserve (limited to $2,000,000) for
the purchase, repair and replacement of hotel property, furniture, fixtures and
equipment and cross covenant defaults with the Partnership's note payable to
bank and certain indebtedness of the General Partner and other affiliates. In
addition to the various loan covenants above, the mortgage loan requires the
Partnership to offer the Sheraton Lakeside Inn and Sheraton Inn - Buffalo
Airport for sale at a sales price not less than the current appraised values.
The Partnership selected a broker to market the two hotel properties in
accordance with the mortgage loan. The mortgage loan also requires all proceeds
from such sales to be applied to the outstanding balance of the mortgage loan.
No acceptable offers have been received.
The Partnership's affiliate notes payable of $6,000,000 were due January 1995.
These affiliate notes payable have been subordinated to the existing mortgage
loan and note payable to bank. A condition of the commitment letter signed by
the Partnership for the new first mortgage loan and revolving credit line also
requires the subordination of the principal balance of the affiliate notes
payable. The affiliate has agreed to the subordination to the existing mortgage
loan and the new first mortgage loan and revolving credit line under the
commitment letter. Accordingly, the affiliate notes payable principal balance
is classified as long-term at December 31, 1994.
PARTNERSHIP DISTRIBUTIONS AND UNIT CONVERSIONS
The Partnership Agreement provides for periodic distribution of distributable
cash flow, as defined, to the partners subject to any applicable restrictions
and the discretion of the General Partner. Distributable cash flow is generally
defined as cash flow from operations of the hotel properties. Such cash is
allocated and distributed (net of AHS's 1% general partnership interest in the
Operating Partnerships) 99% to the Class A Unitholders and 1% to the General
Partner until the Class A Unitholders have received defined Minimum Annual
Distributions. The Minimum Annual Distribution is $2.16 per Class A Unit. The
Partnership expects an amount less than the Minimum Annual Distribution per
Class A Unit will be available for distribution from future operating cash flow.
Any portion of the Minimum Annual Distribution that is not paid by the
Partnership in any year is added to the cumulative unpaid Minimum Annual
Distribution. Based on the appraised value of the Properties at December 31,
1994, the cumulative unpaid Minimum Annual Distribution per Class A Unit exceeds
the Partnership's net assets per Unit of approximately $6.00 by approximately
50%.
The Class B Units entitle each Unitholder to a limited partnership interest
which is subordinated to the Class A Units. The Class B Units are redeemable or
convertible in certain circumstances. The Class B Units do not receive
distributions until the Class A Unitholders receive Minimum Annual Distributions
which have not been made since 1990. Through 1996, the Class B Units
II-7
<PAGE>
are convertible into Class A Units only to the extent that distributable cash
flow of the Partnership in the previous year would have been sufficient to pay
Minimum Annual Distributions for the Class A Units, including the Class B Units
to be converted. After 1996, a minimum of 250,000 Class B Units are required to
be converted into Class A Units annually through 2001 at a redemption value of
$20.00 per Class B Unit, by issuing Class A Units valued at the then current
market price of the Class A Units. Such required conversion may result in
dilution to the Class A Unitholders prior to conversion. For example, based on
the average market price of Class A Units during 1994 of approximately $3.00,
the conversion of 250,000 Class B Units in 1997 would result in an approximate
24% dilution to the Class A Unitholders upon conversion. The conversion of all
950,000 Class B Units would result in an approximate 54% dilution to the
preconversion Class A Unitholders at the $3.00 per unit market price.
PROPERTY VALUES
The appraised value of the Properties is $86,490,000 at December 31, 1994, which
exceeds their carrying values of $68,353,000. However, the appraised value on
two of the hotel properties is approximately $5,000,000 less in the aggregate
than their carrying values at December 31, 1994. In accordance with a proposed
Statement on Financial Accounting Standards on Accounting for the Impairment of
Long-Lived Assets, which is expected to be issued in 1995, the Partnership has
not recognized an impairment on these two hotel properties as the undiscounted
cash flow on these properties exceeds their carrying values. Currently the
Partnership has no plans to sell these properties at less than their carrying
values.
INCOME TAXES
As a result of the Revenue Act of 1987, the Partnership will become a taxable
entity in 1998. As a result, the income of the Partnership will be taxable as a
corporation and distributions from the Partnership will continue to be taxable
to the individual partners. The Partnership is evaluating various alternatives
to minimize any adverse impact on the Partnership as a result of these changes
in the tax laws.
INFLATION
The rate of inflation as measured by changes in the average consumer price index
has not had a material impact on the revenue or net income of the Partnership in
the three most recent years.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of AHP are filed under this Item, beginning on
Page II-9. The financial statement schedules required under Regulation
S-X are filed pursuant to Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
II-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
AIRCOA Hotel Partners, L.P.
We have audited the accompanying consolidated balance sheets of AIRCOA Hotel
Partners, L.P. and subsidiary operating partnerships as of December 31, 1994 and
1993, and the related consolidated statements of operations, partners' capital
and cash flows for each of the years in the three year period ended December 31,
1994. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of AIRCOA Hotel
Partners, L.P. and subsidiary operating partnerships as of December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
years in the three year period ended December 31, 1994, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
February 27, 1995,
except as to notes
3 and 4 which are
as of April 4, 1995
II-9
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(In thousands)
<TABLE>
<CAPTION>
Assets 1994 1993
- ------ -------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,261 $ 2,916
Accounts receivable:
Trade 2,555 2,675
Affiliates 43 207
Inventory 401 376
Prepaid expenses 498 374
-------- --------
Total current assets 4,758 6,548
-------- --------
Property and equipment, at cost:
Land and leasehold improvements 8,767 8,693
Buildings and leasehold improvements 70,109 69,518
Furniture, fixtures and equipment 16,304 15,240
Construction in progress 407 87
-------- --------
95,587 93,538
Less accumulated depreciation and amortization (27,234) (23,311)
-------- --------
Net property and equipment 68,353 70,227
Other assets, including debt issue costs, net of
accumulated amortization of $212 in 1994 and $330 in 1993 431 594
-------- --------
$ 73,542 $ 77,369
-------- --------
-------- --------
</TABLE>
(Continued)
II-10
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED BALANCE SHEETS (Continued)
December 31, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
Liabilities and Partners' Capital 1994 1993
- --------------------------------- -------- --------
<S> <C> <C>
Current liabilities:
Current installments of long-term debt $ 2,185 $ 47,315
Trade accounts payable 1,634 1,689
Payables to affiliates:
Trade accounts 444 469
Interest 2,100 --
Accrued liabilities:
Payroll 327 363
Taxes, other than income taxes 982 934
Other 2,450 2,350
Deferred revenue and advance deposits 1,814 1,608
-------- --------
Total current liabilities 11,936 54,728
Long term debt, excluding current installments 40,180 --
Notes payable to affiliates, including accrued interest of
$1,380 in 1993 6,000 7,380
Deferred franchise fees -- 462
Accrued administration and management fees
payable to affiliate 253 253
-------- --------
Total liabilities 58,369 62,823
-------- --------
Commitments and contingencies.
Partners' capital:
General partner 376 375
Limited partners:
Class A Unitholders 21,605 22,157
Class B Unitholders (deficit) (6,808) (7,986)
-------- --------
Total partners' capital 15,173 14,546
-------- --------
$ 73,542 $ 77,369
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
II-11
<PAGE>
AIRCOA HOTEL PARTNERS, L.P
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(In thousands, except unit data)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Rooms $ 26,863 $ 26,693 $ 25,584
Food and beverage 12,274 11,664 11,349
Other property operations 7,020 6,911 6,065
--------- --------- ---------
46,157 45,268 42,998
--------- --------- ---------
Costs and operating expenses:
Rooms 7,242 7,189 7,132
Food and beverage 8,769 8,186 8,167
Other property operations 3,325 3,206 2,976
Administrative and general 4,793 4,823 4,748
Marketing 4,025 3,764 3,742
Energy 2,307 2,234 2,015
Property maintenance 2,130 2,127 2,274
Rent, taxes and insurance 2,665 2,674 2,323
Management fees 1,835 1,788 1,705
Depreciation and amortization 3,944 3,721 3,585
--------- --------- ---------
41,035 39,712 38,667
--------- --------- ---------
Operating income 5,122 5,556 4,331
--------- --------- ---------
Other income (expenses):
Interest expense, including amortization of debt issue
costs of $471 in 1994, $458 in 1993, and $380 in 1992 (4,600) (4,436) (4,787)
Gain on insurance settlements 105 - 569
--------- --------- ---------
(4,495) (4,436) (4,218)
--------- --------- ---------
Net income $ 627 $ 1,120 $ 113
--------- --------- ---------
--------- --------- ---------
Income (loss) per limited partnership unit:
Class A Unitholders $ (.10) $ (.02) $ (.22)
--------- --------- ---------
--------- --------- ---------
Weighted average number of units outstanding 5,340,214 5,340,214 4,490,214
--------- --------- ---------
--------- --------- ---------
Class B Unitholders $ 1.25 $ 1.27 $ 1.17
--------- --------- ---------
--------- --------- ---------
Weighted average number of units outstanding 950,000 950,000 950,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
II-12
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(In thousands, except unit data)
<TABLE>
<CAPTION>
Limited Partners' Capital (Deficit)
---------------------------------------
Class A Unitholders Class B Unitholders Unallocated Total
General ------------------- ------------------- capital partners'
partner Units Capital Units Capital contributions capital
------- ----- ------- ----- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 $ 375 4,490,214 $ 22,308 950,000 $(10,588) $ 283 $ 12,378
Issuance of Class A Units pursuant
to general partners' purchase
obligation -- 850,000 935 -- -- -- 935
Capital contributions pursuant
to contractual arrangements -- -- -- -- 283 (283) --
Net income (loss) (10) -- (994) -- 1,117 -- 113
------ --------- ------- ------- -------- ------ --------
BALANCES AT DECEMBER 31, 1992 365 5,340,214 22,249 950,000 (9,188) -- 13,426
Net income (loss) 10 -- (92) -- 1,202 -- 1,120
------ --------- ------- ------- -------- ------ --------
BALANCES AT DECEMBER 31, 1993 375 5,340,214 22,157 950,000 (7,986) -- 14,546
Net income (loss) 1 -- (552) -- 1,178 -- 627
------ --------- ------- ------- -------- ------ --------
BALANCES AT DECEMBER 31, 1994 $ 376 5,340,214 $ 21,605 950,000 $ (6,808) $ -- $ 15,173
------ --------- ------- ------- -------- ------ --------
------ --------- ------- ------- -------- ------ --------
</TABLE>
See accompanying notes to consolidated financial statements.
II-13
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 44,592 $ 43,189 $ 40,989
Cash paid to suppliers and vendors (25,226) (23,130) (22,188)
Cash paid to employees (12,423) (12,609) (12,402)
Interest paid (3,430) (3,519) (4,156)
Other cash receipts 2,055 1,910 1,837
--------- --------- ---------
Net cash provided by operating activities 5,568 5,841 4,080
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures (2,049) (2,353) (2,530)
Proceeds from insurance for damaged
property and equipment 105 236 380
Payments for other assets -- (277) (283)
--------- --------- ---------
Net cash used in investing activities (1,944) (2,394) (2,433)
--------- --------- ---------
Cash flows from financing activities:
Principal payments on long-term debt (4,950) (3,325) (2,310)
Refinancing costs and other (329) (342) (244)
Proceeds from partner contributions and sale of Class
A Units -- 55 1,163
--------- --------- ---------
Net cash used in financing activities (5,279) (3,612) (1,391)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents (1,655) (165) 256
Cash and cash equivalents at beginning of period 2,916 3,081 2,825
--------- --------- ---------
Cash and cash equivalents at end of period $ 1,261 $ 2,916 $ 3,081
--------- --------- ---------
--------- --------- ---------
</TABLE>
(Continued)
See accompanying notes to consolidated financial statements.
II-14
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(In thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 627 $ 1,120 $ 113
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,944 3,721 3,585
Amortization of debt issue costs 471 458 380
Gain on insurance settlements (105) -- (569)
Decrease (increase) in accounts receivable
relating to operations 284 (328) (251)
Decrease (increase) in inventory (25) (74) 20
Increase in prepaid expenses (124) (41) (20)
Increase in trade accounts payable, payables
to affiliates, accrued liabilities, accrued
administration and management fees payable
to affiliate relating to operations and deferred
franchise fees 290 826 768
Increase in deferred revenue and advance deposits 206 159 54
-------- -------- --------
Net cash provided by operating activities $ 5,568 $ 5,841 $ 4,080
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
II-15
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
AIRCOA Hotel Partners, L.P. (the "Partnership") is a publicly traded
limited partnership formed to acquire, own and operate hotel properties.
The Partnership holds a 99% limited partner interest in limited
partnerships (the "Operating Partnerships"). Each of the Operating
Partnerships owns and operates one of the six hotel and resort properties
(the "Properties"). AIRCOA Hospitality Services, Inc. ("AHS"), a wholly-
owned subsidiary of Richfield Hospitality Services, Inc. ("Richfield")
holds a 1% General Partner interest in the Partnership and in each of the
Operating Partnerships.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Partnership and the accounts of each of the Operating Partnerships.
All significant interpartnership accounts and transactions have been
eliminated.
CASH AND CASH EQUIVALENTS
Cash equivalents, representing overnight Eurodollar deposits and repurchase
agreements, were $739,000 and $1,941,000 at December 31, 1994 and 1993,
respectively. For purposes of the consolidated statements of cash flows,
the Partnership considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
OPERATING ASSETS
The Partnership uses an inventory method of accounting for china,
glassware, silver, linen, and uniforms. Under the inventory method,
operating assets are stated at amounts based upon the physical quantity of
such assets on hand using average costs, less a valuation allowance to
reflect deterioration from use.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Hotel property renovations and
improvements are capitalized. Repairs, maintenance, and minor
refurbishments are charged to expense as incurred. Interest incurred during
construction of facilities or major renovations is capitalized and
amortized over the life of the related assets. Interest of $43,000 was
capitalized in 1993. No interest was capitalized in 1994 or 1992. Upon
the retirement or sale of property and equipment, the cost and related
accumulated depreciation are removed from the respective accounts, and the
resulting gain or loss, if any, is included in operations.
Property and equipment held under leaseholds is amortized over the shorter
of the lease term or the estimated useful life of the asset.
II-16
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT (CONTINUED)
Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the assets, generally as follows:
Land improvements and leasehold improvements 15 years
Buildings and leasehold improvements 30 years
Furniture, fixtures and equipment 10 years
The appraised value on two of the hotel properties is approximately
$5,000,000 less than their carrying values in the aggregate at December 31,
1994. However, the Partnership believes that expected future cash flows
from operation of these properties will be sufficient to recover their
carrying values. The Partnership has no current plans to sell the
properties at less than their carrying values.
OTHER ASSETS
Other assets consist principally of debt issue costs, franchise license
costs, and liquor license costs. Debt issue and franchise license costs are
amortized using the straight-line method over the term of the respective
debt or license agreement.
DEFERRED REVENUE AND ADVANCE DEPOSITS
Deferred revenue for facility rentals and advance room deposits is
recognized as revenue when services are provided.
INCOME TAXES
No current provision or benefit for income taxes is included in the
accompanying consolidated financial statements since the taxable income or
loss of the Partnership is included in the tax returns of the individual
partners of the Partnership.
Current federal income tax regulations will subject the Partnership to
corporate taxation beginning in 1998. Accordingly, the Partnership
utilizes an asset and liability method of accounting for deferred income
taxes. Under the asset and liability method, deferred income taxes are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis expected to be recovered or
settled subsequent to 1997. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years such temporary differences are expected to be recovered or settled.
The effect on deferred taxes of a change in tax rates will be recognized in
operations in the period of the enactment date.
II-17
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET INCOME (LOSS) PER UNIT
Net income (loss) per limited partnership unit is computed by dividing the
net income (loss) attributable to each class of units by the weighted
average number of units outstanding in each class during the period.
Because of the loss attributable to A Unitholders in 1994, 1993 and 1992,
Class A Units issuable upon conversion of notes payable (see Note 3) and
upon conversion of the Class B Units (see Note 2) were not considered in
the computation, as such conversions would be anti-dilutive.
RECLASSIFICATIONS
Certain amounts in the 1993 and 1992 financial statements have been
reclassified to conform to the 1994 presentation.
(2) PARTNERSHIP UNITS AND ALLOCATIONS
LIMITED PARTNERSHIP UNITS
The Class A Units entitle each Unitholder to a limited partnership interest
in a percentage of the profits and losses, tax allocations, and
distributions of the Partnership, as described below.
The Class B Units entitle each Unitholder to a limited partnership interest
which is subordinated to the Class A Units. The Class B Units are
redeemable by the Partnership or convertible into Class A Units, in certain
circumstances. The Class B Units do not receive distributions until the
Class A Unitholders receive defined Minimum Annual Distributions. Through
1996 the Class B Units are convertible into Class A Units to the extent
that distributable cash flow of the Partnership in the previous year would
have been sufficient to pay Minimum Annual Distributions for the Class A
Units, including the Class B Units to be converted. After 1996, a minimum
of 250,000 Class B Units are required to be converted into Class A Units
annually through 2001 at a redemption value of $20.00 per Class B Unit, by
issuing class A units valued at the then current market price of the Class
A Units.
CASH DISTRIBUTIONS
The Partnership agreement provides for periodic distribution of
distributable cash flow, as defined, to the partners at the discretion of
the General Partner. Distributable cash flow is generally defined as cash
flow from operations of the hotel properties. Such cash is allocated and
distributed (net of AHS' 1% general partnership interest in the Operating
Partnerships) 99% to the Class A Unitholders and 1% to the General Partner
until the Class A Unitholders have received defined Minimum Annual
Distributions. The Minimum Annual Distribution is presently $2.16 per
Class A Unit. After payment of the Minimum Annual Distribution, additional
cash distributions, if any, will be allocated 49.5% to the Class A
Unitholders, 49.5% to the Class B Unitholders and 1% to the General
Partner.
