EXHIBIT 10.9
[OLS Visalia]
CONTRIBUTION AGREEMENT
BY AND AMONG
LASALLE HOTEL OPERATING PARTNERSHIP, L.P.
AND THE
CONTRIBUTORS NAMED HEREIN
Dated as of January 29, 1998
TABLE OF CONTENTS
ARTICLE I. CONTRIBUTION TERMS AND CLOSING PROCEDURES............ 2
1.1 Acquisition of Interests........................ 2
1.2 Term of Agreement............................... 2
1.3 Consideration................................... 2
1.4 Closing; Condition to Obligations............... 2
1.5 Documents to be Delivered at Closing............ 4
1.6 Cessation of IPO................................ 5
1.7 Closing Costs................................... 5
1.8 Default......................................... 5
1.9 Further Assurances.............................. 5
ARTICLE II. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF CONTRIBUTORS........................ 6
2.1 Title to Interests.............................. 6
2.2 Authority....................................... 7
2.3 Litigation...................................... 8
2.4 No Other Agreements to Sell..................... 8
2.5 No Brokers...................................... 8
2.6 Investment Representations and Warranties....... 8
2.7 FIRPTA Representation........................... 10
2.8 Covenant to Remedy Breaches..................... 10
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF OPERATING PARTNERSHIP............................. 10
3.1 Authority....................................... 10
3.2 No Brokers...................................... 11
ARTICLE IV. CLOSING ADJUSTMENTS.................................. 11
4.1 Prorations...................................... 11
4.2 Accounts Receivable............................. 14
4.3 Security Deposits............................... 14
4.4 Timing of Calculations; Cooperation............. 15
4.5 Allocation of Adjustments....................... 15
ARTICLE V. POWER OF ATTORNEY.................................... 15
5.1 Grant of Power of Attorney...................... 15
5.2 Limitation on Liability......................... 16
5.3 Ratification; Third Party Reliance.............. 17
ARTICLE VI. MISCELLANEOUS........................................ 17
6.1 Amendment....................................... 17
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6.2 Entire Agreement; Counterparts; Applicable Law.................... 17
6.3 Assignability..................................................... 17
6.4 Titles............................................................ 17
6.5 Third Party Beneficiary........................................... 17
6.6 Severability...................................................... 17
6.7 Equitable Remedies................................................ 18
6.8 Attorneys' Fees................................................... 18
6.9 Notices........................................................... 18
6.10 Waiver of Rights; Consents with Respect to Partnership Interests.. 19
6.11 Confidentiality................................................... 21
6.12 Computation of Time............................................... 21
6.13 Survival.......................................................... 21
6.14 Time of the Essence............................................... 21
EXHIBIT A: Excluded Interests
EXHIBIT B: Consideration
EXHIBIT C: Permitted Encumbrances
EXHIBIT D: Operating Partnership Agreement
EXHIBIT E: Registration Rights Agreement
EXHIBIT F: Escrow Agreement
ii
CONTRIBUTION AGREEMENT
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This Contribution Agreement (the "Contribution Agreement") is executed as
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of the 29th day of January, 1998 by LaSalle Hotel Operating Partnership, L.P.
(the "Operating Partnership"), a Delaware limited partnership, and the
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Contributors whose names are set forth in Exhibit A hereto (each, a
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"Contributor" and, collectively, the "Contributors").
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WHEREAS, in connection with the consolidation of its hotel acquisition and
ownership business, LaSalle Partners intends to form a Maryland real estate
investment trust (the "REIT") that will be the sole general partner and a
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limited partner of the Operating Partnership and to effect an initial public
offering (the "IPO") of the REIT's common shares of beneficial interest ("Common
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Shares");
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WHEREAS, it is intended that, upon consummation of the IPO, the Operating
Partnership will acquire interests in the following ten hotel properties:
Radisson Hotel Xxxxx xxx Xxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx; Le Meridien New
Orleans Hotel, New Orleans, Louisiana; Le Meridien Dallas Hotel, Dallas, Texas;
The Omaha Marriott Hotel, Omaha, Nebraska; the LaGuardia Marriott Hotel, New
York, New York; Marriott Seaview Resort, Xxxxxxxx Township, New Jersey; The
Xxxxxxxxx Xxxxx Xxxxx Xxxx, Xxxxx, Xxxxxxx; Xxxxxxx Xxx Xxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxx; Holiday Inn Beachside, Key West, Florida; and Le Montrose Suite
Hotel de Gran Luxe, West Hollywood, California;
WHEREAS, it is further understood that the Operating Partnership may
acquire, either before or after the IPO, interests in additional hotel
properties located within or outside the United States;
WHEREAS, each Contributor owns partnership interests in Visalia Plaza Park
Limited Partnership, an Illinois limited partnership (the "Asset Entity") which
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owns fee interests in the land and improvements known as Holiday Inn Plaza Park
(the "Property");
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WHEREAS, the Operating Partnership desires to acquire from each
Contributor, and each Contributor desires to convey to the Operating Partnership
under the terms and conditions set forth herein, the aforementioned partnership
interests owned by such Contributor and (except for the Excluded Interests set
forth in Exhibit B) any other direct or indirect interests such Contributor may
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have, whether now owned or hereinafter acquired, in the Asset Entity or the
Property (the Property and all personal property related thereto or to the
operation thereof is hereinafter referred to as an "Asset" and each such direct
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or indirect interest (except for the Excluded Interests) of a Contributor in
such Asset Entity or in such Asset, is referred to individually as an "Interest"
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and collectively, as such Contributor's "Interests");
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NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Operating Partnership and the
Contributors agree as follows:
ARTICLE I. CONTRIBUTION TERMS AND CLOSING PROCEDURES
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1.1 Acquisition of Interests. At the Final Closing (defined below), each
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Contributor shall, subject to Section 1.4 hereof, contribute, transfer, assign,
and convey to the Operating Partnership and the Operating Partnership shall (i)
acquire and accept from such Contributor, all right, title and interest of such
Contributor in such Contributor's Interests, free and clear of all Encumbrances
(as defined in Section 2.1 hereof) except Permitted Encumbrances (as defined in
Section 2.1 hereof), and (ii) deliver to such Contributor such Contributor's
Consideration (defined below), both in accordance with this Contribution
Agreement.
1.2 Term of Agreement. If the IPO Closing (defined below) does not occur
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by December 31, 1998 (the "Termination Date"), this Contribution Agreement shall
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be deemed terminated and shall be of no further force and effect and neither the
Operating Partnership nor the Contributors shall have any further obligations
hereunder.
1.3 Consideration. The full consideration for each Contributor's
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Interests (such consideration with respect to such Contributor is hereinafter
referred to as such Contributor's "Consideration") shall be an amount payable in
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cash and/or a number of Units (as hereinafter defined) as set forth in Exhibit
A, subject to the terms and provisions of Article IV hereof providing for
adjustments to each Contributor's Consideration based on closing adjustments; it
being understood that it is the intention of the parties to this Contribution
Agreement that any Minimum Working Capital (as defined in Section 4.1(c) hereof)
and any balances remaining in any furniture, fixtures and equipment reserve
accounts are to be transferred to the Operating Partnership as a part of the
Asset. As used herein, the term "Units" means units of limited partnership
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interest in the Operating Partnership.
