UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
Starwood Financial Trust
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(Name of Issuer)
Class A Shares, par value $1.00
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(Title of Class of Securities)
85568V 106
-----------------------------------------------------
(CUSIP Number)
Jay Sugarman, Three Pickwick Plaza, Suite 250,
Greenwich, Connecticut 06830, (203) 861-0752
with a copy to James B. Carlson, Esq., Mayer, Brown & Platt
1675 Broadway, New York, New York 10019 (212) 506-2515
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 18, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [ ].
<PAGE>
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CUSIP No. 85568V 106 13D Page 2 of 49 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Mezzanine Investors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 64,716,944 (See Item 5)
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
64,716,944 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,716,944 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 3 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Mezzanine Holdings, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 64,716,944 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
64,716,944 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,716,944 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 4 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Capital Group I, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 64,716,944 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
64,716,944 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,716,944 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 5 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
BSS Capital Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 64,716,944 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
64,716,944 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,716,944 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 6 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Sternlicht Holdings II, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 64,716,944 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
64,716,944 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
64,716,944 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 7 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Financial Advisors, L.L.C.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES 14,963,057 (See Item 5)
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
14,963,057 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,963,057 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.5% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 8 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFI-IV SMT Holdings, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 247,074,800 (See Item 5)
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
247,074,800 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
247,074,800 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 9 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Opportunity Fund IV, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7a SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 247,074,800 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
247,074,800 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
247,074,800 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 10 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SOFI IV Management, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 247,074,800 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
247,074,800 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
247,074,800 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.6% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 11 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Starwood Capital Group, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 265,398,110 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
265,398,110 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
265,398,110 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
79.8% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 12 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
B Holdings, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
NUMBER OF 7 SOLE VOTING POWER
SHARES 3,360,253 (See Item 5)
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
3,360,253 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,360,253 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0% (See Item 5)
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 13 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SAHI Partners
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 244,100 (See Item 5)
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
244,100 (See Item 5)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
244,100 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 14 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SAHI, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 244,100 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
244,100 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
244,100 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 15 of 49 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Barry S. Sternlicht
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 330,359,154 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
330,359,154 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
330,359,154 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
99.3% (See Item 5)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 16 of 49 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SWL Acquisition Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 244,100 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
244,100 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
244,100 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 85568V 106 13D Page 17 of 49 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SWL Mortgage Investors, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[x]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 244,100 (See Item 5)
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
244,100 (See Item 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
244,100 (See Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1% (See Item 5)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 18 of 49 Pages
AMENDMENT NO. 7 TO SCHEDULE 13D
This Amendment No. 7 to the Schedule 13D filed on November 29, 1993
(the "Schedule 13D"), as amended on January 13, 1994, February 9, 1994, March
15, 1994, March 22, 1996, September 26, 1996 and January 22, 1997 is on behalf
of Starwood Mezzanine Investors, L.P., a Delaware limited partnership ("Starwood
Investors"), Starwood Mezzanine Holdings, L.P., a Delaware limited partnership
("Starwood Holdings"), Starwood Capital Group I, L.P., a Delaware limited
partnership ("Starwood Capital"), BSS Capital Partners, L.P., a Delaware limited
partnership ("BSS"), Sternlicht Holdings II, Inc., a Delaware corporation
("Sternlicht Holdings"), Starwood Financial Advisors, L.L.C., a Connecticut
limited liability company ("Advisors"), SOFI-IV SMT Holdings, L.L.C., a Delaware
limited liability company ("SMT"), Starwood Opportunity Fund IV, L.P., a
Delaware limited partnership ("SOFI IV"), SOFI IV Management, L.L.C., a
Connecticut limited liability company ("SOFI IV Management"), Starwood Capital
Group, L.L.C., a Connecticut limited liability company ("SCG"), B Holdings,
L.L.C., a Connecticut limited liability company ("BLLC"), SAHI Partners, a
Delaware general partnership ("SAHI Partners"), SAHI, Inc., a Delaware
corporation ("SAHI Inc."), SWL Acquisition Partners, L.P., a Delaware limited
partnership ("SWL Partners"), SWL Mortgage Investors, Inc., a Delaware
corporation ("SWL Mortgage") and Barry S. Sternlicht.
Unless otherwise defined herein, all capitalized terms used herein have
the meanings ascribed to them in Amendment No. 6 to the Schedule 13D. Unless
specifically amended and/or restated herein, the disclosure set forth in the
Schedule 13D, as amended through Amendment No. 6, shall remain unchanged.
Item 1. Security and Issuer
The information previously furnished in response to Item 1 is hereby
amended and restated in its entirety as follows:
This Statement (the "Statement") relates to the Class A Shares, par
value $1.00 per share (the "Shares") of Starwood Financial Trust, formerly known
as Angeles Participating Mortgage Trust (the "Issuer"). The principal executive
office of the Issuer is Three Pickwick Plaza, Suite 250, Greenwich, Connecticut
06830.
Item 2. Identity and Background
The information previously furnished in response to Item 2 is hereby
amended by adding the following reporting persons thereto:
1. Legal Name: Starwood Financial Advisors, L.L.C.
Place of Organization: Connecticut
Principal Business: Real Estate Investment Advisory
Address of Principal Business: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
Address of Principal Office: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
The general manager of Advisors is SCG. The principal business of SCG
is real estate investment. The address of its principal business and principal
office is Three Pickwick Plaza, Suite 250, Greenwich, CT 06830.
<PAGE>
Page 19 of 49 Pages
During the last five years, Advisors and, to the best of its knowledge,
its general manager have not been (i) convicted in a criminal proceeding or (ii)
a party to a criminal proceeding of a judicial or administrative body of
competent jurisdiction and, consequently, is not subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws as a result of such proceeding.
2. Legal Name: SOFI-IV SMT Holdings, L.L.C.
Place of Organization: Delaware
Principal Business: Real Estate Investment
Address of Principal Business: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
Address of Principal Office: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
The sole member and manager of SMT is SOFI IV. The principal business
of SOFI IV is real estate investment. The address of its principal business and
principal office is Three Pickwick Plaza, Suite 250, Greenwich, CT 06830.
During the last five years, SMT and, to the best of its knowledge, its
general manager have not been (i) convicted in a criminal proceeding or (ii) a
party to a criminal proceeding of a judicial or administrative body of competent
jurisdiction and, consequently, is not subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws as a result of such proceeding.
3. Legal Name: Starwood Opportunity Fund IV, L.P.
Place of Organization: Delaware
Principal Business: Real Estate Investment
Address of Principal Business: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
Address of Principal Office: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
The general partner of SOFI IV is SOFI IV Management. The principal
business of SOFI IV Management is real estate investment. The address of its
principal business and principal office is Three Pickwick Plaza, Suite 250,
Greenwich, CT 06830.
During the last five years, SOFI IV and, to the best of its knowledge,
its general manager have not been (i) convicted in a criminal proceeding or (ii)
a party to a criminal proceeding of a judicial or administrative body of
competent jurisdiction and, consequently, is not subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws as a result of such proceeding.
4. Legal Name: SOFI IV Management, L.L.C.
Place of Organization: Connecticut
Principal Business: Real Estate Investment
Address of Principal Business: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
Address of Principal Office: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
The general manager of SOFI IV Management is SCG. The principal
business of SCG is real estate investment. The address of its principal business
and principal office is Three Pickwick Plaza, Suite 250, Greenwich, CT 06830.
<PAGE>
Page 20 of 49 Pages
During the last five years, SOFI IV Management and, to the best of its
knowledge, its general manager have not been (i) convicted in a criminal
proceeding or (ii) a party to a criminal proceeding of a judicial or
administrative body of competent jurisdiction and, consequently, is not subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws as a result of such
proceeding.
5. Legal Name: Starwood Capital Group, L.L.C.
Place of Organization: Connecticut
Principal Business: Real Estate Investment
Address of Principal Business: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
Address of Principal Office: Three Pickwick Plaza,
Suite 250, Greenwich, CT 06830
The general manager of SCG is Barry Sternlicht. The principal business
of SCG is real estate investment. The address of its principal business and
principal office is Three Pickwick Plaza, Suite 250, Greenwich, CT 06830.
During the last five years, SCG and, to the best of its knowledge, its
general manager have not been (i) convicted in a criminal proceeding or (ii) a
party to a criminal proceeding of a judicial or administrative body of competent
jurisdiction and, consequently, is not subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws as a result of such proceeding.
Item 3. Source and Amount of Funds or Other Consideration
The information previously furnished in response to Item 3 is hereby
amended by adding at the end thereto the following:
On March 18, 1998, pursuant to a Contribution Agreement among the
Issuer, Starwood Investors and SOFI IV, (i) Starwood Investors was issued
55,148,000 Shares and $25.4 million of cash in exchange for Starwood Investors'
entire interest in a portfolio of mortgage and partnership loans secured by
residential, hotel, office and mixed use real estate and other assets
(collectively, the "Starwood Investors Interests") and (ii) SMT, a wholly-owned
subsidiary of SOFI IV, received 247,074,800 Shares and $306.4 million of cash in
exchange for SOFI IV's rights under certain letters of intent to purchase or
originate debt interests, its entire interest in a portfolio of first mortgage
loans and leases secured by hotel, office and mixed use real estate and other
assets, and a portfolio of first mortgage loans (collectively, the "SOFI IV
Interests").
On March 18, 1998, Starwood Investors exercised its rights under an
exchange rights agreement with the Issuer and exchanged its 91.95% interest in
APMT Limited Partnership for 4,568,444 Shares.
On March 18, 1998, BLLC acquired 2,500,000 Class B Shares from SAHI
Inc. and 1,250,000 Class B Shares from SAHI Partners in a private transaction.
On March 18, 1998, BLLC acquired 153,395,872 Class B Shares as required
by Article IV, Section 6.1 of the Issuer's Amended and Restated Declaration of
Trust, which requires the Board of Trustees to maintain a 2:1 ratio of Shares
outstanding to Class B Shares outstanding.
On March 13, 1998 the Issuer granted immediately exercisable options to
purchase 14,963,057 Shares to Advisors with an exercise price of $2.50 per
share.
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Page 21 of 49 Pages
Item 4. Purpose of Transaction
The information previously furnished in response to Item 4 is hereby
amended and restated as follows:
On March 13, 1998, at an annual meeting of the Issuer's shareholders
(the "Annual Meeting"), holders of a majority of Class A and Class B Shares,
voting as a single class, voted for the following proposals: (i) to approve the
payment of cash and the issuance of 55,148,000 Shares to Starwood Investors in
exchange for the Starwood Investors Interests; (ii) to approve the payment of
cash and the issuance of 247,074,800 Shares to SMT in exchange for cash and the
SOFI IV Interests; (iii) to amend the Declaration of Trust to conform it to the
Advisory Agreement with respect to the termination of the Advisory Agreement;
(iv) to amend the Declaration of Trust with respect to the independence of the
Trustees from the Advisor and SCG; (v) to amend the Declaration of Trust to
change the name of the Issuer to Starwood Financial Trust; (vi) to amend the
Declaration of Trust to change the purpose and investment policy of the Issuer;
(vii) to amend the Declaration of Trust to require the approval of shareholders
holding two-thirds of the voting shares to approve certain asset transactions;
(viii) to amend the Declaration of Trust to eliminate cumulative voting; (ix) to
amend the Declaration of Trust to establish a classified Board of Trustees; (x)
to amend the Declaration of Trust to amend the "Excess Share" provision thereof;
(xi) to amend the Declaration of Trust to eliminate certain limitations on
indemnification by the Issuer and to clarify certain provisions with respect to
shareholder liability and indemnification; (xii) to amend the Declaration of
Trust to permit certain amendments thereto without the consent of shareholders;
(xiii) to amend the Declaration of Trust to effect certain technical amendments;
(xiv) to approve a reverse split of the capital stock of the Issuer and to grant
the Board of Trustees the power to determine the magnitude and timing of the
reverse split and to amend the Declaration of Trust to effect the reverse split;
(xv) to elect eight members to the Board of Trustees; (xvi) to approve the
Starwood Financial Trust 1996 Share Incentive Plan; and (xvii) to ratify the
appointment of Price Waterhouse LLP as the independent auditors of the Issuer
for the fiscal year ended December 31, 1997.
On March 18, 1998, after the approval of the foregoing proposals by the
Shareholders, the Issuer paid cash and issued 55,148,000 Shares at a price of
$2.50 per share to Starwood Investors in exchange for the contribution by
Starwood Investors to the Issuer of the Starwood Investors Interests and the
Issuer paid cash and issued 247,074,800 Shares at a price of $2.50 per share to
SMT in exchange for the contribution by SOFI IV to the Issuer of cash and the
SOFI IV Interests. As required by the Declaration of Trust, the holders of the
Class B Shares were issued 157,170,872 Class B Shares for a purchase price of
$0.01 per share as a result of the issuance of the Shares and the exchange of
Starwood Investor's interest in APMT Limited Partnership for Shares.
On March 18, 1998, the Issuer and Advisors entered into the Advisory
Agreement pursuant to which Advisors manages the investment affairs of the
Issuer.
The Amended and Restated Declaration of Trust changed the purpose and
investment policy of the Issuer. As of March 13, 1998, the primary purposes of
the Issuer are to acquire a diversified portfolio of debt and/or debt like
interests in real estate and/or real estate related assets, including (i)
originating mortgage loans and/or acquiring mortgage loans or acquiring
securities collateralized, in whole or in part, by such mortgage loans, as well
as making equity investments in real estate and real estate-related assets, (ii)
acquiring direct or indirect interests in short term, medium and long-term real
estate-related debt securities and mortgage interests, which may include
warrants, equity participations or similar rights incidental to a debt
investment by the Issuer, (iii) making, holding and disposing of purchase money
loans with respect to assets sold by the Issuer, and (iv) acquiring positions in
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Page 22 of 49 Pages
non-performing and sub-performing debt for the purpose of either restructuring
it as performing debt or if such efforts are unsuccessful, of obtaining shortly
thereafter primary management rights over or equity interests in the underlying
assets securing such debt (the "Diversified Portfolio"). The Issuer's authority
with respect to the Diversified Portfolio includes the power to acquire, hold,
own, develop, redevelop, construct, improve, maintain, operate, manage, sell,
lease, rent, transfer, encumber, mortgage, convey, exchange and otherwise
dispose of all or part of the Diversified Portfolio and the Diversified
Portfolio may be held by the Issuer directly or indirectly. The Issuer is
subject to certain investment restrictions as set forth in the Declaration of
Trust.
The shareholders approved a reverse split (the "Reverse Split") and a
proposal granting the Board of Trustees the authority to determine the magnitude
and timing of the Reverse Split subject to the following limitations: (a) the
magnitude of the Reverse Split shall not be any greater than 1 for 8 and (b) the
Reverse Split shall be effective no later than 60 days after March 13, 1998. If
the Reverse Split is not effected within 60 days of March 13, 1998, the
authority of the Board of Trustees with respect thereto shall terminate and the
Reverse Split will not be effected. The shareholders also approved an amendment
to the Declaration of Trust to effect the Reverse Split to be adopted by the
Board of Trustees immediately prior to the Reverse Split. The Reverse Split will
become effective upon the adoption of an amendment to the Declaration of Trust
by the Trustees.
Trustees were elected at the Annual Meeting and reorganized into two
Classes: Class I Trustees will hold office until the next annual meeting and
until their successors are elected and qualified and Class II Trustees will hold
office until the 1999 Annual Meeting and until their successors are elected and
qualified. Class I is composed of Messrs. Dishner, Eilian, Kleeman and Ms.
Josephs; and Class II is composed of Messrs. Sternlicht, Sugarman, Matthes and
Youngblood. Following the interim arrangement described above, the Trustees of
each class will serve two year terms, and the term of one class will expire each
year.
Item 5. Interest in Securities of the Issuer
The information previously furnished in response to Item 5 is hereby
amended and restated as follows:
Based on information provided in the Issuer's Schedule 14A relating to
its Annual Meeting of Shareholders held on March 13, 1998 and after giving
effect to the transactions described therein and as reported herein, the total
number of Shares outstanding for purposes of calculating the percentage
ownership of Shares for each Reporting Person equaled the sum of: (i)
314,341,744 (number of Shares issued and outstanding) and (ii) 3,207,569 (number
of Shares convertible from 157,170,872 shares of Class B Shares outstanding) and
(iii) 14,963,057 (number of Shares immediately available through the exercise of
options) and (iv) 152,684 (number of Shares issuable upon conversion of
7,481,529 Class B Shares issuable upon the exercise of immediately exercisable
options).
In order to present more meaningful comparisons and in accordance with
Rule 13(d)-3 of the Securities Exchange Act of 1934, as amended, each Reporting
Person's ownership assumes the conversion of all Class B Shares into Shares, or
the exercise of options for Shares, where applicable.
(a) Aggregate Number and Percentage of the Class of Securities
Identified Pursuant to Item 1 Beneficially Owned by Each Person Named in Item 2:
<PAGE>
Page 23 of 49 Pages
As of March 18, 1998, Starwood Investors beneficially owned 20.6% of
the issued and outstanding shares of Class A Common Stock, or 64,716,944 shares
of Class A Common Stock.
As of March 18, 1998, Starwood Holdings may be deemed to have
beneficially owned 20.6% of the issued and outstanding Shares, or 64,716,944
Shares, by virtue of being a general partner of Starwood Investors. This
Reporting Person disclaims beneficial ownership of these securities except to
the extent of its pecuniary interest therein.
As of March 18, 1998, Starwood Capital may be deemed to have
beneficially owned 20.6% of the issued and outstanding Shares, or 64,716,944
Shares, by virtue of being a general partner of Starwood Investors, and the
general partner of Starwood Holdings, which is the other general partner of
Starwood Investors. This Reporting Person disclaims beneficial ownership of
these securities except to the extent of its pecuniary interest therein.
As of March 18, 1998, BSS may be deemed to have beneficially owned
20.6% of the issued and outstanding Shares, or 64,716,944 Shares, by virtue of
being a general partner of Starwood Capital, which is a general partner of
Starwood Investors and the general partner of Starwood Holdings, which is the
other general partner of Starwood Investors. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
As of March 18, 1998, Sternlicht Holdings may be deemed to have
beneficially owned 20.6% of the issued and outstanding Shares, or 64,716,944
Shares, by virtue of being the general partner of BSS, which is the general
partner of Starwood Capital, which is a general partner of Starwood Investors
and the general partner of Starwood Holdings, which is the other general partner
of Starwood Investors. This Reporting Person disclaims beneficial ownership of
these securities except to the extent of its pecuniary interest therein.
As of March 18, 1998, Advisors may be deemed to have beneficially owned
4.5% of the issued and outstanding Shares, or 14,963,057 Shares, by virtue of
owning immediately exercisable options to purchase 14,963,057 shares of Class A
Common Shares.
As of March 18, 1998, SMT beneficially owned 78.6% of the issued and
outstanding Shares, or 247,074,800 Shares.
As of March 18, 1998, SOFI IV may be deemed to have beneficially owned
78.6% of the issued and outstanding Shares, or 247,074,800 Shares, by virtue of
being the sole member and manager of SMT. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
As of March 18, 1998, SOFI IV Management may be deemed to have
beneficially owned 78.6% of the issued and outstanding Shares, or 247,074,800
Shares, by virtue of being a general partner of SOFI IV, which is the sole
member and manager of SMT. This Reporting Person disclaims beneficial ownership
of these securities except to the extent of its pecuniary interest therein.
As of March 18, 1998, SCG may be deemed to have beneficially owned
79.8% of the issued and outstanding Shares, or 265,398,110 Shares, by virtue of
being a general manager of SOFI IV Management, which is the general partner of
SOFI IV, which is the sole member and manager of SMT, by virtue of being the
general manager of BLLC, and by virtue of being the sole member and manager of
Advisors. This Reporting Person disclaims beneficial ownership of these
securities except to the extent of its pecuniary interest therein.
<PAGE>
Page 24 of 49 Pages
As of March 18, 1998, BLLC may be deemed to have beneficially owned
1.0% of the issued and outstanding Shares or 3,360,253 Shares by virtue of its
ownership of 157,170,872 shares of Class B Shares, which may be converted into
3,207,569 Shares and its rights to receive 7,481,529 Class B Shares upon
exercise of options to purchase Shares held by Advisors, which Shares may be
converted into 152,564 Shares.
As of March 18, 1998, SAHI Partners beneficially owned 0.1% of the
issued and outstanding Shares, or 244,100 Shares.
As of March 18, 1998, SAHI, Inc. may be deemed to have owned 0.1% of
the issued and outstanding Shares, or 244,100 Shares, by virtue of being a
general partner of SAHI Partners. This Reporting Person disclaims beneficial
ownership of these securities except to the extent of its pecuniary interest
therein.