II-18
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(2) PARTNERSHIP UNITS AND ALLOCATIONS (CONTINUED)
CASH DISTRIBUTIONS (CONTINUED)
Capital transaction proceeds generally consist of net proceeds from sales
and refinancing of the Partnership's hotel properties. Cash from capital
transaction proceeds is allocated and distributed 99% to the Class A
Unitholders and 1% to the General Partner until the Class A Unitholders
have received any previously unpaid Minimum Annual Distributions, and the
unrecovered capital preference amount, as defined. Capital transaction
proceeds are then allocated and distributed 99% to the Class B Unitholders
and 1% to the General Partner until all the Class B Units have been
redeemed. Subsequent to the redemption of the Class B Units, capital
transaction proceeds are allocated and distributed 75% to the Class A
Unitholders and 25% to the General Partner. The unrecovered capital
preference amount of a Class A and a Class B Unit at December 31, 1994 is
$16.60 and $20.00, respectively.
The Minimum Annual Distribution amount attributable to Class A Unitholders
and the Class B Unitholders sharing percentage in distributable cash flow
are reduced proportionately based upon distributions of capital transaction
proceeds.
Based on the appraised value of the Properties at December 31, 1994, the
cumulative unpaid Minimum Annual Distribution per Class A Unit exceeds the
Partnership's net assets per Unit of approximately $6.00 by approximately
50%. The Partnership did not declare distributions in 1994, 1993 and 1992.
ALLOCATION OF INCOME AND LOSSES
Partnership income and losses are allocated among the partners in
accordance with federal income tax provisions based upon the partners
ownership interests, adjusted to reflect original contribution values
agreed upon by the partners and other basis differences at the inception of
the partnership. Income and losses are allocated among individual Units on
a pro rata basis within each class of units. For financial reporting
purposes, the net income or loss of the Partnership is generally allocated
in accordance with the income tax allocation provisions described above.
(3) LONG-TERM DEBT
On April 4, 1995, the Partnership signed a commitment letter with a new
lender to provide a $45,000,000 first mortgage loan and a $1,000,000
revolving credit line. The proceeds of the $45,000,000 first mortgage loan
will be used to refinance, on a long-term basis, the Partnership's existing
mortgage loan in the amount of $40,450,000 at December 31, 1994 and note
payable to bank of $1,915,000 at December 31, 1994 which are due July 31,
1995 and October 31, 1995, respectively, as well as provide funds for
certain property renovations and the payment of a facility fee and closing
costs. The commitment letter contains certain conditions precedent that
the Partnership considers normal due diligence procedures typically
conducted in connection with
II-19
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(3) LONG-TERM DEBT (CONTINUED)
making such a loan. The Partnership believes that none of these conditions
are significant contingencies in making the loans. As a result of this
commitment, the Partnership's existing mortgage loan and note payable to
bank have been classified as long-term at December 31, 1994. The
Partnership expects the refinancing to be completed by June 1995.
The refinancing terms outlined in the commitment letter include a variety
of interest rate options for the loans. In addition, repayment of the
first mortgage loan is based on a twenty year amortization with a balloon
payment at the end of the fifth year. The revolving credit line will be
renewable annually at the option of the lender. Based on the terms of the
refinancing outlined in the commitment letter, the indebtedness pursuant to
the Partnership's existing mortgage loan and note payable to bank are
summarized as follows:
<TABLE>
<CAPTION>
December 31
------------------
1994 1993
-------- --------
<S> <C> <C>
Mortgage loan $ 40,450 $ 44,600
Note payable to bank 1,915 2,715
-------- --------
42,365 47,315
Less current installments 2,185 47,315
-------- --------
Long-term debt, excluding current
installments $ 40,180 $ --
-------- --------
-------- --------
</TABLE>
As outlined in the commitment letter, the new first mortgage loan and
revolving credit line contain various covenants including minimum debt
service ratios, restrictions on additional indebtedness, limitations on
annual cash distributions to Class A Unitholders, limitations on the
payment of principal and interest on the affiliate notes payable, deferral
of management fees payable to Richfield if minimum debt service ratios are
not achieved, maintenance of a capital expenditure reserve account equal to
4% of gross revenue in 1995 and 5% thereafter, and a maximum loan-to-value
ratio of 65% based on the aggregate appraised values of the Properties.
The new first mortgage loan and revolving credit line are subject to
certain limited guarantees of an affiliate of the Partnership. The new
first mortgage loan also requires the Bank's approval of any dilution or
change in the present ownership interests of affiliates of the General
Partner in the Partnership.
Maturities of long-term debt (based on the terms of the commitment letter)
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1995 $ 2,185
1996 1,080
1997 1,080
1998 1,080
1999 1,080
2000 35,860
--------
$ 42,365
--------
--------
</TABLE>
II-20
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(3) LONG-TERM DEBT (CONTINUED)
The existing mortgage loan's interest rate is 3% above a specific
Eurodollar rate or 1% above the bank's prime if the Eurodollar rate is
unavailable. The rate at December 31, 1994 was 9.0%. The Mortgage Loan
requires monthly installments of $250,000 plus interest and is secured by
separate first mortgages on the hotel properties and a security interest
in all assets related to the operation of the hotel properties.
The existing mortgage loan contains numerous covenants requiring, among
other matters, the maintenance of specified cash flow levels for the
Partnership and at each hotel property, a maximum loan to value ratio of
60% based on the Partnership's secured debt to aggregate appraised values
of the Properties, limitations on additional borrowings, restrictions on
payments to AHS on the Partnership's affiliated notes payable,
restrictions on distributions to partners under the Partnership Agreement
including Minimum Annual Distributions to Class A Unitholders,
restrictions as to cash balances and cross default provisions with the
bank note payable and specified indebtedness of the General Partner and
certain affiliates and the expenditure or reserve (limited to $2,000,000)
for the purchase, repair, and replacement of hotel property, furniture,
fixtures and equipment.
The existing mortgage loan requires the Partnership to offer the Sheraton
Lakeside Inn and Sheraton Inn - Buffalo Airport for sale at a price not
less than their current appraised values. The Partnership selected a
broker to market the two hotel properties on terms consistent with the
mortgage loan. The existing mortgage loan also requires all proceeds from
such sales to be applied to the outstanding balance of the mortgage loan.
In connection with the refinancing terms outlined in the commitment
letter, the Partnership will no longer be required to offer any of the
Properties for sale.
The amended note payable to bank has an interest rate of 1.5% above the
bank's prime rate. In the event that the effective interest rate exceeds
9% per annum, the excess interest is deferred. The effective rate at
December 31, 1994 was 10.0%. The note is payable in monthly installments
of $25,000 plus interest, and is convertible into Class A Units of the
Partnership at $16.60 per unit. The note is secured by a pledge from an
affiliate of AHS of management fees payable to the affiliate by the
Partnership's hotel properties; the pledge of 718,000 Class A Units of the
Partnership held by certain affiliates, and the personal guarantees of two
former officers of AHS. The note contains covenant provisions which are
similar to those contained in the existing mortgage loan.
In accordance with the Partnership Agreement, the General Partner is
entitled to receive a 1% financing fee in exchange for arranging the
refinancing of the Partnership's indebtedness. Such fee is required to be
reduced by the amount of the financing fee paid to the lender. In
addition the Partnership expects to pay a fee to an affiliate for the
limited guarantee of the new first mortgage loan and the revolving credit
line.
II-21
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(4) NOTES PAYABLE TO AFFILIATES
The Partnership's affiliate notes payable of $6,000,000 were due January
1995. These affiliate notes payable have been subordinated to the
existing mortgage loan and note payable to bank. A condition of the
commitment letter signed by the Partnership for the first mortgage loan
and revolving credit line also require the subordination of the affiliate
notes payable principal balance. The affiliate has agreed to the
subordination to the existing mortgage loan and the new first mortgage
loan and revolving credit line under the commitment letter. Accordingly,
the affiliate notes payable principal balance is classified as long-term
at December 31, 1994.
(5) INCOME TAXES
The Partnership's only significant temporary difference (which will result
in tax deductions in 1998 and later years) is an excess of the tax basis
over the book basis of the Properties of approximately $2,350,000 and
$3,200,000 at December 31, 1994 and 1993, respectively. The Partnership's
net deferred tax asset was approximately $940,000 and $1,200,000 at
December 31, 1994 and 1993, respectively. The Partnership has established
a 100% valuation allowance on these net deferred tax assets. The change
in the valuation allowance in 1994 was a decrease of approximately
$260,000.
(6) RELATED PARTY TRANSACTIONS AND COMMITMENTS
PARTNERSHIP ADMINISTRATION
AHS, as General Partner, is responsible for managing the business and
affairs of the Partnership and the Operating Partnerships. The General
Partner is reimbursed monthly for all direct operating expenses incurred
on behalf of the Partnership and Operating Partnerships. In addition, the
General Partner receives an annual partnership administration fee equal to
0.25% of the independently appraised value of the hotel properties of the
Partnership.
MANAGEMENT AGREEMENTS
Richfield operates the hotel properties for the Partnership in exchange
for a management fee equal to 4% of annual gross revenue from the hotel
properties. In addition, the hotel properties are obligated to reimburse
Richfield for payroll, professional fees, and certain out-of-pocket
expenses incurred by Richfield on their behalf. The management agreements
expire in 2012 and can be terminated by the Partnership prior to
expiration, in certain circumstances, through the payment of a fee equal
to three times the management fee paid for the preceding 12 months.
Richfield also provides data processing services and obtains various types
of insurance coverage, on an aggregate basis, for the hotel properties
which it owns or manages. Such data processing and insurance costs are
allocated to the hotel properties.
II-22
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(6) RELATED PARTY TRANSACTIONS AND COMMITMENTS (CONTINUED)
LICENSE AGREEMENTS
One of the hotel properties has a license agreement with an affiliate to
operate as a Regal Hotel. The license agreement provides for a fee of 1.5%
of total revenue, as defined, and is renewed automatically for one year
periods. The agreement can be terminated by the Partnership prior to
expiration in certain circumstances, through payment of a termination fee.
HOTEL PROPERTY ACQUISITIONS AND DISPOSITIONS AND PARTNERSHIP FINANCING
The General Partner receives an acquisition fee equal to 1% of the
purchase price of any hotel property acquired by the Partnership. Upon
the sale of a hotel property, the General Partner receives either a
disposition fee equal to 1% of the sales price of the hotel property, or a
reasonable brokerage fee, based upon fees for comparable properties in the
area, less the amount of any such brokerage fees paid to third parties.
The General Partner receives a financing fee equal to 1% of the principal
amount of any new Partnership loan, or refinancing of Partnership debt if
the refinancing is completed with a lender other than the lender whose
loan is being refinanced. Such fee is required to be reduced by the
amount of the financing fee paid to the lender.
OTHER ARRANGEMENTS
The General Partner and its affiliates are paid development, purchasing,
and design fees for services performed in connection with the renovation
or expansion of the Partnership's hotel properties. In addition, an
affiliate of AHS receives fees in connection with the bulk purchase of
hotel furnishings, equipment, and supplies.
The Partnership leases a private club and recreational facility from an
affiliate of AHS, under an operating lease. The Partnership receives 90%
to 100% of available cash flow from operation of the private club and
recreational facility as lease income and management fees. The lease
expires in 2052 and may be terminated by the Partnership earlier with the
consent of the existing mortgage lender. The Partnership received lease
income and management fees of $330,000, $328,000, and $338,000 pursuant to
these arrangements in 1994, 1993, and 1992, respectively.
Subject to the terms of the lease agreement, an affiliate of the
Partnership has an option to purchase 50 undeveloped acres from the
private club for $10. The option is only exercisable if all the permits
and consents from state and local authorities permit continued operation
of the club after conveyance of the 50 acres to the affiliate. The
affiliate pays a pro-rata share of the property taxes on the private club.
The private club is located on a tract of land consisting of approximately
80 acres.
II-23
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(6) RELATED PARTY TRANSACTIONS AND COMMITMENTS (CONTINUED)
The following amounts resulting from transactions with affiliates are
included in the accompanying consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
December 31
--------------------
1994 1993
------- -------
<S> <C> <C>
Fees and costs, included in property
and equipment, net $ 1,028 $ 1,088
------- -------
------- -------
</TABLE>
The following amounts resulting from transactions with affiliates are
included in the accompanying consolidated statements of operations (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Partnership administration fees $ 222 $ 186 $ 224
------ ------ ------
------ ------ ------
Management fees $1,835 $1,788 $1,705
------ ------ ------
------ ------ ------
Allocated insurance expense $1,505 $1,502 $1,388
------ ------ ------
------ ------ ------
Allocated data processing costs $ 45 $ 45 $ 43
------ ------ ------
------ ------ ------
Interest expense $ 720 $ 720 $ 720
------ ------ ------
------ ------ ------
License fees $ 132 $ 114 $ 9
------ ------ ------
------ ------ ------
</TABLE>
In December 1992, the Partnership issued 850,000 Class A Units to
affiliates of AHS for cash proceeds of $935,000 of which $55,000 was
collected in January 1993.
(7) COMMITMENTS AND CONTINGENCIES
Under terms of the Clarion and ITT Sheraton franchises and the Regal Hotel
license agreements, the Partnership is committed to make annual payments
for franchise and licensing fees and reservation services. The Clarion
and ITT Sheraton license agreements expire 2012. The Regal license
agreement renews automatically for one-year periods. The amounts due
under the agreements were $1,809,000, $1,497,000 and $1,321,000 for 1994,
1993 and 1992, respectively. In accordance with an agreement with ITT
Sheraton, franchise fees for Sheraton Inn - Buffalo Airport and Sheraton
Lakeside Inn were deferred through December 31, 1993. The deferred
franchise fees are payable in monthly installments of approximately
$74,000, beginning in January 1994. Deferred franchise fees were $438,000
and $1,326,000 at December 31, 1994 and 1993, respectively.
Three of the hotel properties are subject to noncancelable operating land
leases which expire between 2000 and 2033. The leases generally require
annual rental payments of a fixed amount, ranging from $10,000 to $90,000,
plus a contingent amount based upon a percentage of specified room
revenue, food and beverage revenue, or gross revenue, as defined, ranging
from 1% to 8%. The accompanying consolidated statements of operations
include land rent expense of $803,000, $762,000, and $687,000 for 1994,
1993, and 1992, respectively.
II-24
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
AND SUBSIDIARY OPERATING PARTNERSHIPS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 and 1993
(7) COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Class A Units issuable upon conversion of notes payable and upon
conversion of the Class B Units, and the Class A Units issued or issuable
pursuant to the general partner's obligations regarding cash distributions
have certain demand registration rights.
The Partnership is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material effect on
the consolidated financial statements of the Partnership.
(8) FOURTH QUARTER ADJUSTMENTS
In the fourth quarter of 1994, the Partnership recorded an adjustment for
accrued vacation in the amount of $150,000.
II-25
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
THE GENERAL PARTNER
AHS is the General Partner of the Partnership and of each of the
Operating Partnerships. From its formation in 1968 until November
1993, AHS was engaged in the management of hotel and resort properties.
Richfield assumed the management contracts for the properties effective
November 1993 as a part of the integration by Richfield of its hotel
management subsidiaries, including AHS.
DIRECTORS AND EXECUTIVE OFFICERS OF AHS
The directors and executive officers of AHS are listed below. The
Advisory Committee of AHP consists of one member of the AHS Board of
Directors, Anthony Williams, a member of the Advisory Board of
Richfield Holdings, Inc. ("Holdings"), William Arthur and a new member,
Frank Hughes, who does not serve in any other capacity with Richfield
or its affiliates. Mr. Hughes replaces one of the Advisory Committee
members, John Armstrong, who resigned his position on the committee on
October 11, 1994 for health reasons. The functions of the AHP Advisory
Committee include, among other things, review of the policies and
practices of the Partnership and AHS regarding various matters as to
which potential conflicts of interest may arise and review of certain
acquisitions and dispositions of hotel properties by AHP. The officers
of AHS devote such time and effort as is necessary for AHS to perform
its duties as General Partner of the Partnership. Each of the
directors of AHS are elected to a one-year term at the annual meeting
of the shareholder of AHS.
IDENTIFICATION OF DIRECTORS
Name and Year First Principal Occupation
Became a Director Age During the Past Five Years
----------------- --- --------------------------
Peter T.K. Yu, 1989 46 Peter T.K. Yu has served as Chairman of
AHS since May 1991 and as President/CEO
from May 1991 to April 1994. He also
served as Senior Executive Vice
President of Holdings from February 1989
to January 1991 and served as
President/CEO of Holdings from January
1991 to February 1995. He serves as a
Director for Regal Hotels International
Holdings Limited, a Bermuda corporation
listed in Hong Kong engaged in property
development, and hotel ownership and
management.
Carol K. Werner, 1989 40 Carol K. Werner has been General Counsel
and Secretary of AHS since February 1989
and served as Executive Vice President
since August 1989. She also served as
Executive Vice President and Secretary
of Holdings and certain affiliates since
1989. Ms. Werner was formerly an
associate with Coudert Brothers, an
international law firm, posted in Hong
Kong, Tokyo and New York. Ms. Werner
has resigned as General Counsel,
Executive Vice President and Secretary
effective March 31, 1995. She will
continue to serve as a Director.
Anthony Williams, 1989 49 Anthony Williams is the Chairman of the
executive committee of Coudert Brothers,
an international law firm, and has been
a partner since 1981.
