-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Aovo9kbXk9J3mpiHMvZ2eR9ueFKqIVRTPqiIfx69lDCNvWI0VaT0fEhPIEgZfY4o fZWt7eRY5O5nA4F13Vcqdw== 0000892569-98-000882.txt : 19980331 0000892569-98-000882.hdr.sgml : 19980331 ACCESSION NUMBER: 0000892569-98-000882 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSTONE HOTEL INVESTORS INC CENTRAL INDEX KEY: 0000930600 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521891908 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-26304 FILM NUMBER: 98579070 BUSINESS ADDRESS: STREET 1: 115 CALLE DE INDUSTRIAS SUITE 201 CITY: SAN CLEMENTE STATE: CA ZIP: 92672 BUSINESS PHONE: 7143613900 MAIL ADDRESS: STREET 1: 115 CALLE DE INDUSTRIAS STREET 2: SUITE 201 CITY: SAN CLEMENTE STATE: CA ZIP: 92672 10-K/A 1 AMENDMENT TO 10-K FOR THE YEAR ENDED 12/31/1997 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A ------------------- (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission file number 0-26304 SUNSTONE HOTEL INVESTORS, INC. (Exact name of registrant as specified in its charter) -------------------- Maryland 52-1891908 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 115 Calle de Industrias, Suite 201, San Clemente, CA 92672 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (714) 361-3900 - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $.01 New York Stock Exchange (Title of Class) (Exchange on Which Registered) Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicated by a check mark if disclosure of delinquent fliers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Based on the closing sale price on New York Stock Exchange on February 27, 1998, the aggregate market value of the voting stock held by non-affiliates of the registrant was $566,643,000. As of February 27, 1998, there were 37,503,851 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Report incorporates information by reference from the definitive Proxy Statement for the Annual Meeting of Stockholders, to be held April 17, 1998. ================================================================================ 2 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: 1. Financial Statements - See Index to Financial Statements on page F-1. 2. Financial Statement Schedule - See Index to Financial Statements on page F-1. 3. Exhibits: EXHIBIT NO. DESCRIPTION - ------- ----------- 3.1 Amended Articles of Incorporation of the Company, as further amended by the Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on November 9, 1994, filed as Exhibit 3.1 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 3.2 Amended Bylaws of the Company, as currently in effect, filed as Exhibit 3.2 to the Company's 1997 Annual Report on Form 10-K and filed therewith. 3.3 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on June 19, 1995, filed as Exhibit 3.3 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 3.4 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on August 14, 1995, filed as Exhibit 3.4 to the Company's Current Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference 3.5 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on May 2, 1997, filed as Exhibit 3.5 to the Company's Current Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 3.6 Articles Supplementary Classifying Shares of 7.9% Class A Cumulative Convertible Preferred Stock, as filed with the State Department of Assessments and Taxation of Maryland on October 14, 1997, filed as Exhibit 3.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 10.1 thru Omitted 10.1.14 10.1.15 Second Amended and Restated Agreement of Limited Partnership dated as of October 4, 1997, filed as Exhibit 10.1.15 to the Company's 1997 Annual Report on Form 10-K and filed therewith. 10.2 Form of Percentage Lease, filed as Exhibit 10.2 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.2.1 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Denver S.E., Colorado, filed as Exhibit 10.2.1 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.2 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Pueblo, Colorado, filed as Exhibit 10.2.2 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.3 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard By Marriott Hotel located in 3 Fresno, California, filed as Exhibit 10.2.3 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.4 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard By Marriott Hotel located in Fresno, California, filed As Exhibit 10.2.4 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.5 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Steamboat Springs, Colorado, filed as Exhibit 10.2.5 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.6 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Craig, Colorado, filed as Exhibit 10.2.6 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.7 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Provo, Utah, filed as Exhibit 10.2.7 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.8 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P. as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Silverthorne, Colorado, filed as Exhibit 10.2.7 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.9 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Doubletree Hotel located in Santa Fe, New Mexico, filed as Exhibit 10.2.9 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.10 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Arcadia, California, filed as Exhibit 10.2.10 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.11 Lease Agreement dated as of December 13, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Oakland, California, filed as Exhibit 10.2.11 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.12 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Clackamas, Oregon, filed as Exhibit 10.2.12 to the Company's Quarterly Quarter 1996 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.13 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Kent, Washington, filed as Exhibit 10.2.13 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.14 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Poulsbo, Washington, filed as Exhibit 10.2.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.15 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Portland, Oregon, 4 filed as Exhibit 10.2.15 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.16 Lease Agreement dated March 28, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard by Marriott Hotel located in Riverside, California, filed as Exhibit 10.2.16 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.17 Lease Agreement dated June 28, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Renton, Washington, filed as Exhibit 10.2.17 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.18 Lease Agreement dated August 13, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Days Inn Hotel located in Price, Utah, filed as Exhibit 10.2.18 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.19 Lease Agreement dated September 20, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Residence Inn Hotel located in Highlands Ranch, Colorado, filed as Exhibit 10.2.18 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.20 Lease Agreement dated August 13, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Comfort Suites Hotel located in South San Francisco, California, filed as Exhibit 10.2.20 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.21 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn located in Tucson, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.21 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.22 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in Mesa, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.22 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.23 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in Flagstaff, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.23 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.24 Lease Agreement dated December 19, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Radisson Suites located in Oxnard, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.24 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.25 Lease Agreement dated January 17, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in San Diego, California. 