1.4 Closing; Condition to Obligations. In connection with its acquisition
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of the Contributors' Interests, the Operating Partnership will notify the
Contributors of a closing date, which date will be no earlier than five (5)
business days after such notification and no later than December 15, 1998
(fifteen (15) business days prior to the Termination Date), for the initial
closing (the "Initial Closing") of the acquisition contemplated by this
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Contribution Agreement. At or before such Initial Closing, which shall be held
at the offices of Xxxxx & Wood llp, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or such other place as is determined by the Operating Partnership in its
sole discretion at a time specified by the Operating Partnership in its sole
discretion, the Operating Partnership and the Contributors will execute all
closing documents (the "Closing Documents") required by the Operating
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Partnership in accordance with Section 1.5 hereof and deposit the same in escrow
with Xxxxx & Xxxx llp, New York, New York, pursuant to an escrow agreement in
substantially the form of Exhibit F hereto, as escrow agent of the Operating
Partnership (the "Closing Agent").
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The transactions contemplated by this Contribution Agreement and by the
Closing Documents executed and deposited in connection with such exercise will
be consummated at the Final Closing (as hereinafter defined) only if (i) the
closing of the IPO (the "IPO Closing") is consummated by the earlier of (a)
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fifteen (15) business days after the date of the Initial Closing and (b) the
Termination Date and (ii) the Total Company Enterprise Value (as
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defined in Exhibit A) is equal to or greater than $405,000,000. If the IPO
Closing occurs by such date:
(a) The Operating Partnership shall, contemporaneously with the
IPO Closing, cause to be delivered to the Closing Agent with
respect to each Contributor (i) the cash portion of such
Contributor's Consideration, if any (such cash portion, the
"Cash Portion"), and (ii) if applicable, a certificate of
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the General Partner of the Operating Partnership certifying
that such Contributor has been or will be, effective upon
the Final Closing (as hereinafter defined), admitted as a
limited partner of the Operating Partnership and that the
Operating Partnership's books and records indicate or will
indicate that such Contributor is the holder of the number
of Units which are called for pursuant to the Consideration
as adjusted pursuant to Article IV hereof;
(b) upon receipt of the Consideration set forth in clause (a)
above, the Closing Agent will release the Closing Documents
to the Operating Partnership and deliver to the Contributor
the Cash Portion, if any, and, if requested by the
Contributor, a copy of such General Partner's certificate;
and
(c) the transactions described or otherwise contemplated herein
or in the Closing Documents will thereupon be deemed to have
been consummated simultaneously with the IPO Closing (such
consummation, the "Final Closing").
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Notwithstanding the above, the Operating Partnership may, in its sole
discretion, elect not to complete the acquisition of all or any portion of the
Interests of any Contributor only in the event that such Contributor specifies,
in its Assignment delivered pursuant to Section 1.5, a breach of or other
exception with respect to Article 2 hereof or has otherwise materially breached
this Contribution Agreement (any such Contributor, a "Non-Complying
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Contributor"), in which case the Operating Partnership shall, in lieu of the
delivery with respect to such Contributor pursuant to clause (a) above, notify
the Closing Agent of such election and direct the Closing Agent to return such
Contributor's Closing Documents and Ancillary Agreements (as defined below) to
such Contributor. The election of the Operating Partnership to not acquire all
or any portion of the Interests of a particular Non-Complying Contributor shall
not affect the obligations of any other Contributor hereunder, including any
other Non-Complying Contributor.
The risk of loss to an Asset Entity's Assets prior to Closing shall be
borne by such Asset Entity. If, prior to the Final Closing, any of an Asset
Entity's Assets shall be destroyed or damaged by fire or other casualty, then
this Contribution Agreement may, at the option of the Operating Partnership, be
terminated with respect to the Asset Entity, the Assets of which have been
destroyed or damaged. If, after the occurrence of any such casualty affecting
an Asset Entity's Assets, this Contribution Agreement is not so terminated
relative to such Asset
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Entity, the Operating Partnership may elect to (i) purchase the given
Contributors' Interests in such Asset Entity or Assets, as the case may be, and
(ii) direct such Contributors to pay or cause to be paid to the Operating
Partnership any sums collected under any policies of insurance because of damage
due to such casualty and otherwise assign to the Operating Partnership all
rights to collect such sums as may then be uncollected; provided, however, that
the Contributors shall not adjust or settle any insurance claim without the
Operating Partnership's prior written consent, not to be unreasonably withheld
or delayed. Under such circumstances, the Consideration payable upon such
purchase shall be reduced by the amount of any deductibles under the applicable
insurance policies.
If the IPO Closing does not occur by the earlier of (a) fifteen (15)
business days after the date of the Initial Closing and (b) the Termination
Date, then, except as set forth in Section 1.8, neither party shall have any
obligations under the Closing Documents or under any agreements or instruments
executed in connection with the transactions contemplated hereunder or
thereunder (such other agreements or instruments, collectively, "Ancillary
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Agreements"), this Contribution Agreement, the Closing Documents and the
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Ancillary Agreements shall be deemed null and void ab initio and the Closing
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Agent will be, and is hereby, directed to destroy the Closing Documents and any
Ancillary Agreement it holds and return to the Operating Partnership the
Consideration, if any, delivered by the Operating Partnership to the Closing
Agent in accordance with the previous paragraph.
1.5 Documents to be Delivered at Closing. At the Initial Closing, each
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Contributor shall, directly or through the attorney-in-fact appointed pursuant
to Article 4 hereof, execute, acknowledge where deemed desirable or necessary by
the Operating Partnership, and deliver to the Closing Agent, in addition to any
other documents mentioned elsewhere herein, the following:
(a) An Assignment of Interests (the "Assignment"), which assignment
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shall be in a form satisfactory to the Operating Partnership, shall contain a
warranty of title that such Contributor owns such Contributor's Interests free
and clear of all Encumbrances (as defined in Section 2.1 hereof), except, where
applicable, for the Permitted Encumbrances (as defined in Section 2.1 hereof)
and shall either (i) reaffirm the accuracy of all representations and warranties
and the satisfaction of all covenants made by such Contributor in Article II
hereof or (ii) if such reaffirmation cannot be made, identify those
representations, warranties and covenants of Article II hereof (other than
Section 2.5 hereof) with respect to which circumstances have changed, represent
that such Contributor has used all reasonable efforts within its control to
prevent and remedy such breach, and reaffirm the accuracy of all other
representations and warranties and the satisfaction of all other covenants made
by such Contributor in Article II hereof.
(b) Any other documents reasonably requested by the Operating
Partnership or reasonably necessary or desirable to assign, transfer and convey
such Contributor's Interests and effectuate the transactions contemplated
hereby, including, without limitation, deeds, assignments of ground leases and
space leases (as applicable), transfer tax and gains tax returns and any other
filings with any applicable governmental jurisdiction in which the
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Operating Partnership is required to file its partnership documentation or the
recording of the Assignment is required.
1.6 Cessation of IPO. If at any time the Operating Partnership or the
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underwriter or underwriters determine in good faith to abandon the formation of
the REIT or the IPO (the date of such determination being referred to as the
"Cessation Date"), the Operating Partnership will so advise each Contributor in
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writing and thereupon all parties hereto will be relieved of all obligations
under this Contribution Agreement, all Ancillary Agreements, and all Closing
Documents (except for obligations arising under Sections 1.7, 2.5 and 3.2
hereof).
1.7 Closing Costs. The Operating Partnership agrees to pay all of the
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closing costs, other than Contributor's legal fees, arising from the transfer of
the Interests of each Contributor pursuant to this Agreement, including, without
limitation, any applicable transfer and sales taxes and any transfer fee due in
connection with the assumption of existing mortgage debt by the Operating
Partnership.
