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EXHIBIT 2
TRANSACTION AGREEMENT
AMONG
WHWE L.L.C.,
WOODSTAR INVESTOR PARTNERSHIP,
NOMURA ASSET CAPITAL CORPORATION,
XXXXXXX XXXXXXX,
W&S HOTEL L.L.C.,
WESTIN HOTELS & RESORTS WORLDWIDE, INC.,
W&S LAUDERDALE CORP.,
W&S SEATTLE CORP.,
WESTIN ST. XXXX HOTEL COMPANY, INC.,
W&S DENVER CORP.,
W&S ATLANTA CORP.,
STARWOOD LODGING TRUST,
SLT REALTY LIMITED PARTNERSHIP,
STARWOOD LODGING CORPORATION
AND
SLC OPERATING LIMITED PARTNERSHIP
DATED AS OF SEPTEMBER 8, 1997
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TABLE OF CONTENTS
PAGE
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RECITALS.................................................... 1
ARTICLE I
The Subsidiary Contributions; The Merger; Closings;
Effective Time;........................................ 1
1.1. The Subsidiary Contributions........................ 1
1.2. The Merger.......................................... 5
1.3. Effect of the Merger on Capital Stock............... 5
1.4. Working Capital Adjustments......................... 7
1.5. Adjustments to Prevent Dilution..................... 10
1.6. Closing............................................. 10
1.7. Effective Time...................................... 10
ARTICLE II
Declaration of Trust and Trust Regulations of the
Surviving Trust........................................ 10
2.1. The Declaration of Trust............................ 10
2.2. The Trust Regulations............................... 10
ARTICLE III
Trustees, Directors and Officers of the Surviving Trust
and Starwood Corp...................................... 11
3.1. Trustees of Surviving Trust......................... 11
3.2. Officers of Surviving Trust......................... 11
3.3. Directors of Starwood Corp. ........................ 11
3.4. Officers of Starwood Corp. ......................... 11
ARTICLE IV
Exchange of Certificates for Worldwide Shares; Dissenter's
Rights; Units of Starwood Realty Partnership and
Starwood Operating Partnership to be Issued in
Connection with the Subsidiary Contributions............ 11
4.1. Exchange of Certificates for Worldwide Shares....... 11
4.2. Dissenters' Rights.................................. 13
4.3. Units of Starwood Realty Partnership and Starwood
Operating Partnership to be Issued in Connection
with the Subsidiary Contributions................... 13
ARTICLE V
Representations and Warranties............................ 15
5.1. Representations and Warranties of the Westin
Companies........................................... 15
5.2. Representations and Warranties of the Starwood
Companies........................................... 30
ARTICLE VI
Covenants................................................. 34
6.1. Interim Operations.................................. 34
6.2. Maintenance, Promotions, etc. ...................... 36
6.3. Information Supplied................................ 36
6.4. Stockholders Meeting................................ 36
6.5. Filings; Other Actions; Notification................ 37
6.6. Tax Matters......................................... 38
6.7. Access.............................................. 38
6.8. Affiliates.......................................... 39
6.9. Registration and Stock Exchange Listing............. 39
6.10. Publicity........................................... 39
6.11. Options; Benefits................................... 40
6.12. Fees and Expenses................................... 40
6.13. Takeover Statute.................................... 41
6.14. Starwood Trust and Starwood Corp. Vote.............. 41
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PAGE
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6.15. Name and Management of Starwood Corp. and Starwood
Trust............................................... 41
6.16. Additional Covenants................................ 42
6.17. Reorganization of the Purchased Entities............ 44
6.18. Closing After January 2, 1998....................... 44
6.19. Commitments for Title Insurance..................... 44
6.20. Liquor and Other Licenses........................... 45
6.21. Solicitation of Employees........................... 45
6.22. Confidentiality..................................... 45
6.23. Capitalized Lease Obligations....................... 46
6.24. Further Assurances.................................. 46
6.25. Transfer of Certain Rights of LLC................... 46
6.26. Nomura Consents..................................... 46
6.27. Escrow Arrangement.................................. 47
6.28. Additional Agreements with Nomura................... 47
ARTICLE VII
Conditions................................................ 47
7.1. Conditions to Each Party's Obligation to Effect the
Merger.............................................. 47
7.2. Conditions to Obligations of the Starwood
Companies........................................... 48
7.3. Conditions to Obligation of the Westin Companies.... 50
ARTICLE VIII
Termination............................................... 51
8.1. Termination by Mutual Consent....................... 51
8.2. Termination by Either the Starwood Companies or
Westin Companies.................................... 51
8.3. Termination by the Westin Companies................. 51
8.4. Termination by Starwood Trust or Starwood Corp. .... 52
8.5. Effect of Termination and Abandonment............... 52
ARTICLE IX
Miscellaneous and General................................. 53
9.1. Survival and Indemnification........................ 53
9.2. Modification or Amendment........................... 53
9.3. Waiver of Conditions................................ 53
9.4. Counterparts........................................ 53
9.5. Governing Law and Venue; Waiver of Jury Trial....... 53
9.6. Notices............................................. 54
9.7. Entire Agreement; No Other Representations.......... 55
9.8. No Third Party Beneficiaries........................ 55
9.9. Obligations of the Starwood Companies and of the
Westin Companies.................................... 55
9.10. Transfer Taxes...................................... 55
9.11. Severability........................................ 56
9.12. Interpretation; Certain Defined Terms............... 56
9.13. Successors and Assigns.............................. 56
9.14. Disclosure Letter Updating.......................... 56
9.15. Index to Defined Terms.............................. 57
9.16. Starwood Trust...................................... 60
9.17. Nomura.............................................. 60
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TRANSACTION AGREEMENT
TRANSACTION AGREEMENT (hereinafter called this "Agreement"), dated as of
September 8, 1997, among WHWE L.L.C., a Delaware limited liability company
("WHWE"), Woodstar Investor Partnership, a Delaware general partnership
("Woodstar"), Nomura Asset Capital Corporation, a Delaware corporation
("Nomura"), Xxxxxxx Xxxxxxx ("Xxxxxxx", and together with WHWE, Woodstar and
Nomura, the "Members"), W&S Hotel L.L.C., a Delaware limited liability company
(the "LLC"), Westin Hotels & Resorts Worldwide, Inc., a Delaware corporation
("Worldwide"), W&S Lauderdale Corp., a Delaware corporation ("Lauderdale"), W&S
Seattle Corp., a Delaware corporation ("Seattle"), Westin St. Xxxx Hotel
Company, Inc., a United States Virgin Islands corporation ("St. Xxxx"), W&S
Denver Corp., a Delaware corporation ("Denver"), W&S Atlanta Corp., a Delaware
corporation ("Atlanta"), Starwood Lodging Trust, a Maryland real estate
investment trust (referred to herein as "Starwood Trust" or the "Surviving
Trust"), SLT Realty Limited Partnership, a Delaware limited partnership
("Starwood Realty Partnership"), Starwood Lodging Corporation, a Maryland
corporation ("Starwood Corp.") and SLC Operating Limited Partnership, a Delaware
limited partnership ("Starwood Operating Partnership" and together with Starwood
Trust, Starwood Realty Partnership and Starwood Corp. the "Starwood Companies").
For purposes of this Agreement, the term "Westin Companies" shall mean the LLC,
Worldwide, Lauderdale, Seattle, St. Xxxx, Denver and Atlanta, and the term
"Westin Subsidiaries" shall mean Worldwide, Lauderdale, Seattle, St. Xxxx,
Denver and Atlanta.
RECITALS
WHEREAS the respective boards of managers, boards of directors, board of
trustees and general partners, as applicable, of the Members, the Westin
Companies and the Starwood Companies deem it in the best interests of their
respective limited liability companies, corporations, real estate investment
trust and partnerships to engage in the transactions described in this
Agreement, including the merger of Worldwide with and into Starwood Trust (the
"Merger"), in the manner set forth in this Agreement;
WHEREAS the respective boards of managers, boards of directors, board of
trustees and general partners, as applicable, of each of the Members, the Westin
Companies and the Starwood Companies have approved the transactions described
herein and the Board of Directors of Worldwide and the Board of Trustees of
Starwood Trust have approved the Merger, in each case, upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS the stockholders and members or managers, as applicable, of the
Westin Companies have approved the transactions described herein and the
stockholders of Worldwide have approved the Merger, in each case upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS the Members, the Westin Companies and the Starwood Companies desire
to make certain representations, warranties, covenants and agreements in
connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE SUBSIDIARY CONTRIBUTIONS; THE MERGER;
CLOSINGS; EFFECTIVE TIME;
1.1. THE SUBSIDIARY CONTRIBUTIONS.
(a) It is understood and agreed that, prior to consummation of the
transactions contemplated by this Agreement, the LLC may distribute the
outstanding shares of capital stock of Seattle held directly or
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indirectly by the LLC to the Members but that such shares may not, without the
prior written consent of the Starwood Companies, be further transferred by such
Members to any other person or entity. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as defined herein)
the Members (or their permitted transferees) shall contribute, or cause to be
contributed, to Starwood Realty Partnership all the then outstanding shares of
capital stock of Seattle ("Seattle Shares"). Concurrently with such
contribution, (i) Starwood Realty Partnership shall issue to the Members (or
their permitted transferees) and any other holders of Seattle Shares, on a pro
rata basis based on the number of Seattle Shares so contributed to Starwood
Realty Partnership, an aggregate of 359,948 Units of Starwood Realty Partnership
having the terms set forth on Annex C hereto ("Starwood Realty Partnership
Units"), as such number of Starwood Realty Partnership Units shall be adjusted
pursuant to the terms of this Agreement, (ii) Starwood Realty Partnership shall
assume indebtedness of the Members (or their permitted transferees) incurred by
the Members (or their permitted transferees) in connection with such
contribution, provided that the aggregate amount of principal of and accrued
interest on such indebtedness to be assumed shall not exceed an aggregate amount
equal to $104,800,000, (iii) Starwood Realty Partnership, the Starwood Companies
and the Members (or their permitted transferees) will comply with the covenants
set forth in Sections 6.16(a), (b), (c) and (d) and (iv) Starwood Realty
Partnership will assume, repay or refinance (or will cause to be assumed, repaid
or refinanced), or, in the case of nonrecourse indebtedness, acquire (directly
or indirectly) the assets securing such indebtedness subject to such
indebtedness (collectively, "Assume") all indebtedness of Seattle and of each
entity set forth on Schedule 1.1(a) in which Seattle has a direct or indirect
equity interest that is outstanding on the Closing Date; provided, however, that
in the event the aggregate amount of indebtedness incurred by the Members (or
their permitted transferees) and assumed pursuant to clause (ii) of this Section
1.1(a) is less than $104,800,000, Starwood Realty Partnership shall pay to each
of the Members (or their permitted transferees) and each other holder of Seattle
Shares that contributes Seattle Shares to Starwood Realty Partnership, in
consideration for such contribution, an aggregate amount in cash equal to the
pro rata portion (determined on the basis of the number of shares of Seattle
contributed by such Member (or such permitted transferees) and each such other
holder to Starwood Realty Partnership) of the excess of $104,800,000 over the
amount of such indebtedness so incurred and assumed.
(b) It is understood and agreed that, prior to consummation of the
transactions contemplated by this Agreement, the LLC may distribute the
outstanding shares of capital stock of Lauderdale held directly or indirectly by
the LLC to the Members but that such shares may not, without the prior written
consent of the Starwood Companies, be further transferred by such Members to any
other person or entity. Upon the terms and subject to the conditions set forth
in this Agreement, on the Closing Date the Members (or their permitted
transferees) shall contribute, or cause to be contributed, to Starwood Realty
Partnership all the then outstanding shares of capital stock of Lauderdale
("Lauderdale Shares"). Concurrently with such contribution, (i) Starwood Realty
Partnership shall issue to the Members (or their permitted transferees) and any
other holders of Lauderdale Shares, on a pro rata basis based on the number of
Lauderdale Shares so contributed to Starwood Realty Partnership, an aggregate of
120,948 Units of Starwood Realty Partnership Units, as such number of Starwood
Realty Partnership Units shall be adjusted pursuant to the terms of this
Agreement, (ii) Starwood Realty Partnership shall assume indebtedness of the
Members (or their permitted transferees) incurred by the Members (or their
permitted transferees) in connection with such contribution, provided that the
aggregate amount of principal of and accrued interest on such indebtedness to be
assumed shall not exceed an aggregate amount equal to $21,900,000, (iii)
Starwood Realty Partnership, the Starwood Companies and the Members (or their
permitted transferees) will comply with the covenants set forth in Sections
6.16(a), (b), (c) and (d) and (iv) Starwood Realty Partnership will Assume all
indebtedness of Lauderdale and of each entity set forth on Schedule 1.1(b) in
which Lauderdale has a direct or indirect equity interest that is outstanding on
the Closing Date; provided, however, that in the event the aggregate amount of
indebtedness incurred by the Members (or their permitted transferees) and
assumed pursuant to clause (ii) of this Section 1.1(b) is less than $21,900,000,
Starwood Realty Partnership shall pay to each of the Members (or their permitted
transferees) and each other holder of Lauderdale Shares that contributes
Lauderdale Shares to Starwood Realty Partnership, in consideration for such
contribution, an aggregate amount in cash equal to the pro rata portion
(determined on the basis of the number of shares of Lauderdale contributed by
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such Member (or such permitted transferees) and each such other holder to
Starwood Realty Partnership) of the excess of $21,900,000 over the amount of
such indebtedness so incurred and assumed.
(c) It is understood and agreed that, prior to consummation of the
transactions contemplated by this Agreement, the LLC may distribute the
outstanding shares of capital stock of Denver held directly or indirectly by the
LLC to the Members but that such shares may not, without the prior written
consent of the Starwood Companies, be further transferred by such Members to any
other person or entity. Upon the terms and subject to the conditions set forth
in this Agreement, on the Closing Date the Members (or their permitted
transferees) shall contribute, or cause to be contributed, to Starwood Realty
Partnership all the then outstanding shares of capital stock of Denver ("Denver
Shares"). Concurrently with such contribution, (i) Starwood Realty Partnership
shall issue to the Members (or their permitted transferees) and any other
holders of Denver Shares, on a pro rata basis based on the number of Denver
Shares so contributed to Starwood Realty Partnership, an aggregate of 116,948
Starwood Realty Partnership Units, as such number of Starwood Realty Partnership
Units shall be adjusted pursuant to the terms of this Agreement, (ii) Starwood
Realty Partnership shall assume indebtedness of the Members (or their permitted
transferees) incurred by the Members (or their permitted transferees) in
connection with such contribution, provided that the aggregate amount of
principal of and accrued interest on such indebtedness to be assumed shall not
exceed an aggregate amount equal to $20,500,000, (iii) Starwood Realty
Partnership, the Starwood Companies and the Members (or their permitted
transferees) will comply with the covenants set forth in Sections 6.16(a), (b),
(c) and (d) and (iv) Starwood Realty Partnership and Starwood Trust will Assume
(or cause to be Assumed) all indebtedness of Denver and of each entity set forth
on Schedule 1.1(c) in which Denver has a direct or indirect equity interest that
is outstanding on the Closing Date; provided however, that in the event the
aggregate amount of indebtedness incurred by the Members (or their permitted
transferees) and assumed pursuant to clause (ii) of this Section 1.1(c) is less
than $20,500,000, Starwood Realty Partnership shall pay to each of the Members
(or their permitted transferees) and each other holder of Denver Shares that
contributes Denver Shares to Starwood Realty Partnership, in consideration for
such contribution, an aggregate amount in cash equal to the pro rata portion
(determined on the basis of the number of shares of Denver contributed by such
Member (or such permitted transferees) and each such other holder to Starwood
Realty Partnership) of the excess of $20,500,000 over the amount of such
indebtedness so incurred and assumed.
(d) It is understood and agreed that, prior to consummation of the
transactions contemplated by this Agreement, (i) the LLC may distribute the
outstanding shares of capital stock of Atlanta held directly or indirectly by
the LLC to the Members but that such shares may not, without the prior written
consent of the Starwood Companies, be further transferred by such Members to any
other person or entity and (ii) Starwood Realty Partnership will lend to Atlanta
an aggregate amount of $34,200,000 of indebtedness on terms reasonably
acceptable to the LLC and that Atlanta will pay a dividend to the LLC (or the
Members, as the case may be), and the LLC may make a distribution to the
Members, in an amount equal to the aggregate amount of such indebtedness. Upon
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date the LLC (or its permitted transferees) shall contribute, or cause
to be contributed, to Starwood Operating Partnership all the then outstanding
shares of capital stock of Atlanta ("Atlanta Shares"). Concurrently with such
contribution, subject to the last sentence of this paragraph, (i) Starwood
Operating Partnership shall issue to the LLC (or its permitted transferees) and
any other holders of Atlanta Shares, on a pro rata basis based on the number of
Atlanta Shares so contributed to Starwood Operating Partnership, an aggregate of
358,000 Units of Starwood Operating Partnership having the terms set forth on
Annex C hereto ("Starwood Operating Partnership Units"), as such number of
Starwood Operating Partnership Units shall be adjusted pursuant to the terms of
this Agreement, and (ii) Starwood Operating Partnership will Assume (or cause to
be Assumed) all indebtedness of Atlanta and of each entity set forth on Schedule
1.1(d) in which Atlanta has a direct or indirect equity interest that is
outstanding on the Closing Date; provided however, that in the event the
aggregate amount of indebtedness loaned by Starwood Realty Partnership to
Atlanta pursuant to this Section 1.1(d) is less than $34,200,000, Starwood
Operating Partnership shall pay to each of the Members (or their permitted
transferees) and each other holder of Atlanta Shares that contributes Atlanta
Shares to Starwood Operating Partnership in consideration for such contribution,
as applicable, an aggregate amount in cash equal to the pro rata portion
(determined on the basis of the number of shares of Atlanta
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contributed by such Member (or such permitted transferees) and each such other
holder to Starwood Operating Partnership) of the excess of $34,200,000 over the
amount of such indebtedness so incurred and assumed.
(e) It is understood and agreed that, prior to consummation of the
transactions contemplated by this Agreement, the LLC may distribute the
outstanding shares of capital stock of St. Xxxx held directly or indirectly by
the LLC to the Members but that such shares may not, without the prior written
consent of the Starwood Companies, be further transferred by such Members to any
other person or entity. Upon the terms and subject to the conditions set forth
in this Agreement, on the Closing Date the Members (or their permitted
transferees) shall contribute, or cause to be contributed, to Starwood Operating
Partnership all the then outstanding shares of capital stock of St. Xxxx ("St.
Xxxx Shares"). Concurrently with such contribution, (i) Starwood Operating
Partnership shall issue to the Members (or their permitted transferees) and any
other holders of St. Xxxx Shares, on a pro rata basis based on the number of St.
Xxxx Shares so contributed to Starwood Operating Partnership, an aggregate of
35,156 Starwood Operating Partnership Units, as such number of Starwood
Operating Partnership Units shall be adjusted pursuant to the terms of this
Agreement, (ii) Starwood Operating Partnership shall assume indebtedness of the
Members (or their permitted transferees) incurred by the Members (or their
permitted transferees) in connection with such contribution, provided that the
aggregate amount of principal of and accrued interest on such indebtedness to be
assumed shall not exceed an aggregate amount equal to $6,000,000, (iii) Starwood
Operating Partnership, the Starwood Companies and the Members (or their
permitted transferees) will comply with the covenants set forth in Sections
6.16(a), (b), (c) and (d), (iv) Starwood Operating Partnership and Starwood
Trust shall Assume (or will cause to be Assumed) all indebtedness of St. Xxxx
and of each entity set forth in Schedule 1.1(e) in which St. Xxxx has a direct
or indirect equity interest that is outstanding on the Closing Date; provided
however, that in the event the aggregate amount of indebtedness incurred by the
Members (or their permitted transferees) and assumed pursuant to clause (ii) of
this Section 1.1(c) is less than $6,000,000, Starwood Operating Partnership
shall pay to each of the Members (or their permitted transferees) and each other
holder of St. Xxxx Shares that contributes St. Xxxx Shares to Starwood Realty
Partnership, in consideration for such contribution, an aggregate amount in cash
equal to the pro rata portion (determined on the basis of the number of shares
of St. Xxxx contributed by such Member (or such permitted transferees) and each
such other holder to Starwood Operating Partnership) of the excess of $6,000,000
over the amount of such indebtedness so incurred and assumed.
(f) Notwithstanding anything contained herein to the contrary, at the
election of the Westin Companies, the Members (other than Xxxxxxx and Nomura)
may distribute not more than 15% of the outstanding shares of each of Seattle,
Lauderdale, Atlanta, Denver and St. Xxxx (the "Redistributed Subsidiary Shares")
to investors in the Members or their designees, and each such investor or
designee will then exchange each such Seattle Share for a pro rata portion
(based on the number of Seattle Shares then outstanding) of (i) an aggregate
number of 359,948 shares of Class B EPS and (ii) an aggregate amount of cash
equal to $104,800,000, each such Lauderdale Share for a pro rata portion (based
on the number of Lauderdale Shares then outstanding) of (i) an aggregate number
of 120,948 shares of Class B EPS and (ii) an aggregate amount of cash equal to
$21,900,000, each such Atlanta Share for a pro rata portion (based on the number
of Atlanta Shares then outstanding) of (i) an aggregate number of 358,000 shares
of Class B EPS and (ii) an aggregate amount of cash equal to $34,200,000, each
such Denver Share for a pro rata portion (based on the number of Denver Shares
then outstanding) of (i) an aggregate number of 116,948 shares of Class B EPS
and (ii) an aggregate amount of cash equal to $20,500,000 and each such St. Xxxx
Share for a pro rata portion (based on the number of St. Xxxx Shares then
outstanding) of (i) an aggregate number of 35,156 shares of Class B EPS and (ii)
an aggregate amount of cash equal to $6,000,000. The Redistributed Subsidiary
Shares shall decrease, on a proportionate basis, the aggregate number of
Starwood Realty Partnership Units or Starwood Operating Partnership Units, as
applicable, to be issued, and the aggregate amount of indebtedness of the
Members to be assumed, in connection with the relevant contribution of the
Westin Subsidiaries referred to in Section 1.1 (each a "Subsidiary
Contribution") shall be reduced dollar for dollar by the amount of cash paid
pursuant to this Section 1.1(f), such that (i) the aggregate number of Starwood
Realty Partnership Units, Starwood Operating Partnership Units and Class B EPS
to be issued pursuant to this Section 1.1 shall not exceed the aggregate number
of Starwood Realty Partnership Units and Starwood Operating Partnership
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Units that would have been issued under this Section 1.1 construed without
regard to this Section 1.1(f) and (ii) the total indebtedness Assumed and cash
paid pursuant to this Section 1.1 shall not exceed the total indebtedness that
would have been Assumed under this Section 1.1 construed without regard to this
Section 1.1(f).
1.2. THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.7) Worldwide
shall be merged with and into Starwood Trust and the separate corporate
existence of Worldwide shall thereupon cease. Starwood Trust shall be the
surviving real estate investment trust in the Merger (sometimes hereinafter
referred to as the "Surviving Trust"), and the separate existence of Starwood
Trust with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in this Article I and in
Articles II and III. The Merger shall have the effects specified in the Maryland
Corporations and Associations law, as amended (the "MCA"), and the Delaware
General Corporation Law, as amended (the "DGCL").
1.3. EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective Time, as a
result of the Merger and without any action on the part of the holder of any
capital stock of Worldwide:
(a) Merger Consideration. Each share of Common Stock, par value $0.01 per
share, of Worldwide (collectively, the "Worldwide Shares") issued and
outstanding immediately prior to the Effective Time (other than Worldwide Shares
owned by any Starwood Company or any direct or indirect subsidiary of any
Starwood Company or Worldwide Shares that are owned by Worldwide or any direct
or indirect subsidiary of Worldwide and in each case not held on behalf of third
parties ("Affiliated Shares") or Worldwide Shares ("Dissenting Shares" and,
together with the Affiliated Shares, the "Excluded Shares") that are owned by
stockholders ("Dissenting Stockholders") exercising appraisal rights pursuant to
Section 262 of the DGCL) shall be converted into, and become exchangeable for, a
pro rata portion (based upon the aggregate number of Worldwide Shares issued and
outstanding immediately prior to the Effective Time) of (x) a number of shares
of Class A Exchangeable Preferred Stock of Starwood Trust, par value $.01 per
share, having the terms set forth on Annex A hereto ("Class A EPS") equal to the
product of (A) the Nondissenting Portion times (B) 6,285,783, (y) a number of
shares of Class B Exchangeable Preferred Stock of Starwood Trust, liquidation
value $38.50 per share, having the terms set forth on Annex B hereto ("Class B
EPS") equal to the product of (A) the Nondissenting Portion times (B) 5,294,783,
and (z) subject to the following provisions of this Section 1.3(a), cash in an
amount equal to the product of (A) the Nondissenting Portion times (B)
177,926,000 reduced by the aggregate amount of cash dividends paid by Denver
pursuant to Section 6.1(b)(iv)(c) prior to the Effective Time (collectively, the
"Merger Consideration"). The "Nondissenting Portion" shall be equal to one minus
a fraction, the numerator of which is the number of Dissenting Shares and the
denominator of which a number of Worldwide Shares (other than Affiliated Shares)
issued and outstanding immediately prior to the Effective Time. In addition, in
connection with the Merger, Starwood Trust will Assume (or cause to be Assumed)
all indebtedness of Worldwide and of each entity set forth on Schedule 1.3(a) in
which Worldwide has a direct or indirect equity interest (including joint
venture indebtedness) (collectively "Worldwide Debt") outstanding immediately
prior to the Effective Date. At the Effective Time, no Worldwide Share shall any
longer be outstanding and all Worldwide Shares shall be canceled and retired and
shall cease to exist, and each certificate (a "Certificate") formerly
representing any of such Worldwide Shares (other than Excluded Shares) shall
thereafter represent only the right to the Merger Consideration and the right,
if any, to receive pursuant to Section 4.1(d) cash in lieu of fractional shares
into which such Worldwide Shares have been converted pursuant to this Section
1.3(a) and any distribution or dividend pursuant to Section 4.1(b).
(b) In the event the principal amount of outstanding indebtedness of the
Westin Subsidiaries and their respective Subsidiaries (excluding any
intercompany indebtedness for borrowed money) immediately prior to the Effective
Date is less than the amount set forth in Schedule 1.3(b), the aggregate amount
of the cash portion of the Merger Consideration shall be increased by an amount
equal to the excess of the amount of such indebtedness set forth in Schedule
1.3(b) over the sum of (i) the principal amount of such indebtedness Assumed
pursuant to Section 1.1 or Section 1.3 and (ii) the amount of any cash paid
pursuant to Section 1.1(f), this Agreement, and each outstanding share of
Worldwide that is converted into a portion of
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the Merger Consideration in the Merger shall be converted into its pro rata
portion of such increased Merger Consideration.
(c) In the event that (1) the sum of (i) the principal of and all accrued
and unpaid interest on the outstanding indebtedness of the Members (or their
permitted transferees) that is Assumed by the Starwood Realty Partnership or the
Starwood Operating Partnership pursuant to Section 1.1, (ii) the principal
amount of indebtedness of the Westin Subsidiaries and their respective
Subsidiaries (including the allocable portion of the indebtedness of
non-subsidiary joint ventures) that is Assumed by the Starwood Companies
pursuant to Section 1.1 or Section 1.3 (other than any indebtedness incurred to
fund (a) Actual Scheduled Expenditures in excess of Budgeted Scheduled
Expenditures, (b) Actual Unscheduled Expenditures or (c) acquisitions that, in
any such case, are permitted to be made as a result of the operation of this
Section 1.3 or any indebtedness incurred by any joint venture that is not
controlled by the Westin Companies) and (iii) without duplication of any amounts
described in clause (i) or (ii), any cash paid pursuant to Section 1.1(f)
exceeds the amount set forth in Schedule 1.3(c), then the aggregate amount of
the cash portion of the Merger Consideration shall be decreased by an amount
equal to such excess, and each outstanding share of Worldwide that is converted
into a portion of the Merger Consideration in the Merger shall be converted into
its pro rata portion of such decreased Merger Consideration.