5 Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.26 Lease Agreement dated January 17, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Ramada Hotel located in Cypress, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.26 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.27 Lease Agreement dated March 10, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hawthorne Suites Hotel located in Kent, Washington. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.27 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.28 Lease Agreement dated March 31, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in La Mirada, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.28 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.29 Lease Agreement dated May 6, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Fountain Suites located in Sacramento, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.29 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.30 Lease Agreement dated June 11, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Ramada Plaza Hotel located in Old Town, San Diego, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.30 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.31 Lease Agreement dated July 17, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Best Western located in Lynnwood, Washington. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.31 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.32 Lease Agreement dated August 7, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in San Diego, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.32 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.33 Lease Agreement dated August 7, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Crystal Suites located in Anaheim, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of 6 Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.33 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.34 Lease Agreement dated August 28, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Regency Plaza located in Los Angeles. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.34 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.35 Lease Agreement by and between Sunstone Hotel Investors, L.P. or its subsidiaries as lessor, and Sunstone Hotel Properties, Inc., as lessee, substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed therewith. 10.3 Form of Right of First Refusal and Option to Purchase, filed as Exhibit 10.3 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.4 Form of Alter Employment Agreement, filed as Exhibit 10.4 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.5 Form of Biederman Employment Agreement, filed as Exhibit 10.5 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.6 Form of Indemnification Agreement to be entered into with officers and directors of the Company, filed as Exhibit 10.6 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.7 1994 Stock Incentive Plan, filed as Exhibit 10.7 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.7.1 Amendment to the 1994 Stock Incentive Plan filed on March 17, 1997 as Appendix A with the Company's 1997 Proxy Statement and incorporated herein by this reference. 10.8 Form of Notice of Grant of Stock Option and Form of Stock Option Agreement (and Addendum thereto) to be generally used in connection with the Discretionary Option Grant Program of the 1994 Stock Incentive Plan, filed as Exhibit 10.8 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.9 Form of Stock Purchase Agreement to be generally used in connection with the Discretionary Option Grant Program of the 1994 Stock Incentive Plan, filed as Exhibit 10.9 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.10 1994 Directors Plan, filed as Exhibit 10.10 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.10.1 Amendment to the 1994 Directors Plan filed on March 17, 1997 as Appendix B with the Company's 1997 Proxy Statement and incorporated herein by this reference. 10.11 Form of Notice of Grant of Automatic Stock Option, Automatic Stock Option Agreement, Stock Purchase Agreement and Automatic Direct Stock Issuance Agreement to be generally used in connection with the 1994 Directors Plan, filed as Exhibit 10.11 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.12 thru Omitted 10.20 7 10.22 thru Omitted 10.30.17 10.30.18 Amended and Restated Third Party Pledge Agreement among the Partnership, Robert A. Alter and Charles Biederman, effective August 28, 1997 filed as Exhibit 10.30.18 to the Company's 1997 Annual Report on Form 10-K. 10.31 Omitted 10.31.1 Amended and Restated Revolving Credit Agreement dated as of October 10, 1997, among Sunstone Hotel Investors, L.P., Bank One Arizona, NA, Credit Lyonnais New York Branch, Wells Fargo Bank, National Association, filed as Exhibit 10.31.1 to the Company's 1997 Annual Report on Form 10-K. 10.32 Stock Purchase Agreement among the Company, Westbrook Real Estate Fund I, L.P., Westbrook Real Estate Co-Investment Partnership I, L.P. and Kahler Realty Corporation dated as of August 5, 1997, filed on August 14, 1997 as Exhibit 10.1 to the Company's Current Report on Form 8-K and incorporated herein by this reference. 10.33 Registration Rights Agreement among the Company, Westbrook Real Estate Fund I, L.P., Westbrook Real Estate Co-Investment Partnership I, L.P. dated as of October 15, 1997 and filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 10.34* Asset Purchase Agreement between Sunstone Hotels, LLC and Sunstone Hotel Properties, Inc. dated as of October 14, 1997. 10.34.1* First Amendment to Asset Purchase Agreement between Sunstone Hotels, LLC and Sunstone Hotel Properties, Inc. dated as of December 19, 1997. 21 List of Subsidiaries of the Registrant filed as Exhibit 21 to the Company's 1997 Annual Report on Form 10-K. 23.1 Consent of Ernst & Young LLP 23.2 Consent of Coopers & Lybrand L.L.P. 27 Financial Data Schedule - ---------- * Filed herewith. (b) Reports on Form 8-K; all other exhibits previously filed. Current Report on Form 8-K dated October 9, 1997 with disclosure under Item 5 filing the Underwriting Agreement and the Opinion letters relating to a securities offering by the Company. Current Report on Form 8-K dated October 15, 1997, with disclosure under Item 2 regarding Acquisition and Disposition of Assets. 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10K/A to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Clemente, State of California, on March 27, 1998. SUNSTONE HOTEL INVESTORS, INC. By: /s/ ROBERT A. ALTER --------------------------------------- Robert A. Alter President, Secretary and Chairman of the Board of Directors Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10K/A has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- /s/ ROBERT A. ALTER President, Secretary and Chairman March 27, 1998 - ---------------------------- of the Board of Directors (Principal Robert A. Alter Executive Officer) /s/ CHARLES L. BIEDERMAN Vice Chairman of the Board of March 27, 1998 - ---------------------------- Directors Charles L. Biederman /s/ KENNETH J. BIEHL Vice President and Chief Financial March 27, 1998 - ---------------------------- Officer (Principal Financial and Kenneth J. Biehl Accounting Officer) /s/ C. ROBERT ENEVER Director March 27, 1998 - ---------------------------- C. Robert Enever /s/ LAURENCE GELLER Director March 27, 1998 - ---------------------------- Laurence Geller /s/ DAVID E. LAMBERT Director March 27, 1998 - ---------------------------- David E. Lambert /s/ H. RAYMOND BINGHAM Director March 27, 1998 - ---------------------------- H. Raymond Bingham /s/ FREDRIC H. GOULD Director March 27, 1998 - ---------------------------- Fredric H. Gould - ---------------------------- Director March __, 1998 Paul D. Kazilionis /s/ EDWARD H. SONDKER Director March 27, 1998 - ---------------------------- Edward H. Sondker