1.8 Default. (a) If, after notifying the Contributors of a date for the
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Initial Closing, the Operating Partnership fails to close (including a failure
due to the IPO Closing not occurring), then the Operating Partnership will pay
to each Contributor the sum of $100.00 as liquidated and agreed-upon damages.
It would be difficult, if not impossible, to ascertain the actual measure of
each Contributor's damages in the event of the Operating Partnership's default
and the parties agree that $100.00 is a fair reflection of each Contributor's
damages in the event of the Operating Partnership's default.
(b) If any Contributor defaults with respect to its obligations under
this Contribution Agreement, the Operating Partnership shall be entitled to
exercise against each such Contributor any and all remedies provided at law or
in equity, including but not limited to, the right to specific performance. No
default by any Contributor hereunder shall in any way limit or affect the
obligations of any other Contributor hereunder.
1.9 Further Assurances. Each Contributor will, from time to time, execute
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and deliver to the Operating Partnership all such other and further instruments
and documents and take or cause to be taken all such other and further action as
the Operating Partnership may reasonably request in order to effect the
transactions contemplated by this Contribution Agreement, including instruments
or documents deemed necessary or desirable by the Operating Partnership to
effect and evidence the conveyance of such Contributor's Interests in accordance
with the terms of this Contribution Agreement. The provisions of this Section
1.9 shall survive the Final Closing.
ARTICLE II. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF CONTRIBUTORS
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As a material inducement to the Operating Partnership to enter into this
Contribution Agreement and to consummate the transactions contemplated hereby,
each Contributor hereby severally makes to the Operating Partnership each of the
representations and warranties set
5
forth in this Article II, which representations and warranties (unless otherwise
noted) are true as of the date hereof. As a condition to the Operating
Partnership's obligation to complete the acquisition of any Contributor's
Interests after the exercise of the Contribution Right, such representations and
warranties must continue to be true as of the date of the Initial Closing and as
of the date of the Final Closing.
2.1 Title to Interests. Each Contributor owns its Interests beneficially
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and of record, free and clear of any claim, lien, pledge, voting agreement,
option, charge, security interest, mortgage, deed of trust, encumbrance, rights
of assignment, purchase rights or other rights of any nature whatsoever
(collectively, "Encumbrances"). Title to the Property is free and clear of any
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Encumbrance, except as disclosed as exceptions in the title report for real
property owned or leased by the Asset Entity, dated on or after the date the
Property was acquired by the Asset Entity, provided such title exceptions are
satisfactory to the Operating Partnership in its sole discretion, and as set
forth on Exhibit C attached hereto (any such encumbrance, a "Permitted
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Encumbrance"), and has full power and authority to convey free and clear of any
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Encumbrances (except, where applicable, the Permitted Encumbrances), its
Interests and, upon delivery of any Assignment by such Contributor conveying its
Interests and delivery of Consideration for such Interests as herein provided,
the Operating Partnership will acquire good and valid title thereto, free and
clear of any Encumbrance except Encumbrances created in favor of the Operating
Partnership by the transactions contemplated hereby and, where applicable, the
Permitted Encumbrances. No Contributor will consent to join in or in any way
effect the transfer of any Asset prior to the Final Closing. At the Final
Closing, if so requested, Contributors will execute all documents necessary to
enable a title insurance company (acceptable to the Operating Partnership, in
its sole discretion) to issue to the Operating Partnership an ALTA Form B (1987
or later) Owner's Policy and such endorsements as the Operating Partnership may
reasonably request, insuring fee simple and/or leasehold title to all real
property and improvements comprising all or any part of the Assets to the
Operating Partnership; provided that each Contributor's cost of complying with
this requirement shall be limited to ten percent of the Consideration to be
received by such Contributor, which amount shall be deducted from such
Consideration at the Final Closing. Each of such Contributor's Interests have
been validly issued and Contributor has funded (or will fund before the same is
past due) all capital contributions and advances to the Asset Entity in which
such Interest represents an interest that are required to be funded or advanced
prior to the date hereof and the date of the Initial Closing and the Final
Closing. There are no agreements, instruments or understandings with respect to
any of such Contributor's Interests except as set forth in the partnership
agreement of the Asset Entity in which an Interest represents a limited partner
or general partner interest or as disclosed in writing to the Operating
Partnership. Such Contributor has no interest, either direct or indirect, in
any of the Assets except for (a) the Interests owned by it which are the subject
of this Contribution Agreement, (b) the Excluded Interests, where applicable,
and (c) direct or indirect interests in partnerships or other entities which are
themselves Contributors hereunder. Such Contributor covenants that no
Encumbrance on his Interests (except, where applicable, the Permitted
Encumbrances) will be in existence as of the date of the Final Closing. In
making the representations in this Section 2.1 regarding the absence of
Encumbrances, each Contributor may assume that the consents and waivers of
rights set forth in Section 6.10 hereof have been given by all partners of
partnerships in which such Contributor's Interest represent direct or
6
indirect interests. Notwithstanding anything to the contrary contained herein,
to the extent that the Contributor's Interests transferred hereunder constitute
interests in partnerships or other entities ("Continuing Partnerships") which
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will continue in existence after the consummation of the transactions
contemplated hereby, such Interests are and will remain subject to the terms and
provisions of the partnership or other organizational agreements (as amended) of
the Continuing Partnerships, including without limitation, restrictions,
options, priorities and partnership loans provided for therein.
2.2 Authority. Such Contributor has full right, authority, power and
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capacity: (a) to enter into this Contribution Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of such
Contributor pursuant to this Contribution Agreement; (b) to carry out the
transactions contemplated hereby and thereby; and (c) to transfer, convey,
assign and deliver all of such Contributor's Interests to the Operating
Partnership upon delivery to such Contributor of the Consideration therefor in
accordance with this Contribution Agreement. This Contribution Agreement and
each agreement, document and instrument executed and delivered by or on behalf
of such Contributor pursuant to this Contribution Agreement constitutes, or when
executed and delivered will constitute, the legal, valid and binding obligation
of such Contributor, each enforceable in accordance with their respective terms.
Except for any breaches, violations or defaults which will be waived or cured
prior to the Initial Closing and all loans, indentures, creditor agreements or
other agreements which will be discharged or repaid prior to or
contemporaneously with the IPO Closing, the execution, delivery and performance
of this Contribution Agreement and each such agreement, document and instrument
by or on behalf of such Contributor: (a) does not and will not violate such
Contributor's partnership agreement, operating agreement, declaration of trust,
charter or bylaws, if applicable, or other organizational documentation; (b)
does not and will not violate any foreign, federal, state, local or other laws
applicable to or binding on such Contributor or require such Contributor to
obtain any approval, consent or waiver of, or make any filing with, any person
or authority (governmental or otherwise) that has not been obtained or made or
which does not remain in effect; and (c) does not and will not result in a
breach of, constitute a default under, accelerate any obligation under or give
rise to a right of termination of, any indenture or loan or credit agreement or
any other agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which such Contributor is a party or by which the property
of such Contributor is bound or affected, or result in the creation of any
Encumbrance on any of the property or assets of any partnership in which an
Interest of such Contributor represents an interest. In making the
representations set forth in this Section 2.2, each Contributor may assume that
the consents and waivers of rights set forth in Section 6.10 hereof have been
given by all partners of partnerships or owners of voting interests in entities
in which such Contributor's Interests represent direct or indirect interests.