(d) In the event the aggregate amount of capital expenditures or
investments made in respect of the hotels or other assets relating to the Westin
Companies and/or their respective Subsidiaries set forth on Schedule 1.3(d)-1
during the period beginning on January 1, 1997 and ending on December 31, 1997
("Actual Scheduled Expenditures") (calculated in accordance with GAAP (as
defined in Section 1.4(f)) applied on a basis consistent with the Westin
Companies' past practice), is less than the aggregate amount of capital
expenditures or investments for such hotels or other assets set forth on
Schedule 1.3(d)-1 ("Budgeted Scheduled Expenditures"), the cash portion of the
Merger Consideration shall be decreased by an aggregate amount of cash equal to
the sum of all such deficits. For purposes of this Section, the portion of
Actual Capital Expenditures made during the period commencing on January 1, 1997
and ending on June 30, 1997 shall be deemed to be no greater than the amounts
set forth on Schedule 1.3(d)-2.
(e) In the event the amount of Actual Scheduled Expenditures exceeds the
amount of Budgeted Scheduled Expenditures, or in the event that capital
expenditures or investments are made in respect of any hotel or other asset
relating to any of the Westin Companies and/or their respective Subsidiaries
that is not set forth on Schedule 1.3(d)("Actual Unscheduled Expenditures"),
then, subject to the fourth succeeding sentence, the cash portion of the Merger
Consideration shall be increased by an aggregate amount of cash equal to the sum
of all such excesses and amounts of Actual Unscheduled Expenditures less all
such excesses and amounts financed directly or indirectly with indebtedness
Assumed (or caused to be Assumed) by any Starwood Company pursuant to this
Agreement. The Westin Companies hereby agree that at least ten business days
prior to making any Actual Scheduled Expenditure that exceeds the amount of the
related Budgeted Scheduled Expenditure or any Actual Unscheduled Expenditure,
the Westin Companies will provide the Starwood Companies with written notice of
any such proposed expenditure (the "Proposed Expenditure"). Notwithstanding
anything contained herein to the contrary, the Westin Companies shall not make
any Proposed Expenditure unless the Starwood Companies approve such Proposed
Expenditure in writing, except as provided in the second succeeding sentence. In
the event the Starwood Companies do not so approve such Proposed Expenditure
within ten business days after receipt of such notice, representatives of the
Starwood Companies and representatives of the Westin Companies will attempt to
resolve the matter. If such attempt does not result in the resolution of such
matter, either (i) the Westin Companies shall not make such Proposed Expenditure
for so long as this Agreement is in effect or (ii) the Westin Companies may make
such Proposed Expenditure but the cash portion of the Merger Consideration shall
not be increased in respect of such excess. Notwithstanding anything contained
herein to the contrary, (i) any refusal by the Starwood Companies to approve the
making of a Proposed Expenditure must be made by the Starwood Companies in good
faith, (ii) the Starwood Companies shall be deemed to approve the making of a
Proposed Expenditure the amount of which the Starwood Companies agree is
required to be made by the Westin Companies by the terms of any agreement to
which any of the Westin Companies is a party on the date hereof and which
agreement is set forth on Schedule 7.2(a) (it being understood and agreed that
(a) the Starwood Companies
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shall not be deemed to have approved any such expenditure in excess of
$1,000,000 if the Starwood Companies determine, in good faith and on a
reasonable basis, that the agreement pursuant to which such expenditure is
proposed to be made does not require the Westin Companies or any of their
Subsidiaries to make such expenditure or that the failure to make such
expenditure would not impose a penalty on any of the Westin Companies or their
Subsidiaries) and (b) the Starwood Companies shall be deemed to have approved
expenditures with respect to the properties located in San Antonio, Texas and
Savannah, Georgia made after June 30, 1997 to the extent that the portion of
such expenditures funded by equity contributions from the Westin Companies does
not exceed $8,890,000 and $240,000 respectively, and to the extent that any
other expenditures in respect of such properties are approved or deemed approved
by operation of this Section 1.3(e), and any Proposed Expenditure made in
connection with a hotel or other item relating to St. Xxxx and/or its
Subsidiaries shall be deemed approved by the Starwood Companies except to the
extent the aggregate amount of such Proposed Expenditures for the 1997 calendar
year exceeds $13,200,000.
(f) The Westin Companies agree that, for so long as this Agreement is in
effect, they shall not acquire any assets (other than assets acquired in the
ordinary course of business consistent with past practice or acquisitions of
assets constituting capital expenditures subject to Section 1.3(d) or 1.3(e)) or
securities of any other Person for an aggregate purchase price in excess of
$1,000,000 without the prior written consent of the Starwood Companies;
provided, however, that in the event that the Starwood Companies object to the
making of an acquisition by the Westin Companies pursuant to this Section 1.3(f)
that can, at the time of any objection thereto by the Starwood Companies, be
acquired by the Westin Companies pursuant to the terms of an agreement relating
to such acquisition, subject to the terms and conditions specified in such
agreement, none of the Starwood Companies or any of their Affiliates may,
without the prior written consent of the Members, pursue or make such
acquisition for the account of any of the Starwood Companies or any of their
affiliates for a period of one year after the date, if any, of the termination
of this Agreement. In the event that any of the Westin Companies makes an
acquisition in accordance with the provisions of this Section 1.3(f), the cash
portion of the Merger Consideration shall be increased by an aggregate amount
equal to the purchase price (other that any portion thereof that is financed by
indebtedness that is assumed by the Starwood Companies) and transaction costs
paid in connection with such acquisition.
(g) At the election of the Westin Companies, the parties will amend this
Agreement to provide that the stockholders of Worldwide and each of the other
Westin Companies may elect to receive different forms of the consideration to be
issued in connection with the Merger and the Subsidiary Contributions provided
that the aggregate amount of each of the Class A EPS, the Class B EPS, Starwood
Realty Partnership Units, Starwood Operating Partnership Units and cash to be
issued in the Merger and each of the Subsidiary Contributions shall not be
altered by such amendment, and each of the parties hereto agrees that in the
event the Westin Companies exercise such option, they will promptly execute and
deliver such amendment and such other documents as may be reasonably requested
by the Westin Companies to effect such amendment; provided, however, that any
amendment to this Agreement made pursuant to this Section 1.3(g) shall not
adversely affect the ability of the Merger to constitute a "reorganization"
within the meaning of the Code or adversely affect the REIT status of Starwood
Trust.
(h) Cancellation of Worldwide Shares. Each Excluded Share (that is not a
Dissenting Share) issued and outstanding immediately prior to the Effective
Time, shall, by virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist.
1.4. WORKING CAPITAL ADJUSTMENTS
(a) At least two business days prior to the Closing Date, the Westin
Companies shall prepare, based on the Westin Companies' books and records and
other information then available, and deliver to the Starwood Companies a
consolidated balance sheet (each an "Estimated Working Capital Balance Sheet")
prepared in accordance with GAAP consistent with the Westin Companies' past
practice (except as provided herein) and setting forth an estimate of the
aggregate Working Capital as of the Closing Date (each, an "Estimated Working
Capital") for each of (i) Worldwide and its Subsidiaries, (ii) Lauderdale and
its Subsidiaries,
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(iii) Seattle and its Subsidiaries, (iv) Denver and its Subsidiaries (v) Atlanta
and its Subsidiaries and (vi) St. Xxxx and its Subsidiaries (each, a "Westin
Group").
If the Estimated Working Capital for Worldwide and its Subsidiaries exceeds
zero, the cash portion of the Merger Consideration shall be increased by the
amount of such excess. In the event the Estimated Working Capital for Worldwide
and its Subsidiaries is less than zero, the cash portion of the Merger
Consideration shall be decreased by the amount of such deficit.
If the Estimated Working Capital for any Westin Group other than Worldwide
and its Subsidiaries exceeds zero, the Starwood Companies shall deliver to the
LLC or the stockholders of the Westin Subsidiary of such Westin Group,
concurrently with the Subsidiary Contribution in respect of such Westin Group,
an amount in cash equal to the amount of such excess. If the Estimated Working
Capital for any Westin Group other than Worldwide and its Subsidiaries is less
than zero, LLC or the stockholders of such Westin Group shall deliver to the
applicable Starwood Company, concurrently with the Subsidiary Contribution in
respect of such Westin Group, an amount in cash equal to the amount of such
deficit.
In the event the Estimated Working Capital for any Westin Group is zero,
the cash portion of the Merger Consideration (in the case of Worldwide and its
Subsidiaries) or the Subsidiary Contribution relating to such Westin Group (in
the case of any Westin Group other than Worldwide and its Subsidiaries), as
applicable, shall not be adjusted.
(b) As promptly as practicable, but no later than 90 days after the Closing
Date, the Starwood Companies shall cause their accountants, Coopers & Xxxxxxx,
to prepare and deliver to the LLC and its accountants, Xxxxxx Xxxxxxxx, a
consolidated balance sheet of each of the Westin Groups (collectively, the
"Closing Balance Sheets"), together with a report of Coopers & Xxxxxxx thereon,
for the purpose of establishing the Closing Working Capital for each Westin
Group. The Closing Balance Sheets shall reflect the Current Assets and Current
Liabilities of each Westin Group as of the close of business on the Closing Date
and shall be prepared on a basis consistent with that required hereby to be used
in the preparation of the relevant Estimated Working Capital Balance Sheet.
(c) If the Closing Working Capital for any Westin Group exceeds the
Estimated Working Capital for such Westin Group, Starwood Trust, Starwood Realty
Partnership or Starwood Operating Partnership, as applicable, shall, subject to
subsection (d) of this Section 1.4, deliver to the stockholders of such Westin
Group an aggregate amount in cash equal to the amount of such excess. If the
Closing Working Capital for any Westin Group is less than Estimated Working
Capital for such Westin Group, each of the stockholders of such Westin Group
shall, subject to subsection (d) of this Section 1.4, deliver to Starwood Trust,
Starwood Realty Partnership or Starwood Operating Partnership, as applicable,
such stockholder's pro rata portion an aggregate amount in cash equal to the
amount of such deficit. In the event the Closing Working Capital for any Westin
Group equals the Estimated Working Capital for such Westin Group, no adjustment
shall be made pursuant to this clause (c).
All amounts owed pursuant to this subsection (c) and subsection (d) of this
Section 1.4 shall include interest, from and including the Closing Date to but
excluding the date of payment, at a rate per annum equal to the rate of interest
announced by Citibank, N.A. from time to time as its Prime or Base Rate in New
York City in effect from time to time.
(d) If the LLC disagrees with any items on the Closing Balance Sheet for
any Westin Group, the LLC shall notify the Starwood Companies in writing of such
disagreement within 30 days after the Starwood Companies' receipt thereof, and
such notice shall set forth the basis for such disagreement in reasonable
detail. During such 30-day period, the Starwood Companies shall afford the LLC
and its duly designated representatives access to all the Starwood Companies'
books and records and cause the Starwood Companies' accountants to afford the
LLC and its duly designated representatives access to all the work papers of the
Starwood Companies' accountants during regular business hours as required by the
LLC to review the Closing Balance Sheet for such Westin Group in each case
solely for purposes of resolving such disagreement, and the LLC shall not,
directly or indirectly, use or permit any of its Affiliates (as defined in
Section 9.12(b)) to use such information for any other purpose or disclose or
permit any of its Affiliates to disclose such information to
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any other Persons, except as required by law or court order. The LLC and the
Starwood Companies shall thereafter negotiate in good faith to resolve any such
disagreements; provided that the Starwood Companies shall promptly pay to the
LLC, or the LLC shall promptly pay to the Starwood Companies, as the case may
be, the amount, if any, determined pursuant to subsection (c) that is not
subject to dispute. If the LLC and the Starwood Companies are unable to resolve
any such disagreements within 30 days after the LLC's receipt of the Starwood
Companies' notice described above, the LLC and the Starwood Companies shall
select an Auditor to resolve the disagreements in accordance with subsection (e)
of this Section 1.4.
(e) The "Auditor" shall be a "big six" nationally recognized certified
public accounting firm mutually selected by the respective accounting firms of
the LLC and the Starwood Companies solely to resolve only those disputed items
in accordance with the terms of this Agreement. The LLC and the Starwood
Companies shall use their reasonable best efforts to cause the Auditor to
resolve all disagreements on the disputed items as soon as practicable; provided
that the Auditor shall be bound by the provisions of this Section 1.4 and shall
not assign a value to any item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed by
either party. Each of the LLC and the Starwood Companies shall permit the
Auditor to have full access to their books, records, key employees and
independent accountants in order to resolve any such disagreements. The
resolution of such disagreements by the Auditor shall be final and binding on
the LLC and the Starwood Companies. The fees and expenses of the Auditor shall
be paid by the party whose position is most at variance with the decision of the
Auditor, as such person shall be determined by the Auditor.
(f) For purposes of this Section 1.4, the terms set forth below shall have
the following meanings:
"Closing Working Capital" means the consolidated Working Capital of a
Westin Group as reflected on the Closing Balance Sheet for such Westin Group.
"Current Assets" means all current assets (taking into account appropriate
reserves for uncollectible or doubtful accounts receivable consistent with
Westin Companies' past practice) but excluding (a) cash proceeds of any asset
sale or other disposition occurring after July 1, 1997 (other than sales or
dispositions of inventory made in the ordinary course of the Westin Companies'
business in a manner consistent with past practice), (b) any amounts receivable
under intercompany loans, (c) in the case of Worldwide, not less than $791,000
of Westel's claims-related current assets and (d) cash distributed from the
pension plans of the Westin Subsidiaries and their Subsidiaries since July 1,
1997, but only to the extent the amount of such cash so distributed exceeds
$5,000,000, in each case determined in accordance with GAAP applied on a basis
consistent with Westin Companies' past practice (except as provided herein).
"Current Liabilities" means, without duplication of any item that results
in a reduction in the cash portion of the Merger Consideration as a result of
the operation of Section 1.3(c), all current liabilities including, in the case
of Worldwide, Westel non-claims-related liabilities, but excluding (a) in the
case of Worldwide, not more than $8,100,000 of Westel's claims-related current
liabilities, (b) any tax liabilities of Worldwide or its Subsidiaries arising in
connection with the sales of assets contemplated by Section 6.17 hereof and any
tax described in Section 9.10, (c) any notes payable referred to in Section
6.1(c)(ii)(e)(2) in an amount not in excess of $2,261,000, (d) the current
portion of any long-term indebtedness of any Westin Group, (e) any liabilities
under any intercompany loans, (f) any short term portion of capitalized lease
obligations incurred pursuant to Section 6.1(c)(ii)(e)(3), (g) any fees and
expenses of the Westin Companies described in Section 6.12, in each case
determined in accordance with GAAP applied on a basis consistent with Westin
Companies' past practice (except as provided herein) and (h) any reserves for
any liability that is the subject of the Other Agreement.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Westel" means Westel Insurance Co., a Vermont corporation.
"Working Capital" means Current Assets minus Current Liabilities.
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1.5. ADJUSTMENTS TO PREVENT DILUTION.
(a) Subject to the next succeeding sentence, in the event that after the
date hereof Starwood Trust or Starwood Corp. changes the number of Starwood
Paired Shares or securities convertible or exchangeable into or exercisable for
Starwood Paired Shares, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), stock
dividend or distribution, recapitalization, merger, subdivision, issuer tender
or exchange offer, or other similar transaction, the Merger Consideration shall
be equitably adjusted. Notwithstanding the foregoing, any arms-length
transaction with an unaffiliated third party shall not require any adjustment.
(b) Subject to the next succeeding sentence, in the event that after the
date hereof Starwood Trust, Starwood Corp., Starwood Realty Partnership or
Starwood Operating Partnership changes the number of Starwood Trust Shares,
Starwood Corp. Shares, Starwood Realty Partnership Units or Starwood Operating
Partnership Units or securities convertible or exchangeable into or exercisable
for Starwood Trust Shares, Starwood Corp. Shares, Starwood Realty Partnership
Units or Starwood Operating Partnership Units, issued and outstanding prior to
the Effective Time as a result of a reclassification, stock split (including a
reverse split), stock dividend or distribution, recapitalization, merger,
subdivision, issuer tender or exchange offer, or other similar transaction, the
number of Starwood Realty Partnership Units or Starwood Operating Partnership
Units to be issued in connection with a Subsidiary Contribution shall be
equitably adjusted. Notwithstanding the foregoing, any arms-length transaction
with an unaffiliated third party shall not require any adjustment.
1.6. CLOSING. Subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger and of each of the Subsidiary
Contributions (the "Closing") shall take place (i) at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 9:00 A.M. on January 2, 1998
or, if on such date all the conditions set forth in Article VII have not been
satisfied or waived, then on such later date (but not later than January 31,
1998) as all the conditions set forth in Article VII have been satisfied or
waived, or if the Starwood Companies reasonably request additional time in order
to complete any financings necessary to consummate the transactions contemplated
by this Agreement, and the lead underwriters of such financing (acting
reasonably) agree to such request, then promptly after the consummation of any
such financings (but not later than January 31, 1998), or at such other place
and time and/or on such other date as the LLC and Starwood Trust may agree in
writing. The date on which the Closing occurs is herein called the "Closing
Date".
1.7. EFFECTIVE TIME. As soon as practicable following the Closing,
Worldwide and Starwood Trust will cause Articles of Merger (the "Maryland
Articles of Merger") to be executed, acknowledged and filed with the Maryland
State Department of Assessments and Taxation (the "Maryland Assessments
Department") as provided in Section 8-501.1 of the MCA and a Certificate of
Merger (the "Delaware Certificate of Merger") to be executed, acknowledged and
filed with the Secretary of State of Delaware as provided in Section 254 of the
DGCL. The Merger shall become effective on the date and at the time when the
last of the following actions shall have been completed: (i) the time the
Maryland Assessments Department accepts the Maryland Articles of Merger for
record and (ii) the Delaware Certificate of Merger has been duly filed with the
Secretary of State of Delaware (the "Effective Time").
ARTICLE II
DECLARATION OF TRUST AND TRUST REGULATIONS
OF THE SURVIVING TRUST
2.1. THE DECLARATION OF TRUST. The declaration of trust of Starwood Trust
as in effect immediately prior to the Effective Time shall be the declaration of
trust of the Surviving Trust (the "Declaration of Trust"), until duly amended as
provided therein or by applicable law.
2.2. THE TRUST REGULATIONS. The regulations of Starwood Trust in effect at
the Effective Time shall be the regulations of the Surviving Trust (the "Trust
Regulations"), until thereafter amended as provided therein or by applicable
law.
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ARTICLE III
TRUSTEES, DIRECTORS AND OFFICERS
OF THE SURVIVING TRUST AND STARWOOD CORP.
3.1. TRUSTEES OF SURVIVING TRUST. The trustees of Starwood Trust at the
Effective Time, together with Xxxxxx X. Xxxxxxxxxx, shall, from and after the
Effective Time, be the trustees of the Surviving Trust until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Declaration of Trust and the Trust
Regulations.
3.2. OFFICERS OF SURVIVING TRUST. The officers of Starwood Trust at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Trust until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Declaration of Trust and the Trust Regulations.
3.3. DIRECTORS OF STARWOOD CORP. The directors of Starwood Corp. at the
Effective Time, together with Xxxxxxx Xxxxxxx and Xxxxx X. Xxxxxxx, shall, from
and after the Effective Time, be the directors of Starwood Corp. until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Articles of
Incorporation and By-laws of Starwood Corp. (it being understood that Xxxxx X.
Xxxxxxxxxx shall be Chairman of the Starwood Corp.).
3.4. OFFICERS OF STARWOOD CORP. The officers of Starwood Corp. at the
Effective Time shall, from and after the Effective Time, be the officers of the
Starwood Corp.; provided, however, that Xxxxxxx Xxxxxxx shall be the Chief
Executive Officer of Starwood Corp., and the President of Starwood Corp., the
Chief Operating Officer of Starwood Corp. and the Chief Financial Officer of
Starwood Corp. shall be appointed immediately after the Effective Time by the
Board of Directors of Starwood Corp. as constituted from and after the Closing
Date in accordance with Section 3.3, in each case until their successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
By-laws of Starwood Corp.
ARTICLE IV
EXCHANGE OF CERTIFICATES FOR WORLDWIDE SHARES; DISSENTER'S RIGHTS; UNITS OF
STARWOOD
REALTY PARTNERSHIP AND STARWOOD OPERATING PARTNERSHIP TO BE ISSUED
IN CONNECTION WITH THE SUBSIDIARY CONTRIBUTIONS
4.1. EXCHANGE OF CERTIFICATES FOR WORLDWIDE SHARES.
(a) The Exchange. (i) As of the Effective Time, Starwood Trust shall
deliver to the holders of Worldwide Shares, certificates representing the shares
of Class A EPS and Class B EPS and, after the Effective Time, if applicable, any
cash, dividends or other distributions with respect to the Class A EPS and Class
B EPS to be issued or paid pursuant to the last sentence of Section 4.1(b)(i),
in exchange for Worldwide Shares outstanding immediately prior to the Effective
Time upon due surrender of the Certificates (or affidavits of loss in lieu
thereof) pursuant to the provisions of this Article IV.
(ii) The holder of each Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Class A EPS and Class B EPS that such holder is then entitled to receive
pursuant to this Agreement, (y) a check in the amount (after giving effect to
any required tax withholdings) of (A) the cash amount payable in respect of such
Worldwide Share pursuant to Section 4.1(a), plus (B) any cash in lieu of
fractional shares plus (C) any unpaid non-stock dividends and any other
dividends or other distributions that such holder has the right to receive
pursuant to the provisions of this Article IV, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
any amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Worldwide Shares that is not registered in the transfer
records of Worldwide, a certificate representing the proper number of shares of
Class A EPS and Class B EPS, together with a check for any cash to be paid upon
due surrender of the Certificate and any other dividends or distributions in
respect thereof, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Worldwide Shares is presented to
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Starwood Trust, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Class A EPS and Class B EPS is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Person requesting such exchange shall pay any transfer or other taxes
required by reason of the issuance of certificates for shares of Class A EPS and
Class B EPS in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of Starwood
Trust that such tax has been paid or is not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(b) Distributions with Respect to Unexchanged Worldwide Shares; Voting. (i)
All shares of Class A EPS and Class B EPS to be issued pursuant to the Merger
shall be deemed issued and outstanding as of the Effective Time and whenever a
dividend or other distribution is declared by Starwood Trust in respect of the
Class A EPS and/or Class B EPS (or in respect of the paired shares of Starwood
Trust and Starwood Corp. (the "Starwood Paired Shares"), the record date for
which is at or after the Effective Time, that declaration shall include
dividends or other distributions in respect of all shares issuable pursuant to
this Agreement. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be issued and/or paid to the holder of the
certificates representing whole shares of Class A EPS and Class B EPS (or in
respect of the Starwood Paired Shares) issued in exchange therefor, without
interest, (A) at the time of such surrender, the dividends or other
distributions with a record date at or after the Effective Time theretofore
payable with respect to such whole shares of Class A EPS and/or Class B EPS and
not paid and (B) at the appropriate payment date, the dividends or other
distributions payable with respect to such whole shares of Class A EPS and/or
Class B EPS (or in respect of the Starwood Paired Shares) with a record date at
or after the Effective Time but with a payment date subsequent to surrender.
(ii) Holders of unsurrendered Certificates shall be entitled to vote after
the Effective Time at any meeting of Starwood Trust or Starwood Corp.
stockholders the number of whole shares of Class A EPS and Class B EPS
represented by such Certificates, regardless of whether such holders have
exchanged their Certificates.
(c) Transfers. After the Effective Time, there shall be no transfers on the
stock transfer books of Worldwide of the Worldwide Shares that were outstanding
immediately prior to the Effective Time.
(d) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Class A EPS or Class B EPS will be issued and
any holder of Worldwide Shares entitled to receive a fractional share of Class A
EPS or Class B EPS but for this Section 4.1(d) shall be entitled to receive a
cash payment in lieu thereof, which payment shall equal $38.50 times such
holder's fractional interest in a share of Class A EPS or Class B EPS, as
applicable.
(e) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Starwood Trust, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, Starwood Trust will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Class A EPS and Class B
EPS and any cash payable and any unpaid dividends or other distributions in
respect thereof pursuant to Section 4.1(b) upon due surrender of and deliverable
in respect of the Worldwide Shares represented by such Certificate pursuant to
this Agreement.
(f) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.8) of Worldwide shall not be exchanged until Starwood Trust has
received a written agreement from such Person as provided in Section 6.8 hereof.
Any such affiliate shall be entitled to registration rights as provided in
Section 6.9, provided that nothing in this Agreement or in the Affiliates Letter
(as defined in Section 6.8) shall prevent the Members from distributing the
shares of Class A EPS or Class B EPS received by the Members in the transactions
contemplated by this Agreement,
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or the Starwood Paired Shares received upon conversion thereof, to investors in
the Members or their designees.
4.2. DISSENTERS' RIGHTS. No Dissenting Stockholder shall be entitled to
shares of Class A EPS, Class B EPS or cash in lieu of fractional shares thereof
or any dividends or other distributions pursuant to this Article IV unless and
until such Dissenting Stockholder shall have failed to perfect or shall have
effectively withdrawn or lost such Dissenting Stockholder's right to dissent
from the Merger under the DGCL, and any Dissenting Stockholder shall be entitled
to receive only the payment provided by Section 262 of the DGCL with respect to
Worldwide Shares owned by such Dissenting Stockholder. If any Person who
otherwise would be deemed a Dissenting Stockholder shall have failed properly to
perfect or shall have effectively withdrawn or lost the right to dissent with
respect to any Worldwide Shares, such Worldwide Shares shall thereupon be
treated as though such Worldwide Shares had been converted into shares of Class
A EPS and Class B EPS pursuant to Section 1.3. Worldwide shall give Starwood
Trust (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments served pursuant to
applicable law received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to direct all negotiations and proceedings
with respect to demand for appraisal under the DGCL. Worldwide shall not, except
with the prior written consent of Starwood Trust, voluntarily make any payment
with respect to any demands for appraisals of Dissenting Shares, offer to settle
or settle any such demands or approve any withdrawal of any such demands. No
party to this Agreement shall become a Dissenting Stockholder.
4.3. UNITS OF STARWOOD REALTY PARTNERSHIP AND STARWOOD OPERATING
PARTNERSHIP TO BE ISSUED IN CONNECTION WITH THE SUBSIDIARY CONTRIBUTIONS.
(a) The Issuance. (i) On the Closing Date, Starwood Realty Partnership or
Starwood Operating Partnership, as applicable, shall deliver to the holders of
Lauderdale Shares, Seattle Shares, St. Xxxx Shares, Denver Shares and Atlanta
Shares contributed to Starwood Realty Partnership or Starwood Operating
Partnership, as the case may be, certificates representing the Starwood Realty
Partnership Units or evidence of admission to the Starwood Operating Partnership
Units in accordance with current practice, as the case may be, in respect of
such Subsidiary Contribution.
(ii) Each holder of Lauderdale Shares, Seattle Shares, St. Xxxx Shares,
Denver Shares or Atlanta Shares that contributes such shares to Starwood Realty
Partnership or Starwood Operating Partnership in a Subsidiary Contribution shall
be entitled to receive, as consideration for the contribution of such shares in
such Subsidiary Contribution, (x) a certificate representing (or, in the case of
the Starwood Operating Partnership, evidence of) that number of whole Starwood
Realty Partnership Units or Evidence of Starwood Operating Partnership Units, as
applicable, that such holder is entitled to receive pursuant to Article I and
this Article IV and (y) a check in the amount (after giving effect to any
required tax withholdings) of (A) any cash amount payable in respect of such
shares pursuant to Article I plus (B) any cash in lieu of fractional units plus
(C) any other cash dividends or other cash distributions that such holder has
the right to receive pursuant to the provisions of this Article IV. In the event
of a transfer of ownership of such shares that is not registered in the transfer
records of Lauderdale, Seattle, St. Xxxx, Denver or Atlanta, as the case may be,
a certificate representing (or in the case of the Starwood Operating
Partnership, evidence of) the proper number of Starwood Realty Partnership Units
or evidence of Starwood Operating Partnership Units, as applicable, may be
issued to such a transferee (if such transfer has been approved by the Starwood
Realty Partnership or the Starwood Operating Partnership, as applicable) if the
Certificate representing such shares is presented to Starwood Realty Partnership
or Starwood Operating Partnership, as applicable, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for Starwood
Realty Partnership Units or evidence of Starwood Operating Partnership Units is
to be issued in a name other than that in which the shares contributed in such
Subsidiary Contribution is registered, it shall be a condition of such issuance
of Starwood Realty Partnership Units or Starwood Operating Partnership Units
that the Person requesting such exchange shall pay any transfer or other taxes
required by reason of the issuance of certificates for Starwood Realty
Partnership Units or evidence of Starwood Operating Partnership Units,
contributed in a name other than that of the registered holder of the shares
contributed in such Subsidiary Contribution, or shall establish to the
satisfaction of Starwood Realty Partnership or Starwood Operating Partnership
that such taxes have been paid or are not applicable.