9 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ------- ----------- 3.1 Amended Articles of Incorporation of the Company, as further amended by the Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on November 9, 1994, filed as Exhibit 3.1 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 3.2 Amended Bylaws of the Company, as currently in effect, filed as Exhibit 3.2 to the Company's 1997 Annual Report on Form 10-K and filed therewith. 3.3 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on June 19, 1995, filed as Exhibit 3.3 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 3.4 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on August 14, 1995, filed as Exhibit 3.4 to the Company's Current Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference 3.5 Articles of Amendment of the Company, as filed with the State Department of Assessments and Taxation of Maryland on May 2, 1997, filed as Exhibit 3.5 to the Company's Current Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 3.6 Articles Supplementary Classifying Shares of 7.9% Class A Cumulative Convertible Preferred Stock, as filed with the State Department of Assessments and Taxation of Maryland on October 14, 1997, filed as Exhibit 3.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 10.1 thru Omitted 10.1.14 10.1.15 Second Amended and Restated Agreement of Limited Partnership dated as of October 4, 1997, filed as Exhibit 10.1.15 to the Company's 1997 Annual Report on Form 10-K and filed therewith. 10.2 Form of Percentage Lease, filed as Exhibit 10.2 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.2.1 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Denver S.E., Colorado, filed as Exhibit 10.2.1 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.2 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Pueblo, Colorado, filed as Exhibit 10.2.2 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.3 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard By Marriott Hotel located in 10 Fresno, California, filed as Exhibit 10.2.3 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.4 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard By Marriott Hotel located in Fresno, California, filed As Exhibit 10.2.4 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.5 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Steamboat Springs, Colorado, filed as Exhibit 10.2.5 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.6 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Craig, Colorado, filed as Exhibit 10.2.6 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.7 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Provo, Utah, filed as Exhibit 10.2.7 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.8 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P. as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Silverthorne, Colorado, filed as Exhibit 10.2.7 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.9 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Doubletree Hotel located in Santa Fe, New Mexico, filed as Exhibit 10.2.9 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.10 Lease Agreement dated as of August 16, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Arcadia, California, filed as Exhibit 10.2.10 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.11 Lease Agreement dated as of December 13, 1995 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn Hotel located in Oakland, California, filed as Exhibit 10.2.11 to the Company's 1995 10-K and incorporated herein by this reference. 10.2.12 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Clackamas, Oregon, filed as Exhibit 10.2.12 to the Company's Quarterly Quarter 1996 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.13 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Kent, Washington, filed as Exhibit 10.2.13 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.14 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Poulsbo, Washington, filed as Exhibit 10.2.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.15 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Cypress Inn Hotel located in Portland, Oregon, 11 filed as Exhibit 10.2.15 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and incorporated herein by this reference. 10.2.16 Lease Agreement dated March 28, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Courtyard by Marriott Hotel located in Riverside, California, filed as Exhibit 10.2.16 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.17 Lease Agreement dated June 28, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn Hotel located in Renton, Washington, filed as Exhibit 10.2.17 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.18 Lease Agreement dated August 13, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Days Inn Hotel located in Price, Utah, filed as Exhibit 10.2.18 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.19 Lease Agreement dated September 20, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Residence Inn Hotel located in Highlands Ranch, Colorado, filed as Exhibit 10.2.18 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.20 Lease Agreement dated August 13, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Comfort Suites Hotel located in South San Francisco, California, filed as Exhibit 10.2.20 to the Company's Registration Statement No. 333-07685 and incorporated herein by this reference. 10.2.21 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hampton Inn located in Tucson, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.21 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.22 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in Mesa, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.22 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.23 Lease Agreement dated October 29, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in Flagstaff, Arizona. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.23 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.24 Lease Agreement dated December 19, 1996 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Radisson Suites located in Oxnard, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.24 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.25 Lease Agreement dated January 17, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in San Diego, California. 