As of March 18, 1998, SWL Partners may be deemed to have beneficially
owned 0.1% of the issued and outstanding Shares, or 244,100 Shares, by virtue of
being a general partner of SAHI Partners. This Reporting Person disclaims
beneficial ownership of these securities except to the extent of its pecuniary
interest therein.
As of March 18, 1998, SWL Mortgage may be deemed to have beneficially
owned 0.1% of the issued and outstanding Shares, or 244,100 Shares, by virtue of
being a general partner of SWL Partners, which is a general partner of SAHI
Partners. This Reporting Person disclaims beneficial ownership of these
securities except to the extent of its pecuniary interest therein.
As of March 18, 1998, Barry S. Sternlicht may be deemed to have
beneficially owned 99.3% of the issued and outstanding Shares, or 330,359,154
Shares, by virtue of his control of (i) Sternlicht Holdings, which is the
general partner of BSS, which is the general partner of Starwood Capital, which
is a general partner of Starwood Investors, and the general partner of Starwood
Holdings, which is the other general partner of Starwood Investors, (ii) SAHI,
Inc., which is a general partner of SAHI Partners, (iii) SCG, which is (a) the
general manager of SOFI IV Management, which is the general partner of SOFI IV,
which is the sole member and manager of SMT, (b) the general manager of BLLC,
and (c) the general manager of Advisors and (iv) SWL Mortgage, which is the
general partner of SWL Partners, which is a general partner of SAHI Partners.
This Reporting Person disclaims beneficial ownership of these securities except
to the extent of his pecuniary interest therein.
(b) Number of Shares as to Which There is Sole Power to Vote or to
Direct the Vote, Shared Power to Vote or to Direct the Vote, and Sole or Shared
Power to Dispose or to Direct the Disposition:
As of March 18, 1998:
Starwood Investors has the sole power to vote and dispose of 64,716,944
Shares. Starwood Investors does not share the power to vote or dispose of any
Shares.
By virtue of being a general partner of Starwood Investors, Starwood
Holdings shares the power to vote and dispose of 64,716,944 Shares. Starwood
Holdings does not have the sole power to vote or dispose of any Shares.
By virtue of being a general partner of Starwood Investors and the
general partner of Starwood Holdings (the other general partner of Starwood
Investors), Starwood Capital shares the power to vote
<PAGE>
Page 25 of 49 Pages
and dispose of 64,716,944 Shares. Starwood Capital does not have the sole power
to vote or dispose of any Shares.
By virtue of being the general partner of Starwood Capital (which is a
general partner of Starwood Investors and the general partner of Starwood
Holdings, which is the other general partner of Starwood Investors), BSS shares
the power to vote and dispose of 64,716,944 Shares. BSS does not have the sole
power to vote or dispose of any Shares.
By virtue of being a general partner of BSS (which is the general
partner of Starwood Capital, which is a general partner of Starwood Investors
and the general partner of Starwood Holdings, which is the other general partner
of Starwood Investors), Sternlicht Holdings shares the power to vote and dispose
of 64,716,944 Shares. Sternlicht Holdings does not have the sole power to vote
or dispose of any Shares.
If all of its options to purchase Shares were exercised, Advisors would
have the sole power to vote and dispose of 14,963,057 Shares. Advisors will not
share the power to vote or dispose of any Shares.
SMT has the sole power to vote and dispose of 247,074,800 Shares. SMT
does not share the power to vote or dispose of any Shares.
By virtue of being the sole member and manager of SMT, SOFI IV shares
the power to vote and dispose of 247,074,800 Shares. SOFI IV does not have the
sole power to vote or dispose of any Shares.
By virtue of being a general partner of SOFI IV, which is the sole
member and manager of SMT, SOFI IV Management shares the power to vote and
dispose of 247,074,800 Shares. SOFI IV Management does not have the sole power
to vote or dispose of any Shares.
By virtue of being (i) a general manager of SOFI IV Management, which
is the general partner of SOFI IV, which is the sole member and manager of SMT,
(ii) the general manager of Advisors, and (iii) a general manager of BLLC, SCG
shares the power to vote and dispose of 265,398,110 Shares. SCG does not have
the sole power to vote or dispose of any Shares.
BLLC has the sole power to vote and dispose of the 157,170,872 Class B
Shares and the right to receive 7,481,529 Class B Shares upon exercise of
options to purchase Shares held by Advisors. If all of these Class B Shares were
converted to Shares, BLLC would have the sole power to vote and dispose of
3,360,253 Shares. BLLC does not share the power to vote or dispose of any
Shares.
SAHI Partners has the sole power to vote and dispose of 244,100 Shares.
SAHI Partners does not share the power to vote or dispose of any Shares.
By virtue of being a general partner of SAHI Partners, SAHI Inc. shares
the power to vote and dispose of 244,100 Shares. SAHI Inc. does not have the
sole power to vote or dispose of any Shares.
By virtue of being a general partner of SAHI Partners, SWL Partners
shares the power to direct the votes and dispose of 244,100 Shares. SWL Partners
does not have the sole power to vote or dispose of any Shares.
<PAGE>
Page 26 of 49 Pages
By virtue of being the general partner of SWL Partners (which is a
general partner of SAHI Partners), SWL Mortgage shares the power to direct the
vote and dispose of 244,100 Shares. SWL Mortgage does not have the sole power to
vote or dispose of any Shares.
By virtue of being (i) the sole owner of Sternlicht Holdings (which is
the general partner of BSS, which is the general partner of Starwood Capital,
which is a general partner of Starwood Investors and the general partner of
Starwood Holdings, which is the other general partner of Starwood Investors,
(ii) the majority owner of SAHI, Inc. (which is a general partner of SAHI
Partners), (iii) the general manager of SCG (which is (a) the general manager of
SOFI IV Management, which is the general partner of SOFI IV, which is the
general manager of SMT, (b) the general manager of Advisors, and (c) the general
manager of BLLC and (iv) the sole owner of SWL Mortgage (which is the general
partner of SWL Partners, which is a general partner of SAHI Partners)), Barry S.
Sternlicht shares the power to vote and dispose of 330,359,154 Shares. Mr.
Sternlicht does not have the sole power to vote or dispose of any Shares.
(c) Except as specified below or as previously reported in the Schedule
13D, no Reporting Person has effected any transactions in Shares during the 60
day period preceding March 13, 1998:
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The information previously furnished in response to Item 6 is hereby
amended and restated as follows:
The Issuer, Starwood Investors, SAHI Partners and SMT are parties to an
Amended and Restated Registration Rights Agreement dated as of March 18, 1998
(the "Registration Rights Agreement"). The following summary of the material
terms of the Registration Rights Agreement is qualified in its entirety by
reference to the form of Registration Rights Agreement attached hereto as
Exhibit 3. Pursuant to the Registration Rights Agreement, the Issuer is required
to use its best efforts to cause a shelf registration of resales of the Shares
held by Starwood Investors, SAHI Partners and SMT under the Securities Act of
1933, as amended (the "Securities Act") to be declared effective prior to the
90th day after March 18, 1998. The Issuer is required to maintain the shelf
registration statement effective until all eligible Shares have been transferred
in a resale registered under the Securities Act or are otherwise freely
transferable without registration under the Securities Act (except for Shares
held by certain affiliates of the Issuer), including pursuant to Rule 144(k)
under the Securities Act. Starwood Investors, SAHI Partners and SMT also have
rights, subject to certain exemptions and limitations, to request that the
Issuer include such Shares in other registrations of securities by the Issuer
under the Securities Act.
The following is a summary of the material terms of the Second Amended
and Restated Shareholders Agreement dated as of March 18, 1998, by and among
BLLC, SAHI Partners, Starwood Investors, SMT and the Issuer and is qualified in
its entirety by reference to the form of Second and Amended Restated
Shareholders Agreement, attached hereto as Exhibit 4 (the "Shareholders
Agreement"). The Shareholders Agreement prohibits BLLC, SAHI Partners, Starwood
Investors and SMT from taking certain actions with respect to the Issuer without
the approval of a majority of the Non-Starwood Trustees (defined below). These
actions include transactions between the Issuer and any of BLLC, SAHI Partners,
Starwood Investors and SMT and SCG or their affiliates (except if such
transactions have been determined by the Non-Starwood Trustees to be pursuant to
the reasonable requirements of the Issuer's business and are upon fair and
reasonable terms which are no less favorable and comparable to an arms-length
independent third party transaction and involve less than $500,000), actions by
the Issuer which would result in one or more publicly-traded classes of the
Issuer's equity securities no longer having the
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Page 27 of 49 Pages
attributes of public ownership, or any actions beneficial to BLLC, SAHI
Partners, Starwood Investors and SCG or their affiliates which would be
detrimental to a material number of the public shareholders of the Issuer.
In addition and pursuant to the Shareholders Agreement, the Issuer has
agreed that prior to the date on which Shares with a fair market value of $250
million are outstanding that were issued as part of one or more primary or
secondary public offerings (with not less than $200 million constituting
issuances of Shares that are not resales of Shares outstanding at 11:59 p.m. on
March 18, 1998) (i) it will grant only options and not other awards to any
person (a "Starwood Insider") that has an interest, directly or indirectly, in
Starwood Investors or SOFI IV or with respect to the initial grant, to the
Advisor; (ii) no options will be granted to Barry Sternlicht; (iii) the Shares
underlying total granted awards shall not exceed in the aggregate 4.5% of the
fully-diluted Shares outstanding from time to time and not more than 2.5% of the
fully-diluted Shares outstanding from time to time will underlie awards to
Starwood Insiders; and (iv) to certain exceptions and for a limited period, not
to grant awards with an exercise or trigger price below fair market value.
Further, the Issuer will not grant awards to officers, key employees, members or
principals of the advisor in such capacity without the consent of the Advisor.
Additionally, the Shareholders Agreement provides that the vesting of options
granted to Starwood Insiders shall, in addition to any service criteria, occur
on a pari passu percentage basis with the percentage of the total number of
Shares held on March 18, 1998 by Starwood Investors and SOFI IV that have been
sold or distributed by Starwood Investors or SOFI IV; provided that in no event
shall such options vest at a rate that is faster than 33.33% per annum and
provided further that subject to the continued satisfaction of any service
criteria imposed by the Board of Trustees, all unvested options held by Starwood
Insiders shall vest in full on the earlier to occur of a change in control or on
the fifth anniversary of the date of grant.
Pursuant to the Shareholders Agreement and during any period in which
(x) the Class B Shares remain controlled by SCG or by an entity under common
control with SCG and (y) the Advisory Agreement has not been terminated by the
Advisor or terminated for cause by the Issuer, the Issuer shall use its best
efforts to cause five nominees designated by SCG or by the parties who control
SCG to be elected to the Board of Trustees and to cause such persons to be
included as the management slate of nominees to the Board of Trustees. Further,
the Issuer has agreed to use its best efforts during such period to cause such
nominees or Trustees to be replaced from time to time, with or without cause,
with new persons designated by SCG or the parties who control SCG at the request
of SCG or persons who control SCG. SAHI Partners, BLLC, Starwood Investors and
SOFI IV agreed to renominate and to vote the Shares and Class B Shares held by
each for the election of Robin Josephs as a Trustee at the 1998 annual meeting
of the Issuer's Shareholders.
Also pursuant to the Shareholders Agreement, BLLC has agreed that from
and after the tenth anniversary of March 18, 1998, it will vote any Class B
Shares in respect of any matters related to the Advisory Agreement (including,
but without limitation, to vote in respect of any proposed termination of the
Advisory Agreement) in the same proportion as the Shares voted on such matter
during any period (a "Suspension Period") in which all of the following
conditions shall be satisfied: (a) the daily average closing price of Shares of
the Issuer on the AMEX or the national securities exchange or electronic trading
system that provides the primary market on which the Shares are then traded for
the 180- consecutive-calendar-day period preceding each day occurring during the
Suspension Period shall be less than the product of (i) the Issuer's book equity
value attributable to the Shares and (ii) the percentage equivalent of a
fraction, the numerator of which is one, and the denominator of which is the
total outstanding Shares; and (b) the partners of SOFI IV shall have received
aggregate distributions from SOFI IV that are less than the sum of (i) the total
accrued "Preferred Return" (as defined in the SOFI IV partnership agreement) on
the contributed and unreturned capital contributions of SOFI IV's partners to
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Page 28 of 49 Pages
SOFI IV plus (ii) the total capital contribution by the partners of SOFI IV to
SOFI IV; provided, however, that solely for purposes of this subparagraph (b)
(and not for purposes of determining distributions from SOFI IV), in the event
SOFI IV's partners are distributed Shares and such Shares are sold to
unaffiliated third parties of such partners within 180 days subsequent to such
distribution, then the prices received by such partners with respect to such
shares so sold shall be deemed to have been the amounts distributed to such
partners by SOFI IV for purposes of this subparagraph (b).
Each of BLLC, the Issuer, SAHI Partners, Starwood Investors and SOFI IV
have agreed to take all actions within their powers, to cause the nomination and
election of at least three Non-Starwood Trustees to serve on the Board of
Trustees during the term of the Shareholders Agreement; provided that in no
event shall BLLC, SAHI Partners, Starwood Investors or SOFI IV be obligated to
take any action which would prevent them from electing a majority of the entire
Trustees on the Board of Trustees. A "Non-Starwood Trustee" is a Trustee who is
a "Non-Employee Trustee within the meaning of Rule 16(b)- 3(b)(3) of the
Securities and Exchange Act of 1934, as amended, and who is not (i) a person
directly or indirectly owning, controlling, or holding, with power to vote, 3%
or more of the outstanding voting securities of Advisors or SCG, (ii) a person
directly or indirectly owning, controlling or holding 10% or more of the
economic interest of any borrower under any loan made by the Issuer with an
outstanding principal balance in excess of $3 million (a "Borrower") or any
person that provides mortgage servicing, or real estate or financial advisory or
consulting services to the Issuer and that received fees from the Issuer for
such services in excess of $100,000 for the prior fiscal year or is expected to
receive in excess of $100,000 per annum during the current fiscal year (a
"Service Provider") or an affiliate of such Borrower or Service Provider, (iii)
an officer, director, employee, member or partner of the Advisors or SCG, (iv) a
spouse, sibling, lineal descendent, parent, grandparent, sibling of parents or
first cousin, including adoptive relationships and with respect to siblings and
parents, in-laws (a "Relative") of any person described in clause (i), or (v) a
Relative of a Borrower or any person described in clause (iii) residing in the
same household as such person.
Finally, the general partners of Starwood Investors and SOFI IV, who
are affiliated with the Advisor, have agreed with their limited partners not to
vote any Shares owned by Starwood Investors or SMT, as applicable, in favor of
any amendment to the Advisory Agreement or the basic terms of the Issuer's
incentive plan that is not approved by the advisory committee of SOFI IV or
limited partners holding two-thirds in economic interest of Starwood Investors,
as applicable and the Issuer has agreed not to amend the basic terms of the
incentive plan without the consent of Starwood Investors and SOFI IV,
respectively, as long as such entity owns Shares.
SMT has pledged all of the Shares owned by it to NationsBank, N.A., as
administrative agent for a syndicate of lenders that have provided SMT a loan.
The pledge agreement and related loan agreement with respect to the pledge
contains standard provisions with respect to restrictions on SMT's ability to
transfer the Shares and standard default and similar provisions.
BLLC has entered into a loan agreement with a Delaware business trust
of which Starwood Investors and SOFI IV are depositors. The loan agreement
provides for participating payments to be made to the business trust based on
distributions on the Class B Shares held by BLLC.
The partnership agreements of each of Starwood Investors and SOFI IV
provide that the consent of two-thirds-in interest of the limited partners of
each must approve the voting of Shares in favor of an amendment to the basic
terms of the Trust's incentive plan or an amendment to the Advisory Agreement or
to any material amendment to the Shareholders Agreement which would have an
adverse effect on the rights of the partnership or its limited partners and (ii)
prior to the later to occur of (a) the first anniversary of the final
distribution date of assets of the entity or (b) that date which is the eighth
<PAGE>
Page 29 of 49 Pages
anniversary of March 18, 1998, any amendment to the Registration Rights
Agreement which would adversely affect the rights of the partnership or its
investors which then hold any of the Shares covered by such Registration Rights
Agreement.
As amended on the Contribution Date, the Shareholders Agreement will
terminate automatically on the date that neither Starwood Mezzanine nor SOFI IV
own any Shares.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1. Amended and Restated Joint Filing Agreement, dated March 18,
1998, among the Reporting Persons pursuant to Rule 13d-1(f) of
the Securities Exchange Act of 1934.
Exhibit 2. Contribution Agreement, dated as of February 11, 1998, among
Starwood Investors, Starwood Opportunity Fund IV, L.P., and
the Issuer.
Exhibit 3. Amended and Restated Registration Rights Agreement, dated as
of March 18, 1998, among the Issuer, Starwood Investors, SAHI
Partners and SMT.
Exhibit 4. Second Amended and Restated Shareholders Agreement, dated as
of March 18, 1998 among BLLC, SAHI Partners, Starwood
Investors, SMT, and the Issuer.
<PAGE>
Page 30 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 31 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD MEZZANINE HOLDINGS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 32 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD CAPITAL GROUP I, L.P.
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 33 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
BSS CAPITAL PARTNERS, L.P.
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 34 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STERNLICHT HOLDINGS II, INC.
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 35 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD FINANCIAL ADVISORS, L.L.C.
By: Starwood Capital Group I, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 36 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
Its: Sole Member and Manager
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 37 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 38 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SOFI IV MANAGEMENT, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 39 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
STARWOOD CAPITAL GROUP, L.L.C.
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 40 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
B HOLDINGS, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 41 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SAHI PARTNERS
By: SAHI, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 42 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SAHI, INC.
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 43 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SWL MORTGAGE INVESTORS, INC.
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 44 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
SWL ACQUISITION PARTNERS, L.P.
By: SWL Mortgage Investors, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 45 of 49 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1998
/S/ BARRY S. STERNLICHT
Barry S. Sternlicht
<PAGE>
Page 46 of 49 Pages
EXHIBIT 1
JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned that
the Amendment No. 7 to the Schedule 13D filed on or about this date with respect
to the beneficial ownership of the undersigned of Class A Shares, par value
$1.00 per share, and Starwood Financial Trust, is being, and any and all further
amendments to the Schedule 13D may be, filed on behalf of each of the
undersigned.
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together shall constitute one
and the same instrument.
Dated: March 18, 1998
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD MEZZANINE HOLDINGS, L.P.
By: Starwood Capital Group I, L.P.
Its: General Partner
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD CAPITAL GROUP I, L.P.
By: BSS Capital Partners, L.P.
Its: General Partner
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 47 of 49 Pages
BSS CAPITAL PARTNERS, L.P.
By: Sternlicht Holdings II, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STERNLICHT HOLDINGS II, INC.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD FINANCIAL ADVISORS, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
SOFI-IV SMT HOLDINGS, L.L.C.
By: Starwood Opportunity Fund IV, L.P.
Its: Sole Member and Manager
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 48 of 49 Pages
SOFI IV MANAGEMENT, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
STARWOOD CAPITAL GROUP, L.L.C.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
B HOLDINGS, L.L.C.
By: Starwood Capital Group, L.L.C.
Its: General Manager
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
SAHI PARTNERS
By: SAHI, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
SAHI, INC.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
SWL ACQUISITION PARTNERS, L.P.
By: SWL Mortgage Investors, Inc.
Its: General Partner
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
<PAGE>
Page 49 of 49 Pages
SWL MORTGAGE INVESTORS, INC.
By: /S/ JEROME C. SILVEY
--------------------
Name: Jerome C. Silvey
Its: Senior Vice President and
Chief Financial Officer
/S/ BARRY S. STERNLICHT
Barry S. Sternlicht
CONTRIBUTION AGREEMENT
AMONG
ANGELES PARTICIPATING MORTGAGE TRUST,
STARWOOD MEZZANINE INVESTORS, L.P.,
AND
STARWOOD OPPORTUNITY FUND IV, L.P.