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(b) Distributions with Respect to Unexchanged Subsidiary Shares;
Voting. (i) All Starwood Realty Partnership Units or Starwood Operating
Partnership Units to be issued pursuant to each Subsidiary Contribution shall be
deemed issued and outstanding as of the Closing Date and whenever a distribution
is declared by Starwood Realty Partnership or Starwood Operating Partnership in
respect of the Starwood Realty Partnership Units or Starwood Operating
Partnership Units, as applicable, the record date for which is at or after the
Closing Date, that declaration shall include distributions in respect of all
Starwood Realty Partnership Units or Starwood Operating Partnership Units
issuable pursuant to this Agreement in connection with such Subsidiary
Contribution. Subject to the effect of applicable laws, following the
contribution of any such share in a Subsidiary Contribution, there shall be
issued and/or paid to the holder of the certificates representing whole Starwood
Realty Partnership Units or Starwood Operating Partnership Units issued in
exchange for such contribution, without interest, (A) at the time of such
surrender, the distributions with a record date at or after the Closing Date
theretofore payable with respect to such whole Starwood Realty Partnership Units
or Starwood Operating Partnership Units, as applicable, and not paid and (B) at
the appropriate payment date, the distributions payable with respect to such
whole Starwood Realty Partnership Units or Starwood Operating Partnership Units,
as applicable, with a record date at or after the Closing Date but with a
payment date subsequent to issuance of certificates representing such Starwood
Realty Partnership Units or Starwood Operating Partnership Units, as applicable.
(ii) Holders of surrendered shares contributed in a Subsidiary Contribution
shall be entitled to vote after the Closing Date at any meeting of Starwood
Realty Partnership or Starwood Operating Partnership unitholders the number of
whole Starwood Realty Partnership Units or Starwood Operating Partnership Units
represented by such shares so contributed, regardless of whether such holders
have received Starwood Realty Partnership Units or Starwood Operating
Partnership Units in respect of the shares contributed by such holder.
(c) Fractional Units. Notwithstanding any other provision of this
Agreement, no fractional Starwood Realty Partnership Units or Starwood Operating
Partnership Units will be issued and any holder of shares contributed in a
Subsidiary Contribution entitled to receive a fractional unit of Starwood Realty
Partnership Units or Starwood Operating Partnership Units but for this Section
4.3(c) shall be entitled to receive a cash payment in lieu thereof, which
payment shall equal $38.50 times such holder's fractional interest in a Starwood
Realty Partnership Unit or Starwood Operating Partnership Unit, as applicable.
(d) Lost, Stolen or Destroyed Subsidiary Certificates. In the event any
certificate representing a share of a Westin Subsidiary to be contributed in a
Subsidiary Contribution shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such certificate to
be lost, stolen or destroyed and, if required by Starwood Realty Partnership or
Starwood Operating Partnership, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such certificate, Starwood Realty Partnership or Starwood Operating
Partnership, as applicable, will issue in respect of such lost, stolen or
destroyed certificate the Starwood Realty Partnership Units or Starwood
Operating Partnership Units, as applicable, and any cash payable and any unpaid
distributions in respect thereof pursuant to Section 4.3(b) upon due surrender
of and deliverable in respect of the shares of such Westin Subsidiary
represented by such certificate pursuant to this Agreement.
(e) Affiliates. Notwithstanding anything herein to the contrary, shares
contributed in a Subsidiary Contribution by any "affiliate" (as determined
pursuant to Section 6.8) of Lauderdale, Seattle, St. Xxxx, Denver or Atlanta, as
applicable, shall not be exchanged until Starwood Realty Partnership or Starwood
Operating Partnership, as applicable, has received a written agreement from such
Person as provided in Section 6.8 hereof. Any such affiliate shall be entitled
to registration rights as provided in Section 6.9., provided, that nothing in
this Agreement or in any Affiliates Letter shall prevent the Members from
distributing the Class A EPS, Class B EPS, Starwood Realty Partnership Units or
Starwood Operating Partnership Units received by the Members in the transactions
contemplated by this Agreement, or the Starwood Paired Shares received upon
conversion thereof, to investors in the Members or their designees.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF THE WESTIN COMPANIES. Each of the
LLC and the Members hereby represents and warrants to the Starwood Companies
that:
(a) Organization, Good Standing and Qualification. Each of the Westin
Companies, and each of their respective Subsidiaries is a limited liability
company, corporation or partnership duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate, limited liability company or partnership power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted; each is qualified to do business and is in good
standing as a foreign corporation, limited liability company or partnership in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing, when taken together with all other such failures,
is not reasonably likely to have a Westin Material Adverse Effect (as defined
below). The Westin Companies have made available to the Starwood Companies
complete and correct copies of the certificate of formation of the LLC and the
certificates of incorporation and by-laws, each as amended to date, of each of
the Westin Subsidiaries and each of their Subsidiaries. The certificate of
formation of the LLC and certificates of incorporation and by-laws of the Westin
Subsidiaries and their respective Subsidiaries so made available are in full
force and effect.
As used in this Agreement, the term (i) "Subsidiary" means, with respect to
any Westin Company or any Starwood Company, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries and (ii) "Westin Material Adverse Effect" means a
material adverse change in or effect on (or any development that would likely
result in such change or effect on) the financial condition, properties,
business, results of operations or prospects of the Westin Companies and their
Subsidiaries taken as a whole; provided, however, that any such effect resulting
from any change in law, rule or regulation or GAAP or interpretations thereof
that applies to both the Starwood Companies and the Westin Companies shall not
be considered when determining if a Westin Material Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of Lauderdale, Seattle,
St. Xxxx, Atlanta, Denver and Worldwide consists solely of 2,000,000, 2,000,000,
1000, 100, 100 and 2,000,000 shares of common stock, respectively, of which
987,931.4, 987,931.4, 10, 100, 100 and 987,931.4 shares of common stock were
outstanding as of the date hereof. All the outstanding capital stock of
Lauderdale, Seattle, St. Xxxx, Denver, Atlanta and Worldwide has been duly
authorized and is validly issued, fully paid and nonassessable and, except as
set forth in Section 5.1(b) of the disclosure letter delivered to the Starwood
Companies by the Westin Companies and the Members on or prior to entering into
this Agreement (the "Westin Disclosure Letter")(it being understood and agreed
that the inclusion of an item on the Westin Disclosure Letter shall not
constitute an admission by the Westin Companies that such item is required to be
set forth therein in response to the representation and warranty that
corresponds to such section of the Westin Disclosure Letter), owned beneficially
by the LLC. Lauderdale, Seattle, St. Xxxx, Atlanta, Denver and Worldwide have no
shares of capital stock reserved for issuance, except that, as of the date
hereof, Xxxxxxx Xxxxxxx, Xxxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxx hold
options to purchase shares of Worldwide, Seattle and Lauderdale pursuant to
their respective employment and related agreements, all of which shall either
have been exercised or terminated immediately prior to the Effective Time.
Except as set forth in Section 5.1(b) of the Westin Disclosure Letter, each of
the outstanding shares of capital stock or other securities of each of the
Subsidiaries of the Westin Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and, except for directors' qualifying shares, owned
directly or indirectly by Lauderdale, Seattle, St. Xxxx, Atlanta, Denver and
Worldwide, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights (other than with respect to wholly-owned subsidiaries),
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase
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rights, agreements, arrangements or commitments to issue or sell any shares of
capital stock or other securities of the Westin Subsidiaries or any of their
respective Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of Lauderdale, Seattle, St. Xxxx, Atlanta, Denver
or Worldwide or any of their respective Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. None
of the Westin Subsidiaries nor any of their Subsidiaries have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or that are convertible into or exercisable for securities having
the right to vote) with the stockholders, members or partners, as the case may
be, of any of the Westin Subsidiaries or any of their Subsidiaries on any matter
("Westin Voting Debt"). At June 30, 1997, the aggregate principal amount of the
Worldwide Debt (without inclusion of any indebtedness of Westin Hotels Limited
Partnership, Westin Chicago Limited Partnership, Westin St. Xxxxxxx Limited
Partnership, or any of their respective general partners) was $547,621,753 plus
CN$ 985,000.
(c) Corporate Authority; Approval. (i) The Members and the Westin Companies
have all requisite corporate, limited liability company or partnership power and
authority and have taken all corporate, partnership or limited liability company
action necessary in order to execute, deliver and perform their obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated hereby. This Agreement is a valid and binding agreement of each of
the Members and the Westin Companies enforceable against each of the Members and
the Westin Companies in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(ii) The Board of Managers of the LLC and the Members have approved this
Agreement and the other transactions contemplated hereby and the Board of
Directors of Worldwide has unanimously approved the Merger.
(iii) Pursuant to Section 228 of the DGCL, the stockholders of Worldwide
have approved this Agreement and the Merger by written consent.
(d) Governmental Filings; No Violations. (i) Except as set forth in Section
5.1(d) of the Westin Disclosure Letter, other than the filings and/or notices
(A) pursuant to Section 1.4, (B) under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and (C) filings necessary
to permit transfer or retention of liquor licenses, no notices, reports or other
filings are required to be made by any of the Members or the Westin Companies
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by any of the Members or the Westin Companies from, any
governmental or regulatory authority, agency, commission, court, body or other
governmental entity ("Governmental Entity"), in connection with the execution
and delivery of this Agreement by the Members and the Westin Companies and the
consummation by Worldwide of the Merger and by the Members and the Westin
Companies of the other transactions contemplated hereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Westin Material Adverse Effect or prevent, materially delay or
materially impair the ability of Worldwide to consummate the Merger or the
Westin Companies to consummate the transactions contemplated by this Agreement.
(ii) Except as set forth in Section 5.1(d) of the Westin Disclosure Letter,
the execution, delivery and performance of this Agreement by the Members and the
Westin Companies, the consummation by Worldwide of the Merger and the
consummation by the Members and the Westin Companies of the other transactions
contemplated hereby will not constitute or result in (A) a breach or violation
of, or a default under, the respective certificates of formation, limited
liability company agreement or partnership agreement of the Members or the LLC
or the respective certificates of incorporation or by-laws of the Westin
Subsidiaries or the comparable governing instruments of any of their
Subsidiaries, (B) a breach or violation of, or a default or the loss of any
material benefit under, or the acceleration of any obligations or the creation
of a lien, pledge, security interest or other encumbrance on the assets of the
Westin Companies or any of their Subsidiaries (with or without notice, lapse of
time or both) pursuant to, any agreement, lease, contract, note, mortgage,
indenture, license, arrangement or other obligation not otherwise terminable by
the other party
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thereto on 30 days' or less notice ("Westin Contracts") binding upon the Westin
Companies or any of their Subsidiaries or any Law (as defined in Section 5.1(i))
or governmental or non-governmental permit or license to which the Westin
Companies or any of their Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any of the Westin Contracts, except, in
the case of clause (B) or (C) above, for any breach, violation, default, loss of
benefits, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to have a Westin Material Adverse Effect or
prevent, materially delay or materially impair the ability of Worldwide to
consummate the Merger or the Westin Companies to consummate the transactions
contemplated by this Agreement.
(e) Financial Statements. Section 5.1(e) of the Westin Disclosure Letter
contains (i) the consolidated balance sheets of the LLC for the years ended
December 31, 1996 and December 31, 1995 and the related consolidated statements
of operations (the "Statements of Operations"), members' equity and cash flows
for each of the year ended December 31, 1996 and the period from May 12, 1995
through December 31, 1995, and the combined statements of operations, changes in
net assets and cash flows of the Predecessor Business for the period from
January 1, 1995 through May 12, 1995, together with the appropriate notes to
such financial statements, accompanied by the report thereon of Xxxxxx Xxxxxxxx
LLP, independent public accountants (the "Audited Financial Statements"), and
(ii) the unaudited consolidated balance sheet of the LLC as of March 31, 1997
and June 30, 1997, and the related unaudited consolidated statements of income
and cash flows for the three months and six months, respectively, then ended
(the "Unaudited Financial Statements"). Except as disclosed in the notes
thereto, the Audited Financial Statements and the Unaudited Financial Statements
have been prepared in conformity with GAAP consistently applied and fairly
present in all material respects the consolidated financial position of the LLC
at the dates of such balance sheets and the results of their operations and cash
flows for the respective periods indicate, except that the Unaudited Financial
Statements are subject to notes and normal year-end adjustments except as may be
noted therein. None of the financial statements referred to in Section 5.1(e) of
the Westin Disclosure Letter for the period after December 31, 1996 contains any
material items of special or nonrecurring income except as expressly specified
therein or in Section 5.1(e) of the Westin Disclosure Letter. Except as set
forth in Section 5.1(e) of the Westin Disclosure Letter or in the Unaudited
Financial Statements, the Unaudited Financial statements include all adjustments
except as may be noted therein, which consist only of normal recurring accruals,
necessary for such fair presentation, other than normal year-end adjustments.
Except as set forth in Section 5.1(e) of the Westin Disclosure Letter, all
assets shown on the balance sheets of the LLC referred to in this Section 5.1(e)
are owned by the Westin Subsidiaries and all revenues reflected on the
Statements of Operations were generated by the Westin Subsidiaries.
(f) Absence of Certain Changes. Except as disclosed in the financial
statements provided to Starwood Trust or as set forth in Section 5.1(f) of the
Westin Disclosure Letter, since December 31, 1996 (the "Audit Date") the Westin
Companies and their Subsidiaries have conducted their respective businesses only
in, and have not engaged in any material transaction other than according to,
the ordinary and usual course of such businesses consistent with past practice
and there has not been (i) any change in the financial condition, properties
(other than hotel acquisitions previously disclosed to Starwood Trust or
Starwood Corporation), business or results of operations of the Westin Companies
and their Subsidiaries or any development or combination of developments that,
individually or in the aggregate, has had or is reasonably likely to have a
Westin Material Adverse Effect; (ii) any material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased or
otherwise used by the Westin Companies or any of their Subsidiaries, whether or
not covered by insurance; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of Lauderdale,
Seattle, St. Xxxx, Atlanta, Denver or Worldwide, except for dividends or other
distributions on its capital stock disclosed to Starwood Trust prior to the date
hereof; (iv) any change by Lauderdale, Seattle, St. Xxxx, Atlanta, Denver or
Worldwide in accounting principles, practices or methods or; (v) any other
action, event or transaction that would have required the prior written consent
of Starwood Trust under Section 6.1 hereof if this Agreement had been entered
into on the Audit Date. Since the Audit Date, except as provided for herein or
as disclosed in Section 5.1(f) of the Westin Disclosure Letter, there has not
been any increase in the compensation payable or that could become payable by
Lauderdale, Seattle, St. Xxxx, Atlanta, Denver or Worldwide or any of their
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Subsidiaries to officers or key employees or any amendment of any of the
Compensation and Benefit Plans (as defined in Section 5.1(h)) other than
increases or amendments in the ordinary course.
(g) Litigation and Liabilities. (i) Except as disclosed in Section
5.1(g)(i) of the Westin Disclosure Letter, there are no (a) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Westin Companies, threatened against the
Westin Companies or any of their Affiliates, (b) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law (as defined in Section 5.1(j)) or (c) any other facts or circumstances that
could result in any claims against, or obligations or liabilities of, the Westin
Companies or any of their Affiliates, except for those (collectively, the
"Immaterial Litigation"), in each case (a), (b) or (c), that are not,
individually or in the aggregate, reasonably likely to have a Westin Material
Adverse Effect or prevent or materially burden or materially impair the ability
of Worldwide to consummate the Merger or the Westin Companies to consummate the
transactions contemplated by this Agreement. The term 'knowledge' when used in
this Agreement with respect to the Westin Companies shall mean, as of the date
of this Agreement, the actual knowledge of Xxxxxxx Xxxxxxx, Xxxxxxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxxxx X. Xxxxxx (with respect to matters
under the supervision of the general counsel's office) after due inquiry and
shall mean, as of the Closing Date, the actual knowledge of Xxxxxxx Xxxxxxx,
Xxxxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx xxx Xxxxxxxxxx, Xxx Xxxx, Xxxx
Pujolet, Hud Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx
and Xxxxxxxxx Xxxxxx (in each case with respect to matters under their
respective supervision), after due inquiry.
(ii) Except as disclosed in Section 5.1(g)(ii) of the Westin Disclosure
Letter, all the actions, suits, claims, hearings, investigations or proceedings
set forth in Section 5.1(g)(i) of the Westin Disclosure Letter (other than the
Immaterial Litigation) are covered by one or more insurance policies listed on
Section 5.1(n) of the Westin Disclosure Letter.
(h) Employee Benefits.
(i) A copy of each material bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy or
arrangement that covers employees, directors, former employees or former
directors of the Westin Companies and their Subsidiaries (the"Compensation and
Benefit Plans") and any trust arrangements or insurance contract forming a part
of such Compensation and Benefit Plans has been "furnished" (it being understood
that the term "furnished" shall be deemed to include, but not be limited to, the
inclusion of a specified item in the data room established by the Westin
Companies) to Starwood Trust prior to the date hereof. The Compensation and
Benefit Plans are listed in Section 5.1(h) of the Westin Disclosure Letter. The
Westin Companies have furnished or made available to Starwood Trust (i) the most
recent annual report prepared in connection with any Compensation and Benefit
Plan (Form 5500 including, if applicable, Schedule B thereto) and (ii) the most
recent actuarial valuation report received in connection with any Compensation
and Benefit Plan. Section 5.1(h) of the Westin Disclosure Letter identifies each
Compensation and Benefit Plan which is a multiemployer plan, within the meaning
of section 3(37) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (a "Multiemployer Plan"). With respect to each Multiemployer
Plan, the Westin Companies have delivered to Starwood Trust correct and complete
copies of all correspondence and other information in the possession of the
Westin Companies and their Subsidiaries relating to any anticipated increases in
contribution rates with respect to such plan. The Westin Companies have
delivered to Starwood Trust with respect to each of the Multiemployer Plans
correct and complete copies of all correspondence and other information in the
possession of the Westin Companies and their Subsidiaries relating to
determinations made during the three year period ending on the date hereof of
any withdrawal liability or hypothetical withdrawal liability under Section 4201
of ERISA of any ERISA Affiliate.
(ii) All Compensation and Benefit Plans are in substantial compliance with
their terms and all applicable law, including the Code and ERISA. Except as
disclosed in Section 5.1(h) of the Westin Disclosure Letter, each Compensation
and Benefit Plan that is an "employee pension benefit plan" within the
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meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") or such
determination letter request has been or will be filed with the IRS prior to the
end of the any applicable remedial/amendment period, and the Westin Companies
are not aware of any event that would adversely affect such qualification. None
of the Westin Companies nor any of their Subsidiaries has engaged in a
transaction with respect to any Compensation and Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
the Westin Companies or any of their Subsidiaries to a material tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by any Westin Company or any
Subsidiary or to the knowledge of the Westin Companies any ERISA Affiliate of
the Westin Companies with respect to any ongoing, frozen or terminated single
employer plan, within the meaning of Section 4001(a)(15) of ERISA (a "Single
Employer Plan"). To the knowledge of the Westin Companies, no proceeding has
been initiated to terminate any Multiemployer Plan. To the knowledge of the
Westin Companies, no Multiemployer Plan is in reorganization as described in
Section 4241 of ERISA or insolvent as described in Section 4245 of ERISA. Except
as disclosed in Section 5.1(h) of the Westin Disclosure Letter, none of the
Westin Companies, their Subsidiaries or, to the knowledge of the Westin
Companies, their ERISA Affiliates, have incurred or reasonably expect to incur
any withdrawal liability with respect to any Multiemployer Plan under Subtitle E
of ERISA. None of the Westin Companies, their Subsidiaries or, to the knowledge
of the Westin Companies, their ERISA Affiliates has failed to make a required or
disputed contribution to any Multiemployer Plan. None of the Westin Companies,
their Subsidiaries or, to the knowledge of Westin Companies, ERISA Affiliates is
bound by a contract or agreement or has any obligation or liability described in
Section 4204 of ERISA. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or, to the knowledge
of Westin Companies, by any ERISA Affiliate within the 12-month period ending on
the date hereof.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet provided to
Starwood Trust prior to the date hereof. Neither any Pension Plan nor any Single
Employer Plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. None of the Westin Companies nor any of their Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
Single Employer Plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(v) Under each Pension Plan which is a Single Employer Plan and is covered
by Title IV of ERISA, as of the last day of the most recent plan year ended
prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the Pension
Plan's most recent actuarial valuation), did not exceed the then current value
of the assets of such Pension Plan, and there has been no material change in the
financial condition of such Pension Plan since the last day of the most recent
plan year.
(vi) None of the Westin Companies nor any of their Subsidiaries has any
obligation for retiree health and life benefits under any Compensation and
Benefit Plan, except as set forth in Section 5.1(h) of the Westin Disclosure
Letter. Except as disclosed in Section 5.1(h)(vi) of the Westin Disclosure
Letter, the Westin Companies or their Subsidiaries may amend or terminate any
such plan under the terms of such plan at any time without incurring any
material liability thereunder.
(vii) Except as disclosed in Section 5.1(h)(vii) of the Westin Disclosure
Letter, all Compensation and Benefit Plans covering current or former non-U.S.
employees of the Westin Companies and their Subsidiaries comply in all material
respects with applicable local law. The Westin Companies and their Subsidiaries
have no material unfunded liabilities with respect to any Pension Plan that
covers such non-U.S. employees, in excess of the amount reserved therefor.
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(viii) Except as disclosed in Section 5.1(h) of the Westin Disclosure
Letter, there is no material pending or, to the Westin Companies' knowledge,
threatened legal action or claim with respect to any of the Compensation and
Benefit Plans.
(ix) Except as set forth in Section 5.1(h) of the Westin Disclosure Letter,
the consummation of the transaction contemplated by this Agreement will not
result in an increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any compensation or benefits payable to or
in respect of any employee of a Westin Company or a Subsidiary of the Westin
Companies.
(i) Compliance with Laws; Permits. Except as set forth in Section 5.1(i) of
the Westin Disclosure Letter, the businesses of the Westin Companies and their
Subsidiaries have not been, and are not being, conducted in violation of any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement,
license or permit of any Governmental Entity (collectively, "Laws"), except for
violations or possible violations that, individually or in the aggregate, are
not reasonably likely to have a Westin Material Adverse Effect or prevent or
materially burden or materially impair the ability of Worldwide to consummate
the Merger or the Westin Companies to consummate the transactions contemplated
by this Agreement. Except as set forth in Section 5.1(i) of the Westin
Disclosure Letter, no investigation or review by any Governmental Entity with
respect to the Westin Companies or any of their Subsidiaries is pending or, to
the knowledge of the Westin Companies, threatened, nor has any Governmental
Entity indicated an intention to conduct the same, except for those the outcome
of which are not, individually or in the aggregate, reasonably likely to have a
Westin Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Westin Companies to consummate the transactions
contemplated by this Agreement. Except as set forth in Section 5.1(i) of the
Westin Disclosure Letter, no material change is required in the Westin
Companies' or any of their Subsidiaries' processes, properties or procedures in
connection with any such Laws, and, to the knowledge of the Westin Companies,
none of the Westin Companies has received any notice or communication of any
material noncompliance with any such Laws that has not been cured as of the date
hereof. Each of the Westin Companies and their Subsidiaries has all permits,
licenses, trademarks, patents, trade names, copyrights, service marks,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct their business as presently
conducted except those the absence of which are not, individually or in the
aggregate, reasonably likely to have a Westin Material Adverse Effect or prevent
or materially burden or materially impair the ability of Worldwide to consummate
the Merger or the Westin Companies to consummate the other transactions
contemplated by this Agreement.
(j) Environmental Matters. (i) Except as disclosed on Section 5.1(j) of the
Westin Disclosure Letter, the Westin Companies and their Subsidiaries have at
all times materially complied and are in material compliance with applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, common law, legally binding agency requirements, judgments and orders
relating to the environment, the effect of Hazardous Substances on human health,
or to emissions, discharges or releases of Hazardous Substances into the indoor
or outdoor environment, including, without limitation, ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances (as defined below) or the investigation,
monitoring, clean-up or other remediation thereof ("Environmental Laws"). To the
knowledge of the Westin Companies, except as disclosed on Section 5.1(j) of the
Westin Disclosure Letter, there are no Hazardous Substances present in, on,
under, or about any Real Property (as defined in Section 5.1(p)) except in
compliance with Environmental Laws.
(ii) Except as disclosed in Section 5.1(j) of the Westin Disclosure Letter,
there are no losses or actual or, to the knowledge of the Westin Companies,
potential claims or liabilities of or relating to any of the Westin Companies or
their Subsidiaries which (i) arise under or relate to matters covered by
Environmental Laws and (ii) relate to acts or omissions of the Westin Companies
occurring or conditions or circumstances existing on or prior to the Closing
Date with respect to the Westin Companies and their Subsidiaries that
individually or in the aggregate have had or may reasonably be expected to have
a Westin Material Adverse Effect.
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(iii) Except as disclosed in Section 5.1(j) of the Westin Disclosure
Letter, there have not been any claims, notices of violation, allegations of
non-compliance, and to the knowledge of the Westin Companies, threatened or
anticipated suits, investigations, or information requests, including notices
from citizens' groups, involving any of the Westin Companies or any of their
Subsidiaries or any Real Property currently owned or operated by any of the
Westin Companies or any of their Subsidiaries that individually or in the
aggregate have had or may reasonably be expected to have a Westin Material
Adverse Effect.
(iv) There has been no material written environmental report, study, audit
or review conducted by any of the Westin Companies or any of their Subsidiaries
in relation to the current or prior business of any of the Westin Companies or
any of their Subsidiaries or any Real Property or facility now or previously
owned or leased by any of the Westin Companies or any of their Subsidiaries
which has not been furnished to the Starwood Companies by the Westin Companies
at least five days prior to the date hereof.
(v) As used in this Agreement, the term (i) "Hazardous Substance" means any
toxic, radioactive, reactive, corrosive or hazardous substance, any pollutant,
contaminant, or any waste, including petroleum, its derivatives, by-products and
other hydrocarbons, asbestos containing materials, radon gas and any other
chemicals, materials or substances designated, classified or regulated as being
"hazardous" or "toxic", or words of similar import, under any Environmental Law.
(k) Tax Matters. As of the date hereof, none of the Westin Companies nor
any of their Affiliates has taken or agreed to take any action, nor do the
Westin Companies have any knowledge of any fact or circumstance, that would
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code.
(l) Taxes. Except as set forth in Section 5.1(l) of the Westin Disclosure
Letter, (i) each of the Westin Companies, each of their Subsidiaries and each
Westin Affiliated Group has filed all Tax Returns required to be filed; (ii) all
such Tax Returns are complete and accurate in all material respects and disclose
all Taxes required to be paid by each of the Westin Companies, each of their
Subsidiaries and each Westin Affiliated Group for the periods covered thereby
and all Taxes shown to be due on such Tax Returns have been timely paid; (iii)
all Taxes (whether or not shown on any Tax Return) owed by any of the Westin
Companies, any of their Subsidiaries or any Westin Affiliated Group have been
timely paid; (iv) none of any of the Westin Companies, any of their Subsidiaries
or any member of any Westin Affiliated Group has waived or been requested to
waive any statute of limitations in respect of Taxes which waiver is currently
in effect; (v) the Tax Returns referred to in clause (i), to the extent related
to income Taxes, have been examined by the appropriate taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (vi) there is no action, suit, investigation,
audit, claim or assessment pending or, to the knowledge of the Westin Companies,
proposed or threatened with respect to Taxes of any of the Westin Companies, any
of their Subsidiaries or any Westin Affiliated Group; (vii) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (i) have been paid in full; (viii) all Tax Sharing
Arrangements and Tax indemnity arrangements relating to any of the Westin
Companies or any of their Subsidiaries (other than this Agreement) will
terminate prior to the Closing Date and neither any of the Westin Companies nor
any of their Subsidiaries will have any liability thereunder on or after the
Closing Date; (ix) there are no liens for Taxes upon the assets of any of the
Westin Companies or any of their Subsidiaries except liens relating to current
Taxes not yet due; (x) all Taxes which any of the Westin Companies, any of their
Subsidiaries or any Westin Affiliated Group are required by law to withhold or
to collect for payment have been duly withheld and collected, and have been paid
or accrued, reserved against and entered on the books of the Westin Companies;
(xi) none of any of the Westin Companies or any of their Subsidiaries has been a
member of any Westin Affiliated Group other than one in which a Westin Company
was the common parent; (xii) no intercompany obligation (as described in Treas.