III-1
<PAGE>
Paul J. Sistare, 1994 40 Paul J. Sistare has served as a Director
since October 1994 and as President/CEO
since April 1994. He previously served
as Executive Vice President from
September 1992. Mr. Sistare served as
Executive Vice President of Holdings
from September 1992 to February 1995
when he was elected President/CEO. He
was elected Director of Holdings in
February 1993. Mr. Sistare joined Forte
Hotels International in 1983 and served
as Senior Vice President from 1989 to
1992.
IDENTIFICATION OF EXECUTIVE OFFICERS
The following is a list of executive officers of AHS not including
those officers already listed above as directors. All officers are
elected for an indefinite term, serving at the discretion of the Board
of Directors.
Positions Held
Name Age During the Past Five Years
---- --- --------------------------
Douglas M. Pasquale 40 Douglas M. Pasquale has served as
Executive Vice President since August
1992 and was appointed Chief Financial
Officer in August 1994. Mr. Pasquale
joined AHS in 1986 as Vice President of
Investor Services. Mr. Pasquale did not
serve as an officer of AHS from August
1989 to August 1992, but continued to
serve as Vice President of Holdings
during this time period. Mr. Pasquale
became a Director of Holdings in
February 1993.
There are no family relationships between any of the directors or the
executive officers of AHS. Coudert Brothers, an international law firm
of which Anthony Williams is a partner, has provided legal services for
the Partnership and affiliates since the beginning of 1989.
ITEM 11. PAYMENTS AND COMPENSATION TO GENERAL PARTNER AND AFFILIATES
As set out in the Partnership's agreement of limited partnership,
various fees are payable to AHS, as General Partner, for services
rendered to the Partnership. These fees include Partnership
administration fees equal to .25% of the appraised value of the
Properties determined as of December 31st of each year; acquisition
fees equal to 1% of the purchase price of any additional hotel property
purchased by the Partnership; mortgage or refinancing fees equal to 1%
of the loan amount; and reasonable brokerage fees with respect to the
sale of a Partnership property to a third party. Affiliates of AHS
receive property management service fees, data processing and risk
management fees pursuant to the hotel management agreements with the
Operating Partnerships. The Properties may also reimburse AHS and its
affiliates for certain costs paid by AHS and its affiliates on behalf
of the Operating Partnerships including payroll, professional fees and
certain out-of-pocket expenses. For a detailed description of amounts
paid or owed to AHS and its affiliates by the Partnership or the
Operating Partnerships for various services performed by AHS and its
affiliates during 1994, see Item 8, Financial Statements and
Supplementary Data. The McCormick Ranch property has also entered into
a license agreement with Holdings for use of the Regal name. For a
detailed description of amounts paid or owed to Holdings, see Item 8,
Financial Statements and Supplementary Data.
III-2
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following table sets forth information as of March 6, 1995 with
respect to persons who are known to the Partnership (based on
statements filed with the Securities and Exchange Commission pursuant
to section 13(d) or 13(g) of the Securities Act of 1934) to be the
beneficial owner of more than five percent of any class of the
Partnership's voting securities.
<TABLE>
<CAPTION>
Name and address of Amount and nature of Percent
Title of Class beneficial owner beneficial ownership of Class
<S> <C> <C> <C>
Class A Units Century City International 3,794,646 (1) 71.0%
Holdings Limited Indirect
Paliburg Plaza Ownership
68 Ye Woo Street
Hong Kong
Class A Units Regal Hotel Management, Inc. 1,825,065 (1) 34.2%
5775 DTC Boulevard Direct
Suite 300 Ownership
Englewood, Colorado 80111
Class A Units Gateway Hotel Holdings, Inc. 769,041 (1) 14.4%
5775 DTC Boulevard Direct
Suite 300 Ownership
Englewood, Colorado 80111
Class A Units AIRCOA Equity Interests, Inc. 650,000 (1) 12.2%
5775 DTC Boulevard Direct
Suite 300 Ownership
Englewood, Colorado 80111
Class A Units Richfield Holdings, Inc. 546,740 (1)(2) 10.2%
5775 DTC Boulevard Direct
Suite 300 Ownership
Englewood, Colorado 80111
Class A Units Investing Group: 276,000 (3) 5.18%
Direct Ownership
Hatfield Family Trust, UA
RR1, Box 162
Ridgeland, South Carolina 29936
(101,000 shares 1.89%)
J. Mark Grosvenor
3145 Sports Arena Boulevard
San Diego, California 92110
(79,400 shares 1.49%)
Gardner-Smith Living Trust, UA
7825 Fay Avenue, Suite 250
La Jolla, California 92037
(43,200 shares 0.81%)
Highmark International
1700 Lincoln Street, Suite 1725
Denver, Colorado 80203
(32,200 shares 0.60%)
III-3
<PAGE>
Don W. Cockroft
P. O. Box 770577
Memphis, Tennessee 38177
(10,500 shares 0.20%)
Michael McNulty
8235 Douglas Avenue, Suite 1300
Dallas, Texas 75225
(10,000 shares 0.19%)
Class B Units Century City International 950,000 (4)(5) 100.0%
Holdings Limited Indirect
Ownership
<FN>
(1) Each of Richfield Holdings, Inc. ("Holdings"), AIRCOA Equity
Interests, Inc. ("AEI"), Regal Hotel Management, Inc. ("RHM") and
Gateway Hotel Holdings, Inc. ("Gateway") share voting and
investment power with Century City International Holdings Limited
("Century City").
(2) Holdings has direct ownership of 546,740 Class A Units, an indirect
ownership of 650,000 Class A Units through AEI, an indirect
ownership of 3,800 Class A Units through Richfield Hospitality
Services, Inc. , for a total indirect ownership of 1,200,540, which
represent 22.5% of the Class A Units.
(3) Individuals or trusts listed have jointly filed a Schedule 13-D
indicating that they are acting as a group. Ownership information
is based on Amendment No. 1 to the Schedule 13-D filed February 6,
1995.
(4) Class B Units are not tradeable securities however, they are
convertible into Class A Units under certain conditions as set
forth in the limited partnership agreement of the Partnership. No
conversion rights have been exercisable since the Partnership's
inception through the date hereof.
(5) Holdings directly owns 200,000 Class B Units. RHM directly owns
688,746 Class B Units of the Partnership. Buffalo Hotel Investors,
Ltd., an affiliate, directly owns 61,254 Class B Units.
</TABLE>
In addition to its direct interest in the Partnership's voting
securities, Holdings indirectly owns 100% of the outstanding common
shares of AHS. In February, 1989 Novolane, B.V., a Netherlands company
("Novolane") and Kingsfield Investment B.V., a Netherlands company
("Kingsfield") together acquired 51% of the voting securities of
Holdings. Kingsfield sold the 5% interest it held in Holdings to an
unaffiliated party during 1990. Novolane currently owns 49.77% of
Holdings outstanding voting securities and 100% of the voting
securities of RHM. In December 1994, Regal International Limited
purchased 45.58% of Holdings outstanding voting securities from an
unaffiliated entity. Century City, a Bermuda company, indirectly
controls Novolane, Gateway and Regal International Limited. More than
60% of the voting stock of Century City is beneficially owned by Mr. Lo
Yuk Sui, a citizen of Hong Kong.
(b) Security Ownership of Management
As of March 6, 1995, no officers or directors of AHS have beneficial
ownership of the equity securities of the Partnership or AHS.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transaction with Management and Others - See (b)
(b) Certain Business Relationships
The Partnership is provided services by, and engages in certain other
transactions with AHS, its general partner, and other affiliates. See
Item 11, Payments and Compensation to the General Partner and
Affiliates and Item 8, Financial Statements and Supplementary Data.
(c) Indebtedness of management - (see (b)).
III-4
<PAGE>
PART IV
Page
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Number
------
(a) (1) Financial Statements - Included in Part II of this Report:
Independent Auditors' Report II-9
Consolidated Balance Sheets, December 31, 1994 and 1993 II-10
Consolidated Statements of Operations II-12
Years Ended December 31, 1994, 1993, and 1992
Consolidated Statements of Partners' Capital II-13
Years Ended December 31, 1994, 1993, and 1992
Consolidated Statements of Cash Flows II-14
Years Ended December 31, 1994, 1993, and 1992
Notes to Consolidated Financial Statements, December 31,
1994 and 1993 II-16
(a) (2) Financial Statement Schedules
The financial statement schedules are omitted as they are either not
required or are not applicable or the required information is included
in the financial statements or notes thereto.
(a) (3) Exhibits
3.1 Agreement of Limited Partnership of the Partnership, as amended and
restated, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 3.1, declared effective by
the Securities and Exchange Commission on July 23, 1987.
3.3 Certificate of Limited Partnership for the Partnership, as amended,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 3.3, declared effective by the
Securities and Exchange Commission on July 23, 1987.
3.4 Agreement of Limited Partnership for the Operating Partnerships,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 3.4, declared effective by the
Securities and Exchange Commission on July 23, 1987.
3.5 Certificate of Limited Partnership for the Operating Partnerships,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 3.5, declared effective by the
Securities and Exchange Commission on July 23, 1987.
4.1 Form of Deposit Agreement, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 4.1,
declared effective by the Securities and Exchange Commission on July
23, 1987.
4.2 Form of Depositary Receipt, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 4.2,
declared effective by the Securities and Exchange Commission on July
23, 1987.
IV-1
<PAGE>
4.3 The form of Transfer Application, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 4.3,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.1 Hotel Contribution Agreement for Sheraton Buffalo, dated December 30,
1986, between the Partnership, Buffalo Inn Associates, a Colorado
general partnership, Newpart, and ABI, Ltd., a Colorado limited
partnership ("ABI"), as amended, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 10.1,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.2 Assignment, Assumption and Indemnification Agreement for Sheraton
Buffalo, dated December 31, 1986, between Buffalo Inn Associates,
Newpart, ABI and the Partnership, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 10.2,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.3 Assignment and Assumption Agreement between Sheraton Buffalo, dated
February 20, 1987, between the Partnership and Buffalo Operating
Partnership, L.P., a Delaware limited partnership, incorporated herein
by reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.3, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.4 Hotel Contribution Agreement for Sheraton University Center ("Sheraton
University"), dated December 30, 1986, between the Partnership, Durham
Joint Venture, a Florida joint venture ("Durham JV"), and Newpart, as
amended, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.4, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.5 Assignment, Assumption and Indemnification Agreement for Sheraton
University, dated December 31, 1986, between Durham JV and the
Partnership, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.5, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.6 Assignment and Assumption Agreement for Sheraton University, dated
February 20, 1987, between the Partnership and Durham Operating
Partnership, L.P., a Delaware limited partnership, incorporated herein
by reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.6, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.7 Hotel Contribution Agreement for Fourwinds, Aurora Inn, Clarion
McCormick, Sheraton Lakeside, dated December 30, 1986, between the
Partnership and Newpart and Amendment thereto dated effective December
30, 1986, between the same parties relating to The Pine Lake Trout Club
("Pine Lake"), as amended, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.7,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.8 Assignment, Assumption and Indemnification Agreement for Fourwinds,
dated December 31, 1986, between Newpart and the Partnership,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.8, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.9 Assignment and Assumption Agreement for Fourwinds, dated February 20,
1987, between the Partnership and Fourwinds Operating Partnership,
L.P., a Delaware limited partnership, incorporated herein by reference
to the Partnership's Registration Statement No. 33-13418, Exhibit 10.9,
declared effective by the Securities and Exchange Commission on July
23, 1987.
IV-2
<PAGE>
10.10 Assignment, Assumption and Indemnification Agreement for Aurora Inn,
dated December 31, 1986, between Newpart and the Partnership,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.10, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.11 Assignment and Assumption Agreement for Aurora Inn, dated February 20,
1987, between the Partnership and Aurora Inn Operating Partnership,
L.P., a Delaware limited partnership, incorporated herein by reference
to the Partnership's Registration Statement No. 33-13418, Exhibit
10.11, declared effective by the Securities and Exchange Commission on
July 23, 1987.
10.12 Assignment, Assumption and Indemnification Agreement for Clarion
McCormick, dated December 31, 1986, between Newpart and the
Partnership, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.12, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.13 Assignment and Assumption Agreement for Clarion McCormick, dated
February 20, 1987, between the Partnership and McCormick Ranch
Operating Partnership, L.P., a Delaware limited partnership,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.13, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.14 Assignment, Assumption and Indemnification Agreement for Sheraton
Lakeside, dated December 31, 1986, between Newpart and the Partnership,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.14, declared effective by the
Securities and Exchange commission on July 23, 1987.
10.15 Agreement for the Purchase and Sale of Partnership Interest for
Sheraton Lakeside, dated as of January 1, 1987, between Lakeside Inns
Limited, a British Virgin Islands corporation, and Newpart; as amended,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.15, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.16 Partnership Interest Purchase Agreement and Consent and Waiver for
Sheraton Lakeside, dated December 30, 1986, between Newpart and the
Orlando S.L. Ltd., an Ohio limited partnership, incorporated herein by
reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.16, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.17 Confirmatory Assignment of Agreement for the Purchase and Sale of
Partnership Interest for Sheraton Lakeside, dated as of February 20,
1987, between Newpart and the Partnership, incorporated herein by
reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.17, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.18 Assignment for Sheraton Lakeside, dated February 20, 1987, by Orlando
Lakeside Associates Limited, a Florida limited partnership, to the
Partnership, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.18, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.19 Assignment and Assumption Agreement for Sheraton Lakeside, dated
February 20, 1987, between the Partnership and Lakeside Operating
Partnership, L.P., a Delaware limited partnership, incorporated herein
by reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.19, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.20 Assignment, Assumption and Indemnification Agreement for Pine Lake,
executed on January 31, 1987, to be effective as of December 31, 1986,
between Newpart and the Partnership, incorporated herein by reference
to the Partnership's Registration Statement No. 33-13418, Exhibit
10.20, declared effective by the Securities and Exchange Commission on
July 23, 1987.
IV-3
<PAGE>
10.21 Assignment and Assumption Agreement for Pine Lake, dated February 20,
1987, between the Partnership and Aurora Inn Operating Partnership,
L.P., incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.21, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.22 Option to Purchase, dated as of February 20, 1987, between the
Partnership and Newpart, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.22a,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.22a Lease, dated as of February 20, 1987, between the Partnership and MHM,
Inc., a Delaware corporation d/b/a Motor Hotel Management, Inc.,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.22b, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.22b Agency Agreement, dated as of February 20, 1987, between the
Partnership and MHM, Inc., incorporated herein by reference to Exhibit
10.22b filed with the Registrant's annual report on Form 10-K filed
with the Commission on March 31, 1989.
10.23 Form of Management Agreement between the Partnership and the General
Partner, as assigned to the Operating Partnerships, incorporated herein
by reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.26, declared effective by the Securities and Exchange
Commission on July 23, 1987.
10.23a Assignment and Assumption of Management Agreement for Aurora Inn
Operating Partnership, L.P. to Richfield Hotel Management, Inc. dated
November 5, 1993, incorporated herein by reference to Exhibit 10.23a
filed with the Registrant's Annual Report on Form 10-K filed with the
commission on April 8, 1994.
10.23b Assignment and Assumption of Management Agreement for Buffalo Operating
Partnership, L.P. to Richfield Hotel Management, Inc. dated November 5,
1993, incorporated herein by reference to Exhibit 10.23b filed with the
Registrant's Annual Report on Form 10-K filed with the commission on
April 8, 1994.
10.23c Assignment and Assumption of Management Agreement for Durham Operating
Partnership, L.P. to Richfield Hotel Management, Inc. dated November 5,
1993, incorporated herein by reference to Exhibit 10.23c filed with the
Registrant's Annual Report on Form 10-K filed with the commission on
April 8, 1994.
10.23d Assignment and Assumption of Management Agreement for Fourwinds
Operating Partnership, L.P. to Richfield Hotel Management, Inc. dated
November 5, 1993, incorporated herein by reference to Exhibit 10.23d
filed with the Registrant's Annual Report on Form 10-K filed with the
commission on April 8, 1994.
10.23e Assignment and Assumption of Management Agreement for Lakeside
Operating Partnership, L.P. to Richfield Hotel Management, Inc. dated
November 5, 1993, incorporated herein by reference to Exhibit 10.23e
filed with the Registrant's Annual Report on Form 10-K filed with the
commission on April 8, 1994.
10.23f Assignment and Assumption of Management Agreement for McCormick Ranch
Operating Partnership, L.P. to Richfield Hotel Management, Inc. dated
November 5, 1993, incorporated herein by reference to Exhibit 10.23f
filed with the Registrant's Annual Report on Form 10-K filed with the
commission on April 8, 1994.
IV-4
<PAGE>
10.24 Clarion License Agreement between the Clarion Hotel Corporation, a
Colorado corporation, and the Partnership, as assigned to the Clarion
Operating Partnerships, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.27,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.24a Assignment and Consent to Assignment dated as of February 28, 1987,
between The Clarion Hotel Corporation, a Colorado corporation, the
Partnership, and Clarion Hotels and Resorts, a Maryland joint venture,
assigning the Clarion License Agreement previously filed as Exhibit
10.27, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.27a, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.24b Amendment between Clarion Hotels and Resorts, a Maryland joint venture
and Fourwinds Operating Partnership L.P., a Delaware limited
partnership dated August 3, 1989 amending certain provisions of the
License Agreement incorporated herein by reference to Exhibit 10.24b
filed with the Registrant's Annual Report on Form 10-K filed with the
Commission on March 31, 1990.
10.25 Sheraton Lakeside License Agreement dated May 14, 1992, incorporated
herein by reference to Exhibit 10.25 filed with the Registrant's Annual
Report on Form 10-K filed with the commission on April 8, 1994.
10.25a Sheraton Lakeside Amendment of License Agreement and License Fee
Deferral Agreement dated November 5, 1993, incorporated herein by
reference to Exhibit 10.25a filed with the Registrant's Annual Report
on Form 10-K filed with the commission on April 8, 1994.