2.3 Litigation. There is no litigation or proceeding, either judicial or
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administrative, pending or overtly threatened, affecting all or any portion of
such Contributor's Interests or such Contributor's ability to consummate the
transactions contemplated hereby. Such Contributor knows of no outstanding
order, writ, injunction or decree of any court, government, governmental entity
or authority or arbitration against or affecting all or any portion of its
Interests, which in any such case would impair such
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Contributor's ability to enter into and perform all of its obligations under
this Contribution Agreement.
2.4 No Other Agreements to Sell. Such Contributor represents that it has
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not made any agreement with, and will not enter into any agreement with, and has
no obligation (absolute or contingent) to, any person or firm other than the
Operating Partnership (a) to sell, transfer or in any way encumber (except for
Permitted Encumbrances) any of such Contributor's Interests or to not sell such
Contributor's Interests, or (b) to enter into any agreement with respect to a
sale, transfer or encumbrance or put or call right with respect to such
Contributor's Interests. In making the representations set forth in this
Section 2.4, the Contributor may assume that the consents and waivers of rights
set forth in Section 6.10 hereof have been given by all partners of the Asset
Entities.
2.5 No Brokers. Such Contributor has not entered into, and covenants that
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it will not enter into, any agreement, arrangement or understanding with any
person or firm which will result in the obligation of the Operating Partnership
to pay any finder's fee, brokerage commission or similar payment in connection
with the transactions contemplated hereby and such Contributor shall indemnify
and hold harmless the Operating Partnership for all costs and expenses incurred
by the Operating Partnership as a result of a breach of this representation.
The provisions of this Section 2.5 shall survive termination of this
Contribution Agreement.
2.6 Investment Representations and Warranties. Each Contributor who is
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receiving Units represents and warrants as follows:
(a) Upon the issuance of Units to such Contributor, such Contributor
shall become subject to, and shall be bound by, the terms and provisions of the
agreement of limited partnership of the Operating Partnership (in substantially
the form attached hereto as Exhibit D) (the "Partnership Agreement"), including
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the terms of the power of attorney contained in Section 15.11 thereof, as the
Partnership Agreement may be amended from time in accordance with its terms.
(b) Such Contributor understands the risks of, and other
considerations relating to, the purchase of the Units. Such Contributor, by
reason of its business and financial experience, together with the business and
financial experience of those persons, if any, retained by it to represent or
advise it with respect to its investment in the Units, has such knowledge,
sophistication and experience in financial and business matters and in making
investment decisions of this type that it is capable of evaluating the merits
and risks of an investment in the Operating Partnership and of making an
informed investment decision, (ii) is capable of protecting its own interest or
has engaged representatives or advisors to assist it in protecting its interests
and (iii) is capable of bearing the economic risk of such investment. If such
Contributor retained a person to represent or advise it with respect to the
investment in Units that may be made hereby then, at Contributor's request, such
Contributor shall, prior to or at the Initial Closing, (i) acknowledge in
writing such representation and (ii) cause such representative or advisor to
deliver a certificate to the Operating Partnership containing such
representations as are reasonably requested by the Operating Partnership.
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(c) Such Contributor understands that an investment in the Operating
Partnership involves substantial risks. Such Contributor has been given the
opportunity to make a thorough investigation of the proposed activities of the
Operating Partnership and has been furnished with materials relating to the
Operating Partnership and its proposed activities. Such Contributor has been
afforded the opportunity to obtain any additional information deemed necessary
by such Contributor to verify the accuracy of any representations made or
information conveyed to such Contributor. Such Contributor confirms that all
documents, records, and books pertaining to its investment in the Operating
Partnership and requested by such Contributor have been made available or
delivered to such Contributor. Such Contributor has had an opportunity to ask
questions of and receive answers from the Operating Partnership, or from a
person or persons acting on the Operating Partnership's behalf, concerning the
terms and conditions of this investment. Such Contributor has relied and is
making its investment decision upon written information provided to the
Contributor by or on behalf of the Operating Partnership and/or Contributor's
position (in the case of certain individual Contributors) as a director or
executive officer of the REIT.
(d) The Units to be issued to such Contributor will be acquired by
such Contributor for its own account (or if such Contributor is a trustee, for a
trust account) for investment only and not with a view to, or with any intention
of, a distribution or resale thereof, in whole or in part, or the grant of any
participation therein, without prejudice, however, to such Contributor's right
(subject to the terms of the Units) at all times to distribute the Units to
affiliates of such Contributor or to sell or otherwise dispose of all or any
part of its Units under an exemption from such registration available under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
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securities laws, and subject, nevertheless, to the disposition of its assets
being at all times within its control. Such Contributor was not formed for the
specific purpose of acquiring an interest in the Operating Partnership.
(e) Such Contributor acknowledges that (i) the Units to be issued to
such Contributor have not been registered under the Securities Act or state
securities laws by reason of a specific exemption or exemptions from
registration under the Securities Act and applicable state securities laws and,
if such Units are represented by certificates, such certificates will bear a
legend to such effect, (ii) the REIT's and the Operating Partnership's reliance
on such exemptions is predicated in part on the accuracy and completeness of the
representations and warranties of such Contributor contained herein, (iii) such
Units, therefore, cannot be resold unless registered under the Securities Act
and applicable state securities laws, or unless an exemption from registration
is available, (iv) there is no public market for such Units, and (v) the
Operating Partnership has no obligation or intention to register such Units for
resale under the Securities Act or any state securities laws or to take any
action that would make available any exemption from the registration
requirements of such laws. Such Contributor hereby acknowledges that because of
the restrictions on transfer or assignment of such Units to be issued hereunder
which will be set forth in the Partnership Agreement and/or in a Registration
Rights Agreement (as defined in Section 5.1 hereof), such Contributor may have
to bear the economic risk of the investment commitment evidenced by this
Contribution Agreement and any Units acquired hereby for an indefinite period of
time, although (i) under the terms of the Partnership Agreement, as it will be
in effect at the time of the IPO, Units
9
will be redeemable at the request of the holder thereof at any time after the
first anniversary of their issuance for cash or (at the option of the REIT) for
Common Shares of the REIT and (ii) the holder of any such Common Shares issued
upon a presentation of Units for redemption will be afforded certain rights to
have such Common Shares registered for resale under the Securities Act or
applicable state securities laws under the Registration Rights Agreement as
described more fully below.
(f) Contributor is an "accredited investor" as defined in Rule 501 of
Regulation D under the Securities Act.
2.7 FIRPTA Representation. Contributor is not a "foreign person" within
--------------------- --------------
the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended.
2.8 Covenant to Remedy Breaches. Each Contributor covenants to use all
---------------------------
reasonable efforts within its control (a) to prevent the breach of any
representation or warranty of such Contributor hereunder, (b) to satisfy all
covenants of such Contributor hereunder and (c) to promptly cure any breach of a
representation, warranty or covenant of such Contributor hereunder upon its
learning of same.
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF OPERATING PARTNERSHIP
-------------------------------------------------
As a material inducement to each Contributor to enter into this
Contribution Agreement and to consummate the transactions contemplated hereby,
the Operating Partnership hereby makes to each Contributor each of the
representations and warranties set forth in this Article III, which
representations and warranties shall be true as of the date hereof, as of the
date of the Initial Closing and as of the date of consummation of the Final
Closing.