Reg. sec. 1.1502-13(g)) between or among any of the Westin Companies, any of
their Subsidiaries or any member of any Westin Affiliated Group will remain
outstanding after the Closing Date; (xiii) no income or gain of any of the
Westin Companies or any of their Subsidiaries has been deferred pursuant to
Treasury Regulation sec. 1.1502-13 or Temporary Treasury Regulation sec.
1.1502-13T and (xiv) no excess loss account (as described in Treasury Regulation
sec. 1.1502-19), exists with respect to any of the Westin Companies or any of
their Subsidiaries.
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No payment or other benefit, and no acceleration of the vesting of any
options, payments or other benefits, will be, as a direct or indirect result of
the transactions contemplated by this Agreement, an "excess parachute payment"
to a "disqualified individual" as those terms are defined in Section 280G of the
Code and the Treasury Regulations thereunder. Except as set forth in Section
5.1(l) of the Westin Disclosure Letter or with respect to the employment and
similar agreements to which Xxxxxxx Xxxxxxx, Xxxxxxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxxx and Xxxx Xxx Xxxxxxxxxx are parties, no payment or other benefit, and no
acceleration of the vesting of any options, payments or other benefits, will, as
a direct or indirect result of the transactions contemplated by this Agreement,
be (or under Section 280G of the Code and the Treasury Regulations thereunder be
presumed to be) a "parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code and the Treasury Regulations
thereunder, without regard to whether such payment or acceleration is reasonable
compensation for personal services performed or to be performed in the future.
As used in this Agreement, (i) the term "Westin Affiliated Group" means any
"affiliated group" (as defined in Section 1504(a) of the Code without regard to
the limitations contained in Section 1504(b) of the Code) that, at any time on
or before the Effective Time, includes or has included any of the Westin
Companies or any of their Subsidiaries or any predecessor of or successor to any
of the Westin Companies or any of their Subsidiaries (or another such
predecessor or successor), or any other group of corporations which, at any time
on or before the Closing Date, files or has filed Tax Returns on a combined,
consolidated or unitary basis with any of the Westin Companies or any of their
Subsidiaries or any predecessor of or successor to any of the Westin Companies
or any of their Subsidiaries (or another such predecessor or successor); (ii)
the term "Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") includes (A) all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severances, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (B) any liability for
the payment of amounts with respect to payments of a type described in clause
(A) as a result of being a member of an affiliated, consolidated, combined or
unitary group, or as a result of any obligation of any of the Westin Companies
or any of their Subsidiaries under any Tax Sharing Arrangement or Tax indemnity
arrangement; (iii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes; and (iv) the term "Tax Sharing Arrangement" means any written or
unwritten agreement or arrangement for the allocation or payment of Tax
liabilities or payment for Tax benefits with respect to a consolidated, combined
or unitary Tax Return which Tax Return includes any member of a Westin Group.
(m) Labor Matters. None of the Westin Companies or any of their
Subsidiaries is, as of the date hereof, the subject of any material proceeding
asserting that the Westin Companies or any of their Subsidiaries has committed
an unfair labor practice or is seeking to compel it to bargain with any labor
union or labor organization nor is there pending or, to the knowledge of the
Westin Companies, threatened, nor has there been for the past two years, any
labor strike, dispute, walk-out, work stoppage, slow-down or lockout involving
the Westin Companies or any of their Subsidiaries, except for any labor strike,
dispute, walk-out, work stoppage, slow-down or lockout that, individually or in
the aggregate, is not reasonably likely to have a Westin Material Adverse
Effect. To the knowledge of the Westin Companies, there are no current
organizational campaigns, petitions or other unionization activities seeking
recognition of a collective bargaining unit that could materially adversely
affect any of the Westin Companies or any of their Subsidiaries. The Westin
Companies have previously furnished to the Starwood Companies correct and
complete copies of all labor and collective bargaining agreements to which the
Westin Companies or any of their Subsidiaries is party or by which any of them
are otherwise bound.
(n) Insurance. All material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by the Westin Companies and any of their Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of the Westin Companies and their
Subsidiaries and their respective properties and
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assets, and are in character and amount consistent with past practices of the
Westin Companies, except for any such failures to maintain insurance policies
that, individually or in the aggregate, are not reasonably likely to have a
Westin Material Adverse Effect. The Westin Companies have furnished to the
Starwood Companies a true, correct and complete list of, and true, correct and
complete copies of, all material insurance policies and fidelity bonds or
binders containing the terms thereof relating to the assets, business,
operations, employees, officers or directors of the Westin Companies and their
Subsidiaries (the "Policies"). With respect to each such policy, except as
disclosed in Section 5.1(n) of the Westin Disclosure Letter, (i) there is no
material claim pending under any of the Policies as to which coverage has been
questioned, denied or disputed by the underwriters of the Policies or in respect
of which such underwriters have reserved their rights; (ii) all premiums owed
have been paid, and all premiums which will become due and payable prior to the
Closing Date will be timely paid; (iii) none of the Westin Companies and their
Subsidiaries has given or received any notice of cancellation, termination or
nonrenewal of any such Policy; (iv) no material breaches or defaults exist under
any of the Policies; and (v) none of the Policies will terminate or be adversely
affected by the transactions contemplated by this Agreement.
(o) Brokers and Finders. None of the Members and Westin Companies nor any
of their officers, directors or employees has employed any broker, agent or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the Merger or the other transactions contemplated in
this Agreement except that the Members and the LLC have employed Xxxxxxx, Xxxxx
& Co. as their financial advisor, and one of the Members has employed Bear
Xxxxxxx & Co. as its financial advisor, fees of which shall be paid by the
Members or the LLC or such Member, respectively.
(p) Properties.
(i) The Westin Companies, together with each and all of their respective
Subsidiaries and affiliates, which own (wholly or in partnerships or joint
ventures) any real property or have any interest in real property (including,
without limitation, any leasehold interest), including without limitation, the
Real Property, the Hotels, the Space Leases, any Tenant Leases (as defined
below) (collectively, the "Real Property Entities" or singularly, a "Real
Property Entity"), and, to the knowledge of the Westin Companies, Westin X'Xxxx
Hotel Venture ("Westin X'Xxxx") have good and marketable title in fee simple to
each of the owned properties identified in clause (i) of Section 5.1(p)(i) of
the Westin Disclosure Letter opposite each such Real Property Entity (the "Owned
Properties"), subject only to the Liens (as defined below) disclosed in clause
(i) of Section 5.1(p)(i) of the Westin Disclosure Letter and to the following
(the "Permitted Liens"):
(1) Liens that secure liabilities (including, but not limited to,
Liens that secure mortgage debt and capitalized leases) reflected on the
combined unconsolidated balance sheet of the Westin Subsidiaries on the
Audit Date or disclosed in the notes thereto or incurred after the Audit
Date;
(2) Liens permitted under Section 6.1(c);
(3) Liens for real estate taxes, assessments and similar charges that
are not yet due and payable delinquent;
(4) mechanic's, materialman's, carrier's, worker's, repairer's and
other similar Liens that arise or are incurred in the ordinary course of
business and are not yet delinquent or, if delinquent, are being contested
in good faith and an adverse determination in such contest would not
reasonably be foreseen to have a Westin Material Adverse Effect;
(5) any and all leases, subleases, licenses, concessions and other
occupancy agreements, and any amendments thereto, whether or not of record,
for the use of occupancy of any portion of the Real Properties excluding,
however, bookings (collectively, "Space Leases"). For purposes of this
Agreement the term Space Lessee means any Person or entity entitled to
occupancy of any portion of the Real Property under a Space Lease;
(6) Liens set forth on or described in title policies, reports or
commitments that have been furnished to Starwood Trust; and
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(7) Liens that would not adversely affect use of the owned properties
by the Westin Companies in a manner consistent with the prior use thereof
by the Westin Companies.
(ii) One or more of the Real Property Entities has, with respect to each of
the leased properties identified in clause (ii) of Section 5.1(p)(ii) of the
Westin Disclosure Letter opposite each such Real Property Entity (the "Leased
Properties"), real estate leases and/or subleases or ground leases and/or ground
subleases described in clause (ii) of Section 5.1(p) of the Westin Disclosure
Letter which are valid, binding, enforceable and in full force and effect and
have not been modified orally or in writing except as disclosed thereon, and the
Real Property Entities hold a valid and existing leasehold interest under each
of such leases or subleases or ground leases and/or ground subleases
(collectively, "Tenant Leases"). The Tenant Leases described in clause (ii) of
Section 5.1(p)(ii) of the Westin Disclosure Letter constitute all of the Tenant
Leases under which the Real Property Entities hold leasehold or subleasehold
interests in Hotels or any other interests in real estate that are material to
the business of the Westin Companies, including the Real Property. Complete,
true and accurate copies of each of the Tenant Leases have been furnished to the
Starwood Companies. With respect to each Tenant Lease:
(1) such Tenant Lease shall continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Closing;
(2) the Real Property Entity which is party to such Tenant Lease is
not, and to the knowledge of the Westin Companies, no other party to such
lease or sublease is, in breach or default, and no event has occurred
which, with notice or lapse of time, or both, would constitute such a
breach or default or permit termination, modification or acceleration under
such Tenant Lease; and
(3) none of the Real Property Entities have assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the
Tenant Lease except as disclosed in clause (ii) of Section 5.1(p) of the
Westin Disclosure Letter.
(iii) Complete, true and accurate copies of rent rolls for Real Property
Entities described in clauses (i) and (ii) of Section 5.1(p) of the Westin
Disclosure Letter have been furnished to the Starwood Companies. With respect to
each such Space Lease the following shall apply:
(1) such Space Lease shall continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Closing; and
(2) neither the Real Property Entity which is party to such Space
Lease, nor, to the knowledge of the Westin Companies, any other party to
such Space Lease is in breach or default under such Space Lease, except in
the case of (1) and (2), for such failure to be in full force and effect or
for such breaches that would not be material to the Westin Companies.
(iv) The real properties described in clauses (i) and (ii) of Section
5.1(p) of the Westin Disclosure Letter (the "Real Property" or the "Real
Properties") constitute all the owned real estate and leased Hotels of the
Westin Companies and, in addition, all the other real estate leased, used or
occupied by the Real Property Entities which is material to the operation of the
Hotels identified opposite such Real Property Entities.
(v) To the knowledge of the Westin Companies, there are no proceedings in
eminent domain or other similar proceedings pending which affect any material
portion of the Real Property as owned or leased by the Real Property Entities,
nor is any such matter threatened. Except as disclosed in clauses (i) and (ii)
of Section 5.1(p) of the Westin Disclosure Letter there exists no writ,
injunction, decree, order or judgment outstanding relating to the ownership,
lease, use, occupancy or operation by any Person of any Real Property of the
Real Property Entities nor, to the knowledge of the Westin Companies, is any
such matter threatened.
(vi) To the knowledge of the Westin Companies, the current use of the Real
Property does not violate in any material respect any instrument of record or
agreement affecting such Real Property. To the knowledge of the Westin
Companies, in respect of the Real Property there is no material violation of any
covenant, condition, restriction, easement, agreement or order of any
Governmental Entity having jurisdiction over any such Real Property that affects
such Real Property or the use or occupancy thereof.
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(vii) In respect of the Real Property, certificates of occupancy and all
permits, operating licenses, approvals and authorizations including, without
limitation, all authorizations under Environmental Laws (collectively, the "Real
Property Permits") of all Governmental Entities having jurisdiction over the
Real Property or over the use of the Real Property, required to enable such Real
Property to be lawfully occupied and used for all of the purposes for which it
is currently occupied and used have been lawfully issued (except where the
failure to obtain any of the foregoing would not prevent or disrupt any use
material to the purposes for which such Real Property is now used or occupied),
are in full force and effect, and, to the extent in the possession of the Real
Property Entities, are located at the respective Real Property. In respect of
the Real Property, the Real Property Entities have not received or been informed
by a third party of the receipt by such Real Property Entity of any notice from
any Governmental Entity having jurisdiction over the Real Property threatening
any material enforcement action or investigation of a material monetary fine
with respect to or a suspension, revocation, modification or cancellation of any
Real Property Permit.
(viii) In respect of Real Property, such Real Property is in compliance
with all applicable building, zoning, subdivision and other land use and similar
laws affecting such Real Property (collectively, the "Real Property Laws"),
except to the extent any failure of such compliance would not impair in any
material manner the current use and operation of such Real Property, and none of
the Real Property Entities have received any notice of violation or claimed
violation of any Real Property Law.
(ix) As used in this Agreement, the term (1) "Consumables" means all food
and beverages (alcoholic, to the extent transferable under applicable law, and
non-alcoholic); engineering, maintenance and housekeeping supplies, including
soap, cleaning materials and matches; stationery and printing; and other
supplies of all kinds, in each case whether partially used, unused or held in
reserve storage for future use in connection with the maintenance and operation
of the Hotels, which are on hand on the date hereof, subject to such depletion
and restocking as shall occur and shall be made in the normal course of business
but in accordance with present standards, excluding, however, Operating
Equipment and all items of personal property owned by Space Lessees, guests,
employees or Persons furnishing food or services to the Hotels; (2) "Documents"
means reproducible copies of all plans, specifications, drawings, blueprints,
surveys, environmental reports and other documents which the Purchased Entities,
the Members or LLC have in their possession or which they can obtain through the
exercise of reasonable best efforts, or have a right to, as the same relate to
the Real Property, including, but not limited to, those relating to any prior or
ongoing construction or rehabilitation of the Real Property; (3) "Fixtures and
Tangible Personal Property" means all fixtures, furniture, furnishings,
fittings, equipment, cars, trucks, machinery, apparatus, signage, appliances,
draperies, carpeting and other articles of personal property now located on the
Real Property and used or useable in connection with any part of each Hotel,
subject to such depletions, resupplies, substitutions and replacements as shall
occur and be made in the normal course of business but in accordance with
present standards excluding, however: (v) Consumables; (w) Operating Equipment;
(x) property owned by Space Lessees, guests, employees or other Persons (other
than the applicable Purchased Entity or any Affiliate thereof), furnishing goods
or services to any of the Hotels; and (y) Improvements; (4) "Hotel" means each
hotel described on Schedule 5.1(p)(ix)(4), such Hotels being all of the hotels
owned or leased by the Westin Companies and their subsidiaries including,
without limitation, all Property owned by the Westin Companies and/or its
Subsidiaries and used in connection with the operation of such Hotels; (5)
"Hotel Agreement" means a management agreement, franchise agreement, system
license agreement, technical services agreement, marketing representation
agreement, representation agreement, or other similar agreement under which the
Westin Companies or any of their Subsidiaries provides management, operations,
marketing, or related services to a hotel owned by a Person other than a Westin
Affiliate; (6) "Hotel Names" mean all names or other identifications used in
connection with the operation of any of the Hotels, (vii) "Improvements" mean
for each parcel of Real Property, the buildings, structures (surface and
sub-surface) and other improvements, including such fixtures as shall constitute
real property, located thereon; (7) "Land" means each parcel of real estate on
which the Hotels and the Seattle Office Building are located, together with all
rights, title and interest, if any, of the applicable Purchased Entity in and to
all land lying in any street, alley, road or avenue, open or proposed, in front
of or adjoining said Land, to the centerline thereof, and all right, title and
interest of the applicable Purchased Entity in and to any award made or to be
made in lieu thereof and in and to any unpaid award for the damage to said Land
by reason of change of grade of any street; (8) "Lien" means, with respect to
any
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property or asset, any mortgage, lien, pledge, charge, security interest,
encumbrance, easement, right of way, servitude, covenant, restriction,
condition, agreement, lease, sublease, tenancy, occupancy, claim, defect or
other title exception of any kind whatsoever with respect to such property or
asset. For the purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any property or asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such property or
asset; (9) "Property" means (i) the Real Property; (ii) the Fixtures and
Tangible Personal Property; (iii) the Operating Equipment; (iv) the Consumables;
(v) the right, title and interest of the Westin Subsidiaries and their
Subsidiaries in, to and under the Space Leases; (vi) the bookings; (vii) the
Hotel Names; and (viii) the Documents.
(q) Material Contracts.
(i) Except as disclosed in Section 5.1(q)(i) of the Westin Disclosure
Letter, none of the Westin Companies or their Subsidiaries, or, to the knowledge
of the Westin Companies, Westin X'Xxxx is a party to or bound by:
(1) any Hotel Agreements;
(2) any lease (whether of real or personal property and whether
operating or capitalized) providing for annual rentals of $750,000 or more
or aggregate payments of $3,000,000 or more;
(3) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets that provides for aggregate payments by
the Westin Companies and their Subsidiaries or Entities party thereto of
$1,000,000 or more;
(4) any partnership, joint venture or other similar agreement or
arrangement;
(5) any agreement relating to indebtedness for borrowed money or the
deferred purchase price of property, except any agreement which has a
maximum outstanding principal amount not exceeding $750,000;
(6) any material license or permit (other than certificates of
occupancy, building permits, elevator permits, hotel operator licenses or
liquor licenses and any similar licenses and permits relating to the
ownership or operation of properties of the Westin Companies and their
Subsidiaries);
(7) any agreement that limits in any material respect the freedom of
the Westin Subsidiaries in the use of any Intellectual Property Rights (as
defined in Section 5.1(r)) or authorizing any other Person to use any
Intellectual Property Rights in any jurisdiction;
(8) any agreement with the Members or the LLC or any of their
Affiliates (other than the Westin Subsidiaries and their Subsidiaries);
(9) any advertising agency, sales promotion, market research,
marketing, marketing consulting or advertising contract providing for
annual payments of $750,000 or more;
(10) any material agreement with any Governmental Entity (other than
contracts relating to hotel rates);
(11) any agreement that limits or purports to limit the ability of any
of the Westin Companies or any of their Subsidiaries to compete in any line
of business or with any Person or in any geographic area or during any
period of time;
(12) any broker, distributor or manufacturer's contract providing
earned payments in excess of $750,000;
(13) any contract with independent contractors or consultants (or
similar arrangements) providing for aggregate payments in excess of
$750,000;
(14) any agreement for the employment of any individual providing
annual compensation in excess of $200,000;
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(15) any agreement or arrangement under which the Westin Companies or
any of their Subsidiaries party thereto have advanced or loaned any amount
to any of their directors, officers partners, co-venturers, members or
employees (other than travel advances for expenses incurred in the ordinary
course of business);
(16) any guarantee of the obligations of any Person (other than
guarantee of performance under Hotel Agreements), which guarantee is not
limited in an aggregate amount equal to or less than $750,000; or
(17) any other agreement, whether or not made in the ordinary course
of business, which is, or the termination of which would be, material to
the Westin Subsidiaries taken as a whole.
(ii) Except as set forth in Section 5.1(q)(i)(11) of the Westin Disclosure
Letter, each agreement, commitment, instrument, franchise, lease, sublease,
license, authorization, arrangement or plan disclosed pursuant to this Section
or required to be disclosed pursuant to this Section, including, without
limitation the Hotel Agreements ("Contract") is a legal, valid and binding
agreement of the applicable Westin Company or Subsidiary party thereto,
enforceable against such Westin Company or Subsidiary in accordance with its
terms (subject to the Bankruptcy or Equity Exception), and is in full force and
effect. Except as set forth in Section 5.1(q)(ii) of the Westin Disclosure
Letter, (1) none of the Westin Companies or their Subsidiaries, or, to the
knowledge of the Westin Companies, Westin X'Xxxx is in, or alleged to be in,
default or breach in any material respects under the terms of any Contract, (2)
to the knowledge of the Westin Companies, no other party to any Contract is in
default or breach in any material respects under the terms of any Contract, (3)
no notices of termination have been delivered under or pursuant to any of the
Contracts which have not been withdrawn, settled or resolved, and (4) to the
knowledge of the Westin Companies, no events or circumstances exist which would
or could give rise to a termination or cancellation of any of the Contracts
(other than expiration of the term thereof).
(iii) Upon consummation of the transactions contemplated by this Agreement,
each Contract shall be in full force and effect without penalty or other adverse
consequence (including, without limitation, any defaults or rights to terminate
or cancel) and without amendment or modification except as disclosed in Section
5.1(q)(iii) of the Disclosure Letter.
(iv) The Westin Companies have furnished to the Starwood Companies a true,
correct and complete copy of each Contract, including all amendments,
modifications, supplements, restatements, exhibits, schedules and attachments
thereto.
(r) Intellectual Property Rights.
(i) Section 5.1(r) of the Westin Disclosure Letter contains a list of:
(1) all material trademarks and service marks owed and used by any of
the Westin Companies or their Subsidiaries (the "Trademarks"), specifying
as to each Trademark, as applicable: (w) the Trademark; (x) the owner of
such Trademark if other than WHC; (y) the goods and/or services relating to
the Trademark and (z) if applicable, the jurisdictions by or in which such
Trademark is registered or in which an application for such issuance or
registration has been filed, including the respective registration or
application numbers;
(2) all registered and unregistered copyrights owned by, licensed to
or used by any of the Westin Companies or and of their Subsidiaries that
are material to the business, financial condition, operating results,
assets, operations or business prospects of any of the Westin Companies or
any of their Subsidiaries; and
(3) all software, databases and compilations owned by, licensed to or
used by any of the Westin Companies or any of their Subsidiaries that are
material to the financial condition, operating results, assets, operations
or business prospects of the Westin Companies and their Subsidiaries.
(ii) Except as disclosed Section 5.1(r) of the Westin Disclosure Letter or
(with respect to software license agreements) Section 5.1(q), the Westin
Companies and their Subsidiaries collectively own and
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possess all right, title and interest in and to, or have a valid and enforceable
license to use, the material Intellectual Property Rights, and none of the
material Intellectual Property Rights is subject to any claim, judgment,
injunction, order, decree, pledge, encumbrance or agreement restricting the use
thereof by the Westin Companies and their Subsidiaries or restricting the
licensing thereof by the Westin Companies and their Subsidiaries to any Person.
(iii) Except as disclosed in Section 5.1(r) of the Westin Disclosure
Letter, there are no existing or, to the knowledge of the Westin Companies,
threatened claims or proceedings (i) alleging that the use by or possession of
any of the Westin Companies or any of their Subsidiaries of any of the
Intellectual Property Rights, infringes, misappropriates or violates any third
Person's rights; or (ii) challenging the ownership, possession or use of any
registration of any of the Intellectual Property Rights, and the Westin
Companies are not aware of any grounds for such claims or proceedings.
(iv) To the knowledge of the Westin Companies, the Trademarks are the only
registered trademarks or service marks containing any reference to the name
"Westin" and used in connection with hotel, timeshare or restaurant services.
(v) To the knowledge of the Westin Companies, no Person is infringing,
misappropriating or violating any of the Intellectual Property Rights, except
where any such infringement misappropriation or violation would not have a
Westin Material Adverse Effect.
(vi) The Westin Companies and their Subsidiaries have taken all reasonable
and necessary steps to maintain and protect the registered Intellectual Property
Rights so as not to materially adversely affect the validity or enforceability
of such Intellectual Property Rights, and will continue to maintain and protect
such Intellectual Property Rights (including, but not limited to, paying
required registration, maintenance and renewal fees) prior to the Closing so as
not to materially adversely affect the validity or enforceability of such
Intellectual Property Rights.
(vii) As used in this Agreement, the term "Intellectual Property Rights"
means all of the following owned by, issued to or licensed to any of the Westin
Companies and any of the Westin Subsidiaries and used in their businesses, along
with all income, royalties, damages and payments due and payable at the Closing
or thereafter (including, but not limited to, damages and payments for past or
future infringements, misappropriations or violations thereof), the right to xxx
and recover for past or future infringements, misappropriations or violations
thereof and any and all corresponding rights that, now or hereafter, may be
secured: United States, foreign and state trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all goodwill
associated therewith (including, but not limited to, the use of the current
corporate name and trade name(s) and all translations, adaptations, derivations
and combinations of the foregoing) whether registered or unregistered; United
States or foreign copyrights and copyrightable works whether registered or
unregistered; United States and foreign patents, patent applications,
continuations, continuations-in-part, divisions, reissues, patent disclosures,
inventions or improvements thereto; computer software (including, but not
limited to, data, databases, compilations source code, object code and
documentation whether in machine readable or human readable form); confidential
ideas, trade secrets, know-how, concepts, methods, processes, formulae, reports,
data, customer lists, mailing lists, business plans, or other proprietary
information; applications, registrations, and documentation; applications for
renewals for any of the foregoing; other intellectual property rights; and all
copies and tangible embodiments of the foregoing (in whatever form or medium) in
each case.
(viii) To the extent any of the representations and warranties set forth in
this Section 5.1(r) apply to the Asia Territory (as defined in the Stock
Purchase Agreement), such representations are made to the knowledge of the
Westin Companies.
(s) Joint Venture Affiliates. (i) Section 5.1(s)(i) of the Westin
Disclosure Letter sets forth: (1) the name of each Joint Venture Affiliate (as
defined below); (2) the type and percentage ownership or investment interest of
any of the Westin Companies therein; (3) Section 5.1(s) of the Westin Disclosure
Letter hereto sets forth to the extent permitted without violating any
obligation of confidentiality, (i) the name and, if available, address,
telephone number and primary contact of each other equity owner or investor
therein and
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the type and percentage ownership or other investment interest therein held by
such Person; and (4) a brief description of the business of each such Joint
Venture Affiliate. Except as set forth on Section 5.1(s)(i) of the Westin
Disclosure Letter, none of the Westin Companies or their Subsidiaries is a party
to any partnership, joint venture or other similar agreement (a "Joint Venture
Agreement") relating to the formation, creation, operation, management or
control of any Joint Venture Affiliate. Each of the applicable Real Property
Entities indicated on Section 5.1(s)(i) of the Westin Disclosure Letter as
owning an interest in one or more of the Joint Venture Affiliates owns such
interest free and clear of any Liens, other than Liens arising as a result of
the terms of the applicable Joint Venture Agreement and the Liens set forth on
Section 5.1(s)(i) of the Westin Disclosure Letter.
(ii) Except as set forth in Section 5.1(s)(ii) of the Westin Disclosure
Letter or as contained in the Joint Venture Agreements, to the knowledge of the
Westin Companies, there are no outstanding; (1) equity ownership interests in
the Joint Venture Affiliates; (2) interests convertible into or exchangeable or
exercisable for equity ownership interests in the Joint Venture Affiliates; or
(3) options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights or other rights to acquire from the Joint Venture Affiliates or
other obligations of the Joint Venture Affiliates to issue equity ownership
interests in the Joint Venture Affiliates.
(iii) Except as set forth in Section 5.1(s)(iii) of the Westin Disclosure
Letter or in the Joint Venture Agreements, there are no outstanding obligations
of any of the Westin Companies or their Subsidiaries to repurchase, redeem or
otherwise acquire any equity interest in the Joint Venture Affiliates. To the
knowledge of the Westin Companies, except as set forth in the Joint Venture
Agreements, there are no agreements, understandings or arrangements between
members or parties of such entities with respect to management and control of
the Joint Venture Affiliates (other than Hotel Agreements). Except as set forth
in Section 5.1(s) of the Westin Disclosure Letter, none of the Joint Venture
Affiliates controls directly or indirectly or has any direct or indirect equity
participation in any entity which is not one of the Westin Companies or a
Subsidiary of a Westin Company. Except as set forth in Section 5.1(s)(iii) of
the Westin Disclosure Letter or with respect to wholly-owned Subsidiaries, there
are no preemptive rights, rights of first refusal or similar rights with respect
to any ownership interest in the Joint Venture Affiliates relating or applicable
to the consummation of the transactions contemplated by this Agreement. Except
as set forth in Section 5.1(s)(iii) of the Westin Disclosure Letter or in
Section 5.1(h), no Person has any right to participate directly in the profits
of a Joint Venture Affiliate whether by means of an appreciation right,
incentive plan or profit participation or similar arrangement.