10.25b Sheraton Buffalo License Agreement dated November 2, 1991, incorporated
herein by reference to Exhibit 10.25b filed with the Registrant's
Annual Report on Form 10-K filed with the commission on April 8, 1994.
10.25c Sheraton Buffalo Amendment of License Agreement and License Fee
Deferral Agreement dated November 5, 1993, incorporated herein by
reference to Exhibit 10.25c filed with the Registrant's Annual Report
on Form 10-K filed with the commission on April 8, 1994.
10.25d Sheraton University License Agreement, incorporated herein by reference
to the Partnership's Registration Statement No. 33-13418, Exhibit
10.28c, declared effective by the Securities and Exchange Commission on
July 23, 1987.
10.25e Regal McCormick License Agreement dated December 16, 1991, incorporated
herein by reference to Exhibit 10.25c filed with the Registrant's
Annual Report on Form 10-K filed with the Commission on April 14, 1992.
10.29 Loan Agreement, dated February 20, 1987, between Bankers Trust Company,
a New York banking corporation ("Bankers"), Cassa D. Risparmio Di
Torino, New York Branch, a federally licensed branch of a Republic of
Italy bank ("Cassa"), as Lenders, Bankers, as Agent, and the
Partnership, as Borrower, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.29,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.29a First Amendment dated July 21, 1987, between the Partnership, as
Borrower, Bankers and Cassa, as Lenders, and the Operating Partnerships
named therein, amending certain provisions of the Loan Agreement
previously filed as Exhibit 10.29, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 10.29a,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.29b Second Amendment between the Partnership, Bankers and Cassa amending
certain provisions of the Loan Agreement, incorporated herein by
reference to Exhibit 10.29b filed with the Registrant's Annual Report
on Form 10-K filed with the Commission on March 29, 1988.
IV-5
<PAGE>
10.29c Third Amendment between the Partnership, Bankers and Cassa amending
certain provisions of the Loan Agreement incorporated herein by
reference to Exhibit 10.29b filed with the Registrant's Annual Report
on Form 10-K filed with the Commission on March 31, 1989.
10.29d Fourth Amendment dated September 22, 1989, between the Partnership,
Bankers and Cassa amending certain provisions of the Loan Agreement
incorporated herein by reference to Exhibit 10.24b filed with the
Registrant's Annual Report on Form 10-K filed with the Commission on
March 31, 1990.
10.29e Fifth Amendment dated January 31, 1992, between the Partnership,
Bankers and Cassa amending certain provisions of the Loan Agreement,
incorporated herein by reference to Exhibit 10.25c filed with the
Registrant's Annual Report on Form 10-K filed with the Commission on
April 14, 1992.
10.29f Sixth Amendment dated July 31, 1993, between the Partnership, Bankers
and Cassa amending certain provisions of the Loan Agreement,
incorporated herein by reference to Exhibit 10.29f filed with the
Registrant's Annual Report on Form 10-K filed with the commission on
April 8, 1994.
10.29g Seventh Amendment dated July 30, 1994, between the Partnership, Bankers
and Cassa amending certain provisions of the Loan Agreement. (1)
10.30 Additional Mortgage Loan Documents, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 10.30,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.30a Promissory Note, dated February 20, 1987, by the Partnership as Maker,
to Bankers as Payee, in the principal amount of $90,000,000
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.30A, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.30b Security Agreement, dated February 20, 1987, between the Partnership
and Bankers, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.30B, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.30c Mortgages, Deeds of Trust and Security Agreements for the Properties,
each dated February 20, 1987, from the Partnership to or for the
benefit of Bankers, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.30C,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.30d Collateral Assignments of Leases, Rents and Other Income from the
Properties, each dated February 20, 1987, by the Partnership, as
Borrower, to Bankers, as agent for itself and other lenders and as
Lender, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 10.30D, declared effective
by the Securities and Exchange Commission on July 23, 1987.
10.31 Amended and Restated Loan Agreement between the Partnership and
National City Bank, Indiana ("National City"), dated December 31, 1992,
for $2,990,000 incorporated herein by reference to Exhibit 10.31 filed
with the Registrant's Annual Report on Form 10-K filed with the
Commission on April 15, 1993.
10.31a Waiver and First Amendment to Amended and Restated Loan Agreement
between the Partnership and National City dated November 9, 1993,
incorporated herein by reference to Exhibit 10.31a filed with the
Registrant's Annual Report on Form 10-K filed with the commission on
April 8, 1994.
10.31b Second Amendment to Amended and Restated Loan Agreement dated July 30,
1994. (1)
IV-6
<PAGE>
10.31c Renewal Promissory Note dated December 31, 1992, by AHP as Maker, to
National City as Payee, in the principal amount of $2,990,000
incorporated herein by reference to Exhibit 10.31a filed with the
Registrant's Annual Report on Form 10-K filed with the Commission on
April 15, 1993.
10.31d Second renewal Promissory Note dated July 30, 1994, by AHP as Maker, to
National City as Payee, in principal amount of $2,065,000. (1)
10.32 Fourwinds Ground Lease, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.36a,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.32a Clarion McCormick Ground Lease, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.36b,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.32b Sheraton Buffalo Ground Lease, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.36d,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.34c Amendment No. 4 to Sheraton Buffalo Ground Lease dated June 28, 1988
incorporated herein by reference to Exhibit 10.34d filed with the
Registrant's Annual Report on Form 10-K filed with the Commission on
March 31, 1989.
10.34d Fourwinds Amended and Restated Indenture of Ground Lease dated May 20,
1991, incorporated herein by reference to Exhibit 10.25c filed with the
Registrant's Annual Report on Form 10-K filed with the Commission on
April 14, 1992.
10.33 Other material contracts, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.37,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.34 Management Contract for Clarion McCormick, dated as of October 23,
1982, between ARI, Inc., an Ohio corporation and the Board of Directors
of the Council of Co-owners of the Shores, as amended, incorporated
herein by reference to the Partnership's Registration Statement No. 33-
13418, Exhibit 10.37h, declared effective by the Securities and
Exchange Commission on July 23, 1987.
10.35 Letter Agreement for Aurora Inn, dated December 23, 1986, between
Aurora Inn Co., an Ohio limited partnership and Aurora Inn Operating
Partnership, L.P., incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 10.37l,
declared effective by the Securities and Exchange Commission on July
23, 1987.
10.35a Sublease and License Agreement for Sheraton Buffalo, dated as of
December 31, 1986 between the Partnership, Buffalo Inn Associates, a
Colorado general partnership ("BIA"), and AEI, incorporated herein by
reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 10.37m, declared effective by the Securities and Exchange
Commission on January 23, 1987.
10.35b Sublease and License Agreement for Sheraton Buffalo, dated February 20,
1987, between Buffalo Operating Partnership, L.P., BIA and AEI,
incorporated herein by reference to the Partnership's Registration
Statement No. 33-13418, Exhibit 10.37n, declared effective by the
Securities and Exchange Commission on July 23, 1987.
10.36 Promissory Note, dated January 25, 1990, by AHP, as Maker, to RAC as
Payee, in the principal amount of $550,000 incorporated herein by
reference to Exhibit 10.40 filed with the Registrant's Annual Report on
Form 10-K filed with the Commission on April 26, 1991.
IV-7
<PAGE>
10.37 Subscription Agreement dated November 19, 1990 incorporated herein by
reference to Exhibit 10.41 filed with the Registrant's Annual Report on
Form 10-K filed with the Commission on April 26, 1991.
10.38 Subscription Agreement dated December 11, 1992 incorporated herein by
reference to Exhibit 10.38 filed with the Registrant's Annual Report on
Form 10-K filed with the Commission on April 15, 1993.
10.39 Commitment Letter dated April 3, 1995 from The Hongkong and Shanghai
Banking Corporation Limited for first mortgage loan and revolving
credit line for AHP. (1)
22. The Partnership holds a 99% limited partner interest in each of the
following Delaware limited partnerships: Aurora Inn Operating
Partnership, L.P.; Buffalo Operating Limited Partnership, L.P.; Durham
Operating Partnership, L.P.; Fourwinds Operating Partnership, L.P.;
Lakeside Operating Partnership, L.P.; and McCormick Ranch Operating
Partnership, L.P.
27. Financial Data Schedule (1)
28.1 Certificate of Incorporation of AIRCOA Hospitality Services, Inc.
(formerly Associated Inns & Restaurants Company of America), as
amended, incorporated herein by reference to the Partnership's
Registration Statement No. 33-13418, Exhibit 28.1, declared effective
by the Securities and Exchange Commission on July 23, 1987.
28.2 By-laws of AIRCOA Hospitality Services, Inc. (formerly Associated Inns
& Restaurants Company of America), as amended, incorporated herein by
reference to the Partnership's Registration Statement No. 33-13418,
Exhibit 28.2, declared effective by the Securities and Exchange
Commission on July 23, 1987.
28.3 Appraisal of Fourwinds, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 28.3,
declared effective by the Securities and Exchange Commission on July
23, 1987.
28.4 Appraisal of Sheraton University, incorporated herein by reference to
the Partnership's Registration Statement No. 33-13418, Exhibit 28.4,
declared effective by the Securities and Exchange Commission on July
23, 1987.
28.6 Appraisal of Sheraton Lakeside, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 28.6,
declared effective by the Securities and Exchange Commission on July
23, 1987.
28.7 Appraisal for Sheraton Buffalo, incorporated herein by reference to the
Partnership's Registration Statement No. 33-13418, Exhibit 28.7,
declared effective by the Securities and Exchange Commission on July
23, 1987.
(1) Filed herewith
IV-8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf of the undersigned, thereunto duly authorized.
By: AIRCOA HOTEL PARTNERS, L.P.
a Delaware limited partnership
By: AIRCOA HOSPITALITY SERVICES, INC.
its General Partner
By: /s/ Paul J. Sistare
--------------------------------------------
Paul J. Sistare Chief Executive Officer,
President and Director
Dated: April 13, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title Date
- ---------------------- --------------------- --------------
/s/ Paul J. Sistare
- -----------------------
Paul J. Sistare Chief Executive Officer, April 13, 1995
President and Director
(Principal Executive Officer)
of AIRCOA Hospitality Services, Inc.
/s/ Douglas M. Pasquale
- -----------------------
Douglas M. Pasquale Executive Vice President April 13, 1995
and Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
of AIRCOA Hospitality Services, Inc.
/s/ Carol K. Werner
- -----------------------
Carol K. Werner Director April 13, 1995
of AIRCOA Hospitality Services, Inc.
/s/ Anthony Williams
- -----------------------
Anthony Williams Director April 13, 1995
of AIRCOA Hospitality Services, Inc.
IV-9
<PAGE>
SEVENTH AMENDMENT
-----------------
SEVENTH AMENDMENT dated as of July 30, 1994 (as the same may be
amended or otherwise modified from time to time, this "AMENDMENT") by and among
(a) (i) BANKERS TRUST COMPANY, a New York banking corporation, and (ii) BANCA
CASSA DI RISPARMIO DI TORINO, S.p.A., NEW YORK BRANCH (formerly known as Cassa
di Risparmio di Torino), a federally licensed branch of a bank incorporated
under the law of the Republic of Italy, as Lenders; (b) AIRCOA HOTEL PARTNERS,
L.P., a Delaware limited partnership, as Borrower; (c) BANKERS TRUST COMPANY, a
New York banking corporation, as Agent; and (d) (i) MCCORMICK RANCH OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, (ii) LAKESIDE OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, (iii) FOURWINDS OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, (iv) BUFFALO OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, (v) DURHAM OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, and (vi) AURORA INN OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership (each an "OPERATING
PARTNERSHIP", and collectively, the "OPERATING PARTNERSHIPS").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower, the Lenders and the Agent entered into a Loan
Agreement dated as of February 20, 1987
EXHIBIT 10.29g
<PAGE>
(as amended by a First Amendment dated as of July 21, 1987, a Second Amendment
dated as of July 30, 1987, a Third Amendment dated as of March 31, 1988, a
Fourth Amendment dated as of September 22, 1989, by letters dated November 13,
1990, as of December 23, 1990 and as of January 24, 1991, a Fifth Amendment
dated as of January 31, 1992 and a Sixth Amendment dated as of July 31, 1993 and
as the same may further be amended or otherwise modified from time to time, the
"AGREEMENT") pursuant to which, among other things, the Lenders extended
financial accommodations to the Borrower upon the terms and conditions contained
therein; and
WHEREAS, the Borrower and the Operating Partnerships have requested,
and the Lenders and all of the Voting Participants have agreed, subject to the
terms and conditions set forth herein, to amend certain of the terms and
conditions of the Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Amendment agree as follows:
1. DEFINITIONS. Unless the context otherwise requires, for all
purposes of this Amendment all capitalized terms used herein without definition
and which are defined
-2-
<PAGE>
in the Agreement are used herein with the respective meanings ascribed to such
terms in the Agreement.
2. Amendments to and Other Provisions Affecting THE AGREEMENT AND
THE OTHER LOAN AND SECURITY DOCUMENTS.
(a) If the Maturity Date is extended from the Maturity Date to
the Extended Maturity Date, then, on the Maturity Date Merchants may be paid an
additional $500,000 on account of the Merchants portion of the Junior Unsecured
Note and the Required Lenders hereby consent to such payment to Merchants. If
the Maturity Date is not, for any reason, extended then such payment to
Merchants shall not be made. For the purposes of making the calculations
described in SECTION 2.06 (d)(ii)(2), $1,000,000 of the principal payment to be
made to Lender pursuant to SECTION 2.18 (g) such $500,000 principal payment on
the Merchants portion of the Junior Unsecured Note shall, whether or not such
payments are funded with monies of the Borrower or any of the Operating
Partnerships, be added to audited net income for the year in question. Such
payments to Lender pursuant to SECTION 2.18(g) shall be applied to principal in
the inverse order of maturity.
(b) SECTION 2.18 (c) and (d) are hereby amended to read, in
their entirety, as follows:
"(c) on or before the Maturity Date, the Agent has received from the
Borrower written notice of Borrower's election to extend the Maturity
Date as hereinafter provided, (d) such notice to Agent is accompanied
by fully executed documents extending the maturity of the Merchants
Debt portion of the Junior Unsecured Note to a date not earlier than
ninety (90) days after the Extended Maturity Date, but allowing the
Merchants Debt portion of the Junior Unsecured Note to become a demand
obligation if the Loans and all other sums due and owing under the
Loan and Security Documents have been paid in full"
(c) SECTION 2.18 (g) is hereby amended to read, in its entirety,
as follows:
"(g) an additional mandatory prepayment of the principal amount of the
Loan shall have been made
-3-
<PAGE>
in the amount of $1,000,000 PLUS the following additional amount: (x)
if the outstanding principal amount of the Loan at the close of
business on the Maturity Date (after giving effect to such $1,000,000
payment) is greater than $36,600,000, then the required additional
mandatory prepayment shall be $500,000, (y) if the outstanding
principal amount of the Loan at the close of business on the Maturity
Date (after giving effect to such $1,000,000 payment) is less than
$36,600,000 but greater than $26,600,000, then the required additional
mandatory prepayment shall be $200,000 and (y) in all other cases
there shall be no additional mandatory prepayment (other than said
$1,000,000 amount) of the Loans required under this SECTION."
(d) PARAGRAPH 6(a) of the Sixth Amendment to the Loan Agreement
is hereby amended to delete the reference to June 30, 1994 and to substitute
therefore a reference to July 31, 1994.
3. CLOSING CONDITIONS; CONDITIONS TO EFFECTIVENESS. This Amendment
shall not be binding and shall not become effective unless and until each of the
following conditions precedent shall have been satisfied:
(a) AMENDMENT. This Amendment shall have been signed by each of
the parties hereto and consented to by each of the Voting Participants, and the
Agent shall have received a counterpart hereof signed by the Borrower and each
Operating Partnership.
(b) MERCHANTS. The Agent shall have received a fully executed
original, in form and substance satisfactory to the Agent, of the consent of the
holder of
-4-
<PAGE>
the Merchants portion of the Junior Unsecured Note to the transactions
contemplated hereby.
(c) AUTHORIZATIONS. The Agent shall have received, with a copy
for each Lender and Voting Participant:
(1) A certificate of the secretary or an assistant
secretary of the General Partner, dated as of the date this Amendment is to
become effective, (A) certifying as to resolutions of the Board of Directors of
the General Partner authorizing the execution, deliver and performance by the
General Partner, as general partner of the Borrower and of each Operating
Partnership, of this Amendment and of the other amendments, agreements,
documents and instruments described herein, (B) stating that such resolutions
have not been modified or rescinded and remain in full force and effect, (C)
certifying as to the names, incumbency and signatures of the officers of the
General Partner authorized to sign this Amendment and all such other amendments,
agreements, documents and instruments and (D) certifying as to all amendments
and other modifications to the Bylaws of the General Partner since the Closing
Date;
(2) A copy of all amendments to the Certificate of
Incorporation of the General Partner since July 31, 1993, certified by the
Secretary of State of the State of Delaware or by an officer of the General
Partner as being true, correct and complete;
(3) A copy of all amendments, since July 31, 1993, to the
partnership agreement and/or to any certificate of limited partnership and/or to
any documents relating to authority to do business in any state, other than its
state of formation, of the Borrower and/or any Operating Partnership; and
(4) A certificate of the chief financial or executive
officer of the General Partner, dated as of the date this Amendment is to become
effective, to the effect that (A) after giving effect to this Amendment and to
the transactions contemplated hereby and as of the date of such certificate,
there exists no Default or Event of Default and (B) all of the representations
and warranties contained in the Loan and Security Documents are true and correct
as of such date, except as may be set forth in such certificate with respect to
litigation commenced after the Closing Date.