--------------------
Dated as of February 11, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
CONTRIBUTION OF ASSETS; ISSUANCE OF CLASS A SHARES
Section 1.1 Contributed Assets............................................2
Section 1.2 Purchase Price................................................2
Section 1.3 Adjustments to Purchase Price.................................3
Section 1.4 Prorations....................................................4
ARTICLE II
CLOSING
Section 2.1 Closing Date..................................................4
Section 2.2 Closing Date Deliveries.......................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE TRUST
Section 3.1 Organization of the Trust.....................................4
Section 3.2 No Subsidiaries...............................................5
Section 3.3 Capitalization................................................5
Section 3.4 Authority.....................................................5
Section 3.5 Litigation....................................................6
Section 3.6 Certain Matters...............................................6
Section 3.7 SEC Documents.................................................6
Section 3.8 Shareholder Agreement.........................................6
Section 3.9 Financial Information.........................................6
Section 3.10 No Finder.....................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
Section 4.1 Organization of Starwood Mezzanine............................7
Section 4.2 Authority.....................................................7
Section 4.3 Investment Representations....................................8
Section 4.4 Litigation....................................................8
Section 4.5 Proxy Statement...............................................8
Section 4.6 Employee Benefit Plans........................................8
Section 4.7 No Finder.....................................................9
Section 4.8 Environmental.................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SOFI IV
Section 5.1 Organization of SOFI IV.......................................9
Section 5.2 Authority.....................................................9
Section 5.3 Investment Representations...................................10
Section 5.4 Litigation...................................................10
i
<PAGE>
Section 5.5 Proxy Statement..............................................11
Section 5.6 Employee Benefit Plans.......................................11
Section 5.7 No Finder....................................................11
Section 5.8 Environmental. ...........................................11
ARTICLE VI
REPRESENTATIONS OF BOTH CONTRIBUTORS
Section 6.1 Good Title...................................................12
Section 6.2 Record Keeping; Mortgage Files; Escrow Deposits..............12
Section 6.3 Additional Representations...................................12
ARTICLE VII
ACTIONS PRIOR TO THE CLOSING DATE
Section 7.1 Proxy Statement..............................................16
Section 7.2 Action by the Trust and Shareholders of the Trust............17
Section 7.3 Lawsuits, Proceedings, etc...................................17
Section 7.4 Conduct of Business by the Trust, Starwood Mezzanine
and SOFI IV Pending the Closing.............................17
Section 7.5 Mortgagor Solicitations......................................19
Section 7.6 Mutual Cooperation; Best Efforts.............................19
Section 7.7 No Public Announcement.......................................19
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
Section 8.1 No Misrepresentation or Breach of Covenants and
Warranties..................................................19
Section 8.2 No Material Adverse Effect...................................20
Section 8.3 Opinion of Counsel for Starwood..............................20
Section 8.4 No Injunctions or Restraints.................................20
Section 8.5 Necessary Governmental Approvals.............................20
Section 8.6 Transaction Agreements.......................................20
Section 8.7 Shareholder and Stockholder Action...........................20
Section 8.8 Termination of Partnership and Exchange Rights Agreement.....20
Section 8.9 Fairness Opinion.............................................20
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE AND SOFI IV
Section 9.1 No Misrepresentation or Breach of Covenants and Warranties...21
Section 9.2 No Material Adverse Effect...................................21
Section 9.3 Opinion of Counsel for the Trust.............................21
Section 9.4 No Injunctions or Restraints.................................21
Section 9.5 Necessary Governmental Approvals.............................21
Section 9.6 Transaction Agreements; Advisory Agreement...................21
Section 9.7 Shareholder and Stockholder Action...........................22
ARTICLE X
INDEMNIFICATION; SURVIVAL
Section 10.1 Indemnification...............................................22
Section 10.2 Notice of Claims.............................................23
Section 10.3 Third-Party Claims...........................................23
Section 10.4 Survival of Representations and Warranties...................24
ii
<PAGE>
ARTICLE XI
TERMINATION
Section 11.1 Termination..................................................24
ARTICLE XII
OTHER PROVISIONS
Section 12.1 Confidential Nature of Information...........................25
Section 12.2 Expenses.....................................................25
Section 12.3 Notices......................................................26
Section 12.4 Definitions..................................................27
Section 12.5 Partial Invalidity...........................................29
Section 12.6 Successors and Assigns.......................................29
Section 12.7 Execution in Counterparts....................................29
Section 12.8 Titles and Headings..........................................29
Section 12.9 Schedules and Exhibits.......................................29
Section 12.10 Entire Agreement; Amendments and Waivers; Assignment.........29
Section 12.11 Governing Law................................................29
Section 12.12 No Third-Party Beneficiaries.................................30
Section 12.13 The Trust; Starwood General Partners.........................30
Section 12.14 Determinations and Interpretations by the Trust..............30
Section 12.15 Submission to Jurisdiction...................................30
Section 12.16 Approvals and Consents.......................................30
SCHEDULE 1.1(a) Starwood Mezzanine Interests
SCHEDULE 1.1(b) SOFI IV Interests
EXHIBIT A - Form of Registration Rights Agreement
EXHIBIT B - Form of Shareholders Agreement
EXHIBIT C - Form of Advisory Agreement
iii
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into
this 11th day of February, 1998, by and between ANGELES PARTICIPATING MORTGAGE
TRUST, a California business trust, ("the Trust"), STARWOOD MEZZANINE INVESTORS,
L.P., a Delaware limited partnership ("Starwood Mezzanine") and STARWOOD
OPPORTUNITY FUND IV, L.P., a Delaware limited partnership ("SOFI IV", and
together with Starwood Mezzanine, the "Contributors"). Unless otherwise
indicated, certain terms used herein are used as defined in Section 12.4 hereof.
W I T N E S S E T H:
WHEREAS, Starwood Mezzanine intends, subject to the terms of this
Agreement, to contribute certain assets (the "Starwood Mezzanine Interests") to
the Trust in exchange for cash and Class A Shares, par value $0.01 per share, of
the Trust ("Class A Shares");
WHEREAS, SOFI IV intends, subject to the terms of this Agreement, to
contribute cash, certain letters of intent to purchase or originate debt
interests (the "Letters of Intent"), a portfolio of mortgage loans and leases
and other debt related assets, (the "SOFI IV Interests") and a portfolio of
first mortgage loans (the "First Mortgage Portfolio" and together with the
Letters of Intent, the SOFI IV Interests and the Starwood Mezzanine Interests,
the "Interests") to the Trust in exchange for cash and Class A Shares to be
issued to SOFI-IV SMT Holdings, L.L.C. ("SOFI Holdings");
WHEREAS, the Trust is the sole general partner and Starwood Mezzanine
is the sole limited partner of Angeles Participating Mortgage Trust, L.P. (the
"Partnership");
WHEREAS, on the Closing Date pursuant to an Exchange Rights Agreement
dated as of September 26, 1996 between the Trust and Starwood Mezzanine (the
"Exchange Rights Agreement") each of the outstanding interests in the
Partnership, which are referred to as "Units," will be exchanged for one Class A
Share and the Partnership and the Exchange Rights Agreement will be terminated;
WHEREAS, the Trust and Starwood Mezzanine are parties to a Registration
Rights Agreement that will be amended and restated (as amended and restated the
"Registration Rights Agreement") on the Closing Date by the Trust, Starwood
Mezzanine, SOFI Holdings and SAHI Partners in substantially the form attached
hereto as Exhibit A.
WHEREAS, the Trust, Starwood Mezzanine and certain other parties are
parties to a Shareholders Agreement originally made and entered into as of March
15, 1994, as restated as of April 27, 1994, and as amended March 15, 1996 (the
"Original Shareholders Agreement") that will be amended and restated by the
Trust, B Holdings, LLC ("BLLC"), SAHI Partners, Starwood Mezzanine and SOFI
Holdings (as amended and restated, the "Shareholders Agreement") in
substantially the form attached hereto as Exhibit B on the Closing Date;
WHEREAS, the general partner of each of Starwood Mezzanine and SOFI IV
and the Advisory Committee of SOFI IV and the requisite number of limited
partners of Starwood Mezzanine have approved the transactions provided for in
this Agreement, and the Board of Trustees of the Trust has
<PAGE>
approved the transactions provided for in this Agreement and has directed that
the transactions contemplated by this Agreement be submitted for adoption to the
shareholders of the Trust; and
WHEREAS, the Trust, Starwood Mezzanine and SOFI IV desire to make
certain representations, warranties and agreements in connection with the
transactions contemplated by this Agreement and also to prescribe various
conditions to the consummation of such transactions.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
CONTRIBUTION OF ASSETS; ISSUANCE OF CLASS A SHARES
Section 1.1 Contributed Assets. (a) Subject to the terms and conditions
set forth in this Agreement, at the Closing, each of Starwood Mezzanine and SOFI
IV shall contribute, assign, transfer and deliver to the Trust all of their
rights, title and interests in and to the Mortgage Files, the Letters of Intent
and the Interests, regardless of when such rights, title and interests arise and
such obligation to contribute, assign and transfer all of their rights, title
and interests in the Mortgage Files, the Letters of Intent and the Interests
shall continue after the date of this Agreement and the Trust shall acquire and
take assignment and delivery of, the Mortgage Files, the Letters of Intent and
the Interests as described on Schedules 1.1(a) and (b) hereto, subject to
changes occurring after the date of this Agreement and prior to the Closing Date
as provided herein.
(b) In the event that the transactions contemplated by any Letter of
Intent are consummated prior to the Closing Date, the asset acquired or
originated will be contributed to the Trust in place of the Letter of Intent and
the amount of cash required to consummate the transaction to which it relates.
The value of the acquired or originated asset shall be equal for purposes of
this Agreement to the value of the amount of cash paid by SOFI IV to acquire or
originate the asset.
(c) Starwood Mezzanine and SOFI IV shall have the option to contribute
at the Closing additional assets to the Trust with a value equal to the amount
of any decrease in the value attributable to the payment of principal of any
Interest; provided that the new asset shall be reasonably acceptable to the
Trust and Schedule 1.1(a) and/or Schedule 1.1 (b), as applicable, shall be
updated accordingly. The value of any substituted assets shall be the actual
amount paid by Starwood Mezzanine or SOFI IV to acquire or originate the asset.
Section 1.2 Purchase Price. On the Closing Date, the Trust shall (i)
pay cash to Starwood Mezzanine in an amount equal to $28.5 million, (ii) issue
to Starwood Mezzanine that number of Class A Shares equal to (a) the dollar
value of the Starwood Mezzanine Interests on December 31, 1997 as set forth on
Schedule 1.1(a) less $28.5 million (b) divided by $2.50, (ii) issue to SOFI
Holdings that number of Class A Shares equal to 302,222,800 less the aggregate
number of Class A Shares issued to Starwood Mezzanine and (iii) pay cash to SOFI
IV in an amount equal (x) to the aggregate value of the cash, the Letters of
Intent, the SOFI IV Interests and the First Mortgage Portfolio contributed by
SOFI IV on December 31, 1997 as set forth on Schedule 1.1(b) less (y) the sum of
(1) the aggregate number of Class A Shares issued to SOFI Holdings on the
Closing Date multiplied by (2) $2.50. The value of the assets to
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be contributed by Starwood Mezzanine and SOFI IV will be adjusted as set forth
in Sections 1.1(c) and 1.3. Subject to adjustment as set forth in Sections
1.1(c) and 1.3, the value of the Starwood Mezzanine Interests as of December 31,
1997 is set forth on Schedule 1.1(a) and based on such value Starwood Mezzanine
will receive 55,148,000 Class A Shares, and the value of the SOFI IV Interests,
the Letters of Intent and the First Mortgage Portfolio as of December 31, 1997
is set forth on Schedule 1.1(b) and based on such value SOFI IV will receive
$313 million in cash and SOFI Holdings will receive 247,074,800 Class A Shares
(collectively, the "Purchase Price").
Section 1.3 Adjustments to Purchase Price. (a) Adjustments shall be
made, at the Closing, to the Purchase Price in the event of any full or partial
repayment of principal of any Mortgage Loan or the termination of any Letter of
Intent during the period from January 1, 1998 to the Closing Date (the
"Adjustment Period") by adjusting the value of the Interests. In the event of
the full repayment of any Mortgage Loan, the value of the Interests shall be
reduced by the value given to such Mortgage Loan on Schedule 1.1(a) or (b). In
the event of a regularly scheduled payment of principal or any other partial
repayment of principal occurring during the Adjustment Period, the value of the
Interests shall be reduced by the dollar amount of the principal repayment. In
the event of any principal draw by the borrower with respect to any Mortgage
Loan occurring during the Adjustment Period in excess of that anticipated on
Schedule 1.1(b), the Purchase Price shall be adjusted upward in the amount of
such excess. In the event that principal draws by the borrower with respect to
any Mortgage Loan occurring during the Adjustment Period do not equal or exceed
the anticipated amount of such draws as set forth in Schedule 1.1(b), the
Purchase Price shall be reduced by such shortfall. With respect to SOFI IV only,
adjustments to the Purchase Price shall be made by first reducing the cash
portion of the Purchase Price as set forth in Section 1.2, if any, by the amount
of any reduction in dollar value of the Interests. In the case of SOFI IV only,
when the entire cash portion of the Purchase Price has been used to offset the
reduction in dollar value of the Interests, and in the case of Starwood
Mezzanine in the event of any adjustment, the number of Class A Shares issued in
exchange for the Interests will be reduced by a number of Class A Shares
determined by dividing (i) the amount of any additional reduction in dollar
value of the Interests contributed by the Contributors by (ii) $2.50.
(b) The purchase price per share of Class A Shares issued to Starwood
Mezzanine and SOFI Holdings will be adjusted in the event of any stock split,
reverse stock split or other recapitalization of the capital stock of the Trust,
so that the percentage of issued and outstanding Class A Stock purchased by each
of Starwood Mezzanine and SOFI Holdings is equal to the percentage of issued and
outstanding Class A Stock that such party would have purchased had such split,
reverse split or other recapitalization not occurred.
(c) If cash adjustments result in a decrease of the cash portion of the
Purchase Price payable to SOFI IV below $313 million, SOFI IV may, at its
option, elect to reduce the number of Class A Shares that SOFI Holdings will
acquire and instead of issuing Class A Shares the Trust will pay cash to SOFI IV
equal to the number of Class A Shares SOFI IV elects not to receive multiplied
by $2.50, provided that SOFI IV may not elect to receive cash pursuant to
Section 1.3 in excess of $313 million.
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Section 1.4 Prorations. Interest which has accrued, whether or not
paid, on the Starwood Mezzanine Interests and the SOFI IV Interests during the
Adjustment Period shall be paid by Starwood Mezzanine or SOFI IV, as applicable,
to the Trust on the Closing Date and interest which has accrued, and not been
paid, on the First Mortgage during the Adjustment Period shall be paid by the
Trust to SOFI IV on the Closing Date. All interest accruing on the Interests
subsequent to December 31, 1997 shall be payable to the Trust.
ARTICLE II
CLOSING
Section 2.1 Closing Date. Upon the terms and subject to the conditions
set forth in this Agreement, the transactions contemplated by this Agreement
shall be consummated (the "Closing") at 10:00 a.m., local time, on the next
business day after the meeting of the shareholders of the Trust provided for in
Section 7.2 at which the Trust Shareholders Matters are approved, or such other
date as may be agreed upon by the parties hereto, at the offices of Mayer, Brown
& Platt, 1675 Broadway, New York, New York 10019, or at such other place or at
such other time as shall be agreed upon by the parties hereto (such date and
time being herein called the "Closing Date").
Section 2.2 Closing Date Deliveries. On the Closing Date, the Trust,
Starwood Mezzanine, SOFI IV, SOFI Holdings, BLLC and SAHI Partners, as
appropriate, shall execute and deliver (a) the Registration Rights Agreement,
(b) the Shareholders Agreement (c) a consent to terminate the Partnership and
the Exchange Rights Agreement, (d) the Mortgage Files and (e) all the other
documents, instruments and agreements (including instruments of transfer)
reasonably necessary to carry out the terms and provisions of this Agreement and
each of the other documents referred to in this Section 2.2 and each outstanding
Unit will be exchanged for one Class A Share. The documents described in clauses
(a) and (b) above shall hereinafter be referred to as the "Transaction
Agreements."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE TRUST
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, the Trust represents,
warrants and agrees as follows:
Section 3.1 Organization of the Trust. The Trust is a business trust
duly organized and validly existing under the laws of the State of California
and no personal liability attaches to the holders of the Class A Shares by
reason of the ownership thereof. The Trust is duly qualified to transact
business in each of the jurisdictions in which the ownership or leasing of the
properties used in its business or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified would not have a Material Adverse Effect on the Trust. The Trust has
all requisite trust power and authority to own or lease and operate its
properties and to carry on its business as now conducted.
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Section 3.2 No Subsidiaries. The Trust has no subsidiaries of any kind
whatsoever except for its interest in the Partnership.
Section 3.3 Capitalization. On the date hereof, (i) 7,550,000 Class A
Shares are validly issued and outstanding and are fully paid and nonassessable,
and (ii) 3,775,000 Class B Shares are validly issued and outstanding and are
fully paid and nonassessable. Subject to approval by the Shareholders of the
Trust of the Trust Shareholder Matters (as defined in Section 7.2), the Class A
Shares to be issued to Starwood Mezzanine and SOFI Holdings on the Closing Date,
upon issuance on the terms and conditions specified in the instrument pursuant
to which such shares are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. Except for this Agreement and any options or other
awards issued pursuant to the Incentive Plans, and except as contemplated by the
Transaction Agreements, the Exchange Agreement and the Trust Declaration, there
are no options, warrants or other rights to acquire, or agreements or
commitments pursuant to which the Trust is obligated to issue, sell, purchase or
redeem, shares of capital stock of the Trust. The Class A Shares are currently
publicly traded on the American Stock Exchange ("AMEX") and will remain so at
Closing.
Section 3.4 Authority.
(a) The Trust has full trust power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by the Trust and, subject to
the approval by the shareholders of the Trust of the Trust Shareholder Matters,
to consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by the Trust of this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby and the consummation by the Trust of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary trust action on the part of the Trust, subject to the approval by the
shareholders of the Trust of the Trust Shareholder Matters. This Agreement is,
and each other agreement or instrument contemplated hereby (including, without
limitation, the Transaction Agreements) to be executed by the Trust, when
executed and delivered by the Trust, will be, the legal, valid and binding
agreement of the Trust, enforceable against the Trust in accordance with its
respective terms.
(c) Neither the execution nor delivery by the Trust of this Agreement,
the Transaction Agreements or the other agreements and instruments contemplated
hereby or thereby, nor consummation of the transactions contemplated hereby or
thereby or compliance with or fulfillment of the terms and provisions hereof or
thereof by the Trust, will (i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a loss of
rights, or result in the creation or imposition of any encumbrance upon any of
the assets of the Trust or the Partnership, under any organizational document of
the Trust or the Partnership or any other instrument, agreement, mortgage,
indenture, deed of trust, permit, concession, grant, franchise, license,
judgment, order, award, decree or other restriction to which the Trust or the
Partnership is a party or any of their properties are subject or by which either
the Trust or the Partnership is bound or any statute, other law or regulatory
provision affecting either the Trust or the Partnership, (ii) require the
approval, consent or authorization of, or the making of any declaration, filing
or registration with, any third party or any foreign, federal, state or local
court, governmental authority or regulatory body, by or on behalf of the Trust
or the Partnership, (iii) cause personal liability to attach to
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the holders of the Class A Shares by reason of the ownership thereof or (iv)
cause the Trust to fail to qualify to be taxed as a "real estate investment
trust," as defined in Section 856 of the Code ("REIT"), for the taxable year
ending December 31, 1998, except for (A) the filing of appropriate documents
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (B) approval by the
shareholders of the Trust of the Trust Shareholder Matters, (C) the filing of
the Trust's Declaration of Trust with certain governmental authorities and (D)
such conflicts, breaches, defaults, events, creations, impositions, approvals,
consents, declarations, filings or authorizations which would not reasonably be
expected to either (x) have a Material Adverse Effect on the Trust or (y)
prevent or hinder the consummation of the transactions contemplated hereby.
Section 3.5 Litigation. To the knowledge of the Trust, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which the Trust is a party or any of its assets is subject or by which the
Trust is bound before or by any court or governmental agency, which if
determined adversely to the interests of the Trust, would reasonably be expected
to either (a) have a Material Adverse Effect on the Trust or (b) prevent or
hinder the consummation of the transactions contemplated hereby.
Section 3.6 Certain Matters.
(a) As of the date hereof, the Trust has no assets or properties other
than short term real estate investments, cash and cash equivalents and a 8.05%
interest in the Partnership, or as otherwise disclosed in the SEC Documents (as
defined in Section 3.7).
(b) The Trust will continue to qualify to be taxed as a REIT for the
taxable year ending December 31, 1998.
(c) As of the close of the 1997 taxable year, the Trust has no material
current or accumulated earnings and profits. The Trust has no material
liabilities for U.S. Federal or state income taxes.
Section 3.7 SEC Documents. The Trust has previously delivered or made
available to Starwood Mezzanine and SOFI IV complete and correct copies of all
reports and statements filed by the Trust with the SEC since September 26, 1996
(the "SEC Documents"). As of their respective dates, none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.8 Shareholder Agreement. The Trust has delivered to each of
Starwood Mezzanine and SOFI IV a true and complete copy of the Original
Shareholders Agreement. Said document is in full force and effect and no
defaults or breaches exist thereunder.
Section 3.9 Financial Information. The financial statements (excluding
the pro forma financial data) included in the SEC Documents present fairly the
financial condition, results of operation and changes in the financial condition
of the Trust at the dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as otherwise indicated
therein). The pro forma financial data included in the Proxy Statement (as
defined in Section 7.1) has been prepared in accordance with all
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applicable rules and guidelines of the SEC with respect to pro forma financial
data, and the adjustments used therein are appropriate to give effect to the
transaction or circumstance referred to therein.