True, correct and complete copies of all Joint Venture Agreements have been
furnished to the Starwood Companies. To the knowledge of the Westin Companies,
none of the Joint Venture Affiliates is in default under or in violation in any
material respect of any provision of the Joint Venture Agreements or other
constitutive documents.
As used in this Agreement, the term "Joint Venture Affiliates" means all
corporations, joint ventures, partnerships, limited liability companies and
other legal entities (other than the Westin Subsidiaries and their Subsidiaries)
in which any of the Westin Companies or any of their Subsidiaries holds a direct
equity or profit, or a direct or indirect (but controlling) voting interest and
which now or intend to own, lease, manage or operate one or more of the hotels
or timeshares comprising the business of the Westin Companies and Sixth &
Virginia Properties.
(t) Starwood Securities.
(i) The LLC and each Member severally represents and warrants that such
party has received (i) the Starwood Reports, and (ii) such further information
as such party desires concerning the Starwood Companies and their assets,
business, financial condition and results of operations.
(ii) The LLC and each Member severally represents, warrants and agrees that
(i) the Starwood Securities that are issuable to the LLC pursuant to this
Agreement are not being registered under the United States Securities Act of
1933, as amended (the "Securities Act"), in reliance upon an exemption from
registration thereunder applicable to the issuance of such Starwood Securities
in transactions that do not
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involve any public offering, (ii) such party has such knowledge and experience
in financial and business matters that such party is capable of evaluating the
merits and risks of the proposed investment in Starwood Securities and the
Starwood Pair Shares issuable upon conversion of the Starwood Securities, (iii)
such party understands that, except as may otherwise be provided in the
Registration Rights Agreement, such party's ability to dispose of such Starwood
Securities in the public market for such stock or otherwise may be limited by
the Securities Act, including Rule 144 promulgated thereunder, and, therefore,
such party may have to bear the risk of such party's investment in such Starwood
Securities for an indefinite period of time and (iv) except as otherwise
disclosed in Section 5.1(t)(ii) of the Westin Disclosure Letter, such party is
an accredited investor as defined in Rule 501 under the Securities Act.
(iii) LLC and each Member severally represents, warrants and agrees that
the receipt and ownership of the Starwood Securities by such Person (or their
designee) will not violate or otherwise be in contravention of Section 6.12 of
the Declaration of Trust, Article NINTH of the Articles of Incorporation,
Sections 9.3 and 10.8 of the Amended and Restated Limited Partnership Agreement
of Starwood Realty Partnership or Sections 9.3 and 10.8 of the Amended and
Restated Limited Partnership Agreement of Starwood Operating Partnership.
(u) Certain Business Relations. None of the Members or the LLC own any
asset, tangible or intangible, that is used in the business of any of the Westin
Subsidiaries.
5.2. REPRESENTATIONS AND WARRANTIES OF THE STARWOOD COMPANIES. Each of the
Starwood Companies hereby represents and warrants to the Westin Companies that:
(a) Organization, Good Standing and Qualification. Each of the Starwood
Companies and their respective Subsidiaries is a real estate investment trust,
partnership or corporation, as the case may be, duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite power and authority to own and operate its
properties and assets and to carry on its business as presently conducted; each
is qualified to do business and is in good standing as a foreign corporation,
partnership or real estate investment trust, as the case may be, in each
jurisdiction where the ownership or operation of its properties or conduct of
its business requires such qualification, except where the failure to be so
qualified or in such good standing, when taken together with all other such
failures, is not reasonably likely to have a Starwood Material Adverse Effect
(as defined below). The Starwood Companies have made available to the Westin
Companies complete and correct copies of the certificates of trust, formation or
incorporation, as the case may be, and trust regulations, partnership agreements
and by-laws, each as amended to the date hereof, of each of the Starwood
Companies and their respective Subsidiaries. The certificates of trust,
formation and incorporation, as the case may be, and trust regulations,
partnership agreements and by-laws of each of the Starwood Companies and their
respective Subsidiaries so delivered are in full force and effect; provided,
however, the partnership agreements may be amended prior to the Closing Date as
previously disclosed to the Westin Companies.
As used in this Agreement, the term "Starwood Material Adverse Effect"
means a material adverse change in or effect on (or any development that,
insofar as can be reasonably foreseen, would result in such change or effect)
the financial condition, properties, business, results of operations or
prospects of the Starwood Companies and their respective Subsidiaries taken as a
whole; provided, however, that any such effect resulting from any change in law,
rule or regulation or GAAP or interpretations thereof that applies to both the
Starwood Companies and the Westin Companies shall not be considered when
determining if a Starwood Material Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of Starwood Trust
consists of 100,000,000 trust shares, par value $.01 per share ("Starwood Trust
Shares"), of which, as of August 31, 1997, 45,682,970 shares were outstanding,
(ii) 20,000,000 excess trust shares, par value $.01 per share, of which no
shares are issued and outstanding and (iii) 5,000,000 excess preferred shares,
par value $.01 per share, of which no shares are issued and outstanding. The
authorized capital stock of Starwood Corp. consists of 100,000,000 shares of
common stock, par value $.01 per share (the "Starwood Corp. Shares"), of which,
as of August 31, 1997, 45,682,970 shares were outstanding. As of August 31,
1997, 58,267,799 units of Starwood Realty Partnership ("SLT Units") and
58,522,140 units of Starwood Operating Partnership ("SLC Units") were
outstanding.
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As of August 31, 1997, Starwood Trust beneficially owned 45,682,970 SLT Units
and Starwood Corp. and its Subsidiaries beneficially owned 45,682,970 SLC Units.
All of the outstanding Starwood Trust Shares, Starwood Corp. Shares, SLT Units
and SLC Units have been duly authorized and are validly issued, fully paid and
nonassessable. None of the Starwood Companies has any shares or units reserved
for issuance, except for Starwood Trust Shares and Starwood Corp. Shares
reserved for issuance upon the exchange of the SLT Units and the SLC Units,
respectively, and except that, as of August 31, 1997, there were 5,952,090
Starwood Corp. Shares and 5,952,090 Starwood Trust Shares reserved for issuance
pursuant to the Incentive and Non-Qualified Shares Option Plan (1986) of the
Trust, the Corporation Stock Non-Qualified Stock Option Plan (1986) of the
Trust, the Stock Option Plan (1986) of the Corporation, the Trust Shares Option
Plan (1986) of the Corporation; the 1995 Share Option Plan of the Trust, and the
1995 Share Option Plan of the Corporation. Each of the outstanding shares of
capital stock of each of the Subsidiaries of the Starwood Companies is duly
authorized, validly issued, fully paid and nonassessable and, except for
directors' qualifying shares, owned by a direct or indirect wholly-owned
subsidiary of the Starwood Companies free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth above, there
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any shares of
capital stock, partnership interests or other securities of any of the Starwood
Companies or any of their Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of any of the Starwood
Companies or any of their Subsidiaries, and no securities or obligation
evidencing such rights are authorized, issued or outstanding. None of the
Starwood Companies has outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders or
unitholders, as applicable, of Starwood Trust, Starwood Corp., Starwood Realty
Partnership or Starwood Operating Partnership on any matter ("Starwood Voting
Debt").
(c) Corporate Authority and Fairness Opinion.
(i) The Starwood Companies have all requisite corporate or similar power
and authority and have taken all corporate or similar action necessary in order
to execute, deliver and perform their obligations under this Agreement and to
consummate, subject only to any stockholder approval required by the laws of the
State of Maryland and the rules of the New York Stock Exchange (the "Starwood
Trust Requisite Vote"), the Merger and the other transactions contemplated by
this Agreement. This Agreement is a valid and binding agreement of each of the
Starwood Companies, enforceable against each of the Starwood Companies in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) The Special Committee of the Starwood Disinterested Trustees of the
Board of Trustees of Starwood Trust and the Special Committee of the Starwood
Disinterested Directors of the Board of Directors of Starwood Corp. have
received the opinion of its financial advisors, Xxxxxx Xxxxxxx & Co.
Incorporated, to the effect that the consideration to be paid by the Starwood
Trust in the Merger and by the other Starwood Companies in the other
transactions contemplated hereby is fair to the stockholders of Starwood Trust
and Starwood Corp., a copy of which opinion has been delivered to the LLC. It is
agreed and understood that such opinion is for the benefit of the Special
Committee of Starwood Disinterested Trustees of the Board of Trustees of
Starwood Trust and the Special Committee of the Starwood Disinterested Directors
of the Board of Directors of Starwood Corp. and may not be relied on by the
Westin Companies. The Board of Trustees of Starwood Trust and the Board of
Directors of Standard Corp. have unanimously approved this Agreement and the
Merger and the other transactions contemplated hereby.
(iii) Prior to the Effective Time, Starwood Trust will have taken all
necessary action to issue the number of shares of Class A EPS and Class B EPS
required to be issued pursuant to Article IV and each of Starwood Realty
Partnership and Starwood Operating Partnership will have taken all necessary
action to issue the Starwood Realty Partnership Units and Starwood Operating
Partnership Units required to be issued pursuant to Article IV. The Class A EPS
and Class B EPS, Starwood Realty Partnership Units and Starwood Operating
Partnership Units, when issued, will be validly issued, fully paid and
nonassessable, and no stockholder or unitholder, as applicable, of Starwood
Trust, Starwood Corp., Starwood Realty Partnership or Starwood Operating
Partnership will have any preemptive right of subscription or purchase in
respect thereof.
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(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section 1.4, (B)
under the HSR Act, the Securities Act of 1933, as amended, and the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (C) to comply
with state securities or "blue sky" laws and (D) required to be made with the
New York Stock Exchange (the "NYSE"), no notices, reports or other filings are
required to be made by the Starwood Companies with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
the Starwood Companies from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by the Starwood Companies and the
consummation by the Starwood Companies of the transactions contemplated hereby
and by Starwood Trust of the Merger, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Starwood Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Starwood Companies to consummate the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Starwood Companies does not, and the consummation by the Starwood Companies of
the transactions contemplated hereby and by Starwood Trust of the Merger will
not, constitute or result in (A) a breach or violation of, or a default under,
the Declaration of Trust, certificate of formation, articles of incorporation,
Trust Regulations, partnership or by-laws of the Starwood Companies or the
comparable governing instruments of any of their Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of the Starwood Companies or any of their Subsidiaries (with or without notice,
lapse of time or both) pursuant to, any Contracts binding upon the Starwood
Companies or any of their Subsidiaries or any Law or governmental or
nongovernmental permit or license to which the Starwood Companies or any of
their Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any of the Contracts, except, in the case of clause (B) or (C)
above, for breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Starwood
Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Starwood Companies to consummate the transactions contemplated by
this Agreement.
(e) Starwood Trust and Starwood Corp. Reports; Financial
Statements. Starwood Trust and Starwood Corp. have made and will make all
required filings with the SEC. Starwood Trust and Starwood Corp. have delivered
to the Westin Companies each registration statement, report, proxy statement or
information statement prepared by it since December 31, 1996 (the "Starwood
Audit Date"), including (i) Starwood Trust's and Starwood Corp.'s Annual Reports
on Form 10-K for the year ended December 31, 1996 and (ii) Starwood Trust's and
Starwood Corp.'s Quarterly Reports on Form 10-Q for the periods ended March 31,
1997 and June 30, 1997, each in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively, including any such reports
filed subsequent to the date hereof, the "Starwood Reports"). As of their
respective dates, the Starwood Reports did not, and any Starwood Reports filed
with the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Starwood
Reports (including the related notes and schedules) fairly presents, or will
fairly present, the consolidated financial position of Starwood Trust and
Starwood Corp. and their Subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position included
in or incorporated by reference into the Starwood Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results of
operations, retained earnings and changes in financial position, as the case may
be, of Starwood Trust and Starwood Corp. and their Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to notes and
normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein.
(f) Litigation and Liabilities. Except as disclosed in the Starwood Reports
filed prior to the date hereof, there are no civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings pending or, to
the knowledge of Starwood Trust and Starwood Corp., threatened against the
Starwood Companies or any of their Affiliates that could result in any claims
against, or obligations or liabilities of, the
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Starwood Companies or any of the Affiliates, except for those that are not,
individually or in the aggregate, reasonably likely to have a Starwood Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Starwood Companies to consummate the transactions contemplated by this
Agreement.
(g) Takeover Statutes. No Takeover Statute or any applicable anti-takeover
provision in Starwood Trust's Declaration of Trust and Trust Regulations or
Starwood Corp's. certificate of incorporation or By Laws is, or at the Effective
Time will be, applicable to the Merger or the other transactions contemplated by
this Agreement.
(h) Tax Matters. As of the date hereof, none of the Starwood Companies or
any of their Affiliates has taken or agreed to take any action, nor do Starwood
Trust or Starwood Corp. have any knowledge of any fact or circumstance, that
would prevent the Merger and the other transactions contemplated by this
Agreement from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code or prevent Starwood Trust from qualifying as a "real estate
investment trust" within the meaning of Section 856 of the Code.
(i) Taxes. Except as set forth in the Starwood Reports filed prior to the
date hereof, and except as set forth in Section 5.2(i) of the disclosure letter
delivered to the Westin Companies and the Members by the Starwood Companies on
or prior to entering into this Agreement, (the "Starwood Disclosure Letter") (i)
each of the Starwood Companies, each of their Subsidiaries and each Starwood
Affiliated Group has filed all Tax Returns required to be filed; (ii) all such
Tax Returns are complete and accurate and disclose all Taxes required to be paid
by each of the Starwood Companies, each of their Subsidiaries and each Starwood
Affiliated Group for the periods covered thereby and all Taxes shown to be due
on such Tax Returns have been timely paid; (iii) all Taxes (whether or not shown
on any Tax Return) owed by any of the Starwood Companies, any of their
Subsidiaries or any Starwood Affiliated Group have been timely paid; (iv) none
of any of the Starwood Companies, any of their Subsidiaries or any member of any
Starwood Affiliated Group has waived or been requested to waive any statute of
limitations in respect of Taxes which waiver is currently in effect; (v) the Tax
Returns referred to in clause (i), to the extent related to income Taxes, have
been examined by the appropriate taxing authority or the period for assessment
of the Taxes in respect of which such Tax Returns were required to be filed has
expired; (vi) there is no action, suit, investigation, audit, claim or
assessment pending or proposed or threatened with respect to Taxes of any of the
Starwood Companies, any of their Subsidiaries or any Starwood Affiliated Group;
(vii) all deficiencies asserted or assessments made as a result of any
examination of the Tax Returns referred to in clause (i) have been paid in full;
(viii) there are no liens for Taxes upon the assets of any of the Starwood
Companies or any of their Subsidiaries except liens relating to current Taxes
not yet due; (ix) all Taxes which any of the Starwood Companies, any of their
Subsidiaries or any Starwood Affiliated Group are required by law to withhold or
to collect for payment have been duly withheld and collected, and have been paid
or accrued, reserved against and entered on the books of the Starwood Companies.
As used in this Agreement, the term "Starwood Affiliated Group" means any
"affiliated group" (as defined in Section 1504(a) of the Code without regard to
the limitations contained in Section 1504(b) of the Code) that, at any time on
or before the Effective Time, includes or has included any of the Starwood
Companies or any of their Subsidiaries or any predecessor of or successor to any
of the Starwood Companies or any of their Subsidiaries (or another such
predecessor or successor), or any other group of corporations which, at any time
on or before the Closing Date, files or has filed Tax Returns on a combined,
consolidated or unitary basis with any of the Starwood Companies or any of their
Subsidiaries or any predecessor of or successor to any of the Starwood Companies
or any of their Subsidiaries (or another such predecessor or successor).
(j) Brokers and Finders. None of the Starwood Companies and none of their
officers, directors or employees has employed any broker, agent or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the Merger or the other transactions contemplated by this
Agreement, except that Starwood Trust has employed Xxxxxx Xxxxxxx & Co.
Incorporated as its financial advisor, the fees of which shall be paid by the
Starwood Companies.
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(k) "REIT" Status. Starwood Trust is currently a "real estate investment
trust" ("REIT") for federal income tax purposes. From and after January 1, 1995,
neither the IRS nor any other taxing entity or authority has made any assertion
that Starwood Trust does not qualify as a REIT for income tax purposes, nor has
there been any challenge to the REIT status of Starwood Trust.
(l) "Partnership" Status. Each of Starwood Realty Partnership and Starwood
Operating Partnership is classified and taxable as a partnership for U.S.
federal income tax purposes.
(m) Starwood Report Disclosure. The Starwood Reports, taken as a whole, do
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
ARTICLE VI
COVENANTS
6.1. INTERIM OPERATIONS. (A) Each of the Westin Companies covenants and
agrees, as to itself and its Subsidiaries, that after the date hereof and prior
to the Effective Time (unless Starwood Trust shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except as
otherwise expressly contemplated by this Agreement):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practice and, to the extent
consistent therewith, it and its Subsidiaries shall use all reasonable efforts
to preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries except that (a) the Westin
Companies may issue shares to members of management of the Westin Companies so
long as such issuance does not (without giving effect to any issuance described
in clause (b) below) result in any of the Westin Subsidiaries having more than
1,000,000 shares of its common stock on a fully diluted basis outstanding on the
Closing Date and (b) the Westin Companies may issue shares pursuant to options
outstanding under the Executive Securities Purchase and Employment Agreements
between one or more of the Westin Companies or their Subsidiaries and each of
Xxxxxxx Xxxxxxx, Xxxxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxx xxx
Xxxxxxxxxx; (ii) amend its certificate of incorporation, partnership agreement,
limited liability company agreement or by-laws, as the case may be, provided
that this clause shall not apply to the LLC; (iii) split, combine or reclassify
its outstanding shares of capital stock or issue, sell or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock, provided that this clause shall not apply to the LLC; (iv)
declare, set aside or pay any cash dividend or other distribution payable in
cash, stock or property in respect of any capital stock, or otherwise make any
payments to any Member or any of its stockholders (other than pursuant to an
agreement existing on the date hereof and set forth on Schedule 7.2(a)), other
than dividends from its direct or indirect wholly-owned Subsidiaries and other
than (a) in the case of Worldwide, cash dividends not in excess of $160,000,000
and an in-kind dividend consisting of the capital stock of Pegasus Systems, Inc.
owned as of the date hereof by the Westin Companies, (b) in the case of
Lauderdale and Seattle, cash dividends not in excess of $6,000,000 in the
aggregate, (c) in the case of Denver, cash dividends not in excess of an amount
equal to accumulated and undistributed earnings and profits of Denver and (d) in
the case of Atlanta, cash dividends not in excess of $34,200,000; or (v)
repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock (except in the case of Worldwide for the repurchase or redemption of
shares of its stock held by Nomura), provided that this clause shall not apply
to the LLC;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
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rights of any kind to acquire any shares of, its capital stock or any class of
any Westin Voting Debt or any other property or assets (other than, in the case
of the Westin Companies, shares issuable pursuant to under the Executive
Securities Purchase and Employment Agreements between one or more of the Westin
Companies or their Subsidiaries and each of Xxxxxxx Xxxxxxx, Xxxxxxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxx xxx Xxxxxxxxxx), provided that this clause
shall not apply to the LLC; (ii) mortgage, pledge or encumber any other property
or assets (including capital stock of any of its Subsidiaries) or guarantee,
incur or modify any indebtedness or other liability (except that (a) Worldwide
may incur indebtedness that is, in the case of borrowed money, both prepayable
and assumable by a third party, in either case at any time without penalty, and,
in all cases, is at fair market terms and otherwise consistent with Schedule
6.1(c) (collectively, "Prepayable Debt"), in an amount not to exceed $160
million, (b) Lauderdale and Seattle may incur Prepayable Debt in an aggregate
amount not to exceed $6 million, (c) Denver may incur Prepayable Debt in an
aggregate amount not to exceed the amount of accumulated and undistributed
earnings and profits of Denver, (d) the Westin Companies and their Subsidiaries
may incur Prepayable Debt to fund capital expenditures as permitted by Section
1.3(e) and to fund acquisitions as permitted by Section 1.3(f) and indebtedness
incurred by any joint venture that is not controlled by the Westin Companies,
(e) Atlanta may incur Prepayable Debt in an aggregate amount not to exceed
$34,200,000, (f) the Westin Companies may incur (1) Prepayable Debt in respect
of capital expenditures relating to St. Xxxx and/or its Subsidiaries in an
amount not to exceed $9,500,000, (2) Prepayable Debt represented by notes
payable in connection with the financing of insurance premiums in an amount not
to exceed $3,000,000 (provided that at the Closing Date the aggregate principal
amount of such notes payable does not exceed $2,261,000), (3) Prepayable Debt
represented by capital leases for an aggregate amount not to exceed $3,875,000,
and (4) subordinated Prepayable Debt that is required to be purchased by Nomura
pursuant to the Participation Agreement dated as of May 12, 1995, among Nomura,
the Members, the LLC and the other parties thereto in an aggregate amount not to
exceed $2,200,000 plus any subordinated Prepayable Debt required to be purchased
by Nomura in connection with any capital expenditures approved under Section
1.3(e) or any acquisitions approved under Section 1.3(f), (g) the Westin
Companies and their Subsidiaries may enter into guarantees of performance under
management, franchise, license or similar agreements to which any of the Westin
Companies or any of their Subsidiaries is a party, (h) the Westin Companies and
their Subsidiaries may make loans to, or investments in, owners of hotels in
connection with the obtaining of management, franchise, license or similar
contracts with such owners provided that the amount of any such loan or
investment shall not exceed $1,000,000 and that the aggregate amount of all such
loans or investments shall not exceed $5,000,000 and (h) the Westin Companies
may incur trade debt and similar indebtedness incurred in the ordinary course of
business consistent with past practice; (iii) make or authorize or commit for
any capital expenditures other than as permitted by Section 1.3(e) or, by any
means, make any significant acquisition of, or investment in, assets or stock of
any other Person or entity other than as permitted by Section 1.3(f); or (iv)
sell, lease (as lessor), transfer or otherwise dispose of any assets, other than
inventory and minor amounts of personal property sold or otherwise disposed of
for fair value in the ordinary course of business consistent with past practice;
(d) except as set forth in Section 6.1(d) of the Westin Disclosure Letter
neither it nor any of its Subsidiaries shall terminate, establish, adopt, enter
into, make any new grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plans, or increase the salary, wage, bonus or other
compensation of any employees except increases occurring in the ordinary and
usual course of business (which shall include normal periodic performance
reviews and related compensation and benefit increases);
(e) neither it nor any of its Subsidiaries shall settle or compromise any
material claims or litigation (except as set forth in Section 6.1(e) of the
Westin Disclosure Letter and except for litigation involving claims that are
covered by insurance) or modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax election or
permit any material insurance policy naming it as a beneficiary or loss-payable
payee to be canceled or terminated except in the ordinary and usual course of
business;
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(g) neither it nor any of its Subsidiaries will make any change in
accounting practices or policies applied in the preparation of the financial
statements referred to in Section 5.1(e) that would have an economic impact on
any of the Westin Companies, except as required by GAAP;
(h) neither it nor any of its Subsidiaries will enter into any contract for
the purchase of real property or for the sale of any Owned Property or exercise
any option to purchase real property listed in subsection (a) of Section 5(p) of
the Westin Disclosure Letter or any option to extend a lease listed in
subsection (b) of Section 5(p) of the Westin Disclosure Letter;
(i) except as set forth in Section 6.1(i) of the Westin Disclosure Letter,
neither it nor any of its Subsidiaries will, directly or indirectly, enter into
any significant contract or agreement with any Member or any Affiliate of any
Member (other than the Westin Subsidiaries and their respective subsidiaries)
other than as expressly contemplated by this Agreement;
(j) neither it nor any of its Subsidiaries shall knowingly take any action
or omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect;
(k) neither it nor any of its Subsidiaries shall sell, transfer, assign,
lease, sublease, license or sublicense any Intellectual Property Rights, except
in the ordinary course of business consistent with past practice and except in
connection with the operation of the Westin Companies' timeshare business;
(l) neither it nor any of its Subsidiaries will authorize or enter into an
agreement to do any of the foregoing.
(B) Starwood Companies' Interim Operations. Each of the Starwood Companies
covenants and agrees as to itself and its Subsidiaries that, after the date
hereof and prior to the Effective Time, none of the Starwood Companies will
declare or pay any dividend on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of capital stock of
any of the Starwood Companies other than dividends in an aggregate amount not to
exceed the greater of (i) the current rate of Starwood Trust's dividends and
(ii) Starwood Trust's "real estate investment trust taxable income" (as such
term is defined for purposes of the Code) without regard to any net capital
gains; provided that this Section 6.1(B) shall not be deemed to prevent
repurchases of stock by the Starwood Companies pursuant to stock "buyback"
arrangements that have been publicly announced by the Starwood Companies prior
to the date hereof or increases in the dividend rate of the Starwood Companies
in the ordinary course consistent with past practice.
6.2. MAINTENANCE, PROMOTIONS, ETC. Except as set forth in Section 6.2 of
the Westin Disclosure Letter, from the date hereof until the Closing Date, the
LLC shall cause the Westin Subsidiaries and their Subsidiaries to (i) repair,
keep, and maintain their properties and assets (including inventories, fixtures
and tangible personal property, operating equipment) in accordance with past
practice, (ii) maintain their current insurance coverage (including, without
limitation, the Policies), (iii) continue to advertise and promote their
properties in a manner consistent with past practice and (iv) make application
for, and diligently pursue, the renewal of any permits and licenses expiring
prior to the Closing Date.
6.3. INFORMATION SUPPLIED. Each of the Westin Companies and the Starwood
Companies agrees, as to itself and its Subsidiaries, that none of the
information supplied or to be supplied by it or its Subsidiaries for inclusion
or incorporation by reference in the Proxy Statement to be filed with the SEC by
Starwood Trust and Starwood Corp. in connection with the Merger and related
matters contemplated hereby (the "Proxy Statement"), and any amendment or
supplement thereto, will, at the date of mailing to stockholders and at the
times of the meetings of stockholders of Starwood Trust and Starwood Corp. to be
held in connection with the Merger and related matters contemplated hereby,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.4. STOCKHOLDERS MEETING. Each of Starwood Trust and Starwood Corp. will
take, in accordance with its Declaration of Trust and Trust Regulations and
Articles of Incorporation and By-laws, respectively, all action necessary to
convene a meeting of holders of Starwood Trust Shares and Starwood Corp. Shares
(the
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"Stockholders Meeting") as promptly as practicable after the mailing of the
Proxy Statement to consider and vote upon the approval of the Merger and related
matters contemplated hereby. Subject to their respective fiduciary obligations
under applicable law, Starwood Trust's Board of Trustees and Starwood Corp.'s
Board of Directors shall recommend such approval and shall take all lawful
action to solicit such approval and will not withdraw or amend such approval in
a manner adverse to the Westin Companies (it being understood that it would be a
breach of each board's fiduciary obligations not to withdraw such recommendation
in the event such board have determined that the transactions contemplated by
this Agreement were reasonably likely to cause a Starwood Material Adverse
Effect not appropriately offset, in such boards' judgment, by the benefits to
the Starwood Companies from such transactions).
6.5. FILINGS; OTHER ACTIONS; NOTIFICATION. (a) Starwood Trust and Starwood
Corp. shall promptly prepare and file with the SEC the Proxy Statement. Starwood
Trust and Starwood Corp. shall use all reasonable efforts to have the Proxy
Statement cleared by the SEC and thereafter mailed to the stockholders of
Starwood Trust and Starwood Corp. Starwood Trust and Starwood Corp. shall also
use all reasonable efforts to obtain prior to the mailing of the Proxy Statement
all necessary state securities law or "blue sky" permits and approvals required
in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) Each of the Westin Companies and the Starwood Companies shall use all
reasonable efforts to cause to be delivered to the other party and its directors
a letter of its independent auditors, dated (i) the date on which the Proxy
Statement is mailed and (ii) the Closing Date, and addressed to the other party
and its directors, in form and substance customary for "comfort" letters
delivered by independent public accountants in connection with proxy statements
similar to the Proxy Statement.