3.1 Authority. The Operating Partnership has full right, authority, power
---------
and capacity: (a) to enter into this Contribution Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of it
pursuant to this Contribution Agreement; (b) to carry out the transactions
contemplated hereby and thereby; and (c) to issue Units to each Contributor to
the extent called for in accordance with the terms of this Contribution
Agreement. This Contribution Agreement and each agreement, document and
instrument executed and delivered by the Operating Partnership pursuant to this
Contribution Agreement constitutes, or when executed and delivered will
constitute, the legal, valid and binding obligation of the Operating
Partnership, each enforceable in accordance with their respective terms. The
execution, delivery and performance of this Contribution Agreement and each such
agreement, document and instrument by the Operating Partnership: (a) does not
and will not violate the Partnership Agreement; (b) does not and will not
violate any foreign, federal, state and local or other laws applicable to
Operating Partnership or require the Operating Partnership to obtain any
approval, consent or waiver of, or make any filing with, any person or authority
(governmental or otherwise) that has not been obtained or made; and (c) does not
and will not result in a breach of, constitute a default under, accelerate any
10
obligation under or give rise to a right of termination of, any indenture or
loan or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Operating Partnership is a party
or by which the property of the Operating Partnership is bound or affected.
3.2 No Brokers. The Operating Partnership represents that it has not
----------
entered into, and covenants that will not enter into, any agreement, arrangement
or understanding with any person or firm which will result in the obligation of
any Contributor to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
ARTICLE IV. CLOSING ADJUSTMENTS
-------------------
4.1 Prorations. The Consideration for the Asset shall be subject to
----------
prorations and credits as follows to be determined as of 12:01 A.M. local time
at the location of the Property on the date of the Final Closing (the
"Adjustment Time"), it being understood that the date of the Final Closing shall
be the first day of income and expense to the Operating Partnership:
(a) Hotel Revenues. Except as set forth below, the Asset Entity
--------------
shall be entitled to all hotel room, food service, bar, beverage and liquor
revenues and charges and all revenues and charges from hotel room
operations, restaurant operations, hotel banquet and conference facility
operations, and other revenue of any kind attributable to the same for the
period prior to the Adjustment Time. The Operating Partnership shall be
entitled to all hotel room, food service, bar, beverage and liquor revenues
and charges and all revenues and charges from restaurant operations, hotel
banquet and conference facility operations, and all other revenue of any
kind attributable to any of the same for the period on and after the
Adjustment Time. Notwithstanding the foregoing, the Operating Partnership
shall be entitled to one-half (1/2) of the revenue from hotel rooms at the
Asset for the night preceding the date of the Final Closing. The Operating
Partnership shall not give the Asset Entity a credit at the date of the
Final Closing for any accounts receivable in connection with the Asset as
of the date of the Final Closing; but the Operating Partnership shall use
reasonable efforts to collect such accounts receivable and shall remit them
to the Asset Entity upon collection, less all reasonable costs of
collection; provided, however, any collection of account receivables shall
first be applied to those accruing after the date of the Final Closing.
The Asset Entity shall provide the Operating Partnership a credit against
the Consideration for the Asset in an amount equal to all guest reservation
deposits held by the hotel for hotel guests arriving or staying after check
out time for the Asset on the date of the Final Closing.
(b) Rents payable under Tenant Leases. Prepaid rent,
---------------------------------
nondelinquent rents, and tax reimbursements under any space leases
affecting the Asset (collectively, "Rents") collected subsequent to the
-----
date of the Final Closing and properly allocable to
11
periods prior to the date of the Final Closing, net of the Operating
Partnership's costs of collection, if any, shall be paid, promptly after
receipt, to the Asset Entity, but subject to all of the provisions of this
Section hereof; and any portion thereof properly allocable to periods
subsequent to the date of the Final Closing, if any, shall be paid to the
Operating Partnership. Any amount collected from a tenant shall first be
applied to such tenant's current monthly rental and then to past due
amounts in the reverse order in which they were due. Any advance rental
payments or deposits paid by tenants prior to the date of the Final Closing
and applicable to the period of time subsequent to the date of the Final
Closing and any security deposits or other amounts paid by tenants,
together with any interest on both thereof to the extent such interest is
due to tenants, shall be credited to the Operating Partnership on the date
of the Final Closing. No credit shall be given the Asset Entity for
accrued and unpaid Rent or any other non-current sums due from tenants
until said sums are paid.
(c) Minimum Working Capital; Cash and Cash Reserves. The Asset
-----------------------------------------------
shall, as of the Closing Time, have working capital equal to $100,000
("Minimum Working Capital"). To the extent all xxxxx cash funds at the
Asset and all cash in any operating accounts for the Asset exceed the
amount required to fund Minimum Working Capital, the Operating Partnership
shall give the Asset Entity a credit on the date of the Final Closing. To
the extent such cash is insufficient to fund Minimum Working Capital, the
deficiency shall be deducted from the consideration payable to Contributor
in accordance with Exhibit A. Any balances remaining in any furniture,
fixtures and equipment reserve accounts shall be transferred to the
Operating Partnership as a part of the Asset. The Operating Partnership
and the Asset Entity shall make mutually satisfactory arrangements for
counting such cash and determining the balances in the operating accounts
as of the Adjustment Time.
(d) Trade Payables. Trade payables shall mean (for all purposes)
--------------
under this Contribution Agreement, open accounts payable to trade vendors
or suppliers of the Asset's hotel, restaurant, bar or similar facilities.
The Asset Entity agrees to give the Operating Partnership a credit on the
date of the Final Closing for all trade payables from the Asset which have
accrued on or prior to the Adjustment Time, and the Operating Partnership
shall be obligated to pay such payables to the extent it has received a
credit from the Asset Entity on the date of the Final Closing. The
Operating Partnership agrees to pay all trade payables from the Asset which
have accrued after the Adjustment Time and shall and hereby does indemnify
and hold the Asset Entity harmless from payment of the same. The
indemnities contained or provided for in this section survive the date of
the Final Closing.
(e) Banquet and Event Deposits. The Operating Partnership shall
--------------------------
receive and be entitled to a credit against the Consideration for all
prepaid deposits for banquets and other functions that are scheduled to
take place at the Asset on or after the date of the Final Closing.
(f) Service Contracts and Equipment Leases. Any amounts prepaid
--------------------------------------
or payable under any Service Contracts or Equipment Leases which the
Operating
12
Partnership has elected to assume shall be prorated at the date of the
Final Closing as of the date of the Final Closing with the Asset Entity
obligated for all sums accrued prior to the Adjustment Time and the
Operating Partnership obligated for all sums accrued after the Adjustment
Time.
(g) Sales Tax. The Operating Partnership shall receive a credit
---------
for any and all sales, occupancy, use or other taxes due in connection with
the operation of the Asset which have accrued prior to the date of the
Final Closing and shall indemnify the Operating Partnership for all such
taxes to the extent the Operating Partnership has not received such credit.
The Operating Partnership shall be responsible to pay all such taxes to the
extent it has received a credit and shall indemnify the Asset Entity for
such taxes. The indemnifications set forth herein shall survive the date
of the Final Closing.
(h) Taxes. The Operating Partnership shall receive a credit for
-----
any accrued but unpaid real estate taxes imposed in respect of the Asset
for the portion of the current year which has elapsed prior to the date of
the Final Closing (and to the extent unpaid, for prior years). If the
amount of any such taxes have not been determined as of the date of the
Final Closing, such credit shall be based on the most recent ascertainable
taxes and shall be reprorated upon issuance of the final tax xxxx. The
Asset Entity shall also give the Operating Partnership a credit for any
special assessments which are levied or charged against the Asset prior to
date of the Final Closing, whether or not then due and payable.