Section 3.10 No Finder. Neither the Trust nor any party acting on the
behalf of the Trust has paid or become obligated to pay any fee or commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
STARWOOD MEZZANINE
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, Starwood Mezzanine
represents, warrants and agrees as follows:
Section 4.1 Organization of Starwood Mezzanine. Starwood Mezzanine is a
limited partnership duly formed, validly existing and in good standing as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act.
Starwood Mezzanine is duly qualified to transact business and is in good
standing in each of the jurisdictions in which the ownership or leasing of the
properties used in its business or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not have a Material Adverse Effect on
Starwood Mezzanine. Starwood Mezzanine has all requisite partnership power and
authority to carry on its business as now conducted.
Section 4.2 Authority.
(a) Starwood Mezzanine has full partnership power and authority to
enter into this Agreement, the Transaction Agreements and the other agreements
and instruments contemplated hereby and thereby to be entered into by it and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by Starwood Mezzanine of
this Agreement, the Transaction Agreements and the other agreements and
instruments contemplated hereby and thereby and the consummation by Starwood
Mezzanine of the transactions contemplated hereby and thereby have been duly
authorized by all necessary partnership action except for the required consent
of its limited partners and the amendment to the partnership agreement that will
be obtained prior to the Closing Date. This Agreement is, and each other
agreement or instrument contemplated hereby (including, without limitation, the
Transaction Agreements) to be executed by Starwood Mezzanine, when executed and
delivered by Starwood Mezzanine, will be, the legal, valid and binding agreement
of Starwood Mezzanine, enforceable against Starwood Mezzanine in accordance with
its respective terms.
(c) Except for consents and approvals that will be obtained prior to
the Closing Date, neither the execution and delivery by Starwood Mezzanine of
this Agreement, the Transaction Agreements or the other agreements and
instruments contemplated hereby and thereby, nor consummation of the
transactions contemplated hereby or thereby or compliance with or fulfillment of
the terms and provisions hereof or thereof by Starwood Mezzanine will (i)
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating
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rights of acceleration, termination or cancellation or a loss of rights under
the agreement of limited partnership of Starwood Mezzanine, any document
relating to the Starwood Mezzanine Interests, any instrument, agreement,
mortgage, indenture, deed of trust, permit, concession, grant, franchise,
license, judgment, order, award, decree or other restriction to which Starwood
Mezzanine is a party or any statute, other law or regulatory provision affecting
any of them, or (ii) require the approval, consent or authorization of, or the
making of any declaration, filing or registration with, any third party or any
foreign, federal, state or local court, governmental authority or regulatory
body, by or on behalf of Starwood Mezzanine, except for conflicts, breaches,
defaults, events, creations, impositions, approvals, consents, declarations,
filings or authorizations which would not reasonably be expected to either (x)
have a Material Adverse Effect on Starwood Mezzanine or (y) prevent or hinder
the consummation of the transactions contemplated hereby.
Section 4.3 Investment Representations. Starwood Mezzanine is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended (the "Securities Act"), and was not organized for the purpose
of acquiring Class A Shares. Starwood Mezzanine has sufficient knowledge and
experience in financial and business matters and in investing in entities
similar to the Trust so as to be able to evaluate the risks and merits of its
investment in the Trust and it is able financially to bear the risks thereof.
Starwood Mezzanine has had an opportunity to discuss the business, management
and financial affairs of the Trust with the management of the Trust. The Class A
Shares of the Trust are being acquired by Starwood Mezzanine for its own account
for the purpose of investment and not with a view to or for sale in connection
with any distribution thereof in violation of the securities laws. Starwood
Mezzanine understands that (i) the Class A Shares have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 505 or 506 promulgated under the Securities Act, and (ii) such Class A
Shares must be held indefinitely unless such Class A Shares are registered upon
receipt thereof, or unless a subsequent disposition thereof is registered under
the Securities Act and applicable state securities laws or is exempt from such
registration.
Section 4.4 Litigation. To the knowledge of Starwood Mezzanine, there
are no actions, suits or proceedings or court orders or decrees pending or
threatened to which Starwood Mezzanine is a party or the Starwood Mezzanine
Interests are subject or by which it is bound before or by any court or
governmental agency, which if determined adversely to the interests of Starwood
Mezzanine would reasonably be expected to either (a) have a Material Adverse
Effect on Starwood Mezzanine or (b) prevent or hinder the consummation of the
transactions contemplated hereby.
Section 4.5 Proxy Statement. None of the information respecting
Starwood Mezzanine or its partners or the Starwood Mezzanine Interests supplied
or to be supplied by Starwood Mezzanine, its partners or any of its
representatives for inclusion in the Proxy Statement (as defined in Section 7.1)
will, at the time of the mailing of the Proxy Statement to the shareholders of
the Trust and at the time of the meetings of such shareholders referred to in
Section 7.2, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein relating to
Starwood Mezzanine or its partners not misleading.
Section 4.6 Employee Benefit Plans. Starwood Mezzanine is not (a) an
"employee benefit plan" as defined in and subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (b) a "plan" as defined in
and subject to Section 4975 of the Code or (c) an entity any portion
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or all of the assets of which are deemed pursuant to United States Department of
Labor Regulation ss.2510.3-101 or otherwise pursuant to ERISA to be, for any
purpose of ERISA or Section 4975 of the Code, assets of any "employee benefit
plan" or "plan" described in clause (a) or (b) above which invests in such
entity by virtue of such investment.
Section 4.7 No Finder. Neither Starwood Mezzanine nor any party acting
on its behalf has paid or become obligated to pay any fee or any commission to
any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
Section 4.8 Environmental. Starwood Mezzanine has no actual knowledge
(without independent investigation) of any violation of Environmental Laws
related to the properties secured by the Starwood Mezzanine Interests or the
presence or release of Hazardous Materials on or from such properties, except as
reflected in the environmental reports acknowledged and approved by the Trust at
or prior to the Closing. The term "Environmental Laws" includes, without
limitation, the Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act and other federal laws
governing the environment as in effect on the date of this Agreement together
with their implementing regulations and guidelines as of the date of this
Agreement, and all state, regional, county, municipal and other local laws,
regulations and ordinances that are equivalent or similar to the federal laws
recited above or that purport to regulate Hazardous Materials. The term
"Hazardous Materials" includes petroleum, including crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas or synthetic
gas usable for fuel (or mixtures of natural gas or such synthetic gas), and any
substance, material waste, pollutant or contaminant listed or defined as
hazardous or toxic, or otherwise regulated, under any Environmental Law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
SOFI IV
As an inducement to the other parties to enter into this Agreement and
to consummate the transactions contemplated hereby, SOFI IV represents, warrants
and agrees as follows:
Section 5.1 Organization of SOFI IV. SOFI IV is a limited partnership
duly formed, validly existing and in good standing as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act. SOFI IV is duly
qualified to transact business and is in good standing in each of the
jurisdictions in which the ownership or leasing of the properties used in its
business or the conduct of its business requires such qualification, other than
in such jurisdictions where the failure to be so qualified and in good standing
would not have a Material Adverse Effect on SOFI IV. SOFI IV has all requisite
partnership power and authority to carry on its business as now conducted.
Section 5.2 Authority.
(a) SOFI IV has full partnership power and authority to enter into this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby to be entered into by it and to consummate the
transactions contemplated hereby and thereby.
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(b) The execution, delivery and performance by SOFI IV of this
Agreement, the Transaction Agreements and the other agreements and instruments
contemplated hereby and thereby and the consummation by SOFI IV of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary partnership action except for the required consent of its Advisory
Committee and the related amendment to its partnership agreement that will be
obtained prior to the Closing Date. This Agreement is, and each other agreement
or instrument contemplated hereby (including, without limitation, the
Transaction Agreements), to be executed by SOFI IV when executed and delivered
by SOFI IV, will be, the legal, valid and binding agreement of SOFI IV,
enforceable against SOFI IV in accordance with its respective terms.
(c) Except for consents and approvals that will be obtained prior to
the Closing Date, neither the execution and delivery by SOFI IV of this
Agreement, the Transaction Agreements or the other agreements and instruments
contemplated hereby and thereby, nor consummation of the transactions
contemplated hereby or thereby or compliance with or fulfillment of the terms
and provisions hereof or thereof by SOFI IV will (i) conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under the agreement of limited partnership of
SOFI IV, any document relating to the Letters of Intent, SOFI IV Interests or
First Mortgage Portfolio any instrument, agreement, mortgage, indenture, deed of
trust, permit, concession, grant, franchise, license, judgment, order, award,
decree or other restriction to which SOFI IV is a party or any statute, other
law or regulatory provision affecting any of them, or (ii) require the approval,
consent or authorization of, or the making of any declaration, filing or
registration with, any third party or any foreign, federal, state or local
court, governmental authority or regulatory body, by or on behalf of SOFI IV,
except for conflicts, breaches, defaults, events, creations, impositions,
approvals, consents, declarations, filings or authorizations which would not
reasonably be expected to either (x) have a Material Adverse Effect on SOFI IV
or (y) prevent or hinder the consummation of the transactions contemplated
hereby.
Section 5.3 Investment Representations. SOFI Holdings is an "accredited
investor" within the meaning of Rule 501 under the Securities Act of 1933, as
amended (the "Securities Act"), and was not organized for the purpose of
acquiring the Class A Shares. SOFI Holdings has sufficient knowledge and
experience in financial and business matters and in investing in entities
similar to the Trust so as to be able to evaluate the risks and merits of its
investment in the Trust, and it is able financially to bear the risks thereof.
SOFI Holdings has had an opportunity to discuss the business, management and
financial affairs of the Trust with the management of the Trust. The Class A
Shares are being acquired by SOFI Holdings for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof in violation of the securities laws. SOFI Holdings
understands that (i) the Class A Shares of the Trust have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) thereof or Rule 505 or 506 promulgated under the Securities Act, and (ii)
such Class A Shares must be held indefinitely unless such Class A Shares are
registered upon receipt thereof, or unless a subsequent disposition thereof is
registered under the Securities Act and applicable state securities laws or is
exempt from such registration.
Section 5.4 Litigation. To the knowledge of SOFI IV, there are no
actions, suits or proceedings or court orders or decrees pending or threatened
to which SOFI IV is a party or the Letters of Intent, SOFI IV Interests or First
Mortgage Portfolio are subject or by which it is bound before or by any court or
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governmental agency, which if determined adversely to the interests of SOFI IV
would reasonably be expected to either (a) have a Material Adverse Effect on
SOFI IV or (b) prevent or hinder the consummation of the transactions
contemplated hereby.
Section 5.5 Proxy Statement. None of the information respecting SOFI IV
or its partners or the Letters of Intent, SOFI IV Interests or First Mortgage
Portfolio supplied or to be supplied by SOFI IV, its partners or any of its
representatives for inclusion in the Proxy Statement (as defined in Section 7.1)
will, at the time of the mailing of the Proxy Statement to the shareholders of
the Trust and at the time of the meetings of such shareholders referred to in
Section 7.2, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein relating to
SOFI IV or its partners not misleading.
Section 5.6 Employee Benefit Plans. SOFI IV is not (a) an "employee
benefit plan" as defined in and subject to ERISA, (b) a "plan" as defined in and
subject to Section 4975 of the Code or (c) an entity any portion or all of the
assets of which are deemed pursuant to United States Department of Labor
Regulation ss.2510.3-101 or otherwise pursuant to ERISA to be, for any purpose
of ERISA or Section 4975 of the Code, assets of any "employee benefit plan" or
"plan" described in clause (a) or (b) above which invests in such entity by
virtue of such investment.
Section 5.7 No Finder. Neither SOFI IV nor any party acting on its
behalf has paid or become obligated to pay any fee or any commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
Section 5.8 Environmental. SOFI IV has no actual knowledge (without
independent investigation) of any violation of Environmental Laws related to the
properties which are the subject of the Letters of Intent or secured by the SOFI
IV Interests or the First Mortgage Portfolio or the presence or release of
Hazardous Materials on or from such properties, except as reflected in the
environmental reports acknowledged and approved by the Trust at or prior to the
Closing. The term "Environmental Laws" includes, without limitation, the
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act and other federal laws governing the
environment as in effect on the date of this Agreement together with their
implementing regulations and guidelines as of the date of this Agreement, and
all state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term "Hazardous Materials"
includes petroleum, including crude oil or any fraction thereof, natural gas,
natural gas liquids, liquefied natural gas or synthetic gas usable for fuel (or
mixtures of natural gas or such synthetic gas), and any substance, material
waste, pollutant or contaminant listed or defined as hazardous or toxic, or
otherwise regulated, under any Environmental Law.
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ARTICLE VI
REPRESENTATIONS OF BOTH CONTRIBUTORS
Each of Starwood Mezzanine and SOFI IV severally, and not jointly,
represents, warrants and agrees as follows with respect to Schedule 1.1(a) and
Schedule 1.1(b), respectively:
Section 6.1 Good Title. The Contributor has and will have, until the
consummation of the transactions contemplated by this Agreement, good title to,
and is and shall be the sole owner of (i) each Mortgage Loan and the related
Mortgage File (except to the extent any Mortgage Loan is prepaid in full prior
to the consummation of the transactions contemplated by this Agreement) and (ii)
the Ground Lease, in each case of clauses (i) and (ii) above free and clear of
any and all adverse claims, liens, pledges , assignments, charges or security
interests of any nature (including, without limitation, liens arising under the
federal tax laws or ERISA), except as shall be released or discharged at the
Closing.
Section 6.2 Record Keeping; Mortgage Files; Escrow Deposits. The
origination, servicing, record keeping, collection and foreclosure practices
used by the Contributor with respect to each Mortgage Loan have been in all
respects legal. The Contributor will deliver to the Trust on the Closing Date
all documents, instruments and files in its possession relating to each Letter
of Intent, Mortgage Loan and Ground Lease. All copies of the material, original
loan documents forwarded to the Trust are true and correct and include all
documents and other instruments known to the Contributor relating to each Letter
of Intent, Mortgage Loan and Ground Lease. Schedule 1.1(a) or (b) as applicable
is true, correct and complete in all material respects. With respect to any
escrow deposits and payments, all of these deposits and payments, if any, which
have been made and not expended for their intended purposes, are in the
possession of, or under the control of, the Contributor, except in those cases
in which the Contributor holds only a minority participation interest or the
interest of a junior lender in a Mortgage Loan, in which event the terms and
conditions of such minority participation interest are contained in an
intercreditor agreement, or similar agreement, which agreements have been
disclosed in writing to the Trust. Concurrently with the closing of this
transaction, the Contributor will, to the extent permitted by the documents
pertaining to a Mortgage Loan, deliver possession and control of all such
deposits and payments (or its rights to and under any escrow) to the Trust or
its designee, provided that the Contributor makes no representation or warranty
as to the sufficiency of such deposits and payments for their intended purposes.
There are no documents or other instruments in the possession of, or actually
known to the Contributor, which would cause the materials provided to the Trust
to be inaccurate or misleading, and, to the knowledge of the Contributor, all
documents and other instruments provided to the Trust are accurate and truthful.
Section 6.3 Additional Representations.
(a) Each Mortgage Loan of the Contributor either (A) was originated by
the Contributor or (B) was purchased by the Contributor in the ordinary course
of its business, for valuable consideration to the transferor, and neither the
transferor nor any other person or entity has any residual or other rights to
such Mortgage Loan, except in those cases in which the Contributor holds only a
minority participation interest or the interest of a junior lender in a Mortgage
Loan;
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(b) the proceeds of each Mortgage Loan of the Contributor have been
fully disbursed and there is no requirement for future advances under such
Mortgage Loan except as expressly provided in documents evidencing or securing
any Mortgage Loan as disclosed to the Trust, and all costs and expenses incurred
in making, or closing or recording, the Mortgage Loans have been paid; the
Contributor has no continuing obligations under such Mortgage Loan relating to
stop notices, set aside letters, letters of credit, subdivision agreements or
bonds except as expressly provided in documents evidencing or securing any
Mortgage Loan as disclosed to the Trust;
(c) to the knowledge of the Contributor, each Mortgage Loan of the
Contributor, as of the date of its origination complied with or is exempt from,
and as of the date hereof complies with or is exempt from, (x) applicable state
or federal laws, regulations and other requirements pertaining to usury, and (y)
any and all other requirements of any federal, state or local law, including,
without limitation, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws,
applicable to each such Mortgage Loan;
(d) the Contributor has not received any notice asserting that any
Mortgage Note, related Mortgage or other agreements executed in connection
therewith of the Contributor has not been duly authorized, executed and
delivered, or is not the legal, valid and binding obligation of the maker
thereof (subject to any non-recourse provisions therein), enforceable in
accordance with its terms, except as such enforcement may be limited by (x)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and (y) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and (z) contractual provisions and laws limiting or eliminating
recourse to the Mortgagor or any other obligor or surety (including, without
limitation, principles such as the so-called "one action rule" and
anti-deficiency legislation). Except as disclosed to the Trust in writing, the
Contributor has not received notice asserting any offset, defense (including
without limitation the defense of usury), claim, counterclaim, or right to
rescission with respect to such Mortgage Note, Mortgage or other related
agreements;
(e) except as disclosed in the schedules attached to the assignment of
loan relating to the Mortgage, each Mortgage of the Contributor has not been
waived, impaired, modified, altered, superseded, amended, satisfied, cancelled,
subordinated or otherwise changed in any material respect in writing by any
Person, or otherwise by the Contributor, or rescinded, and the related mortgaged
property has not been released from the lien or other encumbrance of, nor has
the Mortgagor been released from, its obligations under the Mortgage, in whole
or in any part, nor has any instrument been executed that would effect any such
amendment, satisfaction, cancellation, subordination, rescission or release,
except, in each case, by a written instrument which is part of the related
Mortgage File;
(f) each Mortgage of the Contributor is insured by an ALTA lender's
title insurance policy (each, a "Title Policy"), and the Contributor will
provide true and complete copies of each such Title Policy to the Trust. To the
actual knowledge of the Contributor, without any inquiry, each such Title Policy
is in full force and effect. Unless disclosed in the applicable Mortgage File,
the Contributor has not done, by act or omission, anything which would impair
the coverage of any such Title Policies, and the Contributor has not received
any notice by the title insurer of any such Title Policy of any impairment,
diminution or negation of such coverage;
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(g) to the actual knowledge of the Contributor, without any inquiry,
each Mortgaged Property (including all improvements thereon) of the Contributor
is insured by a hazard insurance policy as required by the applicable Mortgage,
and the Contributor has provided true and complete copies of each policy to the
Trust. To the actual knowledge of the Contributor, without any inquiry, if upon
origination of the Mortgage Loan the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
and if required by applicable law, a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect;
(h) there is no monetary default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note of the
Contributor and no event has occurred during the last twelve months that, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a monetary default, breach, violation or event of
acceleration; to the current actual knowledge of the Contributor without inquiry
or investigation, except as set forth in the applicable Mortgage File there is
no non-monetary default, breach, violation or event of acceleration existing
under any Mortgage or the related Mortgage Note;
(i) the Contributor has not waived any material default, breach,
violation or event of acceleration under any Mortgage Loan of the Contributor,
which would materially impair the Trust's rights to enforce the documents
evidencing, securing or pertaining to such Mortgage Loan (the "Mortgage Loan
Documents");
(j) with respect to the Ground Lease of the Contributor, to the
knowledge of the Contributor, after due inquiry:
(i) the Ground Lease is valid and enforceable, is in full
force and effect, and is binding upon the parties thereto and their
respective successors and assigns, in accordance with its terms;
(ii) the Ground Lease has not been amended, restated,
supplemented, extended or otherwise modified in any respect, and a true
and correct copy of the Ground Lease has been provided to the Trust;
(iii) the Contributor, as the lessor under the Ground Lease,
has fully performed all obligations under the Ground Lease to be
performed by the lessor thereunder, and the lessee under the Ground
Lease has fully performed all obligations under the Ground Lease to be
performed by the lessee thereunder;
(iv) neither the Contributor, as lessor under the Ground Lease
nor the lessee thereunder, is in default under the Ground Lease; and
(v) no consents or approvals of any party having an interest
in the Ground Lease, including, without limitation, the lessee, is
required, under the Ground Lease or otherwise, in order for the
Contributor to validly transfer all right, title and interest of the
Contributor in and to the Ground Lease to the Trust, or, to the extent
such consent is required or necessary, upon
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consummation of the transactions contemplated by this Agreement, such
consent will have been delivered to the Trust in full satisfaction of
such consent requirements;
(k) with respect to each Letter of Intent of the Contributor:
(i) the Letter of Intent is valid and enforceable, is in full
force and effect, and is binding upon the parties thereto except as
otherwise specified in the Letter of Intent and their respective
successors and assigns, in accordance with its terms;
(ii) the Letter of Intent has not been amended, restated,
supplemented, extended or otherwise modified in any respect, and a true
and correct copy of the Letter of Intent has been provided to the
Trust;
(iii) the Contributor has fully performed all obligations
under the Letter of Intent to be performed by the acquiror or
originator thereunder, and the borrower or seller under the Letter of
Intent has fully performed all obligations under the Letter of Intent
to be performed by the seller or borrower thereunder;
(iv) neither the Contributor nor the counter party is in
default under the Letter of Intent; and
(v) no consents or approvals of any party having an interest
in the Letter of Intent, including, without limitation, the seller or
borrower, is required, under the Letter of Intent or otherwise, in
order for the Contributor to validly transfer all right, title and
interest of the Contributor in and to the Letter of Intent to the
Trust, or, to the extent such consent is required or necessary, upon
consummation of the transactions contemplated by this Agreement, such
consent will have been delivered to the Trust in full satisfaction of
such consent requirements;
(l) there has been no fraud, dishonesty, or material misrepresentation
by Contributor, and Contributor has not received from any borrower any notice
that any predecessor to Contributor engaged in fraud, dishonesty or material
misrepresentation, in connection with the origination, servicing, collection or
foreclosure under any Mortgage or the related Mortgage Note of the Contributor;
and the Contributor has made no oral or written promises with respect to any
Mortgage Loan of the Contributor not reflected in the Mortgage File provided to
the Trust;
(m) if any Mortgage Loan of the Contributor has been participated with
other lenders, such participation is indicated on Schedule 1.1(a) or (b), as
applicable, and unless otherwise indicated, the Contributor is the lead lender
in such participation and either has the right under the related participation
agreement to sell its interest in the Mortgage Loan and to transfer the
servicing thereof without the consent of any participant required or, as of the
Closing Date for such Mortgage Loan, has obtained all required consents;
(n) there has been no fraud, dishonesty, or material misrepresentation
in connection with the Contributor's actions as lead lender in the
participations described in subsection (l) above;
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(o) each Mortgage Loan of the Contributor (except in those cases in
which the Contributor holds only a minority participation interest or the
interest of a junior lender in a Mortgage Loan) is being and has been serviced
by the Contributor, and from the date hereof until the Closing Date the
Contributor or its affiliate shall service and administer the Mortgage Loans of
the Contributor, in accordance with Contributor's customary servicing standards.