(c) The Westin Companies and the Starwood Companies shall cooperate with
each other and use (and shall cause their respective Subsidiaries to use) all
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on their part under this
Agreement and applicable Laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement. Subject to applicable laws relating
to the exchange of information, the Westin Companies and the Starwood Companies
shall have the right to review in advance, and to the extent practicable each
will consult the other on, all the information relating to the Starwood
Companies or the Westin Companies, as the case may be, and any of their
respective Subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Westin Companies and
the Starwood Companies shall act reasonably and as promptly as practicable.
(d) Each of the Westin Companies and the Starwood Companies shall, upon
request by the other, furnish the other with all information (including
financial information) concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement, or any other statement,
filing, notice or application made by or on behalf of the Starwood Companies,
the Westin Companies or any of their respective Subsidiaries to any third party
and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement or in connection with the issuance,
sale or exchange of or tender for any securities of any of the Starwood
Companies.
(e) Each of the Westin Companies and the Starwood Companies shall keep the
other apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notice or other communications received by the Starwood Companies or
the Westin Companies, as the case may be, or any of their respective
Subsidiaries, from any third party and/or any Governmental Entity with respect
to the Merger and the other transactions contemplated by this
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Agreement. The Westin Companies and the Starwood Companies each shall give
prompt notice to the other of (i) any change that is reasonably likely to result
in a Westin Material Adverse Effect or Starwood Material Adverse Effect,
respectively, (ii) any notice or other communication from any third Person
alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement, and (iii) any
material default under any Contract or event which, with notice or lapse of time
or both, would become such a default on or prior to the Closing Date or
Effective Time and of which any of the Westin Companies has knowledge. Without
limitation of the foregoing, the Starwood Companies shall give the LLC notice of
any breach by the Westin Companies of any of the provisions of this Agreement,
of the failure of the Westin Companies to satisfy any of the conditions to the
obligation of the Starwood Companies to consummate the transactions contemplated
by this Agreement, or of any change or development that is likely to result in
any such breach by the Westin Companies or any such failure by the Westin
Companies to satisfy any such condition promptly upon the Starwood Companies'
learning of such breach, failure or development from a source other than the
Westin Companies.
(f) Without limiting the generality of the undertakings pursuant to this
Section 6.5, the Westin Companies and the Starwood Companies agree (i) to
provide promptly to any and all federal, state, local or foreign court or
Government Entity with jurisdiction over enforcement of any applicable antitrust
laws ("Government Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the Merger and the transactions contemplated by this Agreement
and (ii) take promptly, in the event that any permanent or preliminary
injunction or other order is entered or becomes reasonably foreseeable to be
entered in any proceeding that would make consummation of the Merger or the
other transaction contemplated hereby in accordance with the terms of this
Agreement, any and all reasonable steps, including the appeal thereof or the
posting of a bond necessary to vacate, modify or suspend such injunction or
order, so as to permit such consummation on a schedule as close as possible to
that contemplated by this Agreement; provided, however, that the foregoing shall
not require the Starwood Companies or the Westin Companies to make any
divestiture or consent to any divestiture in order to fulfill any condition or
obtain any consent, authorization or approval or to appeal an injunction or
order, or to post a bond in respect of such appeal, that is not economically
reasonable for the Starwood Companies.
6.6. TAX MATTERS (a) None of the Westin Companies or the Starwood Companies
shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
(b) Each of the Starwood Companies will use their best efforts to maintain
REIT status, for U.S. federal income tax purposes, of Starwood Trust from the
date hereof through December 31, 1998 and the partnership status, for U.S.
federal income tax purposes, of each of Starwood Realty Partnership and Starwood
Operating Partnership from the date hereof through the tenth anniversary of the
Closing Date. None of the Starwood Companies will take any action that would
adversely affect the ability of Starwood Trust to qualify as a REIT for U.S.
federal income tax purposes from the date hereof through December 31, 1998 and
for each of Starwood Realty Partnership and Starwood Operating Partnership to be
classified and taxable as a partnership for U.S. federal income tax purposes
from the date hereof through the tenth anniversary of the Closing Date.
6.7. ACCESS. Upon reasonable notice, and except as may otherwise be
required by applicable law, each of the Westin Companies and the Starwood
Companies shall (and shall cause its Subsidiaries to) afford the other's
officers, employees, counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the period
prior to the Closing Date, to its properties, books, contracts and records and,
during such period, each shall (and shall cause its Subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as may reasonably be requested, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any representation
or warranty made by any Westin Company or any Starwood Company, and provided,
further, that the foregoing shall not require any Westin Company or Starwood
Company to permit any inspection, or to disclose any information, that in the
reasonable judgment of such Westin Company or Starwood Company, as the case may
be, would result in the disclosure of any trade secrets of third parties or
violate any of its obligations with respect to confidentiality if such Westin
Company or Starwood Company, as the case may be, shall have used best efforts to
obtain the consent of such third party to such inspection or disclosure. All
requests for
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information made pursuant to this Section shall be directed to an executive
officer of the LLC or Starwood Trust, as the case may be, or such Person as may
be designated by either of its officers, as the case may be. Prior to the
Effective Date, the Westin Companies shall deliver to the Starwood Companies,
not later than 45 days after the end of each monthly period and in the form
customarily prepared by the Westin Companies, the unaudited combined
consolidated internal financial statements of the Westin Subsidiaries, including
an income statement, balance sheet and cash flow statement for the monthly
period then ended and for the period from the beginning of the current fiscal
year to the end of such monthly period. All such information shall be governed
by the terms of the Confidentiality Agreement.
For a period of six years after the Effective Date, the LLC and its
representatives shall have reasonable access to all the books and records of the
Westin Companies with respect to periods prior to the Closing Date to the extent
that such access may reasonably be required by the LLC in connection with
matters relating to or affected by the operations of any of the Westin Companies
prior to the Closing Date. The Starwood Companies shall afford such access upon
receipt of reasonable advance notice and during normal business hours. The LLC
shall be solely responsible for any costs or expenses incurred by it pursuant to
this Section 6.7. If any of the Westin Companies shall desire to dispose of any
of such books and records prior to the expiration of such six-year period, the
Westin Companies, prior to such disposition, shall give the LLC a reasonable
opportunity, at the LLC's expense, to segregate and remove such books and
records as the LLC may select.
For a period of six years after the Closing Date, the Starwood Companies
and their respective representatives shall have reasonable access to all the
books and records relating to any of the Westin Companies or their assets or
business which the LLC or any of the Members or their Affiliates may retain
after the Effective Time. Such access shall be afforded by the LLC, the Members
and their Affiliates upon receipt of reasonable advance notice and during normal
business hours. The Starwood Companies shall be solely responsible for any costs
and expenses incurred by it pursuant to this Section 6.7. If any of the LLC or
the Members or any of their Affiliates shall desire to dispose of any of such
books and records prior to the expiration of such six-year period, the LLC or
such Members shall, prior to such disposition, give the Starwood Companies a
reasonable opportunity, at the Starwood Companies' expense, to segregate and
remove such books and records as the Starwood Companies may select.
6.8. AFFILIATES. Prior to the Effective Time, each Westin Company shall
deliver to Starwood Trust a list of names and addresses of those Persons who
are, in the opinion of such Westin Company, as of the time of the Stockholders
Meeting, "affiliates" of such Westin Company within the meaning of Rule 145
under the Securities Act. Each Westin Company shall provide to Starwood Trust
such information and documents as Starwood Trust shall reasonably request for
purposes of reviewing such list. There shall be added to such list the names and
addresses of any other Person subsequently identified by either Starwood Trust
or such Westin Company as a Person who may be deemed to be such an affiliate of
such Westin Company; provided, however, that no such Person identified by
Starwood Trust shall be added to the list of affiliates of such Westin Company
if Starwood Trust shall receive from such Westin Company, on or before the date
of the Stockholders Meeting, an opinion of counsel reasonably satisfactory to
Starwood Trust to the effect that such Person is not such an affiliate. Each
Westin Company shall exercise its best efforts to deliver or cause to be
delivered to Starwood Trust, prior to the date of the Stockholders Meeting, from
each affiliate of a Westin Company identified in the foregoing list (as the same
may be supplemented as aforesaid), a letter dated as of the Closing Date
substantially in the form attached as Exhibit A (the "Affiliates Letter").
6.9. REGISTRATION AND STOCK EXCHANGE LISTING. Starwood Trust and Starwood
Corp. shall use all reasonable efforts to cause the Starwood Paired Shares into
which the Class A EPS, Class B EPS, Starwood Realty Partnership Units and
Starwood Operating Partnership Units issued in the Merger or the other
transactions contemplated by this Agreement are exchangeable to be registered by
filing a registration statement with the SEC and approved for listing on the
NYSE subject to official notice of issuance, pursuant to the Registration Rights
Agreement.
6.10. PUBLICITY. The initial disclosure of the transactions contemplated
hereby shall be a joint press release in the form of Annex D hereto. Except as
otherwise required by applicable law or the rules or regulations of any
securities exchange on which the securities of such party are listed or traded,
no party or any
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of its affiliates shall issue or cause the publication of any press release or
other public announcement or disclosure with respect to the transactions
contemplated by this Agreement without the consent of each other party, and in
any event, each party agrees that it shall give each other party reasonable
opportunity to review and comment upon any such release or announcement prior to
publication of the same provided, however, the Starwood Companies and the Westin
Companies shall be free to make comments to their stockholders, shareholders,
employees, and owners of hotels with which such companies or their affiliates
have management, franchise, license or similar agreements, and to financial
analysts and the press which are substantially consistent with disclosures in
all such permitted press releases or announcements.
6.11. OPTIONS; BENEFITS.
(a) Stock Options. Prior to the Effective Time, each of the Westin
Companies shall take such actions as may be necessary such that immediately
prior to the Effective Time each Westin Company Option, whether or not then
exercisable, shall be exercised for securities of the Westin Companies, it being
understood that (i) 60% of such securities so issued in connection with such
exercises of Westin Company Options shall be "vested" for purposes of the
employment agreements pursuant to which such Westin Company Options were issued
and (ii) 40% of such securities so issued in connection with such exercises of
Westin Company Options shall be "unvested" for purposes of the employment
agreements pursuant to which such Westin Company Options were issued and that
any Starwood Securities issued in the transactions contemplated by this
Agreement in respect of such "unvested" securities will be deemed to be
"unvested" in a manner similar to that set forth in such employment agreements
with the first 50% of such unvested securities to vest on May 12, 1998 and the
remaining 50% of such unvested securities to vest on May 12, 1999.
(b) Employee Benefits. Each of Starwood Trust and Starwood Corp. agrees
that each of Starwood Trust and Starwood Corp. shall maintain for a period of
twelve months immediately following the Effective Time, employee benefit plans,
programs, policies and arrangements for employees of the Westin Companies and
their Subsidiaries and employees of unaffiliated companies that have the
benefits of plans administered by the Westin Companies ("Adopting
Non-Affiliates") Adopting Non-Affiliates which in the aggregate are no less
favorable than the employee benefit plans, programs, policies and arrangements
of the Westin Companies and their Subsidiaries in effect on the Effective Time,
in which such employees are eligible to participate immediately preceding the
Effective Time. Starwood Trust and Starwood Corp. will cause such employee
benefit plans to take into account for purposes of eligibility and vesting
thereunder service by employees of the Westin Companies and their Subsidiaries
and employees of Adopting Non-Affiliates as if such service were with Starwood
Trust or Starwood Corp. Starwood Trust and Starwood Corp. shall honor all
employee benefit obligations to current and former employees (including
employees of Adopting Non-Affiliates) under the Compensation and Benefit Plans
and all employee severance plans (or policies) in existence on the date hereof
and all employment or severance agreements entered into by the Westin Companies
or adopted by the Board of Directors or Board of Managers, as applicable, of
each Westin Company prior to the date hereof. Nothing in this Agreement shall be
interpreted as limiting the power of Starwood Trust or Starwood Corp. to cause
the amendment or termination of any Compensation and Benefit Plan, any other
individual employee benefit plan, program, agreement or policy or as requiring
Starwood Trust or Starwood Corp. or their Subsidiaries to offer to continue
(other than as required by its terms) any written employment contract, so long
as in the aggregate Starwood Trust and Starwood Corp. comply with this Section
6.11(b).
6.12. FEES AND EXPENSES. Except as otherwise provided herein and in Section
9.10, 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 or its Affiliates in connection with the preparation, negotiation,
execution, delivery and performance of this Agreement and each of the other
documents and instruments executed in connection with or contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby (collectively, the "Acquisition Expenses"); provided, however, that the
Acquisition Expenses of the Westin Companies (including, without limitation, the
cost of all third party consents to be obtained by the Westin Companies (it
being understood and agreed that the Starwood Companies shall have the right to
approve the incurrence of such expenses prior to such incurrence) and all taxes
(including transfer, recording or similar fees and all income taxes payable by
the Westin Companies and their Subsidiaries directly resulting from the
reorganizations contemplated by
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Section 6.17) payable in connection with any transactions or restructurings
contemplated by this Agreement to take place on or prior to the Closing Date,
the fees and expenses of Xxxxxx Xxxxxxxx & Co. incurred by the Westin
Subsidiaries related to the preparation of the Proxy Statement and the delivery
of the "comfort letter" described in Section 6.5(b) and the fees and expenses
incurred in connection with earnings and profits, valuation and similar due
diligence evaluations, investigations or studies) shall be borne entirely by the
Starwood Companies, and provided further that the Members shall bear the
Acquisition Expenses attributable to the fees and expenses of the financial and
legal advisors to the Members and the Westin Companies incurred in connection
with the transactions contemplated by this Agreement.
6.13. TAKEOVER STATUTE. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, each of
Starwood Trust and Starwood Corp. and its Board of Trustees or Board of
Directors, as the case may be, shall grant such approvals and take such actions
as are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
6.14. STARWOOD TRUST AND STARWOOD CORP. VOTE. Starwood Trust and Starwood
Corp. shall cause to be voted (or a consent to be given with respect to) any
Starwood Trust Shares or Starwood Corp. Shares beneficially owned by it or any
of its Affiliates or with respect to which it or any of its Affiliates has the
power (by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement and of the
Merger at any meeting of stockholders of Starwood Trust or Starwood Corp. at
which this Agreement shall be submitted for adoption and approval and at all
adjournments or postponements thereof (or, if applicable, by any action of
stockholders of Starwood Trust or Starwood Corp. by consent in lieu of a
meeting).
6.15. NAME AND MANAGEMENT OF STARWOOD CORP. AND STARWOOD TRUST. Immediately
after the Effective Time, the certificate of incorporation and the by-laws of
Starwood Corp. shall be amended to change the name of Starwood Corp. to "Westin
Hotels & Resorts Worldwide, Inc." Starwood Trust shall include Xxxxxx X.
Xxxxxxxxxx (and successors to such person as shall be designated by The Xxxxxxx
Sachs Group, L.P. ("GS Group") or an affiliate thereof designated by GS Group
("Xxxxxxx Xxxxx")) on each management slate of nominees to the board of trustees
of Starwood Trust. Starwood Corp. shall include Xxxxx X. Xxxxxxx (and successors
to such person as shall be designated by Xxxxxxx Xxxxx) and Xxxxxxx Xxxxxxx (to
the extent he continues as Chief Executive Officer) on each management slate of
nominees to the board of directors of Starwood Corp. Any person so designated by
Xxxxxxx Sachs shall be subject to the approval of the Starwood Companies, which
approval shall not be unreasonably withheld; in the event the Starwood Companies
disapprove any such person, Xxxxxxx Xxxxx shall then have the right to designate
another person for approval by the Starwood Companies. The right to designate a
director of Starwood Corp. will expire if Affiliates of Xxxxxxx Sachs sell (to
unaffiliated Persons) more than 50% of the Starwood Securities received by
Affiliates of Xxxxxxx Xxxxx in the transactions contemplated by this Agreement
(or Starwood Securities that may be received upon exchange thereof), and the
right to designate a trustee of Starwood Trust will expire if Affiliates of
Xxxxxxx Sachs sell (to unaffiliated Persons) more than 75% of the Starwood
Securities received by Affiliates of Xxxxxxx Xxxxx in the transactions
contemplated by this Agreement (or Starwood Securities that may be received upon
exchange thereof). At any time after the Closing Date, if WHWE, Whitehall Street
Limited Partnership V or Xxxxxxx Sachs Capital Partners, L.P. defaults in any
payment obligation or materially breaches any of its other agreements, covenants
or obligations under this Agreement or the Other Agreement (as defined in
Section 7.2(k)), and such default or breach continues for 30 days after notice
by the Starwood Companies to Xxxxxxx Xxxxx, then Xxxxxxx Sachs's right to
designate individuals to management's slate of nominees under this Section 6.15
shall immediately terminate and Xxxxxxx Sachs shall cause its then existing
designees to resign, in each case for so long as such default continues. In the
event the B EPS is exchanged, directly or indirectly, into A EPS or Paired
Shares, this paragraph shall apply with respect to the A EPS or Paired Shares
received upon such exchange, with the A EPS or Paired Shares, as applicable,
received upon exchange of the Purchaser Securities received in the transactions
contemplated by this Agreement that is being deemed to be the last sold. The
management of Starwood Trust and Starwood Corp. after the Effective Time will be
determined in accordance with Article III of this Agreement.
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6.16. ADDITIONAL COVENANTS.
(a) Starwood Trust hereby agrees that, from and after the Closing Date,
Starwood Trust will unconditionally guarantee all indebtedness incurred by any
Member in connection with the transactions contemplated hereby pursuant to a
guarantee reasonably acceptable to the Westin Companies and to the Members.
(b) The Starwood Companies will permit each of the Members (or their
permitted transferees) to guarantee all indebtedness incurred by such Members
(or their permitted transferees) in connection with the transactions
contemplated by this Agreement that is assumed by Starwood Realty Partnership or
Starwood Operating Partnership, as applicable, in connection with the Subsidiary
Contributions (it being understood and agreed that such Members (and their
permitted transferees) will not guarantee any such indebtedness originally
incurred by the Westin Subsidiaries or any subsidiaries of the Westin
Subsidiaries), and, in the event that Starwood Trust is required to make any
payment in respect of its guarantee of such indebtedness described in clause (a)
above and the Members elect to guarantee indebtedness pursuant to this clause
(b), the Members (or their permitted transferees) will pay to Starwood Trust
their proportionate share (based on the proportion that the amount of
indebtedness incurred by such Members (or their permitted transferees) and
assumed by Starwood Realty Partnership or Starwood Operating Partnership bears
to the total amount of indebtedness incurred by all the Members (or their
permitted transferees)) of the amount of any such payment made by Starwood Trust
in respect of such guarantee. The Members (or their permitted transferees) may
at any time, at their option, terminate all or any portion of the guarantees of
indebtedness described in the previous sentence; in the event the Members (or
their permitted transferees) terminate such guarantee or any portion thereof,
(i) Starwood Trust may terminate its guarantee of the portion of such
indebtedness as to which such Member or Members (or their transferees)
terminated its or their guarantee, (ii) the portion of the indebtedness as to
which the guarantee of the Members (or their permitted transferees) has been so
terminated shall no longer be subject to Section 6.16(c), (iii) the amount of
indebtedness of Starwood Realty Partnership or Starwood Operating Partnership
required to be outstanding pursuant to Section 6.16(d)(i) shall be decreased by
the amount of Indebtedness as to which such guarantee has been terminated and
(iv) in the event that each of WHWE, Woodstar and Nomura (or their permitted
transferees) terminates 80% (by dollar amount) or more of its respective
guarantee, the obligations of Starwood Trust, Starwood Realty Partnership and
Starwood Operating Partnership set forth in this Section 6.16(b) and Sections
6.16(a), 6.16(c) (other than the last sentence thereof) and 6.16(d) shall
terminate as of the date of such termination of such guarantees.
(c) Starwood Trust agrees that, in the event the Members exercise their
option to guarantee indebtedness pursuant to clause (b) of this Section 6.16,
during the period beginning on the Closing Date and ending on the date that is
two years after the Closing Date, none of Starwood Trust, Starwood Realty
Partnership, Starwood Operating Partnership, the Westin Subsidiaries contributed
to Starwood Realty Partnership or Starwood Operating Partnership, or any of
their respective Subsidiaries, will repay or refinance any of the indebtedness
assumed by Starwood Realty Partnership or Starwood Operating Partnership in
connection with the Subsidiary Contributions. In the event that after such
two-year period, any such indebtedness of the Starwood Realty Partnership is
repaid or refinanced, the Starwood Realty Partnership will permit the Members to
guarantee indebtedness of the Starwood Realty Partnership having the same
principal amount as such indebtedness so repaid or refinanced by the Starwood
Realty Partnership and, in the event that after such two-year period, any such
indebtedness of the Starwood Operating Partnership is repaid or refinanced the
Starwood Operating Partnership will permit the Members to guarantee indebtedness
of the Starwood Operating Partnership having the same principal amount as such
indebtedness so repaid or refinanced by the Starwood Operating Partnership.
Starwood Trust agrees that for a period of six and one-half months after the
Closing Date it will not repay or refinance, or permit to be repaid or
refinanced, $160 million of the indebtedness of Worldwide and $34,200,000 of
indebtedness of Atlanta permitted to be incurred by Worldwide and Atlanta,
respectively, after the date hereof and prior to the Closing Date.
(d) In the event the Members exercise their option to guarantee
indebtedness pursuant to clause (b) of this Section 6.16, during the period
beginning on the Closing Date and ending on the date that is ten years after the
Closing Date, (i) Starwood Realty Partnership and Starwood Operating Partnership
will maintain an
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aggregate amount of indebtedness equal to an amount that is no less than the
amount of indebtedness assumed by Starwood Realty Partnership or Starwood
Operating Partnership, as applicable, in connection with the Subsidiary
Contributions (other than any such indebtedness originally incurred by any of
the Westin Subsidiaries or any subsidiary of the Westin Subsidiaries), (ii) none
of Starwood Trust, Starwood Realty Partnership, Starwood Operating Partnership,
the Westin Subsidiaries contributed to Starwood Realty Partnership or Starwood
Operating Partnership, or any of their respective Subsidiaries, will voluntarily
sell, assign, pledge, dispose of or otherwise transfer any of the stock of such
Westin Subsidiaries contributed to Starwood Realty Partnership or Starwood
Operating Partnership in the Subsidiary Contributions or any of the land and
improvements of such Westin Subsidiaries (excluding time shares), except in a
"like-kind" exchange exempt from taxation pursuant to Section 1031 of the Code,
and (iii) each of Starwood Trust, Starwood Operating Partnership and Starwood
Realty Partnership will comply with covenants substantially to the effect set
forth in Schedule 6.16(d); provided, however, that the Starwood Companies shall
not be required to comply with the covenants contained in this Section 6.16(d)
from and after the date, if any, on which the failure of the Starwood Companies
to comply with such covenants would not adversely affect any of the Members or
the tax position of any of the Members; and provided further, however, that the
Members shall not unreasonably withhold or delay waivers of particular
applications of the covenants set forth in this Section 6.16(d) requested by the
Starwood Companies from time to time so long as such waivers shall not adversely
affect the tax position of any of the Members.
(e) From and after the closing date, each of Starwood Trust, Starwood
Corp., Starwood Realty Partnership and Starwood Operating Partnership shall, no
later than February 28 of each year, deliver to the Members (or their designees)
and each other holder of the stock of a Westin Subsidiary that contributed the
stock of such Westin Subsidiary in a Subsidiary Contribution such accurate
reports and other information as shall be reasonably requested by the Members
(or their designees) for them to file their tax returns for the previous year.
(f) For a period of one year after the Closing Date, the Members will not
sell or otherwise transfer ("Transfer") any of the shares of Class A EPS, Class
B EPS, Starwood Realty Partnership Units or Starwood Operating Partnership Units
received in the transactions contemplated by this Agreement, or any Starwood
Paired Shares received upon conversion or exchange of any thereof (collectively,
"Starwood Securities"), to any Person; provided, however, that any of the
Members may Transfer any of the Class A EPS or Class B EPS received in the
transactions contemplated by this Agreement, or any Starwood Paired Shares
received upon conversion or exchange of any thereof, to one or more investors in
such Member or one or more designees of such investors to whom Starwood
Securities are transferred or issued as contemplated by Section 1.3(g)
("Permitted Designees"), which investors or Permitted Designees have agreed in
writing to comply with the restrictions on Transfer set forth in this paragraph
(f) as though they were Members. From and after the first anniversary of the
Closing Date, none of the Members (or their permitted transferees) or any other
holder of Starwood Realty Partnership Units or Starwood Operating Partnership
Units shall Transfer any Starwood Realty Partnership Units or Starwood Operating
Partnership Units received in the transactions contemplated by this Agreement to
any Person without the prior written consent of the Starwood Realty Partnership
or the Starwood Operating Partnership, as applicable; provided, however, that
this sentence shall not prevent any exchange of any Starwood Realty Partnership
Units or Starwood Operating Partnership Units received in the transactions
contemplated by this Agreement for other Starwood Securities or the Transfer of
any Starwood Securities received upon exchange of Starwood Realty Partnership
Units or Starwood Operating Partnership Units received in the transactions
contemplated by this Agreement. During each of the first four calendar quarters
ending on or after the first anniversary of the Closing Date, no Member will
Transfer more than 25% of the Starwood Securities received by it in the
transactions contemplated by this Agreement, or any Paired Shares received upon
exchange of any Starwood Securities received in the transactions contemplated by
this Agreement, to any Person other than an investor in such Member or one or
more Permitted Designees of such investors; provided, however, that in the event
that less than 25% of such Starwood Securities received by any Member (or an
investor in a Member or a Permitted Designee) are Transferred in any quarter to
any Person other than to the investors in such Member or one or more Permitted
Designees of such investors, the other Starwood Securities held by such Member,
investor or Permitted Designee that could have been Transferred in such quarter
may be Transferred by such Member (or such investor or Permitted Designee) in a
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subsequent quarter and the Transfer of such Starwood Securities shall not reduce
the amount of Starwood Securities that could otherwise be Transferred by such
Member (or such investor or Permitted Designee) in such subsequent quarter; and
provided further that this sentence shall not permit a Transfer of Starwood
Realty Partnership Units or Starwood Operating Partnership Units that would be
prohibited by the second sentence of this Section 6.16(f). In the event that a
Member Transfers any of the Starwood Securities to investors in such Member or
to one or more Permitted Designees, such Transfers will be conditioned on the
receipt by such Member of a written agreement of such transferees to be bound by
the provisions of this Section 6.16(f) and Section 6.16(g). Notwithstanding
anything contained herein to the contrary, in the event of a Change in Control
(as defined in the Starwood LTIP) the restrictions on transfer of the Starwood
Securities provided in this paragraph (f)(other than in the second sentence
hereof) shall no longer apply.
(g) Each of the Members agrees that it will not Transfer any of the
Starwood Securities in violation of the registration requirements of the
Securities Act of 1933, as amended, or in such a manner as to cause Starwood
Realty Partnership or Starwood Operating Partnership to be a "publicly traded
partnership" for purposes of the Code.
6.17. REORGANIZATION OF THE PURCHASED ENTITIES. Immediately prior to the
Closing Date, the LLC shall cause the Westin Companies, and shall use all
reasonable efforts to cause the Joint Venture Affiliates, to be reorganized such
that, in the opinion of counsel to the Starwood Companies, the acquisition
contemplated hereby will not adversely affect the ability of Starwood Trust to
qualify as a "real estate investment trust" as defined in Section 856 of the
Code and/or for the purposes of minimizing the number of required consents or
approvals in connection with the transactions contemplated hereby. Such
reorganization shall include such mergers and sales of the Subsidiaries of the
Westin Subsidiaries or assets thereof as shall be necessary or appropriate to
accomplish the foregoing. The preceding sentence notwithstanding, the purchaser
of any assets or the stock of any Subsidiaries of the Westin Subsidiaries to be
sold shall be either a Starwood Company or a subsidiary thereof or a Westin
Subsidiary or a subsidiary thereof. If Worldwide is dissolved or merged into
another corporation as a result of this reorganization, then references in this
Agreement to Worldwide shall be deemed to be references to the
successor-in-interest to Worldwide.