(i) Utilities. Utilities and fuel, including, without
---------
limitation, steam, water, electricity, gas and oil, shall be prorated as of
the date of the Final Closing. The Asset Entity shall cause the meters, if
any, for utilities to be read the day on which the Final Closing occurs and
to pay the bills rendered on the basis of such readings. If any such meter
reading for any utility is not available, then adjustment therefor shall be
made on the basis of the most recently issued bills therefor which are
based on meter readings no earlier than thirty (30) days prior to the date
of the Final Closing; and such adjustment shall be reprorated when the next
utility bills are received.
(j) Employee Expenses. Wages, benefit payments, vacation pay (or
-----------------
the value of any time accrued with respect thereto), and any other
compensation or benefits payable to all persons currently employed for work
in or in connection with the Asset and its operation (collectively,
"Employees") shall be prorated as of the date of the Final Closing; the
Operating Partnership shall not be required to assume any obligation with
respect to any employee benefits that were incurred prior to the date of
the Final Closing and for which the Operating Partnership did not receive a
credit therefor; the Asset Entity shall indemnify the Operating Partnership
against any claim in connection therewith. The indemnity provided herein
shall survive the date of the Final Closing.
13
(k) Ground Lease Rents. Prepaid rent, nondelinquent rents,
------------------
delinquent rents, tax reimbursements, and other fees and costs under any
ground, or other leases, or parking agreements to which the Asset is
subject (collectively, "Ground Rents") shall be adjusted and prorated as of
------------
the date of the Final Closing.
(l) Other Expenses. Other prepaid expenses to which the Asset is
--------------
reasonably subject shall be adjusted and prorated as of the date of the Final
Closing.
(m) Gift Certificates. The Operating Partnership shall receive a
-----------------
credit for all gift certificates issued by the Asset and paid for by or on
behalf of the recipient. The Operating Partnership agrees to honor all non-
expired gift certificates issued by the Asset to the extent such non-expired
gift certificates are itemized at the Final Closing.
At least five (5) days prior to the date of the Final Closing, the Asset
Entity shall deliver to the Operating Partnership copies of all information and
records necessary to support the prorations hereunder. In the event any
prorations made pursuant hereto shall prove incorrect for any reason whatsoever,
either party shall be entitled to an adjustment to correct the same.
4.2 Accounts Receivable. The Asset Entity shall retain all accounts
-------------------
receivable and other income items which are attributable to periods prior to the
date of the Final Closing. The Asset Entity shall deliver to the Operating
Partnership at the Final Closing a schedule of all such unpaid accounts
receivable and other income items as of the date of the Final Closing. All such
accounts receivable and other income items collected by or for the Operating
Partnership after the date of the Final Closing which are attributable to
periods prior to the date of the Final Closing shall be promptly remitted to the
order of the Asset Entity. Except for sums actually received by the Operating
Partnership pursuant to the immediately preceding sentence, the Operating
Partnership shall assume no obligation to collect or enforce the payment of any
amounts that may be due to the Asset Entity, except that the Operating
Partnership shall render reasonable assistance, at no expense to the Operating
Partnership, to the Asset Entity after the Final Closing in the event the Asset
Entity proceeds against any third-party to collect any accounts receivable or
other income items due the Asset Entity.
4.3 Security Deposits. An amount equal to all tenant security deposits
-----------------
and all other deposits for advance reservations, banquets or future services or
made in connection with the space leases or the guest bookings and interest
thereon, if any, and any other amounts due with respect to such deposits shall
be paid over to the Operating Partnership at the Final Closing.
4.4 Timing of Calculations; Cooperation. Each Asset Entity and/or
-----------------------------------
Transferor Entity and the Operating Partnership agree to use reasonable efforts
to reconcile, prorate, and adjust all of the foregoing items upon the Final
Closing and, in all events, such reconciliation, proration and adjustment shall
be completed within ninety (90) days after the date of the Final Closing. In
the event any adjustments or prorations made pursuant to this Contribution
14
Agreement are, subsequent to Final Closing, found to be erroneous, then either
party hereto who is entitled to additional amounts shall invoice the other party
for such additional amounts as may be owing, and such amounts shall be paid
promptly by the other party upon receipt of invoice. Such invoice shall be
accompanied by reasonable substantiating evidence.
4.5 Allocation of Adjustments. All adjustments contemplated by this
-------------------------
Article IV shall, to the extent practicable, be made by adjusting (either up or
down) the cash portion amount of the Consideration and/or the number of Units
issued to each Contributor by debiting or crediting (as the case may be) such
Contributor's Consideration with a portion of the prorated items allocated to
the Asset Entity in which the Contributor owns an interest. The amount of an
Asset Entity's adjustments calculated pursuant to this Article IV allocated to
each Contributor shall be that portion equal to that Contributor's pro rata
equity interest in each Asset Entity.
ARTICLE V. POWER OF ATTORNEY
-----------------
5.1 Grant of Power of Attorney. Each Contributor does hereby irrevocably
--------------------------
appoint Xxxxxxxx X. Xxxxx, Xxxxxxx Xxxxxxxx, and the Operating Partnership, and
each of them individually and any successor thereof from time to time (such
persons or the Operating Partnership or any such successor of any of them acting
in his, her or its capacity as attorney-in-fact pursuant hereto, the "Attorney-
--------
in-Fact") as the true and lawful attorney-in-fact and agent of such Contributor,
-------
to act in the name, place and stead of such Contributor:
(a) To enter into a registration rights agreement a form of which is
attached hereto as Exhibit E (the "Registration Rights Agreement").
-----------------------------
(b) To enter into a lock-up agreement (the "Lock-up Agreement") which
-----------------
provides that the Contributors will not, directly or indirectly, offer,
sell, offer to sell, contract to sell, grant any option to purchase or
otherwise dispose of (or announce any offer, sale, offer of sale, contract
of sale, grant of any option to purchase or other sale or disposition of)
any REIT Common Shares or any securities convertible into or exchangeable
for or substantially similar to REIT Common Shares, for a period of one
year from the IPO Closing without the prior written consent of the managing
underwriter named in the Lock-up Agreement.
(c) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
consents, letters and other writings (including without limitation the
execution of Closing Documents, Ancillary Agreements, the Partnership
Agreement, any other documents relating to the acquisition by the Operating
Partnership of such Contributor's Interests, and any consents contemplated
by Section 6.10 hereof) and, in general, to do all things and to take all
action which the Attorney-in-Fact in its sole discretion may consider
necessary or proper in connection with or to carry out the transaction
contemplated by this Contribution Agreement, the Ancillary Agreements, if
any, and the Closing Documents as fully as could such Contributor if
personally present and acting.