ARTICLE VII
ACTIONS PRIOR TO THE CLOSING DATE
Each of the Trust, Starwood Mezzanine and SOFI IV, as applicable,
covenants and agrees to take the following actions between the date hereof and
the Closing Date:
Section 7.1 Proxy Statement. The Trust has prepared and filed with the
SEC a proxy statement to solicit proxies in connection with the meeting of the
shareholders of the Trust referred to in Section 7.2 (the definitive form of
such proxy statement, together with any amendments thereof or supplements
thereto, mailed to the shareholders of the Trust in connection with such meeting
is herein referred to as the "Proxy Statement"). A true and complete copy of the
Proxy Statement (and all exhibits thereto) filed with the SEC has been and to
the extent amended will be delivered to Starwood Mezzanine and SOFI IV promptly
when available. The Trust will cause the Proxy Statement to comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the respective rules and regulations thereunder and will cause the Proxy
Statement, at the time of its mailing or delivery to the shareholders of the
Trust and at the time of the meeting referred to above, to not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by the Trust in reliance upon and in conformity with information
concerning Starwood Mezzanine, SOFI IV and their partners or representatives or
the Interests for inclusion in the Proxy Statement. Each of Starwood Mezzanine
and SOFI IV shall, and shall cause their representatives to, furnish the Trust
all information concerning themselves and their partners and the Interests
reasonably required for use in the Proxy Statement. If, at any time prior to the
Closing Date, any event should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement, the Trust will cause such
event to be so described, and such amendment shall be promptly filed with the
SEC and, as required by law, disseminated to any shareholders of the Trust.
Starwood Mezzanine and SOFI IV and their partners will cooperate fully in
connection with such amendment or supplement, including supplying any and all
information with respect to Starwood Mezzanine, SOFI IV, and their partners and
the Interests which is necessary to prepare any such amendment or supplement.
The Proxy Statement includes many proposals for shareholder approval in addition
to the transaction contemplated hereby. Subject to the last sentence of Section
7.2, the Trust shall not amend or delete any proposals relating to the
transactions contemplated hereby without the approval of both Starwood Mezzanine
and SOFI IV, it being understood that shareholder approval of all such proposals
(without any amendments thereto objectionable to Starwood Mezzanine or SOFI IV,
notwithstanding the last sentence of Section 7.2) shall be a condition to the
obligation of Starwood Mezzanine and SOFI IV to close the transactions
contemplated hereby.
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Section 7.2 Action by the Trust and Shareholders of the Trust. The
Trust shall, as soon as practicable after the Proxy Statement shall be cleared
by the SEC, duly call, give notice of, convene and hold a meeting of the
shareholders of the Trust for the purposes set forth in the Proxy Statement
(collectively, the "Trust Shareholders Matters"). Subject to the fiduciary
duties of the Board of Trustees of the Trust under applicable law and to the
last sentence of this Section 7.2 , the Board of Trustees of the Trust will
recommend to its shareholders approval of the Trust Shareholder Matters. The
Board of Trustees of the Trust may at any time prior to the Closing Date
withdraw, modify or change any recommendation regarding the Trust Shareholder
Matters, this Agreement or the transactions contemplated hereby or recommend and
declare advisable any other offer, proposal or transaction if in any such case
it determines upon advice of legal counsel that the failure to so withdraw,
modify or change such recommendation could reasonably be expected to involve it
in a breach of fiduciary duties under applicable law.
Section 7.3 Lawsuits, Proceedings, etc. Each party hereto shall notify
the other party hereto promptly upon becoming aware of any lawsuit, proceeding,
claim or investigation that may be threatened, brought, asserted or commenced
against it (a) involving in any way the transactions contemplated by this
Agreement or (b) that would have been listed or specified as an exception to
Section 3.5, 4.4 or 5.4, as the case may be, if such lawsuit, proceeding, claim
or investigation had arisen prior to the date hereof.
Section 7.4 Conduct of Business by the Trust, Starwood Mezzanine and
SOFI IV Pending the Closing.
(a) During the period from the date of this Agreement through the
Closing Date, except as expressly contemplated by this Agreement, each of the
Trust and the Partnership and each of Starwood Mezzanine and SOFI IV with
respect to the Interests only, shall carry on its business in accordance with
the ordinary course and shall not enter into any material transaction outside of
the ordinary course of business with respect thereto without the prior written
consent of the Trust in the case of Starwood Mezzanine or SOFI IV, or Starwood
Mezzanine and SOFI IV in the case of the Trust (not to be unreasonably
withheld).
(b) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the Closing Date, the Trust shall not, without the prior
written consent of Starwood Mezzanine and SOFI IV (not to be unreasonably
withheld):
(i) take any action or omit to take any action that would
cause it to fail to be taxed as a REIT, for its taxable year ending
December 31, 1998 or omit to take any action necessary to cause the
Trust to be taxed as a REIT for such taxable year;
(ii) take any action or omit to take any action that would
cause personal liability to attach to the holders of the Class A Shares
by reason of the ownership thereof;
(iii) acquire any real estate or other assets (other than
receipt of cash or investments of cash in short term, liquid real
estate assets or cash equivalents);
(iv) issue or enter into any executory agreement to issue any
new debt securities;
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(v) issue or enter into any executory agreement to issue any
new equity securities other than common shares issued in replacement of
lost, stolen or transferred outstanding shares or as described in the
Proxy Statement;
(vi) declare and pay any dividends or make other distributions
to holders of shares other than as are necessary to preserve the REIT
status of the Trust; or
(vii) repay any indebtedness.
(c) Without limiting the generality of the foregoing, and except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement through the Closing Date, Starwood Mezzanine and SOFI IV shall
not, without the prior written consent of the Trust (not to be unreasonably
withheld), except as required by law, or the documents evidencing, securing or
pertaining to the Mortgage Loans, or in the ordinary course in accordance with
Starwood Mezzanine's and SOFI IV's customary practice:
(i) voluntarily dispose of any portion of the Interests or of
the underlying collateral other than as required to maintain the
venture capital operating company status of Starwood Mezzanine;
(ii) release any collateral or any party from any liability on
or with respect to the Mortgage Loans;
(iii) compromise or settle any claims of any kind or character
with respect to the Letters of Intent, the Mortgage Loans or the Ground
Lease;
(iv) initiate, complete or otherwise take any action with
respect to a foreclosure on any of the Mortgaged Property or exercise
any remedies under the related Mortgage Note or Mortgage or under any
Letter of Intent or Ground Lease;
(v) sell or encumber, or contract to sell or encumber, the
Interests, or any portion thereof or any interest therein;
(vi) agree to any amendments or modifications to any Letter of
Intent, Mortgage Loan or Ground Lease;
(vii) subordinate any Mortgage Loan or Ground Lease;
(viii) accept any prepayment of any Mortgage Note at a
discount from the face amount thereof;
(ix) give any notice of default or make any demand on any
Mortgagor or any party to a Letter of Intent or Ground Lease;
(x) accelerate the maturity of any Mortgage Loan, except in
case of a default; or
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(xi) initiate any litigation against any Mortgagor or any
party to a Letter of Intent or Ground Lease.
Section 7.5 Mortgagor Solicitations. Other than in connection with
solicitations or promotions directed at the general public, each Contributor
agrees severally that it will not after the Closing Date solicit any Mortgagor
for the purpose of refinancing the related Mortgage Loan or otherwise agree at
any time to refinance, restructure or replace any Mortgage Loan.
Section 7.6 Mutual Cooperation; Best Efforts. Subject to the fiduciary
duties of the Board of Trustees of the Trust under applicable law, the fiduciary
duties of general partners of Starwood Mezzanine under applicable law, and the
fiduciary duties of the general partner of SOFI IV, the parties hereto shall
cooperate with each other, and shall use their respective best efforts to cause
the fulfillment of the conditions to the parties' obligations hereunder and to
obtain as promptly as possible all consents, authorizations, orders or approvals
from each and every third party, whether private or governmental, required in
connection with the transactions contemplated by this Agreement; provided,
however, that the foregoing shall not require Starwood Mezzanine, any partner
thereof, SOFI IV, any partner thereof, or the Trust to make any divestiture or
consent to any divestiture in order to obtain any waiver, consent or approval.
Section 7.7 No Public Announcement. No party hereto shall, without the
approval of the other parties hereto (which may not be unreasonably withheld),
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so obligated by law, in which case the other parties hereto shall be
advised and the parties hereto shall use their reasonable best efforts to cause
a mutually agreeable release or announcement to be issued.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST
The obligations of the Trust under this Agreement to consummate the
transactions contemplated hereby to be consummated at the Closing shall, at the
option of the Trust, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
Section 8.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by Starwood Mezzanine or SOFI IV in the
performance of the covenants and agreements herein to be performed by each of
them at or prior to the Closing Date; on the Closing Date, each of the
representations and warranties of Starwood Mezzanine and SOFI IV that is
qualified as to materiality shall be true and correct as though made on the
Closing Date; on the Closing Date, each of the representations and warranties of
Starwood Mezzanine and SOFI IV that is not so qualified as to materiality shall
be true and correct in all material respects as though made on the Closing Date;
and there shall have been delivered to the Trust a certificate or certificates
to the foregoing effect, dated the Closing Date, signed on behalf of each of
Starwood Mezzanine and SOFI IV. Notwithstanding anything to the contrary, the
prepayment of any mortgage after the date hereof but prior to the Closing Date
shall not constitute a breach of the representations and warranties of SOFI IV
or Starwood Mezzanine. In the event of a breach of the warranties under Section
6.3(h), the Trust, at its option, may elect not to purchase
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the defaulted Mortgage and to reduce the Purchase Price accordingly pursuant to
Section 1.3 or to purchase the defaulted Mortgage and to negotiate with the
Contributors in good faith in order to determine the appropriate reduction in
the Purchase Price, if the Trust reasonably determines that the occurrence of
such default adversely affects the value of such Mortgage Loan.
Section 8.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on Starwood
Mezzanine, SOFI IV or any of the Interests or the collateral therefor and there
shall have been delivered to the Trust a certificate to that effect, dated the
Closing Date, signed on behalf of Starwood Mezzanine and SOFI IV (with respect
to itself and the Interests owned by it).
Section 8.3 Opinion of Counsel for Starwood. The Trust shall have
received from Katten Muchin & Zavis, counsel for Starwood Mezzanine and SOFI IV,
an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Trust.
Section 8.4 No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of the Trust, Starwood Mezzanine and SOFI IV, however, that
it shall use its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered.
Section 8.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on the Trust,
Starwood Mezzanine or SOFI IV.
Section 8.6 Transaction Agreements. Each of the parties (other than the
Trust) to each of the Transaction Agreements and any other documents
contemplated hereby and thereby shall have entered into such Transaction
Agreements and any other documents contemplated hereby and thereby substantially
in the forms attached hereto as exhibits or, if not so attached, as agreed to by
the parties.
Section 8.7 Shareholder and Stockholder Action. The Shareholders of the
Trust shall have approved, by the requisite vote of the holders of Class A and
Class B Shares, the Contribution Proposal (as defined in the Proxy Statement),
and the Advisory Agreement Proposal (as defined in the Proxy Statement).
Section 8.8 Termination of Partnership and Exchange Rights Agreement.
The Partnership and the Exchange Rights Agreement shall be terminated effective
as of the Closing Date.
Section 8.9 Fairness Opinion. The Trust shall have received from the
Financial Advisor a favorable opinion as to the fairness of the transactions
contemplated hereby, from a financial point of view, to the shareholders of the
Trust.
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Section 8.10 REIT Qualifications. The Trust shall be eligible to elect
to be qualified as a REIT for its taxable year ending December 31, 1998.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF STARWOOD MEZZANINE AND SOFI IV
The obligations of each of Starwood Mezzanine and SOFI IV under this
Agreement to consummate the transactions contemplated hereby to be consummated
at the Closing shall be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
Section 9.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no material breach by the Trust in the performance of its
covenants and agreements herein to be performed at or prior to the Closing Date;
on the Closing Date, each of the representations and warranties of the Trust
that is qualified as to materiality shall be true and correct as though made on
the Closing Date, on the Closing Date, each of the representations and
warranties of the Trust that is not so qualified as to materiality shall be true
and correct in all material respects as though made on the Closing Date; and
there shall have been delivered to Starwood Mezzanine and SOFI IV a certificate
or certificates to the foregoing effect, dated the Closing Date, signed on
behalf of the Trust. Without limitation of the foregoing, the Class A Shares
shall continue to be listed and publicly traded on the AMEX.
Section 9.2 No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Effect on the Trust or
the Partnership; and there shall have been delivered to Starwood Mezzanine and
SOFI IV a certificate to that effect, dated the Closing Date, signed on behalf
of the Trust.
Section 9.3 Opinion of Counsel for the Trust. Starwood Mezzanine and
SOFI IV shall have received from Mayer, Brown & Platt, counsel for the Trust, an
opinion dated the Closing Date, in form and substance reasonably satisfactory to
Starwood Mezzanine and SOFI IV.
Section 9.4 No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect, it
being agreed by each of the Trust, Starwood Mezzanine and SOFI IV, however, that
it shall use its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered.
Section 9.5 Necessary Governmental Approvals. The parties hereto shall
have received all governmental and regulatory approvals and actions reasonably
necessary to consummate the transactions contemplated hereby, which are either
required to be obtained prior to the Closing Date by applicable law or
regulation or are necessary to prevent a Material Adverse Effect on the Trust,
Starwood Mezzanine or SOFI IV.
Section 9.6 Transaction Agreements; Advisory Agreement. Each of the
parties (other than Starwood Mezzanine, SOFI IV and SOFI Holdings) to each of
the Transaction Agreements and any other
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documents contemplated hereby and thereby shall have entered into such
Transaction Agreements and any other documents contemplated hereby and thereby
substantially in the forms attached hereto as exhibits or, if not so attached,
as agreed to by the parties. The Advisory Agreement between the Trust and
Starwood Financial Advisors, L.L.C. shall be entered into on the Closing Date
substantially in the form attached hereto as Exhibit C.
Section 9.7 Shareholder and Stockholder Action. The Shareholders of the
Trust shall have approved, by the requisite vote of the holders of Class A
Shares and Class B Shares, the Trust Shareholder Matters and each of William M.
Matthes and Kneeland C. Youngblood, M.D. shall be elected as Trustees with a
term that expires on the date of the 1999 annual meeting of the Trust's
shareholders and Robin Josephs shall be elected as a Trustee with a term that
expires on the date of the 1998 annual meeting of the Trust's shareholders.
Section 9.8 REIT Qualifications. The Trust shall be eligible to elect
to be qualified as a REIT for its taxable year ending December 31, 1998.
ARTICLE X
INDEMNIFICATION; SURVIVAL
Section 10.1 Indemnification. (a) Each of the Trust, Starwood Mezzanine
and SOFI IV shall indemnify and hold harmless each other and their respective
subsidiaries, affiliates, employees, agents, partners and successors from and
against any and all (x) liabilities, losses or damages ("Loss") and (y)
reasonable out-of-pocket expenses, including without limitation attorneys' fees
and expenses ("Expense") incurred by such party in connection with (i) its
respective breach or failure to perform its obligations under this Agreement or
any other agreement entered into by it in connection therewith (including the
Transaction Agreements) and (ii) any breach of any warranty or the inaccuracy of
any representation, or misrepresentation or material omission, made by it
respectively in this Agreement, any Transaction Agreement or in any certificate
delivered by or on behalf of it respectively pursuant hereto or thereto;
provided however, that the obligation of each Contributor to indemnify and hold
harmless pursuant to this Section 10.1 shall be limited to the payment by such
Contributor in the aggregate of an amount equal to the value of the Class A
Shares and cash received by such Contributor pursuant to this Agreement.
(b) The Trust shall indemnify and hold harmless each of Starwood
Mezzanine and SOFI IV and their respective subsidiaries, affiliates, employees,
agents, partners and successors from and against any and all Loss and Expenses
incurred by such party in connection with any untrue statement of a material
fact or omission of a material fact required to be stated in the Proxy
Statement, at the time of its mailing or delivery to the shareholders of the
Trust and at the time of the shareholders meeting referenced therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing shall not apply to the extent that any such untrue statement of a
material fact or omission to state a material fact was made by the Trust in
reliance upon and in conformity with information concerning Starwood Mezzanine,
SOFI IV and their partners or representatives or the Interests for inclusion in
the Proxy Statement.
(c) Each of Starwood Mezzanine and SOFI IV severally agrees that it
shall indemnify and hold harmless the Trust and its subsidiaries, affiliates,
employees, agents, partners and successors
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from and against any and all Loss and Expenses incurred by such party in
connection with any untrue statement of a material fact or omission of a
material fact required to be stated in the Proxy Statement, at the time of its
mailing or delivery to the shareholders of the Trust and at the time of the
shareholders meeting referenced therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing shall only apply
to the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Trust in reliance upon and in conformity
with information concerning the indemnifying party and its partners or
representatives or its Interests supplied by such indemnifying party for
inclusion in the Proxy Statement.
Section 10.2 Notice of Claims. If a party believes that any of the
persons entitled to indemnification under this Article X has suffered or
incurred any Loss or incurred any Expense, whether or not the applicable dollar
limitation specified by Section 10.1 has been exceeded, such party shall notify
the indemnifying party promptly in writing describing such Loss or Expense, the
amount thereof, if known, and the method of computation of such Loss or Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement, any Transaction Agreement, the Proxy Statement or any
certificate delivered pursuant hereto in respect of which such Loss or Expense
shall have occurred; provided, however, that the omission by such indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its indemnification obligation under this Article X except to the extent that
such indemnifying party is materially damaged as a result of such failure to
give notice. If any action at Law or suit in equity is instituted against a
third party with respect to which any of the persons entitled to indemnification
under this Article X intends to claim any liability or expense as Loss or
Expense under this Article X, any such person shall promptly notify the
indemnifying party of such action or suit as specified in these Sections 10.2
and 10.3. Any party entitled to indemnification hereunder shall use reasonable
efforts to minimize any Loss or Expense for which indemnification is sought
hereunder.