-5-
<PAGE>
(d) OTHER DOCUMENTS. The Agent shall have received such other
documents as the Agent may have requested, including opinions of counsel and
title endorsements, and all other documents and legal matters in connection with
the transactions contemplated by this Amendment shall be satisfactory in form
and substance to the Agent and its counsel.
4. REPRESENTATIONS AND WARRANTIES. The Borrower and each Operating
Partnership jointly and severally represents and warrants to the Lenders (such
representations and warranties also being deemed to be made pursuant to the
Agreement, such that if any thereof proves to have been untrue or misleading in
any material respect at the time when made or deemed to be made, then an Event
of Default shall be deemed to have occurred under SECTION 7.01(b) of the
Agreement) that:
(a) As of July 28, 1994 the principal and interest owing on the
Loans to the Lenders is as follows:
<TABLE>
<CAPTION>
Interest
(through
Principal July 28, 1994)
--------- --------------
<S> <C>
$43,200,000 $252,000
</TABLE>
The Borrower and each Operating Partnership hereby confirms that there are no
defenses or off-sets, and it has no counterclaims or causes of action with
respect, to its obli-
-6-
<PAGE>
gations under the Loan and Security Documents and/or any of the other documents
to which it is a party and to the extent that any such defense or offset or
counterclaims or cause of action exists without its knowledge, the same is
hereby waived and released to the fullest extent permitted by law.
(b) All representations and warranties contained in the Loan and
Security Documents continue to be true and correct, with the same force and
effect as if made on and as of the date this Amendment becomes effective (and
are repeated as of such date), and in addition the representations and
warranties of the Borrower contained in SECTION 4.10 of the Agreement are also
made in respect of the most recent financial statements of the Borrower
furnished to the Lenders.
(c) The Borrower and each Operating Partnership has full power,
authority and legal right to execute, deliver and perform this Amendment. This
Amendment has been duly executed and delivered on behalf of the Borrower and
each Operating Partnership and constitutes a legal, valid and binding obligation
of the Borrower and each Operating Partnership, enforceable against the Borrower
and each Operating Partnership in accordance with its terms. Except for the
consent of Merchants delivered to the Lender concurrently herewith, no consent
of any other Person and no consent, license, approval or authorization of, or
-7-
<PAGE>
registration or declaration with or notice to, any governmental authority,
bureau or agency is required in connection with the execution, delivery or
performance by the Borrower or any Operating Partnership, or the validity or
enforceability against the Borrower or any Operating Partnership, of this
Amendment.
(d) The execution, delivery and performance by the Borrower and
each Operating Partnership of this Amendment does not and will not violate any
provision of any existing law, rule or regulation or of any order, judgment,
award or decree of any court, arbitrator or governmental authority, bureau or
agency, or of the partnership agreement, charter or Bylaws of, or any security
issued by, the Borrower, any Operating Partnership or the General Partner, or of
any mortgage, indenture, lease, contract or other agreement or undertaking to
which the Borrower, any Operating Partnership or the General Partner is a party
or by which any of their respective properties or assets may be bound, and will
not result in the creation or imposition of any Lien on any of their respective
properties or assets pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement or undertaking.
5. CHANGES. This Amendment may not be amended, waived or otherwise
modified, except in accordance with the provisions of SECTION 9.02 of the
Agreement.
-8-
<PAGE>
6. CAPTIONS. Section captions are for convenience only and shall
not affect the interpretation or construction of this Amendment.
7. COUNTERPARTS. This Amendment may be signed in any number of
separate counterparts, each of which shall constitute an original instrument and
all of which taken together shall constitute one and the same instrument, with
the same force and effect as if the signatures of all the parties hereto were on
a single instrument.
8. GOVERNING LAW. This Amendment shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within such State.
9. MERGER. This Amendment sets forth the entire understanding of
the parties hereto with respect to the subject matter hereof, and supersedes any
prior or contemporaneous understandings with respect to the subject matter
hereof.
10. CONTINUING FORCE AND EFFECT. As modified by this Amendment, the
Agreement and each of the other Loan and Security Documents, including, without
limitation, PARAGRAPH 7 (OPERATING ACCOUNTS) to the Fifth Amendment to the Loan
Agreement, shall continue in full force and effect in
-9-
<PAGE>
accordance with their respective terms. This Amendment is a Loan and Security
Document. Accordingly, any Default or Event of Default hereunder shall
constitute a Default and/or Event of Default under the Agreement.
11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respect successors and
assigns, provided that neither the Borrower nor any Operating Partnership may
assign or transfer any of its interest hereunder without the prior written
consent of the Required Lenders.
IN WITNESS WHEREOF, the Borrower, the Operating Partnerships, the
Lenders and the Agent have caused this Amendment to be duly executed and
delivered, all as of the day and year first above written.
AIRCOA HOTEL PARTNERS, L.P.
By: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
-------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
-------------------------
Title: Carol K. Werner
Executive Vice President
BANKERS TRUST COMPANY, as a
Lender and as Agent
By: /s/ Laura J. Buswick
------------------------------
Title: Vice President
-10-
<PAGE>
BANCA CASSA DI RISPARMIO DI
TORINO, S.p.A.,
New York Branch, as Lender
By: /s/ Giorgio Cuccolo
------------------------------
Title: Giorgio Cuccolo
Manager and Senior V.P.
By: /s/ C. Vincent Calvo
------------------------------
Title: C. Vincent Calvo
Vice President
MCCORMICK RANCH OPERATING
PARTNERSHIP, L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
------------------------------
Title: Carol K. Werner
Executive Vice President
LAKESIDE OPERATING PARTNERSHIP,
L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
------------------------------
Title: Carol K. Werner
Executive Vice President
-11-
<PAGE>
FOURWINDS OPERATING PARTNERSHIP,
L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
------------------------------
Title: Carol K. Werner
Executive Vice President
BUFFALO OPERATING PARTNERSHIP,
L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
------------------------------
Title: Carol K. Werner
Executive Vice President
DURHAM OPERATING PARTNERSHIP,
L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title: Douglas M. Pasquale
Executive Vice President
By: /s/ Carol K. Werner
------------------------------
Title: Carol K. Werner
Executive Vice President
-12-
<PAGE>
AURORA INN OPERATING
PARTNERSHIP, L.P.
BY: AIRCOA Hospitality
Services, Inc., general
partner
By: /s/ Douglas M. Pasquale
------------------------------
Title:
By: /s/ Carol K. Werner
------------------------------
Title: EVP
CONSENTED TO:
THE BANK OF NEW YORK
By: /s/ Frederick L. Sasq
-------------------------
Title: Vice President
BANK OF THE WEST
By: /s/ Tom K. Matson
-------------------------
Title: Vice President
ROYAL BANK OF CANADA, GRAND CAYMAN
(NORTH AMERICA NO. ONE BRANCH)
By: /s/ D. S. Berg
-------------------------
Title: Manager
THE SAKURA BANK, LIMITED, NEW YORK BRANCH
By: /s/ T. Tashajima
-------------------------
Title: Senior Vice President
Assistant General Manager
BANKERS TRUST DELAWARE
By: /s/ Dean Mitchell
-------------------------
Title: Vice President
-13-
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this "Second
Amendment"), executed to be effective as of the 30th day of July, 1994, by and
between AIRCOA HOTEL PARTNERS, L.P., a Delaware limited partnership having its
principal office at 5775 DTC Boulevard, Suite 300, Denver, Colorado 80111
(hereinafter referred to as "Borrower"), and NATIONAL CITY BANK, INDIANA, a
national banking association having its principal banking offices at 101 West
Washington Street, Indianapolis, Indiana 46255 (hereinafter referred to as
"National City"), WITNESSES THAT:
WHEREAS, Borrower and National City entered into a certain Loan Agreement
dated September 19, 1988 pursuant to which National City made two (2) loans to
Borrower, each in the original principal amount of Four Million and no/100
Dollars ($4,000,000.00);
WHEREAS, such Loan Agreement was amended by a certain Amendment of Loan
Agreement, executed by Borrower and National City to be effective March 15, 1990
(the "First Amendment"), and was further amended by a certain Second Amendment
of Loan Agreement, executed by Borrower and National City to be effective April
8, 1991 (the "Second Amendment") (such Loan Agreement, as twice amended,
hereinafter referred to as the "Original Loan Agreement");
WHEREAS, the Capital Fund Loan (as such term was defined in the Original
Loan Agreement) was satisfied; however, the Junior Loan (as such term is defined
in the Original Loan Agreement),
EXHIBIT 10.31b
<PAGE>
which was evidenced by a certain promissory note in the original principal
amount of Four Million and no/100 Dollars ($4,000,000.00) executed by Borrower
to National City to be effective September 15, 1988 (the "Junior Note"),
remained unpaid;
WHEREAS, the Original Loan Agreement was amended by a certain Amended and
Restated Loan Agreement, executed by Borrower and National City to be effective
December 31, 1992 (the "Amended and Restated Loan Agreement"), which Amended and
Restated Loan Agreement modified and extended the Junior Loan (the "Extended
Junior Loan");
WHEREAS, the Junior Note was replaced by a certain Renewal Promissory Note
in the principal amount of Two Million Nine Hundred Ninety Thousand and no/100
Dollars ($2,990,000.00) executed by Borrower to National City to be effective
December 31, 1992 (the "Extended Junior Note"), which Extended Junior Note is
due and payable on or before July 30, 1994;
WHEREAS, Borrower applied to National City for a waiver of what would have
been an Event of Default under the Amended and Restated Loan Agreement arising
from a proposed increase in rate and acceleration of amortization of the
indebtedness of Borrower under the Bankers Trust Loan Agreement and the related
promissory note(s) and for an amendment of the minimum net worth covenant and
the definitions of "Available Cash Flow" and "Adjusted
Page 2
<PAGE>
Cumulative Cash Flow" set forth in the Amended and Restated Loan Agreement;
WHEREAS, National City granted such requested waiver and made such
requested amendment pursuant to the terms of a certain Waiver and First
Amendment to Amended and Restated Loan Agreement, executed by Borrower and
National City to be effective November 9, 1993 (the "First Amendment"); and
WHEREAS, the Extended Junior Note matures on July 30, 1994, Borrower has
requested that the due date of the Extended Junior Note be extended, and
National City has agreed to such extension upon the condition that (a) Borrower
executes a certain Second Renewal Promissory Note in the principal amount of Two
Million Sixty-Five Thousand and no/100 Dollars ($2,065,000.00), which is due and
payable on or before October 31, 1995 (the "Second Extended Junior Note");
(b) Borrower executes this Second Amendment; (c) Borrower makes a principal
reduction in the amount of Five Hundred Thousand and no/100 Dollars
($500,000.00) on the principal amount outstanding under the Extended Junior Note
on or before the date of execution hereof; (d) Borrower obtains all necessary
consents, confirmations and approvals as shall be deemed satisfactory to
National City, including the consent of Bankers Trust Company, to the
transactions contemplated herein; and (e) Borrower shall undertake to register
certain restricted Class A Depository Units issued by it to Regal Hotel
Management,
Page 3
<PAGE>
Inc., which Units are pledged to National City, in accordance with the time
frame set forth in this Second Amendment;
NOW, THEREFORE, in consideration of these premises and the agreements and
undertakings set forth herein, Borrower and National City agree as follows:
1. AMENDMENT OF SECTION 1. Section 1. of the Amended and Restated Loan
Agreement shall be amended in its entirety to read as follows:
1. EXTENDED JUNIOR LOAN AND SECURITY. National City shall, subject
to the terms and conditions of this Second Amendment, extend and amend the
Extended Junior Loan in the principal amount of Two Million Sixty-Five
Thousand and no/100 Dollars ($2,065,000.00) (hereinafter referred to as the
"Second Extended Junior Loan"). The Second Extended Junior Loan shall bear
interest as specified in, shall be evidenced by and shall be payable at the
times and in the amounts specified in the promissory note of Borrower to be
executed to National City effective as of July 30, 1994 in the principal
amount of Two Million Sixty-Five Thousand and no/100 Dollars
($2,065,000.00) (hereinafter referred to as the "Second Extended Junior
Note"). The Second Extended Junior Loan shall be entitled to the benefit
and security of the following:
(a) The pledge to National City (i) by REGAL HOTEL MANAGEMENT, INC.,
a Delaware
Page 4
<PAGE>
corporation (hereinafter referred to as "Management"), of three
hundred seventy-two thousand (372,000) issued and outstanding
Class A Depository Units of limited partner interest in Borrower,
and (ii) by RICHFIELD HOLDINGS, INC., formerly known as REGAL-
AIRCOA COMPANIES, INC., a Delaware corporation (hereinafter
referred to as "Companies"), of one hundred seventy-seven
thousand one hundred twenty-six (177,126) issued and outstanding
Class A Depository Units of limited partner interest in Borrower,
all pursuant to a pledge agreement executed by each of Management
and Companies to National City as of December 31, 1992, to be
confirmed and amended by the Third Consent (hereinafter defined)
(hereinafter referred to collectively as the "Additional Units
Pledge Agreements");
(b) The pledge to National City of two hundred thousand two hundred
ninety-eight (200,298) issued and outstanding Class A Depository
Units of limited partner interest in Borrower, pursuant to seven
(7) separate pledge agreements executed to National City, each
dated to be effective September 15, 1988, with the pledge
agreement executed by Companies, to National City having been
amended by a certain Amendment and Waiver Concerning Units Pledge
Agreement dated to be effective March 15, 1990, and with six (6)
of the pledge agreements having been replaced in connection with
the transfer of the units covered thereby (including the transfer
by Joseph A. Frates to Companies), all to be confirmed and
amended by the Third Consent (such agreements, as confirmed and
amended hereinafter referred to collectively as the "Units Pledge
Agreements");
(c) The guaranty by WILLIS M. McFARLANE and ROBERT E. MERRICK
(hereinafter sometimes referred to collectively as the
Page 5
<PAGE>
"Guarantors") of any and all indebtedness and obligations of
Borrower to National City hereunder or in connection herewith,
pursuant to guaranties executed to National City by such
guarantors dated to be effective September 15, 1988, to be
confirmed and amended by the Guarantor's Third Approval
(hereinafter defined) (hereinafter referred to collectively as
"the Guaranties");
(d) The pledge of all rights of AIRCOA HOSPITALITY SERVICES, INC., a
Delaware corporation (hereinafter referred to as "Hospitality"),
to any and all present and future management fees and related
compensation payable Hospitality by Borrower or any Operating
Partnership (hereinafter defined), pursuant to a security
agreement executed by Hospitality to National City dated
effective September 15, 1988 (hereinafter referred to as the "Fee
Security Agreement"), which Fee Security Agreement was assigned
to and assumed by RICHFIELD HOTEL MANAGEMENT, INC. (hereinafter
referred to as "Richfield") pursuant to the terms of a certain
Assignment and Assumption of Security Agreement dated effective
March 2, 1994, to be confirmed and amended by the Third Consent.
(e) The agreement by Companies and AIRCOA Credit Company, a Delaware
corporation (hereinafter referred to as "AIRCOA Credit"), to
purchase the Second Extended Junior Loan upon the occurrence of
certain circumstances, pursuant to a certain loan purchase
agreement executed to National City by Companies and AIRCOA
Credit, dated to be effective September 15, 1988, as amended by a
certain Amendment to Loan Purchase Agreement executed to National
City by Companies and AIRCOA Credit, dated effective March 15,
1990, a certain Second Amendment to Loan Purchase Agreement
executed to National City by Companies and AIRCOA
Page 6
<PAGE>
Credit, dated effective April 8, 1991, a certain Third Amendment
to Loan Purchase Agreement executed to National City by Companies
and AIRCOA Credit dated effective December 31, 1992, and a
certain Fourth Amendment to Loan Purchase Agreement dated
effective July 30, 1994 (hereinafter referred to as the "Loan
Purchase Agreement").
2. CONSENT AND CONFIRMATION. Companies, AIRCOA Credit, Hospitality,
Richfield and each Operating Partnership shall execute a certain Third Consent,
Confirmation and Approval contemporaneously with the execution of this Second
Amendment in the form attached hereto as Exhibit A (herein referred to as the
"Third Consent"), which Third Consent shall set forth each such party's consent
to and approval of this Second Amendment and shall confirm that the Units Pledge
Agreements and Fee Security Agreement continue to secure, extend to, include and
be effective with respect to the Second Extended Junior Note. In addition,
Guarantors shall execute a certain Guarantors Third Consent, Confirmation and
Approval contemporaneously with the execution of this Second Amendment in the
form attached hereto as Exhibit B (herein referred to as the "Guarantors Third
Approval"), which Guarantors Third Approval shall set forth each Guarantor's
consent to and approval of this Second Amendment and shall confirm that the
Guaranties continue to secure, extend to, include and be effective with respect
to the Second Extended Junior Loan and Second Extended Junior Note.
Page 7
<PAGE>
3. PRINCIPAL REDUCTION. On or prior to the date of execution hereof,
Borrower shall make a Five Hundred Thousand and no/100 Dollars ($500,000.00)
principal reduction to National City in the amount of principal balance
outstanding on the Extended Junior Note and, after giving effect to this
principal payment, the outstanding principal balance of the Second Extended
Junior Note will be Two Million Sixty-Five Thousand and no/100 Dollars
($2,065,000.00). Borrower shall obtain the consent of Bankers Trust Company to
this principal reduction, which consent shall in form and substance be
acceptable to National City. Borrower shall also provide National City with a
Certificate of Solvency, in form and substance acceptable to National City,
dated effective as of even date herewith. Such principal reduction shall be
accepted by National City in reliance on the consent of Bankers Trust Company
and on the Certificate of Solvency provided by Borrower to National City.