15
The Power of Attorney granted by each Contributor pursuant to this Article
V and all authority conferred hereby is granted and conferred subject to and in
consideration of the interests of the Operating Partnership, the REIT and the
other Contributors and is for the purpose of completing the transactions
contemplated by this Contribution Agreement. The Power of Attorney shall
terminate upon termination of this Contribution Agreement. The Power of
Attorney of each Contributor granted hereby and all authority conferred hereby
is coupled with an interest and therefore shall be irrevocable and shall not be
terminated by any act of such Contributor or by operation of law, whether by the
death, disability, incapacity or liquidation of such Contributor or by the
occurrence of any other event or events (including without limitation the
termination of any trust or estate for which such Contributor is acting as a
fiduciary or fiduciaries), and if, after the execution hereof, such Contributor
shall die or become disabled or incapacitated or is liquidated, or if any other
such event or events shall occur before the completion of the transactions
contemplated by this Contribution Agreement, the Attorney-in-Fact shall
nevertheless be authorized and directed to complete all such transactions as if
such death, disability, incapacity, liquidation or other event or events had not
occurred and regardless of notice thereof. Each Contributor acknowledges that
Xxxxxxxx X. Xxxxx, Xxxxxxx Xxxxxxxx and the Operating Partnership have, and any
successor thereof acting as Attorney-in-Fact may have an economic interest in
the transactions contemplated by this Contribution Agreement. Each Contributor
agrees that, at the request of the Operating Partnership, it will promptly
execute a separate power of attorney on the same terms set forth in this Article
V, such execution to be witnessed and notarized.
5.2 Limitation on Liability. It is understood that the Attorney-in-Fact
-----------------------
assumes no responsibility or liability to any person by virtue of the Power of
Attorney granted by each Contributor hereby. The Attorney-in-Fact makes no
representations with respect to and shall have no responsibility for the
formation of the REIT, the acquisitions of the Interests by the Operating
Partnership, the Registration Statement, the Prospectus or any Preliminary
Prospectus, nor for any aspect of the offering of the REIT's Common Shares, and
it shall not be liable for any error of judgment or for any act done or omitted
or for any mistake of fact or law except for its own gross negligence or bad
faith. Each Contributor agrees that the Attorney-in-Fact may consult with
counsel of its own choice (who may be counsel for the Operating Partnership or
the REIT) and it shall have full and complete authorization and protection for
any action taken or suffered by it hereunder in good faith and in accordance
with the opinion of such counsel. It is understood that the Attorney-in-Fact
may, without breaching any express or implied obligation to the Contributor
hereunder, release, amend or modify any other Power of Attorney granted by any
other Contributor hereunder or by any other person under any related agreement.
The provisions of this Section 5.2 shall not limit or otherwise affect the
obligations of the Operating Partnership (acting for itself and not as Attorney-
in-Fact) under the other Articles of this Contribution Agreement.
5.3 Ratification; Third Party Reliance. Each Contributor does hereby
----------------------------------
ratify and confirm all that the Attorney-in-Fact shall lawfully do or cause to
be done by virtue of the exercise of the powers granted unto it by such
Contributor hereunder, and such Contributor authorizes the reliance of third
parties on this Power of Attorney and waives its rights, if any, as against any
such third party for its reliance hereon.
16
ARTICLE VI. MISCELLANEOUS
-------------
6.1 Amendment. Any amendment hereto shall be effective only against those
---------
parties hereto who have acknowledged in writing their consent to such amendment.
No waiver of any provisions of this Contribution Agreement shall be valid unless
in writing and signed by the party against whom enforcement is sought.
6.2 Entire Agreement; Counterparts; Applicable Law. This Contribution
----------------------------------------------
Agreement and all Ancillary Agreements, including the Lease Agreement to be
entered into between the Operating Partnership and OLS Visalia, LLC, (a)
constitute the entire agreement and supersede conflicting provisions set forth
in all other prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which will be deemed an original and all of which
shall constitute one and the same instrument and (c) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of New York without giving effect to the conflict of law provisions
thereof.
6.3 Assignability. This Contribution Agreement shall be binding upon, and
-------------
shall be enforceable by and inure to the benefit of, the parties hereto and
their respective heirs, legal representatives, successors and assigns; provided,
however, that this Contribution Agreement may not be assigned (except by
operation of law) by any party without the prior written consent of the other
parties, and any attempted assignment without such consent shall be void and of
no effect.
6.4 Titles. The titles and captions of the Articles, Sections and
------
paragraphs of this Contribution Agreement are included for convenience of
reference only and shall have no effect on the construction or meaning of this
Contribution Agreement.
6.5 Third Party Beneficiary. No provision of this Contribution Agreement
-----------------------
is intended, nor shall it be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any customer, affiliate,
stockholder, partner, director, officer or employee of any party hereto or any
other person or entity, provided, however, that Sections 5.2, 5.3, 6.3 and 6.10
of this Contribution Agreement shall be enforceable by and shall inure to the
benefit of the persons described therein.
6.6 Severability. If any provision of this Contribution Agreement, or the
------------
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Contribution Agreement and application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Contribution
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision and to execute any amendment, consent or agreement
deemed necessary or desirable by the Operating Partnership to effect such
replacement.
17
6.7 Equitable Remedies. The parties hereto agree that irreparable damage
------------------
would occur in the event that any of the provisions of this Contribution
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Contribution
Agreement and to enforce specifically the terms and provisions hereof in any
federal or state court located in New York (as to which the parties agree to
submit to jurisdiction for the purposes of such action), this being in addition
to any other remedy to which they are entitled under this Contribution Agreement
or otherwise at law or in equity.
6.8 Attorneys' Fees. In connection with any litigation or a court
---------------
proceeding arising out of this Contribution Agreement, the prevailing party
shall be entitled to recover all costs incurred, including reasonable attorneys'
fees and legal assistants' fees and costs whether incurred prior to trial, at
trial, or on appeal.
6.9 Notices. Any notice or demand which must or may be given under this
-------
Contribution Agreement or by law shall, except as otherwise provided, be in
writing and shall be deemed to have been given (a) when physically received by
personal delivery (which shall include the confirmed receipt of a telecopied
facsimile transmission), or (b) three (3) business days after being deposited in
the United States certified or registered mail, return receipt requested,
postage prepaid, or (c) one (1) business day after being deposited with a
nationally known commercial courier service providing next day delivery service
(such as Federal Express); addressed and delivered or telecopied in the case of
a notice to the Operating Partnership at the following address and telecopy
number:
LaSalle Hotel Operating Partnership, L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Phone: 000-000-0000
Telecopy: 000-000-0000
with copies to:
Xxxxx & Wood llp
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Phone: 000-000-0000
Telecopy: 212-839-5599
and addressed and delivered or telecopied, in the case of a notice to a
Contributor, at the address and telecopy number set forth under such
Contributor's name in the Contributor's Signature Page hereto.
18
6.10 Waiver of Rights; Consents with Respect to Partnership Interests.
----------------------------------------------------------------
(a) Each Contributor acknowledges that the agreements contained herein
and the transactions contemplated hereby and any actions taken in contemplation
of the transactions contemplated hereby may conflict with, and may not have been
contemplated by, the partnership agreement of one or more partnerships in which
one or more of such Contributor's Interests represents a direct or indirect
interest or another agreement among one or more holders of such Interests or one
or more of the partners of any such partnership. With respect to each
partnership in which an Interest of a Contributor represents a direct or
indirect interest, each Contributor expressly gives all Consents (and any
consents necessary to authorize the proper parties in interest to give all
Consents) and Waivers necessary or desirable to facilitate any Conveyance Action
relating to such partnership (as such terms are hereinafter defined).