12 Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.26 Lease Agreement dated January 17, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Ramada Hotel located in Cypress, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.26 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.27 Lease Agreement dated March 10, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Hawthorne Suites Hotel located in Kent, Washington. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.27 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.28 Lease Agreement dated March 31, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in La Mirada, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.28 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by this reference. 10.2.29 Lease Agreement dated May 6, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Fountain Suites located in Sacramento, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.29 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.30 Lease Agreement dated June 11, 1997 by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Ramada Plaza Hotel located in Old Town, San Diego, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.30 to the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997 and incorporated herein by this reference. 10.2.31 Lease Agreement dated July 17, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Best Western located in Lynnwood, Washington. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.31 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.32 Lease Agreement dated August 7, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Holiday Inn located in San Diego, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.32 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.33 Lease Agreement dated August 7, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Crystal Suites located in Anaheim, California. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of 13 Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.33 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.34 Lease Agreement dated August 28, 1997, by and between Sunstone Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as lessee, for the Regency Plaza located in Los Angeles. Substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed as Exhibit 10.2.34 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by this reference. 10.2.35 Lease Agreement by and between Sunstone Hotel Investors, L.P. or its subsidiaries as lessor, and Sunstone Hotel Properties, Inc., as lessee, substantially identical to Exhibit 10.2; full text omitted pursuant to Instruction 2 to Item 601 of Regulation S-K. The material differences between this Exhibit and Exhibit 10.2 are set forth in the schedule filed therewith. 10.3 Form of Right of First Refusal and Option to Purchase, filed as Exhibit 10.3 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.4 Form of Alter Employment Agreement, filed as Exhibit 10.4 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.5 Form of Biederman Employment Agreement, filed as Exhibit 10.5 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.6 Form of Indemnification Agreement to be entered into with officers and directors of the Company, filed as Exhibit 10.6 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.7 1994 Stock Incentive Plan, filed as Exhibit 10.7 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.7.1 Amendment to the 1994 Stock Incentive Plan filed on March 17, 1997 as Appendix A with the Company's 1997 Proxy Statement and incorporated herein by this reference. 10.8 Form of Notice of Grant of Stock Option and Form of Stock Option Agreement (and Addendum thereto) to be generally used in connection with the Discretionary Option Grant Program of the 1994 Stock Incentive Plan, filed as Exhibit 10.8 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.9 Form of Stock Purchase Agreement to be generally used in connection with the Discretionary Option Grant Program of the 1994 Stock Incentive Plan, filed as Exhibit 10.9 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.10 1994 Directors Plan, filed as Exhibit 10.10 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.10.1 Amendment to the 1994 Directors Plan filed on March 17, 1997 as Appendix B with the Company's 1997 Proxy Statement and incorporated herein by this reference. 10.11 Form of Notice of Grant of Automatic Stock Option, Automatic Stock Option Agreement, Stock Purchase Agreement and Automatic Direct Stock Issuance Agreement to be generally used in connection with the 1994 Directors Plan, filed as Exhibit 10.11 to the Company's Registration Statement No. 33-84346 and incorporated herein by this reference. 10.12 thru Omitted 10.20 14 10.22 thru Omitted 10.30.17 10.30.18 Amended and Restated Third Party Pledge Agreement among the Partnership, Robert A. Alter and Charles Biederman, effective August 28, 1997 filed as Exhibit 10.30.18 to the Company's 1997 Annual Report on Form 10-K. 10.31 Omitted 10.31.1 Amended and Restated Revolving Credit Agreement dated as of October 10, 1997, among Sunstone Hotel Investors, L.P., Bank One Arizona, NA, Credit Lyonnais New York Branch, Wells Fargo Bank, National Association, filed as Exhibit 10.31.1 to the Company's 1997 Annual Report on Form 10-K. 10.32 Stock Purchase Agreement among the Company, Westbrook Real Estate Fund I, L.P., Westbrook Real Estate Co-Investment Partnership I, L.P. and Kahler Realty Corporation dated as of August 5, 1997, filed on August 14, 1997 as Exhibit 10.1 to the Company's Current Report on Form 8-K and incorporated herein by this reference. 10.33 Registration Rights Agreement among the Company, Westbrook Real Estate Fund I, L.P., Westbrook Real Estate Co-Investment Partnership I, L.P. dated as of October 15, 1997 and filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 10.34* Asset Purchase Agreement between Sunstone Hotels, LLC and Sunstone Hotel Properties, Inc. dated as of October 14, 1997. 10.34.1* First Amendment to Asset Purchase Agreement between Sunstone Hotels, LLC and Sunstone Hotel Properties, Inc. dated as of December 19, 1997. 21 List of Subsidiaries of the Registrant filed as Exhibit 21 to the Company's 1997 Annual Report on Form 10-K. 23.1 Consent of Ernst & Young LLP 23.2 Consent of Coopers & Lybrand L.L.P. 27 Financial Data Schedule - ---------- * Filed herewith. EX-10.34 2 ASSET PURCHASE AGREEMENT 1 EXHIBIT 10.34 ================================================================================ ASSET PURCHASE AGREEMENT by and between SUNSTONE HOTELS, LLC, a Delaware limited liability company, and SUNSTONE HOTEL PROPERTIES, INC., a Colorado corporation Dated: October 14, 1997 ================================================================================ 2 ASSET PURCHASE AGREEMENT TABLE OF CONTENTS