4. REFERENCES. All references in the loan documents to the Junior Loan
or the Extended Junior Loan shall be amended to refer to the Second Extended
Junior Loan. All references in the loan documents to the Junior Note or the
Extended Junior Note shall be amended to refer to the Second Extended Junior
Note.
5. COMMITMENT FEE AND EXPENSES. Borrower agrees to pay National City
prior to or concurrent with the execution hereof a non-refundable commitment fee
of Seven Thousand Five Hundred and no/100 Dollars ($7,500.00) in connection with
the processing of
Page 8
<PAGE>
this extension. Borrower agrees to pay all reasonable out of pocket expenses
incurred by National City with respect to this extension, including, but not
limited to, filing, audit and legal fees.
6. CERTIFICATION. Borrower hereby certifies to National City that the
representations and warranties set forth in the Amended and Restated Loan
Agreement are true as of the effective date hereof, that there is full
compliance with all of the covenants set forth in the Amended and Restated Loan
Agreement and that as of the effective date hereof there exists no default or
any condition that, with the giving of notice or lapse of time or both, would
constitute a default under the Amended and Restated Loan Agreement.
7. WAIVER OF JURY TRIAL. Borrower and National City hereby waive trial
by jury in any action, proceeding, claim or counterclaim, whether in contract or
tort, at law or in equity, arising out of or in any way related to the Amended
and Restated Loan Agreement, as amended by the First Amendment, this Second
Amendment and any subsequent amendments. This provision may not be waived,
conditioned or modified, except in writing signed by the duly authorized
officers of Borrower and National City.
8. ANTI-TYING. National City and Borrower severally, each for itself,
acknowledges and agrees that, except as expressly provided in the Amended and
Restated Loan Agreement, as amended, with respect to Borrower's obligation to
maintain depository
Page 9
<PAGE>
account(s) (if any) with National City, the extension of credit provided for
herein is neither conditioned upon nor has the interest rate and fees therefore
been set based upon Borrower's agreement to purchase any other product or
service from National City. Further, National City and Borrower severally, each
for itself, acknowledges and agrees that National City has not offered this
extension of credit or offered to reduce the interest rate or fees therefore
except as provided herein.
9. SECURITIES REGISTRATION. In consideration of the extension provided
for herein, on or before February 25, 1995, Borrower shall take such action as
is necessary to register, under the Securities Act of 1933, the restricted
160,000 Class A Depository Units, represented by Certificate No. R 20449, issued
by Borrower to Regal Hotel Management, Inc., which Units are pledged to National
City. Borrower shall use all reasonable efforts to ensure that such
registration shall be effective within ninety (90) days of February 25, 1995.
Borrower shall pay all costs and expenses of such registration.
10. FORCE AND EFFECT. Except as amended by the preceding paragraphs, the
Amended and Restated Loan Agreement, as amended by the First Amendment, and all
other documents executed in connection therewith shall remain in full force and
effect in accordance with their respective terms. All capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Amended and Restated Loan Agreement.
Page 10
<PAGE>
This Second Amendment shall be binding upon Borrower and its successors, assigns
and legal representatives and shall inure to the benefit of National City and
its successors, assigns and legal representatives.
11. Borrower represents to National City that Borrower has no defenses,
setoffs, claims or counterclaims of any kind or nature whatsoever against
National City in connection with this Second Amendment, any related agreements
or documents prior thereto or any action taken or not taken by National City
with respect to any of the above agreements or with respect to any collateral
securing such agreements. Without limiting the generality of the foregoing,
Borrower hereby releases, acquits and forever discharges National City, its
affiliates and each of their officers, directors, agents, employees, attorneys,
insurers, successors and assigns and anyone claiming through or under them
(collectively the "Released Parties"), from and against any liabilities, rights,
claims, losses, expenses or causes of action, known or unknown, arising out of
any action or inaction by any of the Released Parties to the date of this Second
Amendment with respect to any of the above agreements or documents executed by
Borrower. Borrower also waives, releases and forever discharges the Released
Parties and each of them from and against any and all known or unknown rights to
setoff, defenses, claims, counterclaims, causes of action and any other bar to
the enforcement of the Second Amendment executed by
Page 11
<PAGE>
Borrower, existing as of this date. Borrower expressly disclaims any reliance
on any oral representation made by the Released Parties or any of them with
respect to the subject matter of this Second Amendment. Borrower hereby agrees
to indemnify and hold harmless the Released Parties from and against any and all
claims, losses, damages, causes of action, liabilities, attorneys' fees or
expenses arising out of any action or inaction by any of the Released Parties to
the date of this Second Amendment with respect to the Second Amendment or
arising out of or in connection with this Second Amendment. Borrower
acknowledges and agrees that National City is specifically relying on the
representations, warranties, releases and agreements contained in this Second
Amendment, and that this Second Amendment is being executed by Borrower in good
faith and delivered to National City as an inducement to National City to
consummate the transactions contemplated by this Second Amendment.
Page 12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Amended and Restated Loan Agreement to be executed and effective as of the day
and year first above written.
AIRCOA HOTEL PARTNERS, L.P. NATIONAL CITY BANK, INDIANA
BY: AIRCOA HOSPITALITY
SERVICES, INC., By: /s/ Jeffrey C. Geeding
GENERAL PARTNER -------------------------
Jeffrey C. Geeding
Vice President
By: /s/ Douglas M. Pasquale "National City"
--------------------------
Printed: Douglas M. Pasquale
-----------------------
Title: Executive Vice President
------------------------
By: /s/ Carol K. Werner
--------------------------
Printed: Carol K. Werner
---------------------
Title: Executive Vice President
------------------------
"Borrower"
Page 13
<PAGE>
STATE OF Colorado )
----------------- ) SS:
COUNTY OF Arapahoe )
----------------
BEFORE ME, a Notary Public in and for such County and State, personally
appeared Douglas Pasquale and Carol Werner, the EVP and EVP, respectively, of
AIRCOA Hospitality Services, Inc., general partner of AIRCOA Hotel Partners,
L.P., who, after being duly sworn, acknowledged the execution of the foregoing
Second Amendment to Amended and Restated Loan Agreement for and on behalf of
such corporation as general partner of such limited partnership.
WITNESS my hand and Notarial Seal this 2nd day of August, 1994.
/s/ Nancy T. Walton
--------------------------
Nancy T. Walton, Notary Public
[NOTARY SEAL]
My Commission Expires: My County of Residence:
October 6, 1996 Arapahoe
- ------------------------- -------------------------------
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
BEFORE ME, a Notary Public in and for such County and State, personally
appeared Jeffrey C. Geeding, Vice President of National City Bank, Indiana, who,
after being duly sworn, acknowledged the execution of the foregoing Second
Amendment to Amended and Restated Loan Agreement for and on behalf of such Bank.
WITNESS my hand and Notarial Seal this 4th day of August, 1994.
/s/ Mary Anne Walcott
-------------------------
Mary Anne Walcott, Notary Public
My Commission Expires: My County of Residence:
October 4, 1997 Marion
- ------------------------- -------------------------
Page 14
<PAGE>
AIRCOA HOTEL PARTNERS, L.P.
SECOND RENEWAL PROMISSORY NOTE
$2,065,000.00 Executed to be effective
July 30, 1994
Indianapolis, Indiana
FOR VALUE RECEIVED, AIRCOA HOTEL PARTNERS, L.P., a Delaware limited
partnership ("Maker" or the "Partnership"), hereby promises to pay to the order
of NATIONAL CITY BANK, INDIANA, a national banking association, or its assigns
(the "Holder" or "Payee"), the principal sum of Two Million Sixty-Five Thousand
and No/100 Dollars ($2,065,000.00), on or before October 31, 1995, in the manner
and at the times hereinafter specified, with interest (computed on the basis of
a 360-day year, but applied to the actual number of days in each interest
payment period) on the unpaid balance of such principal sum, at the interest
rate per annum equal to the sum of one and one-half percent (1-1/2%) plus the
rate from time to time posted by Bank as its per annum interest "Base Rate,"
with each change in the rate of interest to take effect on the date of change of
the Base Rate, unless the conditions set forth below are not satisfied, payable
as follows:
(a) Commencing on August 1, 1994, and continuing on the first day of
each of the following calendar months through October 1, 1995, installments
of accrued and unpaid interest shall be due and payable;
(b) Commencing on September 1, 1994, and continuing on the first day
of each of the following calendar months through October 1, 1995,
installments of principal, each in the amount of Twenty-Five Thousand and
No/100 Dollars ($25,000.00), shall be due and payable;
(c) on or before May 30, 1995, an installment of principal, in an
amount equal to twenty-five percent (25%) of Maker's "Excess Cash Flow"
(hereinafter defined) for Maker's fiscal year ending December 31, 1994,
shall be due and payable;
(d) The entire unpaid principal balance and all unpaid and accrued
interest shall be due and payable on October 31, 1995.
(e) In the event that the effective interest rate on this Note
increases to an amount greater than nine percent (9%) per annum during the
term of this Note, the amount of interest due as a result of the difference
between the effective interest rate and nine percent (9%) per annum shall
be deferred and shall be due and payable on October 31, 1995. Any such
deferred interest shall not bear interest.
EXHIBIT 10.31d
<PAGE>
For purposes of this Note, "Excess Cash Flow" shall mean and refer to
"Available Cash Flow", as such term is defined in that certain Amended and
Restated Loan Agreement executed by Maker and Payee effective December 31, 1992,
as amended by a certain Waiver and First Amendment to Amended and Restated Loan
Agreement effective November 9, 1994, as amended by a certain Second Amendment
to Amended and Restated Loan Agreement of even date herewith, and as amended
from time to time hereafter (hereinafter collectively referred to as the "Loan
Agreement").
1. All amounts payable under or with respect to this Note shall be
payable without relief from valuation and appraisement laws. Payments of
principal and interest shall be made in lawful money of the United States of
America at the principal office of the Holder in Indianapolis, Indiana, or at
such other place as the Holder shall have designated for such purpose to the
Partnership in writing.
2. No payment on account of principal of this Note shall be made if a
Default or an Event of Default [as such terms are defined in the Loan Agreement
by and among Bankers Trust Company and Banca Cassa Di Risparmio Di Torino,
S.p.A., New York Branch, as lenders (collectively, the "Senior Lenders"),
Bankers Trust Company, as agent and the Partnership dated as of February 20,
1987 (as the same has been amended seven (7) times prior to the date hereof, the
"Bankers Trust Loan Agreement") relating to the Senior Secured Note of the
Partnership (the "Senior Secured Note")] shall have occurred and shall then be
continuing or would occur as a result thereof. The foregoing shall not prohibit
or otherwise limit the payment of accrued interest on this Note on any scheduled
interest payment date or at any other time contemplated by this Note or
otherwise.
3. Maker may prepay all or any portion of the principal amount
outstanding under this Note at any time and from time to time without penalty or
premium by a payment to Holder in immediately available Dollars by Maker. No
payment or prepayment of this Note shall be readvanced. This Note shall be
immediately due and payable in full in the event that the Senior Secured Note is
paid in full.
4. Maker shall pay a "late charge" for the purpose of defraying expense
incident to handling with respect to any monthly installment of interest and
principal, or portion thereof, payable hereunder not paid within ten (10) days
after the date when first due, at the rate of five cents (5 cents) for each One
and no/100 Dollar ($1.00) so overdue, with a minimum charge of Twenty and no/100
Dollars ($20.00). Provided, however, nothing herein contained shall be construed
as a waiver by the Holder of this Note of its option to declare a default if any
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<PAGE>
payment of any installment of interest or principal, or portion thereof, is not
made when due.
5. Upon any payment or distribution of assets of or in respect of the
Partnership of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding up or total or partial liquidation
or reorganization of the Partnership, either voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due upon the Senior Secured Note shall first be paid in full, or payment
thereof fully provided for, before the Holder shall be entitled to receive or
retain any assets so paid or distributed in respect hereof and/or thereof; and
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets of or in respect of the Partnership of any
kind or character, whether in cash, property or securities, to which the Holder
would be entitled, except for these provisions, shall be paid by the Partnership
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Holder if received by it,
directly to the holder(s) of the Senior Secured Note (PRO RATA to each of such
holders on the basis of the respective amounts of the Senior Secured Note held
by such holders or their representatives), to the extent necessary to pay the
Senior Secured Note in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holder(s) of the Senior
Secured Note, before any payment or distribution is made to the Holder.
Notwithstanding the foregoing, the Senior Lenders have consented to a Five
Hundred Thousand Dollars ($500,000.00) principal reduction made at the time of
execution and delivery hereof and the stated amount of this Note reflects the
payment thereof. Such principal reduction has been accepted by the Holder
hereof in reliance on such consent and on a Certificate of Solvency provided by
the Maker to Holder of even date herewith.
6. By your acceptance of this Note, the Holder shall be deemed to
acknowledge and agree that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration of each holder of the Senior
Secured Note, and such holder(s) of the Senior Secured Note shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, the Senior Secured Note.
7. Notwithstanding anything herein to the contrary, this Note may not be
amended (or any provision hereof waived) without the prior written consent of
the Required Lenders (as defined in the Bankers Trust Loan Agreement). This
Note shall be governed by the terms, provisions and conditions of the Loan
Agreement, and shall be entitled to the benefits and security of all
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agreements and documents executed to National City Bank, Indiana, in connection
with the Loan Agreement.
8. No provision hereof shall alter or impair the obligation of the
Partnership, which is absolute and unconditional, to pay the principal hereof
and interest hereon at the times and places herein specified. The Partnership
and endorsers herein waive demand, protest and notice of dishonor and all
defenses on ground of any extension of the time of payment of this Note that may
be given by the Holder hereof.
9. This Note may be assigned or otherwise transferred as provided in this
Note; provided that (i) the assignment or transfer is made in compliance with
applicable laws and (ii) the assignee or transferee acknowledges in writing to
the Holder that it takes this Note subject to all of the provisions hereof,
including without limitation the subordination provisions.
10. At any time and from time to time, this Note may be assigned or
transferred to one or more persons, in whole or in part, in integral multiples
of $1,000. Upon surrender of this Note to the Partnership for transfer pursuant
to this paragraph, duly endorsed or accompanied by written instruments of
transfer satisfactory to the Partnership, the Partnership, at the Holder's
expense, shall execute and deliver to the designated transferee(s), in the name
of the designated transferee(s), a new note or notes in an authorized designated
principal amount, which new note or notes when so issued shall be the valid
obligation of the Partnership, evidencing the same debt, and entitled to the
same benefits as this Note (or portion thereof) surrendered upon such transfer,
and the Partnership, at the Holder's expense, shall execute and deliver to the
Holder, in the name of the Holder at the Holder's address, a new note in the
aggregate principal amount equal to and in exchange for the untransferred
portion of the principal of this Note so surrendered, which new note when so
issued shall be the valid obligations of the Partnership, evidencing the same
debt, and entitled to the same benefits as this Note (or portion thereof)
surrendered upon such exchange. The Partnership shall establish a register for
the purpose of registering, and registering the transfer of, this Note and any
new notes as permitted hereunder and shall adopt such other reasonable
procedures as it may deem necessary or appropriate to effect the registration
and transfer of this Note and any new notes, as applicable. Accrued interest on
this Note (or portion thereof) at the time of transfer shall be apportioned
between the transferor and the transferee.
11. (a) Subject to and upon compliance with the provisions of this
paragraph 11, the Holder may convert this Note, or any portion of the principal
amount hereof which is at least $1,000
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and any larger integral multiple of $1,000, at any time before payment or
satisfaction of this Note, into Class A Units of limited partner interests in
the Partnership ("Class A Units") issued pursuant to Section 4.6 of the
Agreement of Limited Partnership (dated July 30, 1987) of the Partnership, as it
may be amended (the "Partnership Agreement"), as hereinafter provided.
(b) Upon surrender of this Note or an authorized portion of the
principal amount hereof to the Partnership at its principal office, accompanied
by appropriate endorsements and transfer documents satisfactory to the
Partnership, the Partnership at the Holder's expense, shall issue and deliver to
such Holder in the name of the Holder at the Holder's address (or such other
name and address as the Holder specifies), a certificate or certificates
evidencing the whole number of Class A Units obtained by dividing the aggregate
principal amount of this Note so surrendered by $18.50 (the "Conversation
Price"), subject to adjustment as hereinafter provided. No payment or
adjustment shall be made upon any conversion on account of any interest accrued
on this Note surrendered for conversion or on account of any dividends on the
Class A Units issued upon such conversion.
(c) If this Note is converted in part only, upon such conversion the
Partnership, at the Holder's expense, shall issue and deliver to or on the order
of the Holder hereof, a new note in principal amount equal to the unconverted
portion of this Note.
(d) Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which this Note and other
documents have been surrendered to and received in proper order for conversion
by the Partnership as aforesaid unless such Holder shall have so surrendered
this Note and shall have instructed the Partnership to effect the conversion on
a particular date following such surrender and such Holder shall be entitled to
convert this Note on such date, in which case such conversion shall be deemed to
be effected immediately prior to the close of business on such date. At such
time the rights of the Holder of this Note as the Holder shall cease and the
person or persons in whose name or names the certificate or certificate for
Class A Units shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the Class A Units represented thereby.