6.18. CLOSING AFTER JANUARY 2, 1998. In the event the Starwood Companies
advise the Westin Companies that the Closing is likely to be delayed beyond
January 2, 1998, the LLC, the Members and the Westin Subsidiaries each agree to
take whatever actions may be reasonably requested by the Starwood Companies to
reorganize and restructure the businesses and assets of the Westin Companies so
as to preserve, to the extent practicable, the tax benefits to the Starwood
Companies that would have accrued had the Closing occurred on January 2, 1998,
and to minimize, to the extent practicable, any tax detriment to the Starwood
Companies that might occur due to the Closing occurring after January 2, 1998
(including by transferring assets among the Westin Subsidiaries and/or by
leasing assets to one or more of the Starwood Companies); provided, however,
that the Starwood Companies shall pay all expenses and costs (including any
incremental Taxes and legal and accounting fees and expenses) actually incurred
by the LLC, the Members and the Westin Subsidiaries in connection with such
reorganization and restructuring and, in the event this Agreement is terminated
in connection with the unwinding of such reorganization and restructuring.
6.19. COMMITMENTS FOR TITLE INSURANCE. The Westin Companies shall deliver
to the Starwood Companies not less than ten days prior to the Effective Date,
with respect to each parcel of real property identified in clause (i) of Section
5.1(p) of the Westin Disclosure Letter and each parcel of Leased Property
identified in clause (ii) of Section 5.1(p) of the Westin Disclosure Letter
(with the exception of immaterial office leases comprising part of the Tenant
Leases), (i) a survey, acceptable to the title company referred to in the last
sentence of this Section 6.19, of a recent date with respect to each such parcel
showing no encroachments or other survey defects with respect to the buildings,
structures and other improvements located on such property; and (ii) a current
commitment for the issuance of an owner's title insurance policy or leasehold
owner's title insurance policy, as the case may be, all of which policies shall
be 1990 form policies with an endorsement deleting the "creditor's rights"
exception or exclusion, with extended coverage insuring over all general
exceptions customarily contained in such policies, including without limitation
general exceptions 1 (rights or claims of parties in possession), 2 (survey
matters), 3 (easements), 4 (mechanic's liens) and 5 (taxes or special
assessments not shown as existing liens), with a Form 3.1 Zoning endorsement
(including
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parking and loading docks), survey endorsements insuring that the real property
described in the title insurance policy is the same real estate as shown on the
survey and that the survey accurately depicts the location and dimensions of the
real estate, access endorsement insuring that each street adjacent to the real
property is a public street and that there is direct and unencumbered pedestrian
and vehicular access to such street from the real property, contiguity
endorsement (if the real property consists of more than one record parcel)
insuring that all record parcels are contiguous to one another, location
endorsement identifying the improvements located on the real property, owner's
comprehensive endorsement insuring that there are no encroachments of
improvements onto adjoining land and no violations of enforceable covenants,
conditions or restrictions of record or building lines (and also insuring
against any loss of the right to maintain the improvements located on the real
property because of any such encroachments or current or future violations), and
a non-imputation endorsement insuring against loss due to undisclosed knowledge
of the Westin Companies imputed to the Starwood Companies. Each of such
commitments shall be written by a nationally recognized title insurance company
in amount, form and substance satisfactory to the Starwood Companies and shall
provide that, upon the satisfaction of the conditions specified therein, the
Starwood Companies will have good and marketable title thereto (including all
appurtenant easements), free and clear of all Liens, except for Permitted Liens.
6.20. LIQUOR AND OTHER LICENSES. The Westin Companies shall cooperate, and
prior to the Closing Date shall cause the Westin Companies and their
Subsidiaries, and shall use their reasonable best efforts to cause Westin
X'Xxxx, to cooperate, with the Starwood Companies in any lawful manner
reasonably requested by the Starwood Companies in connection with obtaining the
regulatory approvals of the transactions contemplated by this Agreement as may
be required by any public agencies administering laws regulating the sale of
alcoholic beverages, including but not limited to, obtaining, by transfer or
otherwise, such approvals for, and/or the issuance of all liquor, cabaret and
other federal, state and local licenses necessary to maintain continuity of
service of alcoholic beverages, as well as the continuity of the same forms of
business operations conducted at, in or upon each property by the Westin
Companies and their Subsidiaries, Westin X'Xxxx and all other Hotels which are
subject to Hotel Agreements, immediately before the Closing Date. If any such
regulatory approval or license issuance shall not be obtainable by the Starwood
Companies prior to the Closing Date, the Members and the LLC shall, after the
Closing Date, cooperate, and prior to the Closing Date, shall cause the Westin
Companies and their Subsidiaries, and shall use their reasonable best efforts to
cause Westin X'Xxxx, to cooperate, with the Starwood Companies, at the Starwood
Companies' sole expense, in any lawful and reasonable measure to maintain
continuity of the liquor service as well as the continuity of the same forms of
business operations conducted at, in or upon each property by the Westin
Companies and their Subsidiaries immediately before the Closing Date. Nothing
herein shall require any holder of any liquor, cabaret or other federal, state
or local license to permit any unlicensed Person to unlawfully exercise any
privilege under such license or to have any unlawful interest in liquor
inventory or in revenues from any business operated under such license. The
duties to cooperate set forth herein above shall include, without limitation,
the execution of documents and the renewal of any license or permit issued by
any Governmental Entity.
6.21. SOLICITATION OF EMPLOYEES. Each of the Members and the LLC agrees
that, during the period beginning on the Closing Date and ending on the second
anniversary of the Closing Date, neither it, nor any of its Affiliates (which
such Member unilaterally controls), will, directly or indirectly, solicit
employment, consulting or other services of any employees of the Starwood
Entities, the Westin Subsidiaries or any of their subsidiaries or otherwise
induce such employees to leave the employment of the Starwood Entities, the
Westin Subsidiaries or any of their subsidiaries or breach his or her employment
agreement, if any, with the Starwood Entities, the Westin Subsidiaries or any of
their subsidiaries.
6.22. CONFIDENTIALITY. (a) The Members and the LLC consent and agree not
to, and not to permit their Affiliates to, disclose, communicate, use to the
detriment of any of the Westin Subsidiaries or any of their subsidiaries or
Joint Venture Affiliates, or for the benefit of any other Person, or misuse in
any way, any confidential information or trade secrets of the Purchased
Entities, including, without limitation, the terms, duration and expiration date
of any Hotel Agreement. Nothing in this Section 6.22 shall restrict the Members
and the LLC from disclosing any information that (i) becomes part of the public
domain through no fault of the Members, the LLC or any of their Affiliates or
(ii) is required to be disclosed by law or court order.
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(b) Remedies. The Members and the LLC acknowledge and agree that damages
would not adequately compensate the Starwood Companies if the Members, the LLC
or any of their Affiliates were to breach any of their covenants contained in
Sections 6.21 and 6.22. Consequently, the Members and LLC shall be entitled, in
addition to any other remedies available at law or in equity, to specifically
enforce the terms of Section 6.21 or 6.22 by means of injunction or other
equitable relief.
(c) Validity and Reformation. Should any term or provision of this Section
6.22 be held invalid, unenforceable or illegal by a final adjudication of any
court having competent jurisdiction, or be or become invalidated by reason of
any applicable law or statute existing now or in the future, (i) such term or
provision shall be reformed to reflect the parties' intent and to be enforceable
to the maximum extent permissible under applicable law and (ii) the validity or
enforceability of the remainder of this Section 6.22 shall not be affected
thereby and shall remain in full force and effect.
6.23. CAPITALIZED LEASE OBLIGATIONS. None of the Westin Companies shall
prior to the Effective Date terminate any capitalized lease obligation prior to
its scheduled expiration date.
6.24. FURTHER ASSURANCES. From time to time after the Effective Time, the
officers and director of the Surviving Trust shall be authorized to execute and
deliver, in the name and on behalf of the Westin Subsidiaries and their
respective Subsidiaries or otherwise, such deeds and other instruments and to
take or cause to be taken such further or other action as shall be necessary or
desirable in order to vest or perfect in or to confirm, of record or otherwise,
in the Surviving Trust title to, and possession of, all the property, rights,
privileges, powers, immunities and franchises of the Westin Companies and
otherwise carry out the purposes of this Agreement. With respect to any license,
certificate, approval, authorization, agreement, contract, lease, easement and
other commitment included in the Westin Companies' assets which requires the
consent of any third Person to the Merger or any other transaction contemplated
hereby, if any such consent has not been obtained prior to the Effective Time,
thereafter the LLC and each of the Members shall cooperate with the Surviving
Trust and Starwood Corp. at their request in endeavoring to obtain such consent
promptly, and if any such consent is unobtainable, to use all reasonable efforts
to secure to the Surviving Trust and Starwood Corp. the benefits thereof in some
other manner; provided, however, that nothing herein shall relieve any of the
LLC or the Members of their respective obligations under Section 6.5.
6.25. TRANSFER OF CERTAIN RIGHTS OF LLC. At the Closing, the LLC shall
transfer, assign and convey any and all rights and interests to which it is
entitled to under the Amended and Restated Stock Purchase Agreement, dated as of
May 12, 1995, among Westin Hotel Holding Corp., Westin Hotel L.L.C., Xxxxxx Xxxx
Hotel Investment, Inc. and Aoki Corporation, and any other agreements entered
into in connection therewith (collectively, the "Aoki Agreement"), to the
Starwood Companies; provided, however, that to the extent that any such
transfer, assignment or conveyance would constitute a breach of the Aoki
Agreement, this Agreement (and any related documents delivered at the Closing)
shall not constitute an actual or attempted transfer, assignment or conveyance
of the Aoki Agreement unless and until the consent or waiver of such breach is
obtained from the parties to the Aoki Agreement other than the Westin Companies.
To the extent that the consents and waivers referred to in the proviso to the
immediately preceding sentence are not obtained prior to the Closing, (x) each
Member and the LLC shall use all reasonable efforts to (A) provide or cause to
be provided to the Starwood Companies the benefits of the Aoki Agreement, (B)
cooperate in any arrangement, reasonable and lawful as to both the Members and
the LLC and the Starwood Companies, designed to provide such benefits to the
Starwood Companies and (C) enforce for the account of the Starwood Companies any
rights of the Members and the LLC arising from the Aoki Agreement, including all
rights to payments and to indemnification, in each case after consulting with
and upon the advice and direction of the Starwood Companies. In connection with
the foregoing, the Members and the LLC agree to make their personnel, and
applicable books and records, reasonably available to the Starwood Companies (at
no cost to the Starwood Companies) in order to effect all actions reasonably
required to be taken under this Section 6.26. The Starwood Companies agree to
reimburse the Members and the LLC for all reasonable out-of-pocket expenses
incurred by them in connection with the foregoing.
6.26. NOMURA CONSENTS. Nomura hereby agrees to provide the consents to the
transactions contemplated by this Agreement described in Section 7.2(l).
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6.27. ESCROW ARRANGEMENT. The Members and the LLC shall use all reasonable
efforts to establish, on or prior to the Closing Date, the escrow arrangement
contemplated by Section 7.2(k).
6.28. ADDITIONAL AGREEMENTS WITH NOMURA. On or prior to March 28, 1998,
Nomura will not securitize indebtedness held by it relating to Denver (with an
aggregate principal amount of $45 million plus $8.5 million of preferred equity)
or to St. Xxxx (currently with an aggregate principal amount of $20 million) and
will allow the Starwood Companies to prepay all of such indebtedness (and
preferred equity) plus all breakage costs relating to any related U.S. Treasury
hedge positions (it being understood that Nomura will use its best efforts to
minimize such costs, including, but without limitation, "rolling" such hedge
positions into the new loans referred to below), but otherwise without premium
or penalty, on or prior to March 29, 1998. Concurrently therewith, Starwood
Trust will borrow from Nomura no less than $67.6 million principal amount of
indebtedness secured by one or more first mortgages (the underlying property of
which, in Nomura's reasonable judgment, is promptly capable of supporting an
optimal securitization of such indebtedness with a structure and pursuant to
documentation which is usual and customary for securitizations by Nomura and
which satisfy rating agency standards) on comparable quality assets as Denver
and St. Xxxx and on terms that will provide Nomura with comparable pricing,
fees, debt service coverage, collateralization, amortization and other economic
terms, in the aggregate, as Nomura would have received had the indebtedness of
Denver and St. Xxxx been securitized by Nomura instead of being prepaid.
The contemplated loans on Atlanta aggregating up to $34.2 million will not
be secured by any lien or encumbrance on the equity interests in Westin Portman
Peachtree II L.L.C. On the Closing Date, the $15 million of related credit
enhancement from the Members for capital improvements over three years will
become credit enhancement (on the same terms and conditions) from Starwood
Corporation and the Starwood Operating Partnership and the Members will be
released by Nomura and its affiliates from any obligation on such credit
enhancement after such date. Securitization of the indebtedness related to
Atlanta may proceed as planned by Nomura.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger and the other
transactions contemplated hereby is subject to the satisfaction or waiver at or
prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly approved by
holders of Starwood Trust Shares and Starwood Corp. Shares constituting the
number of Starwood Trust Shares and Starwood Corp. Shares required to approve
this Agreement in accordance with applicable law and the Declaration of Trust
and Articles of Incorporation, as applicable, and Trust Regulations and by-laws,
as applicable, of Starwood Trust and Starwood Corp., the laws of the State of
Maryland and the rules of the NYSE (the "Requisite Vote"), and the Merger shall
have been duly approved by the holders of Starwood Trust Shares and Starwood
Corp. Shares constituting the Requisite Vote.
(b) Regulatory Consents. The waiting period applicable to the consummation
of the Merger and the other transactions contemplated hereby under the HSR Act
shall have expired or been terminated and, other than the filings provided for
in Section 1.7, all notices, reports and other filings required to be made prior
to the Effective Time by the Westin Companies and the Starwood Companies or any
of their respective Subsidiaries with, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior to the
Effective Time by the Westin Companies or the Starwood Companies or any of their
respective Subsidiaries from, any Governmental Entity (collectively,
"Governmental Consents") in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby by the Westin Companies and the Starwood Companies shall
have been made or obtained (as the case may be), except those the failure to
make or to obtain are not, individually or in the aggregate, reasonably likely
to have a Westin Material Adverse Effect or a Starwood Material Adverse Effect
or to provide a
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reasonable basis to conclude that the parties hereto or any of their affiliates
or respective directors, officers, agents, advisors or other representatives
would be subject to the risk of criminal liability.
(c) Litigation. No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or the other
transactions contemplated hereby (collectively, an "Order"), and no Governmental
Entity shall have instituted any proceeding therefor.
7.2. CONDITIONS TO OBLIGATIONS OF THE STARWOOD COMPANIES. The obligations
of the Starwood Companies to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction or waiver by the
Starwood Companies at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Westin Companies set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date and except to
the extent that the Westin Companies have furnished revised sections of the
Westin Disclosure Letter (in which case such representations and warranties
shall speak as of the date the last revisions to the Westin Disclosure Letter
are furnished to the Starwood Companies)), and the Starwood Companies shall have
received a certificate to such effect signed on behalf of the Westin Companies
by the chief financial officer and secretary of Worldwide provided, however,
that notwithstanding anything herein contained to the contrary, this Section
7.2(a) shall be deemed to have been satisfied even if (i) such representations
or warranties were not true and correct on the date of this Agreement but are so
true and correct on the Closing Date or (ii) any such representation or warranty
(other than the representations and warranties contained in Section 5.1(a),
5.1(b), 5.1(c), 5.1(e), 5.1(o), 5.1(t) and 5.1(u)) is untrue as written but such
representation or warranty would be true if any or all of the documents listed
on Schedule 7.2(a) hereof and the contents thereof (other than any documents
referenced in any such documents that are not themselves also listed on Schedule
7.2(a) hereof) were incorporated as exceptions to such representation and
warranty.
(b) Performance of Obligations of the Westin Companies. The Westin
Companies shall have performed in all material respects all material obligations
required to be performed by them under this Agreement at or prior to the Closing
Date and the Starwood Companies shall have received a certificate to such effect
signed on behalf of the Westin Companies by the chief financial officer and
secretary of Worldwide to such effect.
(c) Legal Opinion. (i) No later than the earliest to occur of (a) November
25, 1997, (b) the date of the occurrence of the transaction contemplated in
Section 6.1(b)(iv)(a) hereof and (c) the date of the occurrence of the
transaction contemplated in Section 6.1(b)(iv)(d), the Starwood Companies shall
have received the opinion of Sidley & Austin, special counsel to the Starwood
Companies, subject to assumptions reasonably acceptable to the Westin Companies,
to the effect that (A) the Merger will constitute a "reorganization" with the
meaning of Section 368(a) of the Code and (B) Starwood Trust will continue to
qualify as a REIT for U.S. federal income tax purposes after consummation of the
transactions contemplated by this Agreement.
(ii) The Starwood Companies shall have received the opinion of Sidley &
Austin, special counsel to the Starwood Companies, dated the Closing Date, in
substantially the form attached hereto as Annex E-1, which opinion shall restate
as of the Closing Date the opinion described in Section 7.2(c)(i).
(iii) Starwood Trust shall have received an opinion of Xxxxxxxx & Xxxxxxxx,
special counsel to the Westin Companies, dated the Closing Date, substantially
in the form attached hereto as Annex E-3.
(d) Accountants Letter. The Starwood Companies shall have received from
Xxxxxx Xxxxxxxx LLP the "comfort letter" described in Section 6.5(b).
(e) Fairness Opinion. The Special Committee of Disinterested Trustees of
the Board of Trustees of Starwood Trust and the Special Committee of
Disinterested Directors of the Board of Directors of Starwood Corp. shall have
received an opinion of Xxxxxx Xxxxxxx & Co. Incorporated, in a form satisfactory
to each
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board, to the effect that the Merger, the Subsidiary Contributions and the other
transaction contemplated by this Agreement are fair, from a financial point of
view, to Starwood Trust and Starwood Corp.
(f) Material Adverse Change. There shall not have occurred, since the date
of this Agreement, any material adverse change in the financial condition,
properties, business or results of operations of the Westin Companies and their
Subsidiaries taken as a whole or any development or combination of developments
individually or in the aggregate, that has had or is reasonably likely to have a
Westin Material Adverse Effect.
(g) Change in Tax Laws. There shall not have been any changes in the U.S.
federal income tax laws that materially and adversely affects the ability of
Starwood Trust to consummate the Merger as a "tax-free reorganization" under the
Code or on the ability of Starwood Trust to maintain its status as a REIT for
purposes of the Code.
(h) Financing. There shall have been no change in the general economic,
financial or market conditions in the United States that materially and
adversely affects that ability of the Starwood Companies to obtain the financing
necessary to consummate the transactions contemplated by this Agreement.
(i) FIRPTA Certificate. LLC, each Member and any other person receiving
Starwood Securities or other consideration pursuant to this Agreement shall have
delivered to the Starwood Companies a certification of nonforeign status, in
form and substance reasonably satisfactory to the Starwood Companies, in
accordance with Treas. Reg. sec. 1.1445-2(b), and the Starwood Companies shall
have no actual knowledge that such certification is false or receive a notice
that the certification is false pursuant to Treas. Reg. sec. 1.1445-4.
(j) Consents. The owners of hotels party to management, franchise or
similar agreements with the Westin Companies and the unaffiliated third party
investors in Joint Venture Affiliates and ground lessors of Hotels (or the
properties on which such Hotels are located) from whom consents, approvals or
authorizations are required to be obtained in connection with the consummation
of the transactions contemplated by this Agreement shall not have delivered
written notices of their intention to terminate such agreements or ground leases
("Termination Notices"); provided that this condition shall be deemed to have
been satisfied unless the projected 1998 management fee and/or franchise fee
and/or other revenues (other than marketing fees (including portions of
management and franchise fees that are allocated to marketing fees) and
reimbursed expenses and other revenue items that do not result in a profit for
the Westin Companies) from all such contracts in respect of which such notices
have been received, equal or exceed, in the aggregate, $8,000,000; provided,
further, that this condition shall be deemed to have been waived by the Starwood
Companies if the Starwood Companies do not elect not to consummate the
transactions contemplated by this Agreement as a result of the failure to
satisfy this condition on or prior to November 25, 1997; provided, however, that
in the event the transaction described on Section 6.1(b)(iv)(a) shall not have
occurred prior to November 25, 1997, the foregoing reference to November 25,
1997 shall be deemed to be a reference to the earlier to occur of (i) the
occurrence of the transaction contemplated by Section 6.1(b)(iv)(a) or (ii) the
date that is fourteen days before the Stockholders' Meeting referred to in
Section 6.4. For purposes of the foregoing sentence, 50% of the projected 1998
management fee and/or franchise fee and/or other revenues with respect to
management, franchise or similar agreements that are subject to the provisions
of the License and Master Assignment Agreement, dated as of May 12, 1995, among
Westin International Asia Pacific Corporation, Aoki Corporation, Westin Hotel
Company and the other parties thereto, shall be included in determining whether
the $8,000,000 threshold in the previous sentence has been equaled or exceeded.
Notwithstanding the foregoing, applicable written consents or approvals (as
distinguished form Termination Notices), including such approvals as are
required for modifications to Joint Venture Agreements and/or the execution of
supplementary agreements reasonably required for the continued ownership of
Joint Venture Affiliates in a manner consistent with the REIT or Paired Share
qualification requirements applicable to the Starwood Companies, shall be
required from such owners, unaffiliated third party investors or ground lessors
(collectively, the "Third Parties"), as applicable, with respect to the assets
identified on Schedule 7.2(j), and the failure to obtain any such consent or
approval from the applicable Third Party shall be deemed to be the delivery by
such Third Party of a Termination Notice for purposes of the first proviso to
the first sentence of this Section 7.2(j).
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(k) Other Agreements. WHWE, Woodstar, Nomura and Xxxxxxx shall have
executed and delivered an indemnity agreement in the form agreed to on the date
hereof (the "Other Agreement"), and there shall have been established, on or
prior to the Closing Date, with respect to the matters described in the Other
Agreement, an escrow arrangement relating to the Starwood Securities received by
the stockholders of the Westin Subsidiaries other than WHWE, Woodstar, Nomura
and Xxxxxxx, in form and substance reasonably satisfactory to the Starwood
Companies, providing for the same pro rata economic effect with respect to such
stockholders as the Other Agreement provides for WHWE, Woodstar, Nomura and
Xxxxxxx.
(l) Nomura Consents. Nomura and Property Acquisition Trust, as the case may
be, shall have consented to the transactions contemplated by this Agreement
under all debt agreements relating to indebtedness of the Joint Venture
Affiliates, Westin Companies and their respective Subsidiaries and under any
joint venture agreements, limited liability agreements or partnership agreements
to which Nomura is a party; provided, however, the foregoing shall not require
Nomura to consent to the assumption by any of the Starwood Companies of the
Subordinated Debt of Westin Hotel Company issued to Nomura pursuant to the
Subordinated Note and Class B Purchase Agreement dated as of May 12, 1995 among
Nomura and certain Westin Companies or the Participation Agreement dated as of
May 12, 1995, among Nomura, the Members, the LLC and the other parties thereto
and nothing herein shall be deemed to be such a consent.
7.3. CONDITIONS TO OBLIGATION OF THE WESTIN COMPANIES. The obligations of
the Westin Companies to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction or waiver by the Westin
Companies at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Starwood Companies set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date and except to
the extent that the Starwood Companies have furnished revised sections of the
Starwood Disclosure Letter (in which case such representations and warranties
shall speak as of the date the last revisions to the Starwood Disclosure Letter
are delivered to the Westin Companies and the Members), and the Westin Companies
shall have received a certificate to such effect signed on behalf of the
Starwood Companies by the Chief Financial Officer and Secretary of Starwood
Trust and of Starwood Corp. to such effect.
(b) Performance of Obligations of the Starwood Companies. The Starwood
Companies shall have performed in all material respects all material obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and the Westin Companies shall have received a certificate signed on
behalf of Starwood Trust and Starwood Corp. by the Chief Financial Officer and
Secretary of Starwood Trust and Starwood Corp., respectively, to such effect.
(c) Legal Opinion. (i) No later than the earliest to occur of (a) November
25, 1997, (b) the date of the occurrence of the transaction contemplated by
Section 6.1(c)(iv)(a), and (c) the date of the occurrence of the transaction
contemplated in Section 6.1(b)(iv)(d), the Westin Companies shall have received
the opinion of Sidley & Austin, special counsel to the Starwood Companies,
subject to assumptions reasonably acceptable to the Westin Companies, to the
effect that (A) the Merger will constitute a "reorganization" with the meaning
of Section 368(a) of the Code and (B) Starwood Trust will continue to qualify as
a REIT for U.S. federal income tax purposes after consummation of the
transactions contemplated by this Agreement.
(ii) The Westin Companies shall have received the opinion of Sidley &
Austin, special counsel to the Starwood Companies, dated the Closing Date, in
substantially the form attached hereto as Annex E-1, which opinion shall restate
as of the Closing Date the opinion described in Section 7.3(c)(i).
(iii) The Westin Companies shall have received the opinion of Sidley &
Austin, special counsel to the Starwood Companies, dated the Closing Date, in
substantially the form attached hereto as Annex E-2-A, and the opinion of Piper
& Marbury LLP, special counsel to the Starwood Companies, dated the Closing
Date, in substantially the form attached hereto as Annex E-2-B.
(d) Accountant Letters. The Westin Companies shall have received the
"comfort letter" described in Section 6.5(b).
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(e) Registration Rights Agreement. Starwood Trust and Starwood Corp. shall
have executed and delivered the Registration Rights Agreement substantially in
the form of Annex F hereto.
(f) Material Adverse Change. There shall not have occurred, since the date
of this Agreement, any material adverse change in the financial condition,
properties, business or results of operations of the Starwood Companies and
their Subsidiaries taken as a whole or any development or combination of
developments individually or in the aggregate, that has had or is reasonably
likely to have a Starwood Material Adverse Effect.
(g) Registration and Listing. Starwood Trust and Starwood Corp. will
register and list on the NYSE the shares of Starwood Paired Shares issuable in
exchange for Class A EPS and Class B EPS issued pursuant to the transactions
contemplated by this Agreement pursuant to the Registration Rights Agreement and
such Starwood Paired Shares shall have been authorized for listing on the NYSE
upon official notice of issuance. In the event of a Change in Control of the
Starwood Companies in which the stockholders of the Starwood Companies receive
registered securities of another Person, it shall be a condition to the
consummation of such Change in Control transaction that the Person that acquires
the Starwood Companies in such Change in Control, or the surviving entity in
such Change in Control transaction, shall establish an effective registration
statement with respect to the securities of such Person received by the Members
or their transferees in such a transaction that permits the sale of such
securities by such Members or transferees in a registered public offering for so
long as such a registration statement is required for the Members or their
transferees to sell publicly such shares.
(h) Subordinated Debt. The Subordinated Debt referred to in Section 7.2(l)
shall have been repaid in full unless Nomura shall have otherwise agreed in
writing.
ARTICLE VIII
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger and the other transactions contemplated hereby may be abandoned at
any time prior to the Effective Time, whether before or after the approval by
stockholders of Starwood Corp. and the shareholders of Starwood Trust referred
to in Section 7.1(a), by mutual written consent of the Westin Companies and
Starwood Companies by action of their respective Boards of Trustees or
Directors.
8.2. TERMINATION BY EITHER THE STARWOOD COMPANIES OR WESTIN COMPANIES. This
Agreement may be terminated and the Merger and the other transactions
contemplated hereby may be abandoned at any time prior to the Effective Time by
action of the Board of Trustees, Boards of Directors or Boards of Managers of
Starwood Corp., Starwood Trust or the LLC, as the case may be, if (i) the Merger
shall not have been consummated by January 31, 1998, whether such date is before
or after the date of approval by the stockholders of Starwood Trust and the
unitholders of Starwood Corp. (the "Termination Date"), (ii) the approval of the
stockholders of Starwood Corp., and the unitholders of Starwood Trust as
required by Section 7.1(a) shall not have been obtained at a meeting duly
convened therefor or (iii) any Order permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger or the other transactions
contemplated hereby shall become final and non-appealable (whether before or
after the approval by the stockholders of Starwood Trust and Starwood Corp.);
provided, that the right to terminate this Agreement pursuant to clause (i)
above shall not be available to any party that has breached (or whose Affiliate
has breached) in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the occurrence of the
failure of the Merger to be consummated.