Section 10.3 Third-Party Claims. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party, the indemnified persons shall give notice
thereof to the indemnifying party not later than twenty (20) business days prior
to the time any response to the asserted claim is required, if possible, and in
any event within fifteen (15) days following the date such indemnified person
has actual knowledge thereof; provided, however, that the omission by such
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its indemnification obligation under this Article X except
to the extent that such indemnifying party is materially damaged as a result of
such failure to give notice. In the event of any such claim for indemnification
resulting from or in connection with a claim or legal proceeding by a third
party, the indemnifying party may, at its sole cost and expense, assume the
defense thereof; provided, however, that counsel for the indemnifying party, who
shall conduct the defense of such claim or legal proceeding, shall be reasonably
satisfactory to the indemnified party; and provided, further, that if the
defendants in any such actions include both the indemnified persons and the
indemnifying party and the indemnified persons shall have reasonably concluded
based on a written opinion of counsel that there may be legal defenses or rights
available to them which have not been waived and are in actual or potential
conflict with those available to the indemnifying party, the indemnified persons
shall have the right to select one law firm reasonably acceptable to the
indemnifying party to act as separate counsel, on behalf of such indemnified
persons, at the expense of the indemnifying party. Unless the indemnified
persons are represented by separate counsel pursuant to the second proviso of
the immediately preceding sentence, if an indemnifying party assumes the defense
of any such claim or legal proceeding, such
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<PAGE>
indemnifying party shall not consent to entry of any judgment, or enter into any
settlement, that (a) is not subject to indemnification in accordance with the
provisions in this Article X, (b) provides for injunctive or other nonmonetary
relief affecting the indemnified persons or (c) does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
indemnified persons of a release from all liability with respect to such claim
or legal proceeding, without the prior written consent of the indemnified
persons (which consent, in the case of clauses (b) and (c), shall not be
unreasonably withheld); and provided, further, that unless the indemnified
persons are represented by separate counsel pursuant to the second proviso of
the immediately preceding sentence, the indemnified persons may, at their own
expense, participate in any such proceeding with the counsel of their choice
without any right of control thereof. So long as the indemnifying party is in
good faith defending such claim or proceeding, the indemnified persons shall not
compromise or settle such claim or proceeding without the prior written consent
of the indemnifying party, which consent shall not be unreasonably withheld. If
the indemnifying party does not assume the defense of any such claim or
litigation in accordance with the terms hereof, the indemnified persons may
defend against such claim or litigation in such manner as they may deem
appropriate, including, without limitation, settling such claim or litigation
(after giving prior written notice of the same to the indemnifying party and
obtaining the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld) on such terms as the indemnified persons may
deem appropriate, and the indemnifying party will promptly indemnify the
indemnified persons in accordance with the provisions of Article X.
Section 10.4 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive until
the first (1st) anniversary of the Closing Date, at which time such
representations and warranties will terminate and be of no force and effect. Any
claim under this Article X for Loss or Expense in respect of any representations
and warranties must be asserted in writing prior to the first (1st) anniversary
of the Closing Date. Notwithstanding the foregoing, if a claim of a breach of a
representation or warranty under this Article X is asserted in writing prior to
the applicable time period set forth above in this Section 10.4, then such
representation or warranty, as it relates to such claim, shall survive until the
Loss or Expense in respect thereof, if any, is finally determined and paid by
the indemnifying party.
ARTICLE XI
TERMINATION
Section 11.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of the parties;
(b) by the Trust upon any material breach by Starwood
Mezzanine or SOFI IV of any of their respective representations,
warranties or covenants contained in this Agreement that is not
qualified as to materiality and upon any breach by Starwood Mezzanine
or SOFI IV of any of their respective representations, warranties or
covenants contained in this Agreement that is qualified as to
materiality; provided that either Starwood Mezzanine or SOFI IV, as the
case may be, shall have been given a reasonable opportunity to cure
such breach;
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<PAGE>
(c) by Starwood Mezzanine or SOFI IV upon any material breach
by the Trust of any of its representations, warranties or covenants
contained in this Agreement that is not qualified as to materiality and
upon any breach by the Trust of any of its representations, warranties
or covenants contained in this Agreement that is qualified as to its
materiality; provided that the Trust shall have been given a reasonable
opportunity to cure such breach;
(d) by the Trust if any of the conditions specified in Article
VIII has not been met or waived at such time as it is no longer
possible to satisfy such condition;
(e) by Starwood Mezzanine and SOFI IV if any of the conditions
specified in Article IX has not been met or waived at such time as it
is no longer possible to satisfy such condition;
(f) by the Trust, Starwood Mezzanine, or SOFI IV if the
transactions contemplated by this Agreement are not consummated on or
before March 31, 1998 (the "Outside Date"); except that on or after the
Outside Date no party may terminate this Agreement pursuant to this
Section 10.1(f) if such party is then in material breach of its
representations, warranties or covenants in this Agreement; or
(g) upon 15 days' written notice by the Trust, Starwood
Mezzanine or SOFI IV if the Trust enters into an agreement with any
party other than Starwood Mezzanine, SOFI IV or any other entity
controlled by Starwood Capital Group, L.P., Starwood Capital Group,
L.L.C. or their principals (a "Starwood Controlled Party") which is not
consistent with the obligations of the Trust set forth in this
Agreement or with the consummation of the transactions contemplated by
this Agreement. For the purposes hereof, an agreement with a party
other than Starwood Mezzanine, SOFI IV or a Starwood Controlled Party
will be deemed to be inconsistent with the obligations of the Trust set
for this Agreement in the event that such agreement would impose any
exclusivity or non-competition agreements on the Trust or would require
a commitment of the Trust capital in excess of $1,000,000 in the
aggregate.
ARTICLE XII
OTHER PROVISIONS
Section 12.1 Confidential Nature of Information. Each party agrees that
it will treat in strict confidence all documents, materials and other
information which it obtains regarding the other party during the course of the
negotiations leading to the consummation of the transactions provided for herein
and the preparation of this Agreement; and if for any reason whatsoever the
transactions contemplated by this Agreement shall not be consummated, each party
shall return to the other party all copies of non-public documents and materials
which have been furnished or acquired in connection therewith and shall not use
or disseminate such documents, materials or other information for any purpose
whatsoever.
Section 12.2 Expenses.
(a) Each of the parties hereto shall bear its own costs and expenses
(including, without limitation, fees and disbursements of its counsel,
accountants and other financial, legal, accounting or other advisors) incurred
by it in connection with the preparation, negotiation, execution and delivery of
this Agreement, each of the other documents and instruments executed in
connection with or contemplated by this Agreement, including the Proxy
Statement, and the consummation of the
25
<PAGE>
transactions contemplated hereby and thereby (collectively "Acquisition
Expenses"); provided, that, if the transactions contemplated by this Agreement
are not consummated on or before June 30, 1998, the Contributors (pro rata based
on the relative amounts of Class A Shares that would have been issued to each
and the amount of cash payable to each had the transactions been consummated)
will reimburse the Trust for all amounts the Trust pays to Houlihan, Zokey,
Howard & Zukin Financial Advisors, Inc. other than as a result of the
Independent Trustees of the Trust withdrawing their approval for the proposed
transactions.
(b) In the event of a Qualifying Termination (as defined below), then
within ten (10) business days after receipt by the Trust from Starwood Mezzanine
or SOFI IV, as the case may be, of reasonable documentation therefor, the Trust
shall reimburse Starwood Mezzanine or SOFI IV, as the case may be, for its
reasonable out-of-pocket Acquisition Expenses.
For the purposes of this Section 12.2(b), a "Qualifying Termination"
shall mean a termination of this Agreement pursuant to Section 11.1(g).
Section 12.3 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered by
facsimile, personally or by overnight mail, or four (4) days after being mailed
(by registered mail, return receipt requested) to a party at the following
address (or to such other address as such party may have specified by notice
given to the other parties pursuant to this provision):
If to the Trust to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Jay Sugarman
Fax No.: (203) 861-2101
with copies to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Attention: James B. Carlson
Fax No.: (212) 262-1910
and
Rinaldi & Associates
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Ellis Rinaldi
Fax No.: (203) 861-2122
26
<PAGE>
If to Starwood Mezzanine to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax No.: (312) 902-1620
If to SOFI IV to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with copies to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax No.: (312) 902-1620
Section 12.4 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person; provided, however, that the
Trust, Starwood Mezzanine and SOFI IV are not affiliates for any purpose under
this Agreement;
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Financial Advisor" means Houlihan, Zokey, Howard & Zukin.
(d) "Incentive Plans" means the Angeles Participating Mortgage Trust
1996 Share Incentive Plan and the Angeles Participating Mortgage Trust 1996
Trustee Share Incentive Plan.
27
<PAGE>
(e) "Ground Lease" means the lease agreement between Red Lion Hotels,
Inc. and RLH Partnership, L.P.
(f) "Material Adverse Effect" means any change or effect (or any
development that, insofar as can reasonably be foreseen, would result in any
change or effect) that is materially adverse to (i) in the case of the Trust and
Starwood Mezzanine, the business, properties, assets, condition (financial or
otherwise) or results of operations of the applicable person or persons, taken
as a whole and (ii) in the case of SOFI IV, the SOFI IV Interests, the Letters
of Intent and the First Mortgage Portfolio.
(g) "Mortgage" shall mean the original mortgage, deed of trust or other
instrument, as amended, restated, supplemented or otherwise modified from time
to time prior to the date hereof, securing a Mortgage Note relating to a
Mortgage Loan.
(h) "Mortgage Files" means all related notes, deeds of trust,
mortgages, security agreements, guaranties, indemnities, financing statements,
assignments, endorsements, correspondence, bonds, letters of credit, accounts,
insurance contracts and policies, credit reports, tax returns, appraisals,
environmental reports, escrow documents, participation agreements (if
applicable), loan files, servicing files and all other documents evidencing,
securing or pertaining to the Mortgage Loans.
(i) "Mortgage Loan" or "Mortgage Loans" shall mean the loan or loans
identified on Schedule 1.1(a) or (b), as the same may be amended from time to
time pursuant to the provisions of this Agreement, together with all Servicing
Rights related thereto.
(j) "Mortgage Note" means a note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
(k) "Mortgaged Property" means the property encumbered by a Mortgage.
(l) "Mortgagor" means a Person that has executed and delivered a
Mortgage encumbering Mortgaged Property owned and/or leased by such Person.
(m) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
entity.
(n) "Servicing Files" means the documents, files and other items
pertaining to the Mortgage Loans, including without limitation the computer
files, data disks, books, records, data tapes, notes, and all additional
documents generated as a result of or utilized in originating or servicing the
Mortgage Loans.
(o) "Servicing Rights" means, with respect to each Mortgage Loan, any
and all of the following: (a) all rights to service such Mortgage Loan; (b) any
payments or monies payable or received for servicing such Mortgage Loan; (c) any
late fees, assumption fees, penalties or similar payments with respect to such
Mortgage Loan; (d) all agreements or documents creating, defining or evidencing
any such Servicing Rights and all rights of the Contributor thereunder,
including without limitation any clean-up calls and termination options; (e) all
accounts and other rights to payment related to any of the property described in
this paragraph; (f) possession and use of any and all Servicing Files pertaining
to
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<PAGE>
such Mortgage Loan or pertaining to the past, present or prospective servicing
of such Mortgage Loan; and (g) all rights, powers and privileges incident to any
of the foregoing.
Section 12.5 Partial Invalidity. In case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
Section 12.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors or assigns.
Section 12.7 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original
counterpart, and shall become a binding agreement when each of the parties shall
have each executed one counterpart.
Section 12.8 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.9 Schedules and Exhibits. The schedules and exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein.
Section 12.10 Entire Agreement; Amendments and Waivers; Assignment.
This Agreement (together with the Transaction Agreements and other documents
referred to herein) contains the entire understanding of the parties hereto with
regard to the subject matter contained herein. The parties hereto, only by
mutual agreement in writing, may amend, modify and supplement this Agreement.
The failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
such party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach. Except as expressly provided herein, the rights and
obligations of the parties under this Agreement may not be assigned or
transferred by any party hereto without the prior written consent of the other
parties hereto, provided, however, that the Trust shall be permitted to assign
this agreement in connection with any merger, reorganization, consolidation,
sale of all or substantially all of its assets in which the Trust is the
surviving entity or the primary purpose of which is to change the domicile of
the Trust or to change the form of the Trust to a corporation.
Section 12.11 Governing Law. This Agreement and the application or
interpretation thereof, shall be exclusively governed by its terms and by the
internal laws of the State of New York, without regard to principles of
conflicts of laws as applied in the State of New York or any other jurisdiction
which, if applied, would result in the application of any laws other than the
internal laws of the State of New York.
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<PAGE>
Section 12.12 No Third-Party Beneficiaries. Except as specified in
Article X, nothing in this Agreement, expressed or implied, is intended or shall
be construed to confer upon any person other than the parties hereto and
successors and assigns permitted by Section 12.6 any right, remedy or claim
under or by reason of this Agreement.
Section 12.13 The Trust; Starwood General Partners. Each of the parties
hereto acknowledges and agrees that (a) the name "Angeles Participating Mortgage
Trust" is a designation of the Trust and its Trustees (as Trustees but not
personally) under a Declaration of Trust, originally made and entered into as of
April 15, 1988, as restated as of July 18, 1988, and all persons dealing with
the Trust shall look solely to Trust's assets for the enforcement of any claims
against the Trust, and the Trustees, officers, agents and security holders of
the Trust assume no personal liability for obligations entered into on behalf of
the Trust, and their respective individual assets shall not be subject to the
claims of any person relating to such obligations; (b) all persons dealing with
Starwood Mezzanine shall look solely to the assets of Starwood Mezzanine for the
enforcement of any claims against Starwood Mezzanine and the general partners of
Starwood Mezzanine, and the officers, agents and security holders of such
general partner assume no personal liability for obligations entered into on
behalf of Starwood Mezzanine, and their respective individual assets shall not
be subject to the claims of any person relating to such obligations; and (c) all
persons dealing with SOFI IV shall look solely to the assets of SOFI IV for the
enforcement of any claims against SOFI IV and the general partners of SOFI IV,
and the officers, agents and security holders of such general partner assume no
personal liability for obligations entered into on behalf of SOFI IV, and their
respective individual assets shall not be subject to the claims of any person
relating to such obligations.
Section 12.14 Determinations and Interpretations by the Trust. All
determinations of the Trust (or the Board of Trustees of the Trust) provided for
in or pursuant to this Agreement shall be made by the Independent Trustees (as
defined in the Shareholders Agreement). All interpretations of the terms of this
Agreement shall be resolved on behalf of the Trust by the Independent Trustees
(as defined in the Shareholders Agreement).
Section 12.15 Submission to Jurisdiction. Each of the parties hereto
irrevocably submits and consents to the jurisdiction of the United States
District Court for the Southern District of New York in connection with any
action or proceeding arising out of or relating to this Agreement or any
Transaction Document and the transactions contemplated hereby and thereby, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
Section 12.16 Approvals and Consents. Unless otherwise expressly set
forth herein, any agreement, approval or consent required of a party hereto
shall not be unreasonably withheld or delayed.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto or by their duly authorized officers, all as of the date
first above written.
ANGELES PARTICIPATING MORTGAGE TRUST, a California
business trust
By: /s/ Barry S. Sternlicht
Name: Barry S. Sternlicht
Title:
STARWOOD MEZZANINE INVESTORS, L.P.
By: Starwood Capital Group, L.P.
its general partner
By: BSS Capital Partners, L.P.
its general partner
By: Sternlicht Holdings II, Inc.
its general partner
By: /s/ Jay Sugarman
Name: Jay Sugarman
Title:
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its General Manager
By: /s/ Jay Sugarman
Name: Jay Sugarman
Title:
31
<PAGE>
SCHEDULE 1.1(a)
Starwood Mezzanine Interests
<TABLE>
<CAPTION>
Outstanding
Original Principal
Loan Interest Principal Balance at Anticipated Contribution
Borrower Collateral Rate Maturity Balance ----- Draws Participation Value Subordination
- -------- ---------- -------- --------- ------- ------------ -------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal
Amount to
Senior
Investment
- ----------
<C>
</TABLE>
32
<PAGE>
SCHEDULE 1.1(b)
SOFI IV Interests
<TABLE>
<CAPTION>
Outstanding Principal
Original Principal Amount to
Loan Interest Principal Balance at Contribution Senior
Lender Collateral Rate Maturity Balance ----- Participation Value Subordination Investment
- -------- ---------- -------- --------- ------- ------------ ------------- --------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
33
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (this
"Agreement") is made and entered into this 18th day of March, 1998, among
Starwood Financial Trust, a California business trust (the "Trust"), Starwood
Mezzanine Investors, L.P., a Delaware limited partnership ("Starwood
Mezzanine"), SAHI Partners, a Delaware general partnership ("SAHI"), and SOFI-IV
SMT Holdings, L.L.C., a Delaware limited liability company ("SOFI IV"). Unless
otherwise indicated, capitalized terms used herein are used herein as defined in
Section 1.1.
RECITALS
WHEREAS, the Trust and Starwood Mezzanine are parties to the
Registration Rights Agreement, dated September 26, 1996 (the "Original
Agreement"); and
WHEREAS, the Trust and Starwood Mezzanine now desire to amend and
restate the Original Agreement in its entirety; and
WHEREAS, pursuant to a Contribution Agreement, dated February 11, 1998,
among the Trust, Starwood Mezzanine and SOFI IV (the "Contribution Agreement"),
on the date hereof, Starwood Mezzanine and SOFI IV are contributing certain
assets to the Trust in return for the issuance by the Trust of Class A Shares,
$.01 par value, of the Trust (the "Class A Shares"); and
WHEREAS, SAHI owns 244,100 Class A Shares on the date hereof; and
WHEREAS, the parties hereto desire to set forth the rights of Starwood
Mezzanine, SOFI IV and SAHI and the obligations of the Trust to cause the
registration of the Registrable Securities pursuant to the Securities Act;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions and Usage.
1.1 Definitions. As used in this Agreement:
"Beneficially Owning" and "Beneficially Own" shall mean owning Class A
Shares directly, indirectly or constructively by a Person through the
application of Section 318(a) of the Code, as modified by Section 856(d)(5) of
the Code, or Section 544 of the Code, as modified by Section 856(h) of the Code.
"Class A Shares" shall have the meaning set forth in the Recitals.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
regulations thereunder.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Contribution Agreement" shall have the meaning set forth in the
Recitals.
"Exchange Act" shall mean the Securities Exchange Act of 1934 and the
rules and regulations of the Commission thereunder.
A "Holder" shall mean Starwood Mezzanine, the partners of Starwood
Mezzanine, SAHI, the partners of SAHI, SOFI IV, or the partners of SOFI IV as
long as such Person owns Registrable Securities.
"Independent Trustees", when used with respect to the Trust, has the
meaning set forth in the Amended and Restated Shareholders Agreement of the
Trust, as amended from time to time.
"Majority Selling Holders" means those Selling Holders whose
Registrable Securities included in a given registration pursuant to or in
accordance with this Agreement represent a majority of the Registrable
Securities of all Selling Holders included therein.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in Section 3.
"Register", "registered", and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering by the Commission of effectiveness of such registration statement or
document.
"Registrable Securities" shall mean: (i) the Class A Shares issued to
Starwood Mezzanine pursuant to the exercise of a Class A Warrant issued by the
Trust on March 15, 1994 and held by Starwood Mezzanine; (ii) the Class A Shares
issued to Starwood Mezzanine pursuant to the Contribution Agreement or in
exchange for interests in the APMT Limited Partnership; (iii) the Class A Shares
issued to SOFI IV pursuant to the Contribution Agreement; (iv) the Class A
Shares owned by SAHI on the date hereof; (v) any Class A Shares or other
securities issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange by the Trust generally for, or in
replacement by the Trust generally of, such Class A Shares; and (vi) any
securities issued in exchange for such Class A Shares or other securities that
are Registrable Securities in any merger, reorganization, recapitalization or
combination of the Trust; provided, however, that Registrable Securities shall
not include any securities which have theretofore been sold in an offering
registered under the Securities Act or which have been sold pursuant to Rule 144
or any similar rule promulgated by the Commission pursuant to the Securities
Act, and, provided further, the Trust shall have no obligation under Sections 2
and 3 to register any Registrable Securities if the Trust shall deliver to the
Holders of such Registrable Securities an opinion of counsel to the effect that
the proposed sale or disposition of all of the Registrable Securities for which
registration was requested does not require registration under the Securities
Act for a sale or disposition in a single public sale, and offers to remove any
and all legends restricting transfer from the certificates evidencing such
Registrable Securities and the term
-2-
<PAGE>
Registrable Securities shall not include such securities if the Trust is willing
to deliver such an opinion and remove such legend.
"Registrable Securities then outstanding" shall mean, with respect to a
specified determination date, the Registrable Securities owned by all Holders on
such date.
"Registration Expenses" shall have the meaning set forth in Section
6.1.
"REIT Requirements" shall mean the requirements for the Trust to
qualify as a REIT under the Code.
"Securities Act" shall mean the Securities Act of 1933 and the rules
and regulations of the Commission thereunder, all as the same may be in effect
at the time.