(e) The number of Class A Units issuable upon exercise of the
conversion right provided herein shall be adjusted from time to time as follows:
(i) In case the Partnership shall have, after September 15, 1988, (A) paid a
dividend or made a
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distribution on Class A Units or other of its securities, (B) subdivided or
reclassified its outstanding Class A Units into a greater number of Class A
Units, or (C) combined or reclassified its outstanding Class A Units into a
smaller number of Class A Units, the Conversion Price and the number of Class A
Units that the Holder shall be entitled to receive upon conversion in effect at
the time of the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be adjusted so
that the Holder of this Note surrendered for conversion after such date shall be
entitled to receive, upon payment by surrender of the principal amount or
authorized portion thereof of this Note as would have been payable before such
date, the number and kind of Class A Units or other securities which, if this
Note had been converted immediately prior to such date such Holder would have
owned upon such conversion and been entitled to receive by virtue of such
dividend, distribution, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(f) In case the Partnership shall issue rights or warrants to all
holders of Class A Units entitled them (for a period expiring within 45 days
after the record date for the determination of holders of Class A Units entitled
to receive such rights or warrants) to subscribe for or purchase Class A Units
(or securities convertible into Class A Units) at a price per Class A Unit (or
having a conversion price per Class A Unit, if a security convertible into Class
A Units) less than the current market price per Class A Unit [as defined in
subsection (i) of this paragraph 11] on such record date, then the Conversion
Price shall be adjusted by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction, of which the numerator
shall be the number of Class A Units outstanding on such record date plus the
number of Class A Units which the aggregate offering price of the total number
of Class A Units so to be offered (or the aggregate initial Conversion Price of
the convertible securities so to be offered) would purchase at such current
market price and of which the denominator shall be the number of Class A Units
outstanding on such record date plus the number of additional Class A Units to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). Such adjustment shall
become effective at the close of business on such record date; however, to the
extent that Class A Units (or securities convertible into Class A Units) are not
delivered after the expiration of such rights or warrants, the Conversion Price
shall be readjusted (but only with respect to notes exercised after such
expiration) to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants
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been made upon the basis of delivery of only the number of Class A Units (or
securities convertible into Class A Units) actually issued. In case any
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by the Advisory Committee (as defined in the Partnership Agreement)
of the Partnership. Class A Units owned by or held for the account of the
Partnership or any Operating Partnership (as defined in the Partnership
Agreement) shall not be deemed outstanding for the purpose of any such
computation.
(g) In case of any reclassification of or change to the outstanding
Class A Units issuable upon conversion (other than a change as a result of a
subdivision or combination), or in case of any consolidation of the Partnership
with or the merger of the Partnership into any other business organization
(other than a consolidation or merger in which the Partnership continues and
which does not result in any reclassification of or change to the outstanding
Class A Units), or in case of any sale or transfer of all or substantially all
of the assets of the Partnership, the Holder shall thereafter (in each case
prior to the expiration of the conversion right) receive, upon conversion of
this Note in the manner herein provided, the kind and amount of cash, securities
or other property properly receivable upon such reclassification, change,
consolidation, merger, sale or transfer by a holder of the number of Class A
Units then deliverable upon conversion, and the Partnership shall take such
steps in connection with such reclassification, change, consolidation, merger,
sale or transfer as may be necessary to assure that the provisions hereof shall
thereafter be applicable as nearly as reasonably may be, in relation to any
cash, securities or other property thereafter deliverable upon conversion of
this Note. The above provisions of this paragraph shall apply to successive
reclassifications, changes, consolidations, mergers, sales or transfers.
(h) In case the Partnership shall distribute to all holders of Class
A Units (including any such distribution made in connection with a consolidation
in which the Partnership is the continuing entity) evidences of its indebtedness
or assets [including distributions of Capital Transaction Proceeds (as defined
in the Partnership Agreement) but excluding other cash dividends or
distributions and dividends payable in Class A Units] or subscription rights or
warrants (excluding those referred to in subsection (f) of this paragraph 11],
then the Conversion Price shall be adjusted by multiplying the Conversion Price
in effect immediately prior to the record date for the determination by a
fraction, of which the numerator shall be the current market price per Class A
Unit [as defined in subsection (i) of this paragraph 11] on such record date,
less the fair
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<PAGE>
market value (as determined by the Advisory Committee of the Partnership, whose
determination shall be conclusive) of the portion of the evidences of
indebtedness or assets so to be distributed or of such subscription rights or
warrants applicable to one Class A Unit and of which the denominator shall be
such current market price per Class A Unit.
(i) For the purpose of any computation under subsection (f) or (h) of
this paragraph 11, the current market price per Class A Unit on any record date
shall be deemed to be the average of the daily representative closing prices for
the 30 consecutive trading days commencing 45 trading days before such date.
The closing price for each day shall be the last sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices regular way, in either case on the principal national securities
exchange on which the Class A Units are listed or admitted to trading, or, if
the Class A Units are not listed or admitted to trading on any national
securities exchange, the average of the highest reported bid and lowest reported
asked prices as furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information. If on any such date the Class A Units are not quoted by any
such organization, the fair value of Class A Units on such date, as determined
by the Advisory Committee of the Partnership, shall be used.
(j) No fractional Class A Units shall be issued upon conversion of
this Note. Instead, the Partnership will deliver a number of Class A Units that
reflects a rounding to the nearest whole number (with .5 rounded up).
(k) The Partnership shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Class A Units,
the full number of Class A Units then issuable upon conversion of this Note.
The Partnership covenants that all Class A Units which may be issued upon
conversion of this Note will upon issue be duly and validly issued and fully
paid and, except as otherwise provided in the Partnership Agreement and Delaware
law, nonassessable.
(1) At least 20 days prior to the record date or effective date of
the occurrence of any event described in subparagraphs (e) and (f) of this
paragraph 11, the Partnership shall give notice thereof to the Holder. Upon any
adjustment provided in this paragraph 11, the Partnership may cause a firm of
independent public accountants selected by it to calculate the number of Units
or securities that the holder shall be entitled to receive upon conversion after
giving effect to the event causing such adjustment. The Partnership shall be
entitled to
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<PAGE>
rely on any certificate provided by such firm as conclusive evidence of the
correctness of such a calculation.
12. (a) At any time or from time to time the Holder shall have the right
(the "Demand Rights"), upon request, to cause the Partnership to file with the
Securities and Exchange Commission as promptly as practicable after receiving
such request, and to use its best efforts to cause to become effective as soon
as possible, a registration statement under the Securities Act of 1933 (the
"Securities Act") on the appropriate form registering the offering and sale of
this Note or the number of Class A Units held by the Holder upon conversion of
this Note as hereinafter provided. In connection with any such requests, the
Partnership promptly shall prepare and file such documents as may be necessary
to register or qualify this Note and such Class A Units under the securities
laws of such states as the Holder shall reasonably request, and shall do any and
all other acts and things that may reasonably be necessary or advisable to
enable the Holder to consummate a public sale of this Note or such Class A Units
in such states; provided, however, that in no event shall the Partnership be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to the service of process
in suits other than those arising out of the offer or sale of the securities
covered by such registration statement in any jurisdictions where it is not now
so subject or to subject itself to taxation in any such jurisdiction.
Notwithstanding the foregoing, in no event shall the Partnership be required to
effect a registration relating to this Note or the Class A Units more frequently
than once in any 12-month period. The Partnership shall be entitled to
postpone, for a reasonable period of time, the filing of any registration
pursuant to this paragraph if, at the time it receives a request for
registration pursuant to this paragraph, the General Partner (or, if the General
Partner is the Holder at the time, the Advisory Committee of the Partnership)
determines in its reasonable business judgment that such registration and
offering would interfere with any material financing, acquisition, corporate
reorganization or other material transaction or development involving the
Partnership and promptly gives the Holder written notice of such determination;
provided that upon such postponement by the Partnership, the Partnership shall
be required to file such registration statement as soon as practicable after the
General Partner (or, if the General Partner is the Holder at the time, the
Advisory Committee of the Partnership) shall determine, in its reasonable
business judgment, that such registration and offering will not interfere with
the aforesaid material transaction or development. If this Note has been
transferred and new notes issued as provided for herein, the Partnership shall,
upon receipt of a request for registration hereunder,
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provide notice of such request to other holders of notes (or holders of Class A
Units issued on conversion thereof). Such holders may, by written notice to the
Partnership within 15 days of receipt of the notice from the Partnership,
request inclusion of their notes (or Class A Units) in such registration. If
this Note has been transferred and new notes issued as provided for herein, this
paragraph shall apply only if holders of new notes representing at least
$500,000 in aggregate principal amount (or, if this Note has been converted,
holders of at least 27,000 Class A Units) request registration of their notes or
Class A Units. Any registration statement filed pursuant hereto shall be
continued in effect for a period of not less than six months following its
effective date unless the Holder agrees to a shorter period.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of securities of
the Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use its best efforts to include this Note
and such number or amount of Class A Units held by the Holder pursuant to a
conversion of this Note as hereinafter provided in such registration statement,
at the Holder's request (the "Request Rights"). If the proposed offering
pursuant to this paragraph shall be an underwritten offering, then in the event
that the managing underwriter advised the Partnership in writing that in its
opinion the inclusion of this Note or of all or some of the Holder's Class A
Units would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only this Note or that number or
amount, if any, of Class A Units held by the Holder which, in the opinion of the
managing underwriter will not so adversely affect the offering.
(c) Except as expressly prohibited under the blue sky or securities
laws of any jurisdiction under which a registration or qualification is being
effected, the Partnership shall pay all fees and expenses in connection with the
first such registration or qualification effected pursuant to the Demand Rights
and any registration or qualification effected under the Request Rights, other
than any underwriting discounts, fees, commissions or similar charges relating
to this Note or the Class A Units of the person being qualified or registered.
The Holder requesting registration shall bear all of the fees and expenses in
connection with any subsequent registration or qualification under the Demand
Rights. The Partnership shall provide indemnification and other assurances to
the underwriters, and the Holder shall provide indemnification and other
assurances to the Underwriters and the Partnership, in form and substance
reasonably satisfactory to the general partner of the Partnership and the
underwriters.
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<PAGE>
(d) The foregoing registration rights of the Holder with respect to
the Class A Units issued upon conversion of this Note shall survive the payment
or other satisfaction of this Note. The registration rights of the Holder
hereunder may be assigned by the Holder to any person acquiring from the Holder
this Note or Class A Units held by the Holder upon conversion of this Note as
herein provided, and any such assignee shall be entitled to the benefits of such
registration rights during such period as the assignor is so entitled; provided,
that the registration rights shall expire at such time as a registration
statement covering this Note or the Class A Units becomes effective and is not
subsequently withdrawn.
13. In case one or more of the following events ("Events of Default")
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of any installment of interest upon this
Note as and when the same shall become due and payable and a continuation of
such default for at least five (5) banking business days after the due date; or
(b) default in the payment of all or any part of the principal on
this Note as and when the same shall become due and payable either as scheduled,
at maturity, by declaration or otherwise and a continuation of such default for
at least five (5) banking business days after the due date; or
(c) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect to the Partnership in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Partnership or for any substantial
part of the property of the Partnership or ordering the winding up or
liquidation of the affairs of the' Partnership, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(d) the Partnership shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Partnership or for any substantial part of the property of the
Partnership, or the Partnership shall make
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any general assignment for the benefit of creditors or shall fail generally to
pay its debts as they become due; or
(e) the occurrence of any event of default or condition which results
in the acceleration of the maturity of the Senior Secured Note and such
acceleration shall not be rescinded or annulled or waived or such indebtedness
repaid within 10 days after the holder thereof shall have given notice thereof
to the Partnership; PROVIDED that if such event of default shall be remedied or
cured by the Partnership or waived by the holders of such indebtedness, then the
Event of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action by any person;
or
(f) failure on the part of the Partnership in any material respect to
observe or perform its obligations under this Note with respect to registration
rights and conversion rights of the Holder for a period of 30 days after written
notice, specifying such failure and stating that such notice is a "notice of
default" hereunder, shall have been given by registered or certified mail,
return receipt requested; to the Partnership by the Holder; or
(g) the occurrence of an event of default under the Loan Agreement;
then, and in each and every such case, unless the principal of this Note shall
have already become due and payable, by notice in writing to the Partnership,
the Holder may declare the entire principal of this Note and the interest
accrued thereon, to be due and payable immediately, and, subject to the other
provisions of this Note, including, without limitation paragraphs 2 and 5, upon
any such declaration the same shall become immediately due and payable. No
waiver of any default or failure or delay to exercise any right or remedy by the
holder of this Note shall operate as a waiver of any other default or of the
same default in the future or as a waiver of any right or remedy with respect to
the same or any other occurrence.
14. The Partnership will pay any and all taxes that may be payable in
respect of the transfer or conversion of this Note or issuance and delivery of
Class A Units on conversion of this Note pursuant hereto. The Partnership shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of a new note or certificates
evidencing Class A Units in a name other than that of the Holder to be
transferred or converted, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Partnership the amount of
any such
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tax, or has established, to the satisfaction of the Partnership, that such tax
has been paid.
15. Unless otherwise expressly provided herein, all payments, notices,
communications, surrenders for transfer or conversion and consents hereunder,
shall be as follows: if to the Partnership, at 5775 DTC Boulevard, Suite 300,
Denver Colorado 80111; if to the Holder, at 101 West Washington Street,
Indianapolis, Indiana 46255 or at such other address given or changed in
writing to the Partnership by the Holder.
16. This Note is delivered in and shall be construed and enforced in
accordance with and governed by the laws of the State of Indiana. If any
provision, or portion thereof, of this Note or the application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, then the
remainder of this Note, or the application of such provision, or portion
thereof, to any other person or circumstances shall be valid and enforceable to
the fullest extent permitted by law.
17. This Note renews, amends, restates, supersedes and replaces that
certain Renewal Promissory Note, executed to be effective as of December 31,
1992, by Maker to National City Bank, Indiana in the principal amount of Two
Million Nine Hundred Ninety Thousand and No/100 ($2,990,000.00) and referred to
as the Extended Junior Note in the Loan Agreement.
18. MAKER, AND HOLDER WITHOUT FURTHER ACCEPTANCE, HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR
TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE.
THIS PROVISION MAY NOT BE WAIVED, CONDITIONED OR MODIFIED EXCEPT IN WRITING
SIGNED BY THE DULY AUTHORIZED OFFICERS OF BORROWER AND BANK.
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IN WITNESS WHEREOF, the Maker has caused this instrument to be dated,
executed and delivered on its behalf by its general partner thereunder duly
authorized and its corporate seal to be hereunto duly affixed.
AIRCOA HOTEL PARTNERS, L.P.
BY: AIRCOA HOSPITALITY
SERVICES, INC., AS
GENERAL PARTNER
By: /s/ Douglas M. Pasquale
--------------------------------
Printed: Douglas M. Pasquale
---------------------------
Title: Executive Vice President
-----------------------------
By: /s/ Carol K. Werner
--------------------------------
Printed: Carol K. Werner
---------------------------
Title: Executive Vice President
-----------------------------
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<PAGE>
STATE OF Colorado )
) SS:
COUNTY OF Arapahoe )
Before me, a Notary Public in and for such County and State, personally
appeared Douglas Pasquale and Carol Werner, the EVP and EVP, respectively, of
AIRCOA Hospitality Services, Inc., a Delaware corporation and general partner of
AIRCOA Hotel Partners, L.P., who, after having been duly sworn, acknowledged the
execution of the foregoing Second Renewal Promissory Note for and on behalf of
such corporation as general partner of such limited partnership.
WITNESS, my hand and Notarial Seal this 2nd day of August, 1994.
/s/ Nancy T. Walton
-------------------------------
(Nancy T. Walton) Notary Public
My Commission Expires: My County of Residence
My Commission Expires Oct. 6, 1996 Arapahoe
- ---------------------------------- --------------------------------
[NOTARY PUBLIC SEAL]
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<PAGE>
HSBC CORPORATE BANKING
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED
New York Branch: 140 Broadway, New York, NY 10005-1196
April 3, 1995
Mr. Michael Sheh
Senior Vice President and Treasurer
Richfield Hospitality Services, Inc.
5775 DTC Boulevard
Englewood, CO 80111
Dear Michael:
BANKING FACILITIES FOR AIRCOA HOTEL PARTNERS, L.P.
We are pleased to confirm the willingness of the New York Branch of the Hongkong
and Shanghai Banking Corporation Limited to grant the following facilities,
subject to the terms and conditions mentioned hereunder:
LENDER: The Hongkong and Shanghai Banking Corporation Limited, New York
Branch (the "Bank").
BORROWER: Aircoa Hotel Partners, L.P., a Delaware limited partnership (the
"Borrower").
GUARANTOR: Regal Hotels International Holdings Limited, a Bermuda registered
corporation (the "Guarantor").
AMOUNT: (A) USD45,000,000 first mortgage loan (the "Mortgage Loan"), and
(B) USD1,000,000 revolving credit line (the "Revolving Loan").
Maximum aggregate amount of facilities A and B shall not exceed
65% of aggregate appraised value of the Properties (as defined in
the Collateral section below) as reviewed and accepted by the
Bank.
PURPOSE: (A) (1) Refinance USD39,200,000 of first mortgage debt secured by
first mortgages on the Properties (as defined below),
(2) Refinance USD1,790,000 of junior unsecured debt owed to
National City Bank (Indiana),
(3) Provide USD3,310,000 to partially fund property renovations
at some of the Properties, and
(4) Provide approximately USD700,000 to fund the facility fee
and estimated closing costs including legal, environmental,
and engineering due diligence expenses.
(B) Seasonal working capital needs of the properties. Subject to 60
day annual cleanup.
INTEREST RATE: At the Borrower's option:
(A) (1) Prime plus 1. 25% p.a., payable monthly (the
EXHIBIT 10.39
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
2 OF 11
"Floating Rate Option"). Prime Rate means, for any day, the
rate of interest publicly announced from time to time by
Marine Midland Bank at the New York City Main Branch as its
prime rate, and is a base rate for calculating interest on
certain loans. Any change in the interest rate on this
facility resulting from a change in Marine Midland Bank's
Prime Rate shall be effective on the date of such change.