Page ARTICLE I - PURCHASE AND SALE OF ASSETS AND TRANSFER OF EMPLOYEES............................................... 1 1.1 Purchased Assets.......................................................................... 1 1.2 Transfer of Employees..................................................................... 2 ARTICLE II - ASSUMED LIABILITIES................................................................................ 3 2.1 Assumed Liabilities....................................................................... 3 ARTICLE III - FUNDING AND CLOSING............................................................................... 3 3.1 Funding and Adjustments................................................................... 3 3.2 Closing and Effective Time................................................................ 4 3.3 Closing Deliveries........................................................................ 4 3.4 Post-Closing Deliveries................................................................... 5 3.5 Transfer Taxes and Fees................................................................... 5 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER........................................................... 5 4.1 Authority of Seller Relative to Agreement................................................. 5 4.2 No Conflicts.............................................................................. 5 4.3 Consents.................................................................................. 5 4.4 Pass-Through of Westbrook Representations and Warranties.................................. 6 ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER............................................................. 6 5.1 Authority of Seller Relative to Agreement................................................. 6 5.2 No Conflicts.............................................................................. 6 5.3 Consents.................................................................................. 6 ARTICLE VI - SURVIVAL; INDEMNIFICATION.......................................................................... 6 6.1 Indemnification by Seller................................................................. 6 6.2 Indemnification by Buyer.................................................................. 7 ARTICLE VII - MISCELLANEOUS..................................................................................... 7 7.1 Further Assurances........................................................................ 7 7.2 Assignment................................................................................ 7 7.3 Notices................................................................................... 7 7.4 Governing Law............................................................................. 8 7.5 Entire Agreement; Modifications and Waivers............................................... 8 7.6 Counterparts.............................................................................. 9 7.7 Expenses.................................................................................. 9 7.8 Invalidity................................................................................ 9 7.9 Titles.................................................................................... 9 7.10 No Third-Party Beneficiaries.............................................................. 9 7.11 Construction.............................................................................. 9 7.12 Execution................................................................................. 9
-i- 3 TABLE OF CONTENTS (CONTINUED)
Schedules: Schedule 1.1(a) Management and Concession Contracts and Cheat Interest Schedule 1.1(b) Current Assets and Liabilities Schedule 1.1(d) Employee Benefit Plans and Agreements Exhibit: Exhibit A Hotels
-ii- 4 EXHIBIT 10.34 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is entered into as of October 14, 1997, by and between Sunstone Hotels, LLC, a Delaware limited liability company ("Seller") and Sunstone Hotel Properties, Inc., a Colorado corporation ("Buyer"). R E C I T A L S A. In connection with the acquisition (the "Kahler Acquisition") by Sunstone Hotel Investors, Inc. ("Sunstone, Inc.") of all of the capital stock of Kahler Realty Corporation, a Minnesota corporation ("Kahler") from Westbrook Real Estate Fund I, L.P. and Westbrook Real Estate Co-Investment Partnership I, L.P. (collectively, "Westbrook"), Seller, through the merger of certain of Kahler's subsidiaries with and into Seller, now owns certain of the assets and has assumed related liabilities of Kahler and its subsidiaries, including (i) the hotels listed in Part I of Exhibit A (the "Hotels"), (ii) the Salt Lake City, Utah and Rochester, Minnesota industrial laundry businesses (the "Laundries"), (iii) all of the capital stock of Lakeview of Rochester, Inc. (the "Lakeview Stock"), a Minnesota corporation that owns an 80% interest in Cheat Progressive Venture, a joint venture that owns a sewer plant in Morgantown, West Virginia (the "Sewer Plant"), and (iv) the rights and obligations of the manager under certain contracts pursuant to which subsidiaries of Kahler managed properties or property owners' associations, and operated concessions at two public venues (the "Management and Concession Contracts"). In addition, Seller has assumed through such mergers, a portion of the workforce of Kahler's subsidiaries and employer liabilities, including as sponsor of certain employee benefit plans. B. In order for Sunstone, Inc. to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and for the mutual benefit of Sunstone, Inc. and Buyer, immediately following the Kahler Acquisition, Seller will enter into leases with Buyer, pursuant to which Buyer will lease from Seller and operate the Hotels and Laundries. In addition, Buyer will assume from Seller the rights and obligations of the manager under the Management and Concession Contracts, and will purchase from Seller the Lakeview Stock. C. Immediately prior to the Kahler Acquisition, Buyer desires to purchase and assume from Seller, and Seller desires to sell and transfer to Buyer the Employees and Employee Liabilities and such licenses, permits, inventory, contract rights and other assets and related liabilities as are necessary or beneficial in operating the Hotels, Laundries and Sewer Plant (collectively, the "Facilities") and performing the services of manager under the Management and Concession Contracts. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS AND TRANSFER OF EMPLOYEES 1.1 Purchased Assets. At the Closing (as defined in Section 3.2 hereof) of the transactions contemplated by this Agreement, Seller shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase from Seller, all right, title and interest of Seller in and to the "Purchased Assets," which consist of the following: -1- 5 (a) Management and Concession Contracts. The Management and Concession Contracts listed on Schedule 1.1(a). (b) Lakeview Stock. The Lakeview Stock identified on Schedule 1.1(a). (c) Operating Assets, Contracts and Permits. The governmental licenses and permits, contract rights (including service contracts and equipment leases) and all other operating assets and rights related to the use, maintenance or operation of the Facilities and performance of the Management Contracts, including the current assets identified on Schedule 1.1(b). In addition, the inventory related to the use, maintenance or operation of the Facilities and performance of the Management and Concession Contracts shall be transferred hereby to the Buyer at the Effective Time (as defined herein) as required by the terms of the leases between Buyer and Seller. (d) Employee Benefit Plans. The employee benefit plans and employment agreements listed on Schedule 1.1(d) and related cash, bank accounts and other assets maintained by Kahler for purposes of funding such plans (collectively, the "Employee Benefit Plans and Agreements"). (e) Books, Records and Intellectual Property. All books, records, trademarks, tradenames, logos, copyrights, good will, specifications, files, computer software, computer programs, computerized records, warranties, guaranties, leases, agreements and other documents and information maintained in any form in any way relating to the use, maintenance or operation of the Facilities or the performance of the Management and Concession Contacts (collectively, the "Intellectual Property"); (f) Third Party Claims. Any and all claims against unrelated third parties relating to or arising from the ownership, use, maintenance or operation of the Facilities or the performance of the Management and Concession Contacts, including, without limitation, all accounts receivable and claims or rights to any property tax refunds (collectively, the "Third Party Claims"); (g) Deposits. All leases and rents, room deposits, banquet, meeting and other function deposits and other similar deposits and all advance bookings relating to the Facilities or the Management and Concession Contracts, including all such deposits as one listed on Schedule 1.1(b) (collectively, the "Deposits"); and (h) Accounts. All reserves, operating and other accounts maintained in connection with the use, maintenance or operation of the Facilities or the performance of the Management and Concession Contacts (collectively, the "Accounts"), including those identified on Schedule 1.1(b). Notwithstanding the foregoing, the Purchased Assets shall not include any furniture, fixtures or equipment located at the Facilities and owned by Seller. 1.2 Transfer of Employees. At the Closing, Seller shall transfer to Buyer the employees of Kahler who perform functions related to the operation of the Facilities and performance of the Management and Concession Contracts whom the Buyer has determined to hire and who are listed in the payroll records of Buyer maintained by ADP payroll services as becoming employees of Buyer after the date hereof (collectively, the "Employees"). -2- 6 ARTICLE II ASSUMED LIABILITIES 2.1 Assumed Liabilities. As of the Closing, Buyer hereby agrees to assume, satisfy or perform when only the following specific liabilities and obligations of Seller existing as of the Closing related to the Purchased Assets (collectively, the "Assumed Liabilities"): (a) Current Liabilities. The current liabilities listed on Schedule 1.1(a) related to the Facilities, Management and Concession Contracts, Employees and Employee Benefits and Agreements (the "Current Liabilities"). (b) Contract and Permit Liabilities. All duties and obligations of Seller (in addition to those covered by the Current Liabilities) under the Management and Concession Contracts, and all other contracts and governmental licenses and permits included in the Purchased Assets being transferred and assigned to Buyer. (c) Employment Liabilities. All duties and obligations (in addition to those covered by Current Liabilities) of Seller as to accrued and future wages and benefits of the Employees, including wages and benefits under the Employee Benefit Plans and Agreements. (d) Liabilities Related to Intellectual Property. All liabilities associated with the Intellectual Property arising from events occurring after the Effective Time. (e) Liabilities Related to Third Party Claims. All liabilities related to the Third Party Claims arising from events occurring after the Effective Time. (f) Liabilities Related to Deposits and Accounts. All liabilities (in addition covered by the Current Liabilities) related to the Deposits and the Accounts arising from events occurring after the Effective Time. (g) Sewer Plant Liabilities. All liabilities (in addition to those covered by Current Liabilities) related to or arising from the Sewer Plant arising from events occurring after the Effective Time. Nothing in this Section 2.1 or elsewhere in this Agreement shall be construed to require that, after the transfer of the Assumed Liabilities to the Buyer, Buyer retain any of the Employees, Employee Benefit Plans and Agreements, Management and Concession Contracts or any of the other Purchased Assets being transferred to Buyer hereunder. Any liabilities and obligations of Seller existing as of the Closing related to the Purchased Assets and not listed above are retained by Seller. ARTICLE III FUNDING AND CLOSING 3.1 Funding and Adjustments. (a) Closing Funding. Immediately following the Closing, Seller shall pay to Buyer $1,069,701 in cash, which represents the estimated $3,676,829 in current liabilities as of the Closing to be assumed by Buyer hereunder related to the hotels listed in Parts I and II of Exhibit A and the Laundries, minus the $1,325,000 agreed value of the assets transferred hereby as set forth on -3- 7 Schedule 1.1(a), minus the $1,282,128 Union Annuity liability set forth as item 226 on the last page of Schedule 1.1(b). Promptly following October 15, 1998, Buyer and Seller shall agree upon the actual liabilities funded by Buyer during such period if actual liabilities funded exceeded $2,351,829, the excess shall promptly be paid by Seller to Buyer. If liabilities funded were less than $2,351,829, the difference shall promptly be paid by Buyer to Seller. (b) Adjustments for Union Annuity. Seller shall promptly reimburse Buyer for any portion of the $1,282,128 Union Annuity liability set forth as Item 226 on the last page of Schedule 1.1(b) following payment of such portion by Buyer, until the entire $1,282,128 has been paid in full. (c) Adjustments for Extraordinary Sick Leave. If prior to December 31, 1997 the Employees, in the aggregate, take more than ordinary course sick leave and, as a result, Buyer incurs additional compensation expense in covering for employees on extraordinary sick leave, such additional expense shall be reimbursed in cash by Seller to Buyer at the end of the calendar month in which such expense was incurred, following receipt from Buyer of a certified statement of such expense which Buyer and Seller have agreed upon in good faith; provided, however, that Buyer must make reasonable efforts to keep extraordinary sick leave to a minimum and to mitigate any additional compensation expense incurred as a result of extraordinary sick leave. (d) Adjustments for Loss of Value of Assets. If Seller is unable to deliver any of the Purchased Assets to Buyer because Seller has not been able to obtain required third-party consents to such transfer or the Buyer loses the economic value of any Asset because of a condition imposed by a third party as a condition to consent to such transfer, then Buyer and Seller shall work together in good faith to agree upon a reassessed value of the Purchased Assets and Assumed Liabilities as may be necessary, and shall adjust the funding under Section 3.1(a) and make any other changes necessary to this Agreement in order to reflect such reassessment. 3.2 Closing and Effective Time. The closing of the transactions contemplated under this Agreement (the "Closing") shall take place at the offices of Brobeck, Phleger & Harrison LLP, Newport Beach, California, on the same date as the closing of the Kahler Acquisition. The transfer of the Purchased Assets by Seller to Buyer and Buyer's assumption of the Assumed Liabilities shall be effective immediately prior to the closing of the Kahler Acquisition (the "Effective Time"). At the Effective Time, without the execution of any documents or instruments by Seller or Buyer or any other action on the part of Seller or Buyer: (i) Seller automatically assigns to Buyer all the rights and benefits of Seller, and Buyer automatically assumes from Seller all of the duties and obligations of Seller under the Management and Concession Contracts, the Employee Benefit Plans and Agreements and all other contracts, licenses and permits included in the Purchased Assets; and (ii) Seller automatically transfers to Buyer all right, title and interest of Seller, and Buyer automatically assumes from Seller all liability related to the inventory included in the Purchased Assets. Buyer shall have possession of the tangible Purchased Assets immediately upon Closing. 