"Selling Holders" shall mean, with respect to a specified registration
pursuant to this Agreement, Holders whose Registrable Securities are included in
such registration.
"Shelf Registration" shall have the meaning set forth in Section 2.1.
"Transfer" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
security) (and correlative words shall have correlative meanings); provided
however, that any transfer or other disposition upon foreclosure or other
exercise of remedies of a secured creditor after an event of default under or
with respect to a pledge, hypothecation or other transfer as security shall
constitute a "Transfer".
"Underwriters' Representative" shall mean the managing underwriter, or,
in the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
"Violation" shall have the meaning set forth in Section 7.1.
1.2 Usage.
(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which are
held of record in the name of a nominee, trustee, custodian, or other agent.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
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(iv) References to Sections or to Schedules are to sections hereof or
schedules hereto, unless the context otherwise requires.
(v) The definitions set forth herein are equally applicable both to the
singular and plural forms and the feminine, masculine and neuter forms of the
terms defined.
(vi) The term "including" and correlative terms shall be deemed to be
followed by "without limitation" whether or not followed by such words or words
of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as a
whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 12.
Section 2. Shelf Registrations.
2.1 The Trust shall use its best efforts to cause to be filed with the
Commission within 90 days from the date hereof but in no event prior to that
date which is 60 days after the date hereof, a registration statement in
accordance with the Securities Act for an offering on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act (a "Shelf Registration") and
the Trust shall include therein all Registrable Securities; provided each Holder
will provide at least 10 business days notice of its intention to effect a
resale of any Registrable Securities pursuant to the Shelf Registration to the
Trust and the Trust's transfer agent. The notice requirement set forth in the
preceding sentence will be shortened to 3 business days for any resale made
within 30 days of a distribution of Registrable Securities by Starwood Mezzanine
or SOFI IV to their limited partners. In no event will any Holder be permitted
to Transfer any Registrable Securities in violation of federal and state
securities laws, including pursuant to the Shelf Registration if the Shelf
Registration has been suspended pursuant to Section 2.2 or prior to delivery by
the Trust of the requested number of prospectuses. Any Holder may Transfer
Registrable Securities at any time including periods during which the Shelf
Registration is suspended if such transfer is otherwise in compliance with
applicable state and federal securities law. Any notice given pursuant to this
Section 2.1 shall be addressed to the attention of the Secretary of the Trust
and the Trust's transfer agent, and shall specify the maximum number of
Registrable Securities to be sold, the intended methods of disposition thereof
and the number of copies of the prospectus included in the Shelf Registration as
the Holder requests.
2.2 Subject to the provisions of this Section 2.2, the Trust shall be
entitled to postpone or suspend the filing, effectiveness, supplementing or
amending of any registration statement otherwise required to be prepared and
filed pursuant to this Section 2, if the Board of Trustees of the Trust
determines that such registration and the Transfer of Registrable Securities
contemplated thereby would interfere with, or require premature disclosure of,
any material financing, acquisition, disposition, reorganization or other
transaction involving the Trust, including the filing of a registration
statement covering primary sales of securities by the Trust, as to which, in
each instance of the Trust determining that the registration and Transfer would
require premature disclosure, the Trust has a bonafide business purpose for
preserving the confidentiality thereof and the Trust promptly gives Starwood
Mezzanine, SAHI, SOFI IV and each Holder notice of such determination. Upon
receipt of such notice, Starwood Mezzanine, SAHI, SOFI IV and the Holders agree
to cease making offers or Transfers of Registrable Securities pursuant to such
registration statement. Notwithstanding the foregoing, during any period
commencing on the date of a distribution of Class A Shares by Starwood
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Mezzanine and/or SOFI IV to their limited partners and ending on the date that
all such distributed Class A Shares have been resold by the limited partners or
are otherwise immediately eligible for resale by the limited partners (other
than limited partners that are both affiliates of the Trust and are, or whose
affiliates are, a partner or member, directly or indirectly, of SOFI IV
Management, L.L.C., Starwood Capital Group, L.P. or Starwood Mezzanine Holding,
L.P. or an officer, member or Trustee of the Trust or the Advisor) under Rule
144(k) of the Securities Act, the Trust shall not postpone or suspend the
filing, effectiveness, supplementing or amending of any registration statement
(i) during the thirty-five (35) day period following any distribution of Class A
Shares by Starwood Mezzanine or SOFI IV to their limited partners, (ii) on more
than two (2) occasions during any 12 month period or (iii) for any period longer
than ninety (90) days; provided that in the event of a distribution by Starwood
Mezzanine or SOFI IV to their partners within a thirty (30) day period of more
than twenty five percent (25%) of the Class A Shares received by such
partnership pursuant to the Contribution Agreement, the thirty-five (35) day
period referred to in clause (i) above shall be a ninety (90) day period
commencing on the date of the first distribution in such thirty (30) day period.
Each of Starwood Mezzanine, SAHI, SOFI IV and each Holder hereby acknowledges
that any notice given by the Trust pursuant to this Section 2.2 may constitute
material non-public information and that the United States securities laws
prohibit any Person who has material non-public information about a company from
purchasing or selling securities of such company or from communicating such
information to any other Person under circumstances in which it is reasonably
foreseeable that such Person is likely to purchase or sell such securities.
2.3 Within 90 days of the date hereof, the Trust shall use its best
efforts to:
(i) file the Shelf Registration with the Commission and have the
registration declared effective under the Securities Act giving due regard to
the need to prepare current financial statements, conduct due diligence and
complete other actions that are reasonably necessary to effect a registered
public offering; and
(ii) subject to Section 2.2, keep the Shelf Registration continuously
effective until the Holders no longer hold any Registrable Securities.
2.4 Notwithstanding anything in this Agreement to the contrary, no
registration shall be effected under this Agreement and no Transfer of
Registrable Securities may be effected if as a result thereof the Trust would
not satisfy the REIT Requirements in any respect or if such registration or
Transfer would result in any Person Beneficially Owning Class A Shares in excess
of the ownership limitation provisions of the REIT Requirements or the Amended
and Restated Declaration of Trust of the Trust.
2.5 A registration pursuant to this Section 2 shall be on such
appropriate registration form of the Commission as shall be selected by the
Trust and shall permit the disposition of the Registrable Securities in
accordance with the intended method or methods of disposition specified in each
notice given pursuant to Section 2.1.
2.6 If any Shelf Registration pursuant to Section 2 involves an
underwritten offering (whether on a "firm commitment", "best efforts" or "all
reasonable efforts" basis or otherwise), the Majority Selling Holders
participating therein shall select the underwriter or underwriters and manager
or managers to administer such underwritten offering; provided, however, that
each Person so selected shall be reasonably acceptable to the Trust; provided,
further, that no such underwriter shall be an
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entity 5% or more of which is owned by an employer - sponsor of any Holder that
is an "ERISA Partner" within the meaning of the Amended and Restated Agreement
of Limited Partnership of SOFI IV, as in effect on the date hereof.
2.7 During any period that a Shelf Registration remains effective,
Starwood Mezzanine and SOFI IV shall use their respective best efforts to
provide the Trust with at least 5 business days prior notice of a distribution
of Registrable Securities by such partnership to its partners and shall provide
to the Trust notice of all information reasonably necessary for purposes of
Section 12.2 with respect to each partner to which Class A Shares are to be so
distributed.
Section 3. Piggyback Registration.
3.1 If at any time prior to the later to occur of (a) the first
anniversary of the date on which Starwood Mezzanine and SOFI IV have distributed
all Class A Shares that they own to their limited partners and (b) the eighth
anniversary of the date hereof, the Trust proposes to register securities under
the Securities Act in connection with the public offering solely for cash on
Form S-1, S-2, S-3, or S-11 (or any replacement or successor forms), the Trust
shall promptly give each Holder written notice of such registration. Upon the
written request of each Holder given as promptly as practicable but in any event
within twenty (20) days following the date of such notice, the Trust shall cause
to be included in such registration statement and use its reasonable efforts to
be registered under the Securities Act all the Registrable Securities that each
such Holder shall have requested to be registered; provided, however, that such
right of inclusion shall not apply to any registration statement covering an
offering of debt securities or convertible debt securities (any such
registration in which Holders participate pursuant to this Section 3.1 being
referred to as a "Piggyback Registration"). The Trust shall have the absolute
right to delay, withdraw or cease to prepare or file any registration statement
for any offering referred to in this Section 3 without any obligation or
liability to Starwood Mezzanine, SAHI, SOFI IV or any other Holder, it being
understood that any Registrable Securities previously included in any such
withdrawn Registration Statement shall not cease to be Registrable Securities by
reason of such inclusion or withdrawal.
3.2 If the Underwriters' Representative shall advise the Trust that, in
its opinion, the amount or type of Registrable Securities requested to be
included in such registration would adversely affect such offering, or the
timing thereof, then the Trust will include in such registration, to the extent
of the amount and class which the Trust is so advised can be sold without such
adverse effect in such offering: first, securities proposed to be sold by the
Trust with a value equal to 80% of the aggregate gross proceeds from the sale of
all securities included in such registration; second, Registrable Securities
requested to be included in such registration by Holders of Registrable
Securities other than SAHI and the partners of SAHI pursuant to this Section 3,
pro rata based on the number of Registrable Securities owned by all such
Holders; provided that if any such Holder does not request inclusion of all of
its pro rata share of Registrable Securities, the other Holders may include
additional Registrable Securities up to the maximum number permitted to be
included for all such Holders, allocated and reallocated pro rata based on the
aggregate amount of Registrable Securities held by such Holders until such
maximum number is reached; third, the Registrable Securities requested to be
included in such registration by SAHI or its partners pursuant to this Section
3; and fourth, all other securities requested to be included in such
registration.
Section 4. Registration Procedures. Whenever required under Section 2
or Section 3 to effect the registration of any Registrable Securities, the Trust
shall, as promptly as practicable:
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4.1 Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and in the case of a Shelf Registration,
use best efforts to cause such registration statement to become effective;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Trust shall furnish to one firm of
counsel for the Selling Holders, copies of all such documents in the form
substantially as proposed to be filed with the Commission and shall in good
faith consider incorporating in each such document such changes as such counsel
to the Selling Holders reasonably and in a timely manner may suggest.
4.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act and rules thereunder with respect to the
disposition of all securities covered by such registration statement. If the
registration is for an underwritten offering, the Trust shall amend the
registration statement or supplement the prospectus whenever required by the
terms of the underwriting agreement entered into pursuant to Section 5.2. If the
registration statement is for a Shelf Registration, the Trust shall amend the
registration statement or supplement the prospectus so that it will remain
current and in compliance with the requirements of the Securities Act for the
period specified in Section 2.3(ii), and if during such period any event or
development occurs as a result of which the registration statement or prospectus
contains a misstatement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, the Trust shall promptly notify each Selling Holder and one counsel
to the Selling Holders, amend the registration statement or supplement the
prospectus so that each will thereafter comply with the Securities Act and
furnish to each Selling Holder and one counsel to the Selling Holders such
amended or supplemented prospectus, which each such Holder shall thereafter use
in the Transfer of Registrable Securities covered by such registration
statement. Following receipt of such notice and pending any such amendment or
supplement described in this Section 4.2, each such Holder shall cease making
offers or Transfers of Registrable Securities pursuant to the prior prospectus.
4.3 Furnish to each Selling Holder of Registrable Securities, without
charge, such numbers of copies of the registration statement, any pre-effective
or post-effective amendment thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each case in conformity
with the requirements of the Securities Act and the rules thereunder, and such
other related documents as any such Selling Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by such
Selling Holder.
4.4 Use best efforts in the case of a Shelf Registration and reasonable
efforts in the case of a registration pursuant to Section 3 (i) to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such states where an exemption from registration
is not available and as shall be reasonably requested by the Underwriters'
Representative or the Selling Holders and (ii) to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of the
offer and transfer of any of the Registrable Securities in any state, at the
earliest possible moment; provided, however, that the Trust shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to consent to general service of process in any state.
4.5 In the event of any underwritten offering, use best efforts to
enter into and perform its obligations under an underwriting agreement
(including indemnification and contribution obligations of underwriters), in
usual and customary form, with the managing underwriter or underwriters of such
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offering. The Trust shall also cooperate with the Majority Selling Holders, and
the Underwriters' Representative for such offering in the marketing of the
Registrable Securities, including making available the officers, accountants,
counsel, premises, books and records of the Trust for such purpose, but the
Trust shall not be required to incur any material out-of-pocket expense pursuant
to this sentence.
4.6 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission in connection therewith and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
4.7 Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide any Selling Holder, any underwriter participating
in such offering and the representatives of such Selling Holder and Underwriter
the reasonable opportunity to discuss the business affairs of the Trust with its
principal executives and independent public accountants who have certified the
audited financial statements included in such registration statement, in each
case all as necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
that the Trust determines to be confidential and which the Trust advises such
Person in writing, is confidential shall not be disclosed unless such Person
signs a confidentiality agreement reasonably satisfactory to the Trust or the
related Selling Holder of Registrable Securities agrees to be responsible for
such Person's breach of confidentiality on terms reasonably satisfactory to the
Trust.
4.8 Use reasonable efforts to obtain a so-called "comfort letter" from
the independent public accountants of the Trust, and legal opinions of counsel
to the Trust addressed to the Selling Holders, in customary form and covering
such matters of the type customarily covered by such letters, and in a form that
shall be reasonably satisfactory to Starwood Mezzanine and SOFI IV. Delivery of
any such opinion or comfort letter shall be subject to the recipient furnishing
such written representations or acknowledgments as are customarily provided by
selling shareholders who receive such comfort letters or opinions.
4.9 Use reasonable efforts to cause the Registrable Securities covered
by such registration statement (i) if the Class A Shares are then listed on a
securities exchange or included for quotation in a recognized trading market, to
continue to be so listed or included for a reasonable period of time after the
offering, and (ii) to be registered with or approved by such other United States
or state governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Trust to enable the Selling Holders of
Registrable Securities to consummate the disposition of such Registrable
Securities.
4.10 Take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities included in
each such registration.
Section 5. Holders' Obligations. It shall be a condition precedent to
the obligations of the Trust to take any action pursuant to this Agreement with
respect to the Registrable Securities of any Selling Holder of Registrable
Securities that such Selling Holder shall:
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5.1 Furnish to the Trust such information regarding such Selling
Holder, the number of the Registrable Securities owned by it, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Selling Holder's Registrable Securities, and to cooperate
fully with the Trust in preparing such registration statement.
5.2 In the event of an underwritten offering agree to sell their
Registrable Securities to the underwriters at the same price and on
substantially the same terms and conditions as the Trust or the other Persons on
whose behalf the registration statement is being filed have agreed to sell their
securities, and to execute the underwriting agreement agreed to by the Majority
Selling Holders (in the case of a registration under Section 2) or the Trust (in
the case of a registration under Section 3).
Section 6. Expenses of Registration. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1 With respect to each Shelf Registration, the Trust shall bear and
pay all expenses incurred in connection with any registration, filing, or
qualification of Registrable Securities with respect to such registration for
each Selling Holder, including all registration, filing and National Association
of Securities Dealers, Inc. fees, all fees and expenses of complying with
securities or blue sky laws, all printing expenses, messenger and delivery
expenses, the reasonable fees and disbursements of counsel for the Trust, and of
the independent public accountants for the Trust, including the expenses of
"cold comfort" letters required by or incident to such performance and
compliance (the "Registration Expenses"), but excluding underwriting discounts
and commissions relating to Registrable Securities (which shall be paid on a pro
rata basis by the Selling Holders) and all fees and expenses of the Selling
Holders including counsel for the Selling Holders.
6.2 The Trust shall bear and pay all Registration Expenses incurred in
connection with any Piggyback Registrations pursuant to Section 3 but excluding
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the Selling Holders) and all fees and
expenses of counsel for the Selling Holders.
Section 7. Indemnification; Contribution. If any Registrable Securities
are included in a registration statement under this Agreement:
7.1 To the extent permitted by applicable law, the Trust shall
indemnify and hold harmless each Selling Holder, each Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, and each
officer, director, trustee, partner and employee of such Selling Holder and such
controlling Person, against any and all losses, claims, damages, liabilities and
expenses (joint or several), including reasonable attorneys' fees and
disbursements and reasonable expenses of investigation, incurred by such party
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any of
the following statements, omissions or violations (collectively, a "Violation"):
(i) Any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein, or any amendments or supplements thereto;
or
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(ii) The omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; provided, however, that the indemnification required by this Section
7.1 shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or expense if such settlement is effected without the consent
of the Trust (which consent shall not be unreasonably withheld), nor shall the
Trust be liable in any such case for any such loss, claim, damage, liability or
expense to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with information related to the
indemnified party furnished to the Trust by the indemnified party in writing
expressly for use in connection with such registration; and provided, further,
that the indemnity agreement contained in this Section 7 shall not apply to the
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if an underwriter was under an
obligation to deliver such final prospectus and failed to do so.
7.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Trust, and each of the officers, employees
and Trustees of the Trust who shall have signed the registration statement, each
Person, if any, who controls the Trust within the meaning of the Securities Act,
any other Selling Holder, any controlling Person of any such other Selling
Holder and each officer, director, trustee, partner and employee of such other
Selling Holder and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint and several), including reasonable
attorneys' fees and disbursements and reasonable expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or other
federal or state laws, but only insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any Violation, in each
case to the extent that such Violation occurs in reliance upon and in conformity
with information related to the indemnified party seeking indemnification
furnished by such Selling Holder in writing expressly for use in connection with
such registration; provided, however, that (x) the indemnification required by
this Section 7.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if such settlement is effected without the
consent of the relevant Selling Holder (which consent shall not be unreasonably
withheld) and (y) in no event shall the amount of any indemnity under this
Section 7.2 exceed the proceeds (net of any underwriting discounts or
commissions) from the applicable offering received by such Selling Holder.
7.3 Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, suit, proceeding, investigation or
threat thereof made in writing for which such indemnified party may make a claim
under this Section 7, such indemnified party shall deliver to the indemnifying
party a written notice thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and disbursements and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if
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prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7 to the extent of such prejudice but shall not relieve the indemnifying party
of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 7. Any fees and expenses incurred by the indemnified
party (including any fees and expenses incurred in connection with investigating
or preparing to defend such action or proceeding) shall be paid to the
indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel in writing that there
may be one or more legal defenses available to it which are different from or in
addition to those available to the indemnifying party and that the assertion of
such defenses would create a conflict of interest such that counsel employed by
the indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels).
7.4 If the indemnification required by this Section 7 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 7:
(i) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7.1 and Section 7.2,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
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(ii) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in Section 7.4(i). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(iii) In no event shall the amount of any contribution from the Selling
Holders under this Section 7.4 exceed the proceeds (net of any underwriting
commissions or discounts) from the applicable offering received by such Selling
Holder.
7.5 If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 7 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
7.6 The obligations of the Trust and the Selling Holders of Registrable
Securities under this Section 7 shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement under this
Agreement, and otherwise.
Section 8. Determinations and Interpretation. All determinations of the
Trust (or the Board of Trustees of the Trust) provided for in or pursuant to
this Agreement shall be made by the Independent Trustees, including, without
limitation, any determination pursuant to Section 2.2. All interpretations of
the terms of this Agreement shall be resolved on behalf of the Trust by the
Independent Trustees.
Section 9. Holdback. In connection with an underwritten offering of any
securities covered by a registration statement filed by Trust, Starwood
Mezzanine, SAHI and SOFI IV, whether or not their Registrable Securities are
included in the registration statement, and each Selling Holder, if so requested
by the Underwriters' Representative shall not effect any public sale or
distribution of Class A Shares or any securities convertible into or
exchangeable or exercisable for Class A Shares, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 180-day period
in the case of the first registration statement declared effective after the
date hereof that registers resales of Registrable Securities pursuant to Section
3 and 90 days in the case of any subsequent registration beginning on, the date
such registration statement is declared effective under the Securities Act by
the Commission. In order to enforce the foregoing covenant, the Trust shall be
entitled to impose stop-transfer instructions with respect to the Registrable
Securities of each such Holder until the end of such period. Holders of
Registrable Securities shall have the right to participate in any such
registration on the terms provided in Section 3 hereof.
Section 10. Amendment, Modification and Waivers; Further Assurances.
(i) Subject to the partnership agreement of each of Starwood Mezzanine
and SOFI IV, this Agreement may be amended with the consent of the Trust and the
Trust may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Trust shall have obtained the
written consent of Starwood Mezzanine, SAHI and SOFI IV to such amendment,
action or omission to act and no consent or agreement of any other Holder shall
be required for such amendment, action or omission to act, provided that,
commencing on the date that Starwood Mezzanine and SOFI IV no longer own
Registrable Securities, the consent of the Holders owning a
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<PAGE>
majority of the then outstanding Registrable Securities shall be required for
such amendment, action or omissions to act.