(2) 1, 2, 3, 6, or 12 month Reserve Adjusted LIBOR plus 2.00%,
p.a., with payments of interest due at the maturity of the
LIBOR period chosen (the "LIBOR Option"). For LIBOR periods
longer than 3 months, interest payments shall be due
quarterly. Borrower will be required to reimburse the Bank
for and indemnify the Bank against all costs incurred by or
imposed against the Bank as a result of any change in laws,
regulations, rules or directives which impose, modify or
deem applicable any reserve or special deposit requirements
against all losses, penalties, taxes, expenses, and other
charges suffered by the Bank in connection with Borrower's
selection of a LIBOR option.
(3) For periods longer than one year up to a maximum of three
years, fixed rate financing calculated at a rate of the
Bank's fixed-rate cost of funds for this period plus a
margin of 2.00% p.a., with interest payments due quarterly
(the "Fixed Rate Option").
(B) (1) MMB Floating Prime plus 1.25% p.a. (as above),
(2) 1, 2, 3, 6, and 12 month Reserve Adjusted LIBOR plus 2.00%
p.a. (as above).
PENALTY RATE: After maturity and with respect to late payments, the Loan shall
bear interest at a rate per annum equal to the interest rate then
in effect plus 2.00% p.a. (the "Default Rate"). In the case of
funding under the LIBOR option only, the Default Rate shall be
2.00% p.a. above the rate in effect until the maturity of the
LIBOR funding period, after which time the Default Rate shall be
2.00% p.a. above the rate applicable under the Floating Rate
option.
FACILITY FEE: Extension fee of USD300,000 payable at closing.
AMORTISATION: (A) Five years from closing. Monthly principal payments of
USD90,000 (approximately based on a 20 year amortization
schedule), with a balloon repayment of approximately
USD39.6M due at maturity.
(B) Renewable annually subject to no default.
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
3 OF 11
Subject to repayment on demand in the event of a default.
Annual 60 day reduction of outstandings to a maximum of
USD500,000 required.
PREPAYMENT
PROVISIONS: During loan years 1 and 2 a penalty of 1% will be assessed on
principal amounts prepaid, and during loan year 3 a penalty of
0.5% will be assessed on principal amounts prepaid, provided
however, that the penalty shall not apply to mandatory
prepayments or prepayments arising from a sale of the Properties
to a third party. No prepayment penalties will be assessed for
prepayments occuring in loan years 4 and 5.
(1) In the case of LIBOR Option funding the loan may be prepaid
in full or in partial increments upon 7 days written notice
to the Bank. Should prepayment occur during the LIBOR
interest option, an amount equal to the Bank's funding
losses will be assessed on the amount prepaid and the
remaining days to maturity in the LIBOR period in effect at
the time of prepayment based on the difference between the
Bank's LIBOR rate for such interest option and the
prevailing LIBOR rate offered for comparable amounts and
tenures at the time of prepayment. A determination of the
funding loss shall be made in accordance with the Bank's
funding loss provisions which are customary for loans of
this type.
(2) In the case of Fixed Rate Option funding the loan may be
prepaid in full or in partial increments upon 7 days written
notice to the Bank. An amount equal to the Bank's funding
losses will be assessed on the amount prepaid and the
remaining days to maturity in the fixed rate funding period
in effect at the time of prepayment based on the difference
between the Bank's fixed rate for such interest option and
the prevailing rate offered for comparable amounts and
tenures at the time of prepayment. A determination of the
funding loss shall be made in accordance with the Bank's
funding loss provisions which are customary for loans of
this type.
(3) In the case of Floating Rate Option funding, any prepayments
(subject to 7 days written notice to the Bank) will be
permitted without additional breakage costs.
COLLATERAL: (A) Registered first mortgages on seven hotel properties owned
by the Borrower (each, a "Property" and collectively, the
"Properties) :
<PAGE>
AIRCOA HOTEL PARTNERS L.P. APRIL 3, 1995
4 OF 11
Aurora Inn - Aurora, OH
Pine Lake Trout Club - Chagrin Falls, OH
Fourwinds/Clarion - Bloomington, IN
Regal McCormick Ranch - Scotsdale, AZ
Sheraton Inn - Buffalo, NY
Sheraton Lakeside Inn - Orlando, FL
Sheraton University Center - Durham, NC
(B) First lien on all assets relating to the operation of the
hotel Properties, including FF&E and inventory, supported by
UCC-1 filings.
(C) Assignment of accounts receivable, management contracts, and
all licenses, patents, and franchises.
(D) Assignment of leases and rents of all the Properties.
(E) Assignment of proceeds from the sale or refinancing of any
of the Properties securing the Mortgage Loan, which shall be
used to pay down loan principal and accrued interest in an
amount equal to: (i) the pro rata share of the Mortgage Loan
amount allocated to the Property (to be set forth in the
Credit Agreement); plus (ii) 50% of Excess Proceeds
derived from the sale or refinancing of the Property.
"Excess Proceeds" shall mean the gross proceeds derived from
the sale or refinancing less (a) commissions, broker's fees
and closing costs actually incurred by the Borrower, and (b)
the pro rata share of Mortgage Loan amount allocated to the
Property.
(F) A Debt Service Reserve Account to be funded in an amount
equal to three months debt service (principal and interest)
on the Mortgage Loan and the Revolving Loan. This account
will be gradually funded with 25% of Annual Excess Cash Flow
from the Properties deposited on an annual basis until the
required balance (estimated at USD1.35M) is met. "Annual
Excess Cash Flow" shall be defined as aggregate net
operating income from the Properties less: (a) debt service
(P + I) on the Mortgage Loan and Revolving Loan, (b)
required contributions to the capex reserve account, and (c)
interest payments on affiliate debt. Once the Debt Service
Reserve Account is funded at the required level, the 25% of
Annual Excess Cash Flow previously used to fund this account
will be available for distribution subject to the
restrictions discussed in the Covenant section below. If
the Borrower achieves a Debt Service Coverage Ratio (see
Covenant section below for
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
5 OF 11
definition and method of calculation) of 1.5OX or greater
for two successive years, funds in the Debt Service Reserve
Account will be released for distribution.
GUARANTEES: (1) Continuing limited guarantee ("Debt Service Guarantee") of
the Guarantor for all interest and scheduled principal
repayments, excluding the final principal repayment at
maturity.
(2) Continuing limited guarantee ("Principal Guarantee") of the
Guarantor for the amount, if any, by which principal
outstandings exceed 65% of the aggregate appraised value of
the Properties as reviewed and accepted by the Bank. The
amount of such Principal Guarantee shall be fixed as of the
closing date and the amount of such Principal Guarantee
shall not be reduced due to any principal reduction or
increase in the appraised value of the Properties. In the
event that the appraised value of the Properties as
determined at the closing date should decrease during the
term of the facilities, the amount of the Principal
Guarantee shall be increased so that the Principal Guarantee
will cover any amount by which the loan to value ratio
exceeds 65%.
COVENANTS: Standard, including:
(1) Minimum debt service coverage ratio of 1.25X in loan years
1, 2, and 3 and 1. 3OX in loan years 4 and 5. "Debt Service
Coverage Ratio" shall be defined as aggregate net operating
income of the Properties, less capex reserves, divided by
debt service (P + I) on the Mortgage Loan and the Revolving
Loan. Debt Service Coverage Ratio shall be calculated on
an annual basis using actual aggregate net operating income
and capex reserves for the calendar year just ended and
projected debt service for the coming calendar year.
(2) No additional debt except unsecured borrowings from
affiliates which shall be subordinated to bank debt.
(3) Debt owed to affiliate companies to be subordinated to the
bank. Subject to the Borrower meeting the required Debt
Service Coverage Ratios, up to 25% of Annual Excess Cash
Flow may be applied to repayment of affiliate debt.
Interest payments allowed only after debt service (P + I) on
the Mortgage Loan and Revolving Loan. No principal or
interest payments on affiliate debt if Debt Service Coverage
Ratios are not met or in an event of default.
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
6 OF 11
(4) Management fees paid to Richfield shall not exceed 4% of
gross revenues and shall be subordinated to the bank.
Management fees shall not be paid to Richfield if the
Borrower fails to meet minimum debt service coverage
ratios, or in the event of any monetary default. Provided
however, that any unpaid fees will accrue and become payable
upon Borrower's curing any such failure or default.
(5) Maintenance of a capital expenditure reserve account for
each property equal to at least 5% of annual gross revenues.
If, for reasons of the timing of capital repairs or
upgrades, the full 5% is not expended during the year, or if
the Bank and the Borrower mutually agree that capital
expenditures in an amount less than 5% of a given Property's
annual gross revenues is adequate for a given year, the
difference between the amount expended and the 5%
requirement will be escrowed for application against the
following year's requirement. The funds so escrowed may
only be used for capital expenditures. For the balance of
calendar year 1995, the reserve requirement will only be 4%
in view of the funds being made available for capital
improvements.
(6) The Regal Group's ownership interest in the Borrower
(approximately 71% of the total voting rights of all
outstanding Class A limited partnership units) may not be
diluted or changed without the Bank's approval. The Bank
will not unreasonably withhold such approval as long as the
Regal Group's ownership interest does not fall below a
controlling 51%.
(7) Annual cash distributions to Class A partnership unitholders
limited to 50% of Annual Excess Cash Flow (as defined
above). Provided however, that if the Borrower achieves a
Debt Service Coverage Ratio of 1.50X or greater for any
calendar year during the loan term, and the Debt Service
Reserve Account is fully funded, then up to 75% of Annual
Excess Cash Flow may be distributed. Cash distributions may
not be paid if the Borrower fails to meet the minimum debt
service coverage ratio or in the event of a monetary
default.
(8) Annual audited financials and 10K statements within 90 days
of fiscal year end, and quarterly management prepared
financials and 10Q statements for the Borrower within 60
days of the end of first, second, and third quarters.
(9) Annual audited financials of Regal Hotels International
Holdings Limited within 180 days of fiscal year end.
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
7 OF 11
(10) Annual audited financial statements and quarterly management
prepared financial statements of Richfield Hospitality
Services, Inc. within 120 days of fiscal year end and 60
days of quarter end.
(11) For Each Property, monthly operating statement within 30
days of month end, and STAR reports as soon as possible
after received by the Borrower.
(12) New property appraisals every two years at the Borrower's
expense. If, upon reappraisal, the aggregate value of the
portfolio should yield an LTV in excess of 65%, the
Guarantor shall increase its Principal Guarantee by an
amount which, when added to aggregate appraised portfolio
value, will yield an LTV of 65% or lower. The Bank shall
have the right to commission new appraisals or require
updates of the current appraisals more frequently than every
two years, provided that the expense of these additional
appraisals/updates are paid by the Bank.
(13) Subordination of ground leases for the Sheraton-Buffalo and
Clarion-Fourwinds Properties. On a best efforts basis, the
Borrower will try to negotiate the subordination of the
ground lease for the Regal McCormick Ranch Property.
(14) The Borrower and Richfield must comply with all requirements
of the franchise/licensing agreements.
(15) Such other covenants as the Bank may require.
INSURANCE: The Borrower must provide evidence of public liability and
casualty insurance coverage on the Properties (along with flood
insurance should the Properties be located in a flood hazard
zone) with the Bank's interest noted as mortgagee and loss payee,
and such other coverage that the Bank may reasonably deem
necessary to protect its interest.
INDEMNITIES: Applicable environmental and Americans With Disabilities Act
indemnities.
EVENTS OF
DEFAULT: Standard including:
(1) Non payment of principal or interest.
(2) Material adverse change in the financial condition of the
Borrower, Richfield, or the Guarantor.
(3) Failure to meet any covenant requirement.
(4) Such other events of default as the Bank may require.
CONDITIONS
PRECEDENT: (1) Delivery of Phase I environmental surveys of each Property
satisfactory to the Bank.
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
8 OF 11
(2) Delivery of property condition surveys of each property
satisfactory to the Bank. The Bank shall commission these
surveys at the expense of the Borrower. The Borrower will
be required to substantially comply with the reasonable
recommendations of the property condition surveys as a part
of their ongoing plans for capital expenditures and
renovations.
(3) Delivery of all deeds of trust, mortgages, security
agreements, pledge agreements, insurance policies, financing
statements, evidence of recordation and all other
documentation necessary or requested by the Bank to perfect
and maintain the Bank's security interest as described
above.
(4) Delivery of title insurance policies issued by a company or
companies acceptable to the Bank in an amount not less than
the total Mortgage Loan amount ensuring that the Bank has
valid first mortgage liens on the Properties providing
affirmative insurance required by the Bank, and confirming
the nonexistence of any liens, mortgages, judgments, taxes
or assessments affecting the Properties and an updated
survey for each Property certified by a registered surveyor
or updated by title company inspection and dated within 60
days prior to the date of closing.
(5) At the time of closing, the Bank shall have received
evidence satisfactory to it that none of the Properties nor
any parts thereof have suffered any casualty or are subject
to actual or threatened condemnation or taking by eminent
domain or otherwise.
(6) Delivery to the Bank of copies of all liquor licenses and
other material licenses and permits relating to the
operation of the Properties.
(7) Delivery to the Bank of copies of the hotel operating
agreements between each hotel operator and the Borrower and
copies of the franchise and/or license agreements relating
to the hotels, with estoppel letters in form satisfactory to
the Bank signed by each operator, franchisor, and licensor.
(8) Delivery to the Bank of evidence that all taxes with respect
to the Properties are current and have been paid.
(9) Delivery to the Bank of Certificates of
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
9 OF 11
Occupancy, Fire Underwriter's Certificates and any other
licenses or permits relating to the legal use of the
Properties, and evidence that no municipal or other
violations exist, and that the premises comply with all
local, state, and federal laws and regulations.
(10) Delivery to the Bank of such corporate documents as the Bank
shall require as evidence of the Borrower's existence,
power, and authority to enter into the transaction described
in this proposal.
(11) Satisfactory opinion from counsel to the Borrower and the
Guarantor and any other legal opinion relating to the Bank's
security interest in the collateral.
AVAILABILITY: Upon completion of loan documentation required and compliance
with all conditions described above.
DOCUMENTATION: All loan documentation will be prepared by the Bank's lawyers and
will contain such terms and conditions considered by the bank
(and its lawyers) to be reasonable and necessary for a
transaction of this nature.
All documentation and formalities should be accomplished on or
before 30 June 1995. If closing has not occurred by such date
for any reason, the Bank reserves the right to terminate this
offer.
EXPENSES: All transaction costs, including legal, appraisal, environmental,
and engineering fees incurred in connection with the negotiation
and preparation of documentation and closing of this transaction
will be for the account of the Borrower.
TAXATION: All payments of principal, interest, fees and other expenses
shall be made by the Borrower free and clear of taxes, levies,
imposts, duties, charges or withholdings of any nature
whatsoever.
GOVERNING
LAW: This offer letter shall be governed by the laws of the state of
New York. The documents evidencing and securing the facilities
shall be governed by the laws of the state of New York except
that such documents may provide for the law of the states in
which any of the Properties is located to be the law governing
such documents.
ASSIGNMENT: Borrower may not assign or transfer this offer letter.
The terms and conditions of this commitment are not limited to the
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
10 OF 11
above terms and conditions. Those matters which are not covered by or made
clear in the above outline are subject to mutual agreement of the parties.
This commitment is conditional upon the preparation, execution and delivery of
legal documentation in form and substance satisfactory to us and to our counsel
incorporating substantially the terms and conditions outlined or referred to
above. This offer is open for acceptance until 15 April 1995 ("Expiry Date") .
Please indicate your understanding and acceptance of the foregoing terms and
conditions by signing and returning to us the duplicate copy of this letter on
or before the Expiry Date.
We are pleased to advise that your Corporate Banking relationship officers are:
Josephine Lee (212) 658-2858
A.J. Andreasen (212) 658-2847
While the individuals listed above are the primary contact people between you
and the Bank and will always be pleased to assist you, it may sometimes be more
effective if you have any matters of an operational nature to transact or
discuss, that you contact our Loan Operations area:
David Colberg (212) 658-2825
We look forward to being of continued assistance.
Yours sincerely,
/s/ J N Rider /s/ Josephine Lee
- --------------------- --------------------
J N Rider Josephine Lee
Senior Vice President Vice President
Real Estate Real Estate
The undersigned consent and agree in principle to all of the terms of this
letter.
For: Aircoa Hotel Partners, L.P.
By: AIRCOA Hospitality Services, Inc.,
its general partner
By: /s/ Michael Sheh/ David Ridgley
-------------------------------
<PAGE>
AIRCOA HOTEL PARTNERS, L.P. APRIL 3, 1995
11 OF 11
Authorized Signature(s)
Michael Sheh / David Ridgley
- ----------------------------------
Print Name
Sr. V.P./
Treasurer V.P./Chief Accounting Officer
- ----------------------------------
Title
Date: April 4, 1995
-----------------------------
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,261
<SECURITIES> 0
<RECEIVABLES> 2,598
<ALLOWANCES> 0
<INVENTORY> 401
<CURRENT-ASSETS> 4,758
<PP&E> 95,587
<DEPRECIATION> 27,234
<TOTAL-ASSETS> 73,542
<CURRENT-LIABILITIES> 11,936
<BONDS> 46,180
<COMMON> 0
0
0
<OTHER-SE> 15,173
<TOTAL-LIABILITY-AND-EQUITY> 73,542
<SALES> 0
<TOTAL-REVENUES> 46,157
<CGS> 0
<TOTAL-COSTS> 41,035
<OTHER-EXPENSES> (105)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,600
<INCOME-PRETAX> 627
<INCOME-TAX> 0
<INCOME-CONTINUING> 627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 627
<EPS-PRIMARY> (.10)<F1>
<EPS-DILUTED> 0
<FN>
<F1>APPLIES TO CLASS A UNITHOLDERS ONLY. CLASS B UNITHOLDERS
PRIMARY EPS IS 1.25.
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