3.3 Closing Deliveries. (a) Seller. At the Closing, Seller shall execute and deliver to Buyer: (i) the stock certificate evidencing all of the Lakeview Stock owned in the name of The Kahler Corporation, marked "cancelled" and a new stock certificate showing Buyer as owner of all of the Lakeview Stock; (ii) such instruments as shall be reasonably requested by Buyer to vest in Buyer title in and to the Purchased Assets not covered by Section 3.2(i) and (ii); and (iii) the books and records related to the -4- 8 Purchased Assets and the Assumed Liabilities, including copies of the Management and Concession Contracts, Employee Benefit Plans and Agreements and all other contracts, licenses and permits in the possession of Seller and included in the Purchased Assets and not previously provided to Buyer. (b) Buyer. At the Closing, Buyer shall deliver to Seller the documents as shall be reasonably requested by Seller to complete the assumption of the Assumed Liabilities by Buyer. 3.4 Post-Closing Deliveries. Buyer and Seller shall work together in good faith to prepare and execute any documents or other instruments necessary to effect the transfer from Seller to Buyer of any of the Purchased Assets and Assumed Liabilities, including any forms or other filings that need to be made with any governmental entities to effect such transfer. 3.5 Transfer Taxes and Fees. Buyer and Seller shall each be responsible for fifty-percent (50%) of any transfer taxes or other government fees imposed in connection with the transfer of the Purchased Assets and Assumed Liabilities to Buyer. Seller shall receive a credit in the amount of fifty-percent (50%) of such taxes and fees against the amount due from Seller to Buyer under Section 3.1(b). ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 4.1 Authority of Seller Relative to Agreement. The Seller has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized and no other proceedings on the part of the Seller are necessary to authorize this Agreement and the consummation by the Seller of such transactions. This Agreement has been validly executed and delivered by the Seller and constitutes a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, by general equitable principals (regardless of whether such enforceability is considered in a proceeding in law or at equity). 4.2 No Conflicts. The execution, delivery and performance of this Agreement by the Seller do not and will not, in a manner which would cause a material adverse effect: (i) conflict with or violate any governmental regulation applicable to the Seller; (ii) result in a breach or violation of or constitute a default under, or give rise to any right of first refusal, termination, amendment, acceleration or cancellation of, result in a loss or reduction of rights under, or result in the creation of any lien on any assets of the Seller pursuant to, any note, bond, mortgage, indenture contract, agreement, lease, license or other instrument or obligation to which the Seller is a party; (iii) conflict with or violate the organizational documents of the Seller; or (iv) conflict with or violate any partnership or joint venture agreement binding on the Seller. 4.3 Consents. To the best of Seller's knowledge, no consent is required from any third party to the execution, delivery or performance by the Seller of its obligations under this Agreement, the failure of which would reasonably be expected to result in a material adverse effect on Buyer's use of the Asset being transferred. -5- 9 4.4 Pass-Through of Westbrook Representations and Warranties. Seller makes such representations and warranties to Buyer regarding the Purchased Assets and Assumed Liabilities as were made to Sunstone, Inc. by Westbrook in Section 3.1 of the Stock Purchase Agreement dated as of August 5, 1997 among Sunstone, Inc., Westbrook and Kahler (the "Stock Purchase Agreement"). The representations and warranties of Seller to Buyer are subject to the same exceptions, qualifications and limitations as are Westbrook's representations and warranties to Sunstone, Inc. under Section 3.1 of the Stock Purchase Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 5.1 Authority of Seller Relative to Agreement. Buyer has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by the Sole Director of Buyer and no other corporate proceedings on the part of Buyer are necessary to authorize this Agreement and the consummation by Buyer of such transactions. This Agreement has been validly executed and delivered by Buyer and constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, by general equitable principals (regardless of whether such enforceability is considered in a proceeding in law or at equity). 5.2 No Conflicts. The execution, delivery and performance of this Agreement by Buyer do not and will not, in a manner which would cause a material adverse effect: (i) conflict with or violate any governmental regulation applicable to Buyer; (ii) result in a breach or violation of or constitute a default under, or give rise to any right of first refusal, termination, amendment, acceleration or cancellation of, result in a loss or reduction of rights under, or result in the creation of any lien on any assets of Buyer pursuant to, any note, bond, mortgage, indenture contract, agreement, lease, license or other instrument or obligation to which Buyer or the Company is a party; (iii) conflict with or violate the Articles of Incorporation or Bylaws of Buyer; or (iv) conflict with or violate any partnership or joint venture agreement binding on Buyer. 5.3 Consents. No consent is required from any third party to the execution, delivery or performance by Buyer of its obligations under this Agreement, other than the consent of Wells Fargo Bank, N.A. ARTICLE VI SURVIVAL; INDEMNIFICATION 6.1 Indemnification by Seller. (a) Indemnification Regarding Sections 4.1, 4.2 and 4.3. The representations and warranties of Seller under Section 4.1, 4.2 or 4.3 shall survive for a period of twelve (12) months after the Closing. Seller shall indemnify Buyer for any third party action against Buyer founded on a breach of Seller's representations and warranties in Section 4.1, 4.2 or 4.3 in an amount equal to a judgment or reasonable settlement actually paid by Buyer to such third party, plus Buyer's reasonable attorneys' fees and costs in defending such action. Buyer shall promptly give Seller of the initiation of any such third party action. -6- 10 (b) Indemnification Regarding Section 4.4. The representations and warranties of Seller to Buyer with respect to any particular Purchased Asset or Assumed Liability shall survive as long as the corresponding representation and warranty of Westbrook to Sunstone, Inc. regarding such Purchased Asset or Assumed Liability survives. If, during such survival period, Buyer suffers damage or is subject to a third party claim as a result of a breach by Seller of any representation and warranty under Section 4.4, Buyer shall promptly notify Seller of such claim or damage. Sunstone, Inc. as the general partner of Sunstone Hotel Investors, L.P., the owner and manager of Seller, shall in turn notify Westbrook of such claim or damage and pursue indemnification from Westbrook therefor on the basis that the claim or damage has been suffered by Sunstone, Inc. itself; provided, however, that Sunstone, Inc. shall not be required to notify or pursue such action against Westbrook until and unless the claim or damage suffered by Buyer, together with all claims or damages suffered by Sunstone, Inc. as a result of the breach of Westbrook's representations and warranties to Sunstone, Inc. under the Stock Purchase Agreement, exceeds the $2.5 million threshold in Section 7.1(d) of the Stock Purchase Agreement. In addition, Seller's total liability to Buyer as a result of the breach of Seller of any of the representations and warranties under Section 4.4 shall be limited to an amount equal to the product of (i) $5 million and (ii) a fraction, the numerator of which is the total value shown on Schedule 1.1(a) of the assets listed on such schedule, the denominator of which is the value of all assets owned by Kahler at the time it was acquired by Sunstone, Inc. The procedures governing the timing, handling and reimbursement of expenses related to third party claims for breaches of Seller's representations and warranties to Buyer under Section 4.4, shall be identical to those established between Sunstone, Inc. and Westbrook under Section 7.1(e) of the Stock Purchase Agreement. 