(ii) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
Section 11. Assignment; Benefit. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto, each Holder, each limited partner of Starwood Mezzanine and SOFI
IV and each indemnified party under Section 7 hereof and their respective heirs,
assigns, executors, administrators or successors; provided, however, that
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned or delegated by the Trust (except in connection with a merger,
reorganization, sale of all or substantially all of the assets of the Trust, or
similar transaction if the primary purpose of such transaction is to change the
domicile of the Trust or to change the form of the Trust to a corporation)
without the consent of Starwood Mezzanine, SAHI and SOFI IV (which consent shall
not be unreasonably withheld) or, in the event of an assignment or delegation
other than in connection with a merger, sale of all or substantially all of the
assets or stock of the Trust, recapitalization or similar transaction, without
the consent of each Holder.
Section 12. Miscellaneous.
12.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving regard to
the conflict of laws principles thereof.
12.2 Notices. All notices and requests given pursuant to this Agreement
shall be in writing and shall be made by hand-delivery, first-class mail
(registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified on Schedule I, as otherwise specified to the Trust in writing
or to the address set forth in the stock record books of the Trust. Except as
otherwise provided in this Agreement, the date of each such notice and request
shall be deemed to be, and the date on which each such notice and request shall
be deemed given shall be: at the time delivered, if personally delivered or
mailed; when receipt is acknowledged, if sent by facsimile; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next business day delivery.
12.3 Entire Agreement; Integration. This Agreement supersedes all prior
agreements between or among any of the parties hereto, including the Original
Agreement with respect to the subject matter contained herein and therein, and
such agreements embody the entire understanding among the parties relating to
such subject matter.
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<PAGE>
12.4 Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
12.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
12.6 Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not affect the
validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
12.7 Termination. Subject to the terms of the Amended and Restated
Agreement of Limited Partnership of each of Starwood Mezzanine and SOFI IV, as
in effect on the date hereof, this Agreement may be terminated at any time by a
written instrument signed by the Trust and each Holder. Unless sooner terminated
in accordance with the preceding sentence, this Agreement (other than Section 7
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Securities outstanding, provided that any Class A Shares previously
subject to this Agreement shall not be Registrable Securities following the date
such Class A Shares no longer meet the definition of Registrable Securities.
12.8 Submission to Jurisdiction. Each of the parties hereto and each of
the Holders irrevocably submits and consents to the jurisdiction of the United
States District Court for the Southern District of New York in connection with
any action or proceeding arising out of or relating to this Agreement, and
irrevocably waives any immunity from jurisdiction thereof and any claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled in any such action or proceeding.
12.9 References to Date Hereof. References to "the date hereof" or "the
date of this Agreement" shall be to the date of this Amended and Restated
Registration Rights Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
STARWOOD FINANCIAL TRUST
a California business trust
By: /s/ Jay Sugarman
--------------------
Name: Jay Sugarman
Title: CEO
STARWOOD MEZZANINE INVESTORS, L.P.
a Delaware limited partnership
By: Starwood Capital Group, L.P.
its general partner
By: BSS Capital Partners, L.P.
its general partner
By: Sternlicht Holdings II, Inc.
its general partner
By: /s/ Jerome C. Silvey
---------------------
Name: Jerome C. Silvey
Title: Vice President
SAHI PARTNERS
a Delaware general partnership
By: /s/ Jerome C. Silvey
--------------------
Name: Jerome C. Silvey
Title: Vice President
<PAGE>
STARWOOD OPPORTUNITY FUND IV, L.P.,
a Delaware limited partnership
By: SOFI IV Management, L.L.C.
Its: General Partner
By: Starwood Capital Group, L.L.C.
Its General Manager
/s/ Jerome C. Silvey
----------------------
By: Jerome C. Silvey
Its: Vice President
<PAGE>
SCHEDULE I
Addresses for Notice
If to the Trust to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Jay Sugarman
Fax No.: (203) 861-2101
with copies to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Attention: James B. Carlson
Fax No.: (212) 262-1910
and
Rinaldi & Associates
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Ellis Rinaldi
Fax No.: (203) 861-2122
If to Starwood Mezzanine to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with a copy to:
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax. No.: (312) 902-1061
If to SAHI Partners to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
<PAGE>
with a copy to:
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax. No.: (312) 902-1061
If to SOFI IV to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza
Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with a copy to:
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax. No.: (312) 902-1061
SECOND AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT dated as of March
18, 1998 (the "Contribution Date"), by and among B Holdings, L.L.C., a
Connecticut limited liability company ("BLLC"), SAHI Partners, a Delaware
general partnership ("SAHI Partners"), Starwood Mezzanine Investors, L.P., a
Delaware limited partnership ("Starwood Mezzanine"), SOFI-IV SMT Holdings,
L.L.C. ("SOFI IV" and, together with BLLC, SAHI Partners and Starwood Mezzanine,
"SAHI") and Starwood Financial Trust, a California business trust formerly known
as Angeles Participating Mortgage Trust (the "Company").
WHEREAS, SAHI Partners, SAHI, Inc., Starwood Mezzanine and the Company
are a party to the Restated Shareholders Agreement, dated as of March 15, 1994
and restated as of April 27, 1994, as amended by Amendment No. 1 to the Restated
Shareholders Agreement, dated as of March 15, 1996 (the Restated Shareholders
Agreement, as amended by Amendment No. 1 thereto, the "Original Agreement");
WHEREAS, SAHI, Inc. is no longer a shareholder of the Company;
WHEREAS, SAHI Partners, Starwood Mezzanine and the Company hereby deem
it to be in their respective best interest to add BLLC and SOFI IV as parties to
the Original Agreement and to amend and restate the Original Agreement as set
forth below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1.Interested Transactions. (a) SAHI Partners agrees that until
the date that a majority of members of the Board of Trustees are Independent
Trustees (the "Restricted Period"), neither it nor its Affiliates shall take any
action, directly or indirectly, which would result in the Company entering into
any Interested Transactions (as defined below) unless any such Interested
Transaction has been approved by a majority of the Independent Trustees (as
defined below) of the Company. In addition, as to all contracts or other
transactions between the Trust and any Trustee or any Affiliate of a Trustee,
such interested Trustee shall recuse himself from any vote by the Board of
Trustees on such agreement or transaction; provided that the presence of such
interested Trustee shall count for the determination of the presence of a quorum
at any meeting.
(b) SOFI IV agrees that it will not contribute any assets to the Trust
after the date hereof without the consent of Starwood Mezzanine and SOFI IV.
<PAGE>
Section 2. Options and Other Incentive Awards. (a) The Company agrees
that at all times prior to the date on which Class A Shares with a Fair Market
Value of at least $250,000,000 are outstanding that were issued as part of one
or more primary or secondary public offerings (with not less than $200,000,000
constituting issuances of Class A Shares which are not resales of Class A Shares
outstanding at 11:59 pm on the Contribution Date) (an "IPO Event"):
(i) Only Options, and not any other Awards, shall be granted
under the Starwood Financial Trust 1996 Long-Term Incentive Plan (the
"Incentive Plan") to any person who has an interest, directly or
indirectly, in SOFI IV or Starwood Mezzanine (a "Starwood Insider");
(ii) The initial Award to Starwood Financial Advisors, L.L.C.
shall be in the form of Options;
(iii) No Options shall be granted to Barry S. Sternlicht;
(iv) The Class A Shares underlying total Awards granted shall
not exceed 4.5%, in the aggregate, of the fully-diluted Class A Shares
outstanding from time to time and the Class A Shares underlying Awards
granted to Starwood Insiders shall not exceed 2.5% of the fully diluted
Class A Shares outstanding from time to time; and
(v) Vesting of Options granted to Starwood Insiders shall, in
addition to any service criteria imposed by the Board of Trustees,
occur on a pari passu percentage basis with the percentage of the total
number of Class A Shares held on the Contribution Date by SOFI IV and
Starwood Mezzanine as have been sold or distributed from time to time
by SOFI IV or Starwood Mezzanine; provided, however, that in no event
shall such Options vest at a rate that is faster than 33.33% per annum
and provided further, however, that, subject to the continued
satisfaction of any service criteria imposed by the Board of Trustees,
any theretofore unvested options held by Starwood Insiders shall vest
in full on the earlier to occur of a Change of Control (as defined in
the Incentive Plan) or on the fifth anniversary of the date of grant.
(b) The Company further agrees that Options will be issued at Fair
Market Value, except that on the Contribution Date, Options (or restricted stock
with equivalent value) not exceeding 4.5%, in the aggregate, of the
fully-diluted Class A Shares outstanding after giving effect to the transactions
occurring on the Contribution Date may be issued with an exercise price which is
less than the Fair Market Value of the Class A Shares but is not less than $2.50
per Class A Share (subject to adjustment for stock splits, capitalizations and
similar events) and after the Contribution Date but prior to the date which is
the earlier of (x) six (6) months after the Contribution Date and (y) the date
on which the outstanding publicly traded Class A Shares held by Outside Parties
shall have a Fair Market Value of more than $100 million, Options (or restricted
stock with equivalent value) may be issued based on the fair market value of the
assets of the Trust (subject to the aforesaid 4.5% limitation). Without the
prior written consent of the
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<PAGE>
Advisor, the Company shall not grant Awards directly to officers, key employees,
members or principals of the Advisor in such respective capacities.
(c) The Company agrees that it will not amend the basic terms of the
Incentive Plan without the consent of Starwood Mezzanine and SOFI IV
respectively, as long as such entity owns Class A Shares.
Section 3.Election of Trustees. During any period in which (x) the
Class B Shares remain controlled by Starwood Capital Group, L.L.C. ("SCG") or by
any entity under common control with SCG, and (y) the Advisory Agreement has not
been terminated by the Advisor or terminated for cause by the Company, the
Company shall use its best efforts to cause five nominees designated by SCG or
by the parties who control SCG to be elected to the Board of Trustees and to
cause such persons to be included as the management slate of nominees to the
Board of Trustees. Further, during such period, the Company shall use its best
efforts to cause such nominees or Trustees to be replaced from time to time,
with or without cause, with new persons designated by SCG or the parties who
control SCG at the request of SCG or persons who control SCG. SAHI agrees to
renominate and to vote the Class A and Class B Shares held by it for the
election of Robin Josephs as a Trustee at the 1998 annual meeting of the Trust's
shareholders.
Section 4.Voting. From and after the tenth anniversary of the
Contribution Date, BLLC agrees to vote any Class B Shares in respect of any
matters related to the Advisory Agreement (including, but without limitation, to
vote in respect of any proposed termination of the Advisory Agreement) in the
same proportion as the Class A Shares voted on such matter during any period (a
"Suspension Period") in which all of the following conditions shall be
satisfied:
(a) The daily average closing price of Class A Shares on the
American Stock Exchange or the national securities exchange or
electronic trading system that provides the primary market on which the
Class A Shares are then traded for the 180-consecutive- calendar-day
period preceding each day occurring during the Suspension Period shall
be less than the product of (a) the Trust's book equity value
attributable to the Class A Shares and (b) the percentage equivalent of
a fraction, the numerator of which is one, and the denominator of which
is the total outstanding Class A Shares; and
(b) The partners of SOFI IV shall have received aggregate
distributions from SOFI IV that are less than the sum of (i) the total
accrued "Preferred Return" (as defined in the SOFI IV Partnership
Agreement) on the contributed and unreturned capital contributions of
SOFI IV's partners to SOFI IV plus (ii) the total capital contributed
by the partners of SOFI IV to SOFI IV; provided, however, that solely
for purposes of this subparagraph (b) (and not for purposes of
determining distributions from SOFI IV), in the event partners are
distributed Class A Shares and such Class A Shares are sold to
unaffiliated third parties of such partners within 180 days subsequent
to such distribution, then the prices received by such partners with
respect to such shares so sold shall be
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<PAGE>
deemed to have been the amounts distributed to such partners by SOFI IV
for purposes of this subparagraph (b).
Section 5.Independent Trustees. During the Restricted Period each of
BLLC, the Company, SAHI Partners, Starwood Mezzanine and SOFI IV, severally and
not jointly, shall take all actions within their powers, to cause the nomination
and election of at least three Independent Trustees to serve on the Company's
Board of Trustees; provided that in no event shall BLLC, SAHI Partners, Starwood
Mezzanine or SOFI IV be obligated to take any action which would prevent them
from electing a majority of the entire Trustees on the Company's Board of
Trustees.
Section 6.Transfers. During the term of this Agreement, BLLC, SAHI
Partners, Starwood Mezzanine and SOFI IV, severally and not jointly, shall not
transfer or undertake a series of transfers of Class A Shares or Class B Shares
which in the aggregate represent over 9% of the voting power of the Company
unless the transferees thereof agree to be bound by the terms hereof pursuant to
a written agreement in form and substance reasonably acceptable to the Company;
provided that, Starwood Mezzanine and SOFI IV shall be permitted to distribute
Class A Shares to their limited partners without compliance with the terms of
this Section and transfers that are registered under the Securities Act of 1933,
as amended shall be exempted from the terms of this Section. The limited
partners of Starwood Mezzanine and SOFI IV may transfer Class A Shares without
regard to this Section 6.
Section 7.Definitions. The following terms have the meanings set forth
below:
"Advisor" means Starwood Financial Advisors, L.L.C. and its
successors and assigns.
"Advisory Agreement" means the Advisory Agreement between the
Company and the Advisor dated as of the Contribution Date as amended
from time to time.
"Affiliate" of any entity means a person which directly or
indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such entity.
"Award" has the meaning given in the Incentive Plan.
"Class A Shares" means the Company's Class A Shares, $1.00 par
value per share.
"Class B Shares" means the Company's Class B Shares, $.01 par
value per share.
"Fair Market Value" has the meaning given in the Incentive
Plan.
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<PAGE>
"Independent Trustees" shall mean a Trustee who qualifies as a
"Non-Employee Director" of the Company within the meaning of Rule
16b-3(b)(3) of the Securities Exchange Act of 1934, as amended and who
is not (i) a Person directly or indirectly owning, controlling or
holding 3% or more of the outstanding economic or voting interest of
the Advisor or SCG, (ii) a Person directly or indirectly owning,
controlling or holding 10% or more of the economic interest of any
borrower under any loan made by the Company with an outstanding
principal balance in excess of $3 million (a "Borrower") or any Person
that provides mortgage servicing, or real estate or financial advisory
or consulting services to the Company and that received fees from the
Company for such services in excess of $100,000 for the prior fiscal
year or is expected to receive in excess of $100,000 per annum during
the current fiscal year (a "Service Provider") or an Affiliate of such
Borrower or Service Provider, (iii) an officer, director, employee,
member or partner of the Advisor or SCG, (iv) a spouse, sibling, lineal
descendent, parent, grandparent, sibling of parents or first cousin,
including adoptive relationships and with respect to siblings and
parents, in-laws (a "Relative") of any Person described in clause (i),
or (v) a Relative of a Borrower or any Person described in clause (iii)
residing in the same household as such Person.
"Interested Transactions" means to:
(a) merge, consolidate with, or otherwise acquire all
or any portion of the business, assets or securities of any
Affiliate of SAHI or SCG or sell, transfer or assign any
portion of the Company's business, assets or securities to any
Affiliate of SAHI or SCG;
(b) make any loans or other advances of money to, or
guarantee with or for the benefit of, any Affiliate of SAHI or
SCG or any officer, director, partner, trustee or shareholder
(both direct and indirect) of any Affiliate of SAHI or SCG;
(c) sell, lease, transfer or otherwise dispose of any
property or assets from, entertain or maintain any contract,
agreement or understanding with, or otherwise enter into, or
be a party to, any transaction with, any Affiliate of SAHI or
SCG or any officer, director, partner, trustee or shareholder
(both direct and indirect) of any Affiliate of SAHI or SCG;
(d) take any actions which would result in one or more
publicly-traded classes of the Company's equity securities no
longer having the attributes of public ownership; or
(e) take any actions beneficial to any Affiliate of
SAHI or SCG which would be detrimental to a material number of
public shareholders of the Company;
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<PAGE>
provided, however, the actions described in (a), (b) and (c) above,
shall not constitute an Interested Transaction if (i) the action taken
has been determined by the Independent Trustees to be pursuant to the
reasonable requirements of the Company's business and upon fair and
reasonable terms which are no less favorable to the Company than would
be obtained in a comparable arm's length transaction with an
independent third-party and (ii) the transaction involves less than
$500,000.
"Options" has the meaning given in the Incentive Plan.
"Outside Parties" means persons other than Starwood Mezzanine
or any of its limited partners, SOFI IV or any of its limited partners,
SCG or any entity controlled, directly or indirectly by SCG or Barry S.
Sternlicht.
"Person" means an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Section 8. Amendment and Waiver. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement will be
effective against the Company, BLLC, SAHI Partners, Starwood Mezzanine or SOFI
IV unless such modification, amendment or waiver is approved in writing by the
Company, BLLC, SAHI Partners, Starwood Mezzanine and SOFI IV.
Section 9. Successors and Assigns. This Agreement will bind and inure
to the benefit of and be enforceable by (a) the Company and its successors and
assigns and (b) BLLC, SAHI Partners, Starwood Mezzanine and SOFI IV and their
respective successors and assigns; provided that no partner of Starwood
Mezzanine or SOFI IV shall have any obligations under this Agreement unless it
specifically consents in writing to be bound by the terms hereof.
Section 10. Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
Section 11. Descriptive Headings; Interpretation. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement. The use of the word "including" in this Agreement shall be by
way of example rather than by limitation.
Section 12. Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.
Section 13. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and will be deemed to have been duly given when delivered
personally to the recipient, sent to the recipient
-6-
<PAGE>
by reputable express courier (charges prepaid) or mailed by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the addresses indicated on
Schedule I or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.
Section 14. Preamble; Preliminary Recitals. The Preliminary Recitals
set forth in the Preamble hereto are hereby incorporated and made part of this
Agreement.
Section 15. Entire Agreement. Subject to the Amended and Restated
Declaration of Trust of the Trust, this Agreement sets forth the entire
understanding of the parties, and supersedes and preempts all prior oral or
written understandings and agreements with respect to the subject matter hereof,
including the Original Agreement; provided that this Agreement shall not
supersede or preempt any understanding or agreement between each of SAHI
Partners, Starwood Mezzanine and SOFI IV and their respective partners.
Section 16. Third Party Beneficiaries. It is specifically contemplated
that the public shareholders of the Company be third party beneficiaries of this
Agreement.
Section 17. Termination. This Agreement will terminate automatically
and be of no further force and effect on the date that neither Starwood
Mezzanine nor SOFI IV no longer own Class A Shares.
Section 18. The Trust. Each of the parties hereto acknowledges and
agrees that the name "Starwood Financial Trust" is a designation of the Trust
and its Trustees (as Trustees but not personally) under a Declaration of Trust,
originally made and entered into as of April 15, 1988, as restated as of July
18, 1988, September 26, 1996 and March 13, 1998, and all persons dealing with
the Trust shall look solely to the Trust's assets for the enforcement of any
claims against the Trust, and the Trustees, officers, agents and security
holders of the Trust assume no personal liability for obligations entered into
on behalf of the Trust, and their respective individual assets shall not be
subject to the claims of any person relating to such obligations.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date set forth above.
STARWOOD FINANCIAL TRUST
By: /s/ Jay Sugarman
----------------------
Name: Jay Sugarman
Title: CEO
B HOLDINGS, L.L.C.
By: /s/ Jerome C. Silvey
----------------------
Name: Jerome C. Silvey
Title: Vice President
SAHI PARTNERS
By: SAHI, Inc., a general partner
By: /s/ Jerome C. Silvey
----------------------
Name: Jerome C. Silvey
Title: Vice President
STARWOOD MEZZANINE INVESTORS, L.P.
By: STARWOOD CAPITAL GROUP I, L.P.,
General Partner
By: BSS CAPITAL PARTNERS, L.P.,
General Partner
-8-
<PAGE>
By: STERNLICHT HOLDINGS II, INC.,
General Partner
By: /s/ Jerome C. Silvey
------------------------
Name: Jerome C. Silvey
Title: Vice President
STARWOOD OPPORTUNITY FUND IV, L.P.
By: SOFI IV Management, L.L.C.,
General Partner
By: Starwood Capital Group, L.L.C.,
General Partner
By: /s/ Jerome C. Silvey
-----------------------
Name: Jerome C. Silvey
Title: Vice President
-9-
<PAGE>
SCHEDULE I
Addresses for Notice
If to the Trust, to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Jay Sugarman
Fax No.: (203) 861-2101
with copies to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Attention: James B. Carlson
Fax No.: (212) 262-1910
and
Rinaldi & Associates
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Ellis Rinaldi
Fax No.: (203) 861-2122
If to SAHI Partners, BLLC, Starwood Mezzanine or SOFI IV, to:
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Madison F. Grose, Esq.
Fax No.: (203) 861-2101
with a copy to:
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Nina Matis
Fax. No.: (312) 902-1061
-10-