As used herein, the term "Conveyance Action" means, with respect to any
-----------------
partnership having a direct or indirect ownership interest in any Asset, (i) the
conveyance or agreement to convey by a partner thereof or by any holder of an
indirect interest therein (whether or not such partner or holder is a
Contributor hereunder) of its direct or indirect interest in such partnership to
the Operating Partnership or (ii) the entering into by any such partner or
holder of any agreement relating to (x) the formation of the Operating
Partnership or the REIT, or (y) the direct or indirect acquisition by the
Operating Partnership of any such direct or indirect interest or (iii) the
taking by any such partner or holder of any action necessary or desirable to
facilitate any of the foregoing, including, without limitation, the following
(provided that the same are taken in furtherance of the foregoing): any sale or
distribution to, or merger with, any person of a direct or indirect interest in
such partnership, the entering into any agreement with any person that grants to
such person the right to purchase a direct or indirect interest in such
partnership, and the giving of the Consents and Waivers contained in this
Section 6.10 or consents or waivers similar thereto in form or purpose. As used
herein, the term "Consents" means, with respect to any such partnership, any
--------
consent necessary or desirable under the partnership agreement of such
partnership or any other agreement among all or any of the holders of interests
therein or any other agreement relating thereto or referred to therein (i) to
permit any and all Conveyance Actions relating to such partnership or to amend
such partnership agreement and/or other agreements so that no provision thereof
prohibits, restricts, impairs or interferes with any Conveyance Action (such
amendments to include, without limitation, the deletion of provisions which
cause a default under such agreement if interests therein are transferred for
cash), (ii) to admit the Operating Partnership as a substitute limited partner
or general partner of such partnership upon the Operating Partnership's
acquisition of a limited or general partnership interest therein, respectively,
and to adopt such amendment as is necessary or desirable to effect such
admission, (iii) to adopt any amendment as may be deemed desirable by the
Operating Partnership, either simultaneously with or immediately prior to the
acquisition of any interest therein, (iv) to continue such partnership following
the transfer of interest therein to the Operating Partnership, and (v) to merge
such partnership with and into the Operating Partnership. As used herein, the
term "Waivers" means, with respect to a partnership of which an Interest of a
-------
Contributor represents a direct or indirect interest, the waiving of any and all
rights that such Contributor may have with respect to, and (to the extent
possible) that any other person may
19
have with respect to, or that may accrue to such Contributor or other person
upon the occurrence of, a Conveyance Action relating to such partnership,
including, but not limited to, the following rights: rights of notice, rights to
response periods, rights to purchase the direct or indirect interests of another
partner in such partnership or to sell such Contributor's or other person's
direct or indirect interest therein to another partner, rights to sell such
Contributor's or other person's direct or indirect interest therein at a price
other than as provided herein, or rights to prohibit, limit, invalidate,
otherwise restrict or impair any such Conveyance Action or to cause a
termination or dissolution of such partnership because of such Conveyance
Action. Each Contributor further covenants that such Contributor will take no
action to enjoin, or seek damages resulting from, any Conveyance Action by any
holder of a direct or indirect interest in a partnership in which an Interest of
such Contributor represents a direct or indirect interest. The Waivers and
Consents contained in this Section 6.10 shall terminate upon the termination of
this Contribution Agreement, except as to transactions completed hereunder prior
to termination.
(b) Each Contributor by its execution hereof (i) with respect to each
Asset Entity in which an Interest owned by Contributor represents a direct or
indirect interest therein and with respect to which the Operating Partnership
acquires all of the ownership interests therein gives such consent as is
necessary to cause each such Asset Entity, as applicable, to have authority to
transfer the Assets of such Asset Entity to the Operating Partnership on such
terms and conditions as such Asset Entity and the Operating Partnership may
agree; and (ii) agrees that such Contributor's Consideration may be reduced to
reflect such direct transfer of assets and the consequent receipt of Units
directly by such Asset Entity, provided that the total consideration to be
received by such Contributor either directly hereunder or indirectly through the
receipt of Units by an Asset Entity shall not be less than Contributor's
Consideration.
(c) Each Contributor by its execution hereof gives such consent as is
necessary to cause, with respect to the partnership agreement of each
partnership in which an Interest of such Contributor represents, directly or
indirectly, a limited partner or general partner interest, an amendment thereto
to enable such partnership, to the extent permissible under applicable law, (i)
to admit the Operating Partnership as a substitute limited partner therein
and/or a substitute general partner therein if the Operating Partnership by the
exercise of its Contribution Right acquires a limited partnership interest or a
general partnership interest in such partnership, respectively, (ii) to redeem
the interest of any other partner therein who has not agreed to become a party
to this Contribution Agreement or a similar contribution agreement with the
Operating Partnership, (iii) to transfer to all partners thereof, including any
partner who has not agreed to become a party to this Contribution Agreement,
Units and/or cash (provided that such Contributor receives as a result of all
such distributions and the direct payment of consideration hereunder, an amount
of cash and/or Units that is in conformity with the Consideration of such
Contributor provided for herein), and thereafter, at the Operating Partnership's
option, to dissolve, and (iv) any such other amendment as the Operating
Partnership may deem desirable, provided that such amendment occurs
simultaneously with or immediately prior to the acquisition of the applicable
partnership interest and, provided further, that such amendment will not result
in any increased liability on the part of any Contributor hereunder or under the
applicable partnership agreement. The
20
Attorney-in-Fact may on behalf of each Contributor execute such consents,
amendments or other instruments as it deems necessary or desirable in connection
with the foregoing.
6.11 Confidentiality. All press releases or other public communications of
---------------
any kind relating to the IPO or the transactions contemplated herein, and the
method and timing of release for publication thereof, will be subject to the
prior written approval of the Operating Partnership.
6.12 Computation of Time. Any time period provided for herein which shall
-------------------
end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of the next
full business day. All times are Eastern Time.
6.13 Survival. It is the express intention and agreement of the parties
--------
hereto that the representations, warranties and covenants of each Contributor
set forth in this Contribution Agreement shall survive the consummation of the
transactions contemplated hereby.
6.14 Time of the Essence. Time is of the essence with respect to all
-------------------
obligations of Contributor under this Contribution Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Contribution Agreement, or caused the Contribution Agreement to be duly
executed on its behalf, as of the date first written above.
LASALLE HOTEL OPERATING PARTNERSHIP, L.P.
By: LASALLE HOTEL PROPERTIES
Its General Partner
By:_______________________________
Name:
Title:
22
CONTRIBUTOR SIGNATURE PAGE
The undersigned, desiring to become one of the within named
Contributors to that certain Contribution Agreement by and among LaSalle Hotel
Operating Partnership, L.P. and such Contributors, dated as of January 29, 1998,
hereby becomes a party to such Contribution Agreement. The undersigned agrees
that this signature page may be attached to any counterpart of said Contribution
Agreement.
Outrigger Lodging Services
By: Xxxx Xxxx
---------------------------
Name: Xxxx Xxxx
Title: Senior Vice President
Address of Contributor:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Telephone/Facsimile Numbers:
Phone: 000-000-0000
Fax: 000-000-0000
By the Contributor's execution of this Contribution Agreement, the
Contributor grants a Power of Attorney to certain individuals and to the
Operating Partnership hereunder pursuant to Article V.
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EXHIBIT A
---------
Contributor Interest Consideration
---------------------------- --------------------- -------------------------------
Outrigger Lodging Services 44.82% limited See attached valuation formula.
partnership interest
in the Asset Entity
EXHIBIT B
---------
EXCLUDED INTERESTS
EXHIBIT C
---------
PERMITTED ENCUMBRANCES
EXHIBIT D
---------
OPERATING PARTNERSHIP AGREEMENT
EXHIBIT E
---------
REGISTRATION RIGHTS AGREEMENT
EXHIBIT F
---------
ESCROW AGREEMENT