8.3. TERMINATION BY THE WESTIN COMPANIES. This Agreement may be terminated
and the Merger and the other transactions contemplated hereby may be abandoned
at any time prior to the Effective Time, whether before or after the approval by
stockholders of Starwood Corp. and the unitholders of Starwood Trust, as
required by Section 7.1(a), by action of the Board of Managers of the LLC if (i)
the Board of Trustees of Starwood Trust or the Board of Directors of Starwood
Corp. shall have withdrawn or adversely modified its approval or recommendation
of this Agreement in a manner adverse to the Westin Companies, (ii) there has
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been a material breach by the Starwood Companies of any representation,
warranty, covenant or agreement contained in this Agreement that is not curable
or, if curable, is not cured within 30 days after written notice of such breach
or (iii) as contemplated by penultimate sentence of Section 9.14(b).
8.4. TERMINATION BY STARWOOD TRUST OR STARWOOD CORP. This Agreement may be
terminated and the Merger and the other transactions contemplated hereby may be
abandoned at any time prior to the Effective Time, whether before or after the
approval by the stockholders of Starwood Corp. or the shareholders of Starwood
Trust as required by Section 7.1(a), by action of the Board of Directors of
Starwood Corp. or the Board of Trustees of Starwood Trust if (i) there has been
a material breach by the Westin Companies of any representation, warranty,
covenant or agreement contained in this Agreement that is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by the Starwood Companies to the party committing such breach (provided
that if such 30-day period would but for this proviso extend past January 2,
1998, such period shall be deemed to end on January 2, 1998) or (ii) as
contemplated by the penultimate sentence of Section 9.14(a), in the case of
either (i) or (ii) above, by action to such effect of the Board of Directors of
Starwood Corp. or the Board of Trustees of Starwood Trust.
8.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment of
the Merger and the other transactions contemplated hereby pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its trustees, directors, officers, employees, agents, legal and
financial advisors or other representatives); provided, however, except as
otherwise provided herein, no such termination shall relieve any party hereto of
any liability or damages resulting from any wilful breach of this Agreement.
(b) In the event that (a) this Agreement is terminated by the Westin
Companies pursuant to Section 8.3, (b) the condition set forth in Section 7.1(a)
shall not have been satisfied and this Agreement shall have been terminated
pursuant to Section 8.2, (c) the Starwood Companies shall have failed to satisfy
any of the conditions set forth in Section 7.3(a), (b), (c)(i), (c)(ii), (d),
(e) or (g) on or prior to the Closing Date and the Westin Companies shall, by
written notice delivered to Starwood Trust, elect not to consummate the
transactions contemplated hereby as a result of such failure or (d) the Starwood
Companies otherwise fail to consummate the transactions contemplated by this
Agreement, then the Starwood Companies shall promptly, but in no event later
than five business days after the date of such event, pay the Westin Companies a
termination fee of $5,000,000 and shall promptly, but in no event later than
five business days after the date of such event, pay all the charges and
expenses incurred by the Westin Companies and the Members in connection with
this Agreement and the transactions contemplated by this Agreement in an amount
not to exceed $5,000,000, in each case payable by wire transfer of same day
funds; provided, however, that no such payment shall be required in the event
that (i) the Westin Companies shall have failed, after the expiration of 30 days
after receipt by the Westin Companies of written notice of such failure during
which the Westin Companies shall have the opportunity to cure any such failure,
provided, that such cure period shall not extend beyond January 2, 1998 unless
the parties shall have agreed to extend the Closing Date to a date that is later
than January 2, 1998 to satisfy any condition specified in Section 7.2 that is
required to be satisfied by the Westin Companies prior to the Closing Date, (ii)
the Starwood Companies elect not to consummate the transactions as a result of
the failure of the satisfaction of the condition specified in Section 7.1(b) or
(c) or 7.2(a), (b), (c)(iii), (d), (f), (g), (i), (j), (k) or (l) or Section
9.14 or (iii) the Starwood Companies fail to deliver the opinions of Sidley &
Austin required to be delivered by Section 7.3(c)(i) or (ii), and the sole cause
of such failure is a change in the factual circumstances of the Westin Companies
occurring after the date hereof that causes one or more explicit assumptions
contained in the opinion attached hereto as Annex E-1 to be untrue as of the
Closing Date. The Starwood Companies' payment shall be the sole and exclusive
remedy of the Westin Companies against the Starwood Companies and any of their
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the breach of any covenant or
agreement giving rise to such payment. The Starwood Companies acknowledge that
the agreements contained in this Section 8.5(b) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
the Westin Companies would not enter into this Agreement.
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ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. SURVIVAL AND INDEMNIFICATION. This Article IX and the agreements of
the Westin Companies, the Members and the Starwood Companies contained in
Sections 1.4 (Working Capital Adjustments), 6.6 (b) (Taxation), 6.9
(Registration and Stock Exchange Listing), 6.11 (Benefits), 6.12 (Expenses),
6.15 (Name and Management of Starwood Corp. and Starwood Trust.), 6.16
(Additional Covenants), 6.20 (Liquor and other Licenses), 6.21 (Solicitation of
Employees), 6.28 (Additional Agreements with Nomura), 7.3(g) (Registration and
Listing) and 9.10 (Transfer Taxes) and this Section 9.1 shall survive the
consummation of the Merger. This Article IX, the agreements of the Westin
Companies, the Members and the Starwood Companies contained in Section 6.12
(Expenses), Section 6.18 (Closing after January 2, 1998), Section 8.5 (Effect of
Termination and Abandonment) and the Confidentiality Agreement shall survive the
termination of this Agreement. All other representations, warranties, covenants
and agreements in this Agreement shall not survive the consummation of the
Merger or the termination of this Agreement.
9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of applicable
law, at any time prior to or after the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger and the other transactions contemplated
hereby are for the sole benefit of such party and may be waived by such party in
whole or in part to the extent permitted by applicable law.
9.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of New
York and the Federal courts of the United States of America located in the State
of New York solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a New York State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 9.6 or in such other
manner as may be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND
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HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.5.
9.6. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to the Starwood Companies
Starwood Lodging Trust
c/o Starwood Capital Group
0 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chairman
Fax: (000) 000-0000
(with a copy to Xxxxxxx Xxxxxxx, Esq.,
Sidley & Austin,
000 Xxxx Xxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000.)
if to the Westin Companies
WHWE L.L.C.
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
and to:
Woodstar Investor Partnership
c/o Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Attention: Xxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
and to:
Xxxxxxx Xxxxxxx
Westin Hotel Company
The Westin Building
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
54
58
and to:
Nomura Asset Capital Corporation
2 World Xxxxxxxxx Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
(with a copy to Xxxxxx X. Xxxxxxx, Esq.,
Xxxxxxxx & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
Fax: (000) 000-0000
and with a copy to Xxxx Xxxxxxxxx, Esq.
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000.)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. Except as expressly agreed
in a separate writing signed by the parties hereto on or after the date of this
Agreement, this Agreement (including any exhibits hereto), the Westin Disclosure
Letter, the Starwood Disclosure Letter, the Registration Rights Agreement, the
Confidentiality Agreement, dated January 8, 1997, between Starwood Trust and W&S
Hotel L.L.C. (the "Confidentiality Agreement") and the Other Agreement
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NONE OF THE STARWOOD COMPANIES NOR ANY OF THE WESTIN COMPANIES MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. NO THIRD PARTY BENEFICIARIES. Except with respect to injunctive relief
in respect of Section 6.11 (Benefits), this Agreement is not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
9.9. OBLIGATIONS OF THE STARWOOD COMPANIES AND OF THE WESTIN COMPANIES.
Whenever this Agreement requires a Subsidiary of a Starwood Company to take any
action, such requirement shall be deemed to include an undertaking on the part
of such Starwood Company to cause such Subsidiary to take such action. Whenever
this Agreement requires a Subsidiary of a Westin Company to take any action,
such requirement shall be deemed to include an undertaking on the part of such
Westin Company and the Members to cause such Subsidiary to take such action and,
after the Effective Time, on the part of the Surviving Trust to cause such
Subsidiary to take such action.
9.10. TRANSFER TAXES. Any liability arising out of the transactions
contemplated hereby in respect of any state or local real property, transfer,
documentary transfer, recording or other transfer tax shall be borne by
55
59
Starwood Trust, Starwood Corp., Starwood Realty Partnership or Starwood
Operating Partnership, as applicable, and expressly shall not be a liability of
the stockholders of the Westin Companies.
9.11. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12. INTERPRETATION; CERTAIN DEFINED TERMS.
(a) The table of contents and headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof. Where a reference in
this Agreement is made to a Section, Annex, Schedule or Exhibit, such reference
shall be to a Section of or Exhibit or Annex to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." For purposes of this Agreement, "indebtedness" includes
indebtedness for borrowed money and capitalized lease obligations.
(b) As used in this Agreement, the term (1) "Affiliate" means, with respect
to any Person, any other Person which directly or indirectly controls, is
controlled by or is under common control with such Person, and (2) "Purchased
Entities" means the Westin Subsidiaries and their Subsidiaries and all other
entities of which any of Westin Subsidiaries or any of their Subsidiaries has a
direct ownership interest, including the Joint Venture Affiliates.
9.13. SUCCESSORS AND ASSIGNS. (a) The rights of each party under this
Agreement shall not be assignable by such party prior to the Effective Time
without the written consent of each of the other parties. Following the
Effective Time, any party may assign any of its rights hereunder, but no such
assignment shall relieve it of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. The successors and
permitted assigns hereunder shall include without limitation, in the case of the
Starwood Companies, any permitted assignee as well as the successors in interest
to such permitted assignee (whether by merger, liquidation (including successive
mergers or liquidations) or otherwise). Except as provided in Section 6.11,
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors and
assigns permitted by this Section 9.13 any right, remedy or claim under or by
reason of this Agreement.
9.14. DISCLOSURE LETTER UPDATING. (a) The Westin Companies may revise the
Westin Disclosure Letter to reflect any changes that occur after the date hereof
or to reflect matters coming to the attention of the Westin Companies after the
date hereof by delivering a revised Westin Disclosure Letter (or portion
thereof) to the Starwood Companies at any time prior to ten business days prior
to the Closing Date, marked to show changes from the most recent previously
delivered Westin Disclosure Letter (or such portion thereof). The Starwood
Companies shall have the right to review the revised Westin Disclosure Letter
(or such portion thereof) for a period of ten business days after receipt
thereof. If during such ten business-day period the Starwood Companies shall
have made a reasonable determination that the revised information contained in
the Westin Disclosure Letter (or such portion thereof), together, in the case of
the first revision to the Westin Disclosure Letter, with any document referred
to in the Westin Disclosure Letter as of the date hereof which is not listed in
Schedule 7.2(a) (without giving effect to any revision thereof occurring after
the date hereof), would have on the Closing Date caused the condition set forth
in Section 7.2(a) not to have been satisfied, the Starwood Companies shall have
the right to deliver a notice to the Westin Companies during such period to the
effect that the Starwood Companies are electing to terminate this Agreement
pursuant to Section 8.4. If the Starwood Companies do not give such notice
within such period, the Starwood Companies shall be
56
60
deemed to have accepted such revisions and/or the inclusion of such additional
documents as a revision to Schedule 7.2(a), and the Westin Disclosure Letter
shall be deemed to be superseded by the revised Westin Disclosure Letter.
(b) The Starwood Companies may revise the Starwood Disclosure Letter to
reflect any changes that occur after the date hereof or to reflect matters
coming to the attention of the Starwood Companies after the date hereof by
delivering a revised Starwood Disclosure Letter (or portion thereof) to the
Westin Companies and the Members at any time prior to ten business days prior to
the Closing Date, marked to show changes from the most recent previously
delivered Starwood Disclosure Letter (or such portion thereof). The Westin
Companies shall have the right to review the revised Starwood Disclosure Letter
(or such portion thereof) for a period of ten business days after receipt
thereof. If during such ten business-day time period the Westin Companies and
the Members shall have made a reasonable determination that the revised
information contained in the Starwood Disclosure Letter (or such portion
thereof) would have on the Closing Date caused the condition set forth in
Section 7.3(a) not to have been satisfied, the Westin Companies shall have the
right to deliver a notice to the Starwood Companies during such period to the
effect that the Westin Companies and the Members are electing to terminate this
Agreement pursuant to Section 8.3. If the Westin Companies and the Members do
not give such notice within such period, the Westin Companies shall be deemed to
have accepted such revisions, and the Starwood Disclosure Letter shall be deemed
to be superseded by the revised Starwood Disclosure Letter.
9.15. INDEX TO DEFINED TERMS. The capitalized terms set forth below have
been defined herein in the respective Sections or other parts hereof set forth
below:
DEFINED TERM SECTION OR OTHER PART
------------ ---------------------
Acquisition Expenses........................................ Sec. 6.12
Actual Scheduled Expenditures............................... Sec. 1.3(d)
Actual Unscheduled Expenditures............................. Sec. 1.3(e)
Affiliate................................................... Sec. 9.12(b)
Affiliates Letter........................................... Sec. 6.8
Agreement................................................... Caption
Assume...................................................... Sec. 1.1(c)
Atlanta..................................................... Caption
Atlanta Shares.............................................. Sec. 1.1(c)
Audit Date.................................................. Sec. 5.1(f)
Auditor..................................................... Sec. 1.4(e)
Bankruptcy and Equity Exception............................. Sec. 5.1(c)
Xxxxxxx..................................................... Caption
Budgeted Scheduled Expenditures............................. Sec. 1.3(d)
Class A EPS................................................. Sec. 1.3(a)(i)
Class B EPS................................................. Sec. 1.3(a)(i)
Certificate................................................. Sec. 1.3(a)(i)
Closing Balance Sheets...................................... Sec. 1.4(b)
Closing Working Capital..................................... Sec. 1.4(f)
Code........................................................ 4th Recital
Compensation and Benefit Plans.............................. Sec. 5.1(h)(i)
Confidentiality Agreement................................... Sec. 9.7
Consumables................................................. Sec. 5.1(p)(ix)
Contract.................................................... Sec. 5.1(q)(ii)
Current Assets.............................................. Sec. 1.4(f)
Current Liabilities......................................... Sec. 1.4(f)
Declaration of Trust........................................ Sec. 2.1
Delaware Certificate of Merger.............................. Sec. 1.7
Denver...................................................... Caption
Denver Shares............................................... Sec. 1.1(c)
57
61
DEFINED TERM SECTION OR OTHER PART
------------ ---------------------
DGCL........................................................ Sec. 1.2
Dissenting Shares........................................... Sec. 1.3(a)(i)
Dissenting Stockholders..................................... Sec. 1.3(a)(i)
Documents................................................... Sec. 5.1(p)(ix)
Effective Time.............................................. Sec. 1.7
Environmental Laws.......................................... Sec. 5.1(j)(i)
Environmental Property Transfer Acts........................ Sec. 5.1(j)(vii)
ERISA....................................................... Sec. 5.1(h)(i)
ERISA Affiliate............................................. Sec. 5.1(h)(i)
Estimated Working Capital................................... Sec. 1.4(a)
Estimated Working Capital Balance Sheet..................... Sec. 1.4(a)
Exchange Act................................................ Sec. 5.2(d)(1)
Excluded Shares............................................. Sec. 1.3(a)(i)
Fixtures and Tangible Personal Property..................... Sec. 5.19(p)(ix)
GAAP........................................................ Sec. 1.4(f)
Government Antitrust Entity................................. Sec. 6.5(f)
Governmental Entity......................................... Sec. 5.1(d)(i)
Governmental Consents....................................... Sec. 7.1(b)
Hazardous Substance......................................... Sec. 5.1(j)(v)
Hotel....................................................... Sec. 5.1(p)(ix)
Hotel Agreement............................................. Sec. 5.1(p)(ix)
Hotel Names................................................. Sec. 5.1(p)(ix)
HSR Act..................................................... Sec. 5.1(d)(i)
Improvements................................................ Sec. 5.1(p)(ix)
Intellectual Property Rights................................ Sec. 5.1(r)(vii)
IRS......................................................... Sec. 5.1(h)(ii)
Joint Venture Affiliates.................................... Sec. 5.1(s)
Joint Venture Agreement..................................... Sec. 5.1(s)
Land........................................................ Sec. 5.1(p)(ix)
Lauderdale.................................................. Caption
Lauderdale Shares........................................... Sec. 1.1(b)
Laws........................................................ Sec. 5.1(i)
Leased Properties........................................... Sec. 5.1(p)(ii)
Lien........................................................ Sec. 5.1(p)(ix)
LLC......................................................... Caption
Maryland Articles of Merger................................. Sec. 1.7
Maryland Assessments Department............................. Sec. 1.7
MCA......................................................... Sec. 1.2
Members..................................................... Caption
Merger...................................................... 1st Recital
Merger Consideration........................................ Sec. 1.3(a)(i)
Multiemployer Plan.......................................... Sec. 5.1(h)(i)
Nomura...................................................... Caption
NYSE........................................................ Sec. 5.2(d)(i)
Order....................................................... Sec. 7.1(c)
Owned Properties............................................ Sec. 5.1(p)(i)
Pension Plan................................................ Sec. 5.1(h)(ii)
Permitted Liens............................................. Sec. 5.1(p)(i)
Prepayable Debt............................................. Sec. 6.1(c)
Proposed Expenditure........................................ Sec. 1.3(e)
Proxy Statement............................................. Sec. 6.3
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62
DEFINED TERM SECTION OR OTHER PART
------------ ---------------------
Purchased Entities.......................................... Sec. 9.12(b)
Real Property, Real Properties.............................. Sec. 5.1(p)(iv)
Real Property Entity, Real Property Entities................ Sec. 5.1(p)(i)
Real Property Laws.......................................... Sec. 5.1(p)(viii)
Real Property Permits....................................... Sec. 5.1(p)(vii)
Redistributed Subsidiary Shares............................. Sec. 1.1(g)
REIT........................................................ Sec. 5.2(k)
Representatives............................................. Sec. 6.7
Requisite Vote.............................................. Sec. 7.1(a)
St. Xxxx.................................................... Caption
St. Xxxx Shares............................................. Sec. 1.1(d)
Seattle..................................................... Caption
Seattle Shares.............................................. Sec. 1.1(a)
Securities Act.............................................. Sec. 5.1(t)(ii)
Significant Subsidiaries.................................... Sec. 5.2(a)
Single Employer Plan........................................ Sec. 5.1(h)(iii)
Space Leases................................................ Sec. 5.1(p)(i)(5)
Starwood Affiliated Group................................... Sec. 5.2(i)
Starwood Audit Date......................................... Sec. 5.2(e)
Starwood Companies.......................................... Caption
Starwood Corp............................................... Caption
Starwood Corp. Shares....................................... Sec. 5.2(b)
Starwood Disclosure Letter.................................. Sec. 5.2
Starwood Material Adverse Effect............................ Sec. 5.2(a)
Starwood Operating Partnership.............................. Caption
Starwood Operating Partnership Units........................ Sec. 1.1(d)
Starwood Realty Partnership................................. Caption
Starwood Realty Partnership Units........................... Sec. 1.1(a)
Starwood Reports............................................ Sec. 5.2(e)
Starwood Securities......................................... Sec. 6.16(f)
Starwood Trust.............................................. Caption
Starwood Trust Requisite Vote............................... Sec. 5.2(c)(i)
Starwood Trust Shares....................................... Sec. 5.2(b)
Starwood Trust Stock Plan................................... Sec. 5.2(b)
Starwood Voting Debt........................................ Sec. 5.2(b)
Stockholders Meeting........................................ Sec. 6.4
Subsidiary.................................................. Sec. 5.1(a)
Subsidiary Contribution..................................... Sec. 1.1(e)
Surviving Trust............................................. Caption
Tax, Taxes, Taxable......................................... Sec. 5.1(l)
Tax Return.................................................. Sec. 5.1(l)
Tax Sharing Arrangement..................................... Sec. 5.1(l)
Tenant Leases............................................... Sec. 5.1(p)(ii)
Termination Date............................................ Sec. 8.2
Trademarks.................................................. Sec. 5.1(r)(i)(1)
Transfer.................................................... Sec. 6.16(f)
Westin Affiliated Group..................................... Sec. 5.1(l)
Westin Companies............................................ Caption
Westin Contracts............................................ Sec. 5.1(d)(ii)
Westin Disclosure Letter.................................... Sec. 5.1
Westin Group................................................ Sec. 1.4(a)
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63
DEFINED TERM SECTION OR OTHER PART
------------ ---------------------
Westin Material Adverse Effect.............................. Sec. 5.1(a)
Westin Subsidiaries......................................... Caption
Westin Voting Debt.......................................... Sec. 5.1(b)
WHWE........................................................ Caption
Woodstar.................................................... Caption
Working Capital............................................. Sec. 1.4(f)
Worldwide................................................... Caption
Worldwide Debt.............................................. Sec. 1.3(a)
Worldwide Shares............................................ Sec. 1.3(a)
9.16. STARWOOD TRUST. The name "Starwood Trust" is the designation of
Starwood Trust and its Trustees (as Trustees but not personally) under a
Declaration of Trust dated August 25, 1969 as amended and restated, and all
Persons dealing with Starwood Trust must look solely to Starwood Trust's
property for the enforcement of any claims against Starwood Trust, as the
Trustees, officers, agents and security holders of Starwood Trust assume no
personal obligations of Starwood Trust, and their respective properties shall
not be subject to claims of any Person relating to such obligation.
9.17. NOMURA. The parties hereto acknowledge that Nomura owns a nonvoting
membership interest in the LLC and that such interest does not give Nomura the
ability to control the ongoing operations and activities of the LLC. The parties
agree that Nomura will not be personally liable for the actions of the LLC to
the extent it does not have the ability to control the operations, activities or
decisions of the LLC.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
W&S Hotel L.L.C.
By:
------------------------------------
Name:
Title:
WHWE L.L.C.
By: Whitehall Street Real Estate
Limited Partnership V,
Member and Manager
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc. V,
General Partner
By:
------------------------------------
Name:
Title:
By: GS Capital Partners, L.P.,
Member and Manager
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64
By: GS Advisors, L.P.,
General Partner
By: GS Advisors, Inc.,
General Partner
By:
------------------------------------
Name:
Title:
Woodstar Investor Partnership
By: Marswood Investors, L.P.
General Partner
By: Starwood Capital Group, L.P.
General Partner
By: BSS Capital Partners, L.P.
General Partner
By: Sternlicht Holdings II, Inc.
General Partner
By:
------------------------------------
Name:
Title:
Xxxxxxx Xxxxxxx
--------------------------------------
Nomura Asset Capital Corporation
By:
------------------------------------
Name:
Title:
W&S Lauderdale Corp.
By:
------------------------------------
Name:
Title:
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65
W&S Seattle Corp.
By: ----------------------------------
Name:
Title:
Westin St. Xxxx Hotel Company, Inc.
By:
------------------------------------
Name:
Title:
W&S Denver Corp.
By:
------------------------------------
Name:
Title:
W&S Atlanta Corp.
By:
------------------------------------
Name:
Title:
Westin Hotels & Resorts Worldwide,
Inc.
By:
------------------------------------
Name:
Title:
Starwood Lodging Trust
By:
------------------------------------
Name:
Title:
Starwood Lodging Corporation
By:
------------------------------------
Name:
Title:
62
66
SLT Realty Limited Partnership
By: Starwood Lodging Trust,
General Partner
By:
------------------------------------
Name:
Title:
SLC Operating Limited Partnership
By: Starwood Lodging Corporation,
General Partner
By:
------------------------------------
Name:
Title:
63
67
SCHEDULE 1.3(D)-1
SCHEDULED CAPITAL EXPENDITURES AND/OR INVESTMENTS
Worldwide and/or its Subsidiaries:
Cincinnati.................................................. $ 4,901,000
Costa Mesa................................................ $ 2,023,000
Denver -- Cherry Creek.................................... $ 342,000
Houston................................................... $ 7,172,000
San Francisco Airport..................................... $ 2,938,000
Seattle................................................... $ 8,158,000
Indianapolis.............................................. $ 3,284,000
Corporate -- Fixed Assets (including Capital Leases)...... $11,453,000
Lauderdale and/or its Subsidiaries
Ft. Lauderdale (including Capital Leases)................. $ 1,968,000
Atlanta and/or its Subsidiaries
Atlanta................................................... $ 3,200,000
Denver and/or its Subsidiaries
Denver.................................................... $ 363,000
===========
$45,802,000
68
SCHEDULE 6.1(C)
In the case of debt incurred by Worldwide, the debt must: (i) mature no
earlier than the applicable six and one-half month period during which
refinancing is prohibited; and (ii) bear interest at a market rate for
comparable debt.
In the case of debt incurred by the Members, the debt must: (i) mature no
earlier than the applicable two-year period during which refinancing is
prohibited and (ii) bear interest at a market rate for comparable debt.
The Westin Companies will attempt in good faith to obtain terms with
respect to all such indebtedness providing for the interest rate on such
indebtedness to be amended, upon the assumption or guarantee thereof by one or
more Starwood Companies, to an appropriate rate that takes into account
assumption or guarantee of such indebtedness by the Starwood Companies.
69
SCHEDULE 1.3(C)
[FOR DETERMINING DECREASE IN PURCHASE PRICE]
Total Debt
----------
(in 000s)
Members Debt
Fort Lauderdale........................................... $ 21,900
Seattle................................................... 104,800
Xxxxx Center.............................................. 20,500
St. Xxxx.................................................. 6,000
----------
153,200
Existing Debt
Senior Credit Facility.................................... 280,848
Revolving Credit Facility................................. 50,152
Subordinated Notes........................................ 113,856
Indianapolis 1st.......................................... 41,613
Indianapolis Mezz......................................... 5,253
St. Xxxxx Existing Debt................................... 29,500
San Francisco Airport..................................... 562
Capitalized Leaseholds.................................... 9,076
Notes Payable............................................. 2,553
Joint Venture Debt(1)(2).................................. 34,230
Xxxxx Center.............................................. 53,200
Peachtree................................................. 90,000
----------
Total Existing Debt......................................... 710,843
----------
Debt to be incurred by Worldwide............................ 160,000
Debt to be incurred by Atlanta.............................. 34,200
Debt to be incurred for E&P................................. 6,000
Subtotal(2)................................................. 911,043
----------
Total Debt(2)............................................... $1,064,243
==========
-------------------------
(1) Includes the fair share of joint venture indebtedness associated with The
Westin London, Ontario of Cdn$985,000, which amount has been converted to
U.S. dollars at the Cdn$/US$ exchange rate on June 30, 1997 of $1.3795.
(2) For all purposes of this Schedule 1.3(c) and for purposes of determining any
purchase price reduction pursuant to Section 1.3(c), all existing
indebtedness as of June 30, 1997 of Westin Hotels Limited Partnership,
Westin St. Xxxxxxx Limited Partnership, Westin Chicago Limited Partnership
and their respective general partners is, and shall be, excluded.
70
SCHEDULE 6.16(D)
None of the Starwood Companies shall be required to comply with any
financial covenants other than financial covenants no more restrictive than the
following:
(i) Fixed charge coverage ratio of no greater than 1.5.
(ii) Maximum total indebtedness of 60% of "Total Value", defined as
(a) 11 times trailing 12 month run rate EBITDA of the Starwood Companies
(other than the Westin Subsidiaries) plus (b) the aggregate value of total
consideration paid for Worldwide and the other Westin Subsidiaries under
the Transaction Agreement.
(iii) Minimum consolidated net worth of $1.0 billion.
71
SCHEDULE 7.2(J)
1. Westin Philippine Plaza (Manilla)
2. Westin Chicago (X'Xxxx)
3. Galleria Hotel (Dallas)
4. Westin Resort (Hilton Head)
5. Westin Maui
6. Westin Hotel (Surabaya, Indonesia)
7. Westin Hotel Charlotte (Charlotte, NC)
8. Westin Dragonara Resort (Malta)
9. The Westin Galleria & Oaks (Houston)
10. The Westin South Court Plaza (Costa Mesa)
11. New York Palace