6.2 Indemnification by Buyer. The representations and warranties of Buyer under Article V shall survive for a period of twelve (12) months after the Closing. Buyer shall indemnify Seller for any third party action against Seller founded on a breach of Buyer's representations and warranties in Article V in an amount equal to a judgment or reasonable settlement actually paid by Seller to such third party, plus Seller's reasonable attorneys' fees and costs in defending such action. Seller shall promptly give Buyer of the initiation of any such third party action. ARTICLE VII MISCELLANEOUS 7.1 Further Assurances. The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement. 7.2 Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by any party without the prior written consent of all of the other parties; provided, however, that this Agreement may be assigned by operation of law due to a change in ownership or control of Seller without the consent of Buyer. 7.3 Notices. Unless otherwise provided herein, any notice, request, instruction or other document to be given hereunder by any party to any other party shall be in writing and shall be deemed to have been given (a) if mailed by registered or certified mail (postage prepaid) on the date when the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as not deliverable, (b) if sent by facsimile transmission, when so sent and receipt acknowledged by an appropriate telephone or facsimile receipt or (c) if sent by other means, when actually received by the party to which such notice has been directed, in each case at the respective addresses or telecopier -7- 11 numbers set forth below or such other address or telephone number as such party may have fixed by notice: If to Seller, addressed to: Sunstone Hotels LLC 115 Calle de Industrias, Suite 201 San Clemente, California 92672 Attention: Robert A. Alter Telephone: (714) 361-3900 Fax: (714) 361-4157 With a copy to: Brobeck, Phleger & Harrison LLP 4675 MacArthur Court, Suite 1000 Newport Beach, California 92660 Attention: Roger M. Cohen Telephone: (714) 955-8705 Fax: (714) 752-7522 If to Buyer, addressed to: Sunstone Hotel Properties, Inc. 115 Calle de Industrias, Suite 201 San Clemente, California 92672 Attention: Randy Hulce Telephone: (714) 361-3900 Fax: (714) 361-4157 With a copy to: Sharp & Barney LLC 401 Lincoln Avenue Steamboat Springs, Colorado 80477 Attention: Thomas Sharp Telephone: (970) 879-7600 Fax: (970) 879-8162 7.4 Governing Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of California, without reference to the choice of law provisions thereof. 7.5 Entire Agreement; Modifications and Waivers. This Agreement, together with all exhibits and schedules hereto and thereto, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other -8- 12 provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 7.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.7 Expenses. Except as otherwise specified herein, each party hereto shall pay his or its own legal, accounting, out-of-pocket and other expenses incident to this Agreement and to any action taken by such party in preparation for carrying this Agreement into effect. 7.8 Invalidity. In the event that any one or more of the provisions contained in this Agreement, or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, or any other such instrument. 7.9 Titles. The titles, captions or headings of the Articles and Sections herein are for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 7.10 No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns. 7.11 Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The parties hereto intend that each representation, warranty, and covenant contained herein shall have independent significance. If any party hereto has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant. 7.12 Execution. This Agreement and any other documents related thereto, including exhibits and/or certificates, may be executed by transmitting a facsimile signature page to the other parties hereto, and by promptly sending to such other parties an originally executed signature page. [signature page follows] -9- 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Seller: SUNSTONE HOTELS, LLC, a Delaware limited liability company By KAHLER REALTY CORPORATION, a Minnesota corporation, its sole member and manager By: /STEVEN R. STENHAUG/ ---------------------------------------- Name: Steven R. Stenhaug -------------------------------------- Title: Senior Vice President - Treasuer ------------------------------------- Buyer: SUNSTONE HOTEL PROPERTIES, INC., a Colorado corporation By: /DAVID R. KINKADE/ ---------------------------------------- Name: David R. Kinkade -------------------------------------- Title: Vice President, Acquisitions ------------------------------------- This Agreement is also executed by Sunstone Hotel Investors, Inc. as of the day and year first above written solely to confirm and acknowledge its obligations under Section 6.1(b) hereof. SUNSTONE HOTEL INVESTORS, INC., a Maryland corporation By: /ROBERT A. ALTER/ -------------------------------------- Robert A. Alter President 14 SCHEDULE 1.1(a) MANAGEMENT AND CONCESSION CONTRACTS AND LAKEVIEW STOCK
================================================================================ ASSET BEING FAIR MARKET TRANSFERRED VALUE OF ASSET - -------------------------------------------------------------------------------- THIRD PARTY HOTEL MANAGEMENT CONTRACT: - -------------------------------------------------------------------------------- Euro-Suites $ 0.00 - -------------------------------------------------------------------------------- Red Fox Inn $ 87,000 - -------------------------------------------------------------------------------- Plaza One $ 4,000 - -------------------------------------------------------------------------------- HIBBING MANAGEMENT CONTRACT, NOTE & OWNER INTERESTS: - -------------------------------------------------------------------------------- Management Contract $ 0.00 - -------------------------------------------------------------------------------- 25% LP Interest N/A - -------------------------------------------------------------------------------- CONCESSION CONTRACTS: - -------------------------------------------------------------------------------- Rochester Civic Center $324,000 - -------------------------------------------------------------------------------- Ogden Egyptian Center $180,000 - -------------------------------------------------------------------------------- ASSOCIATORY MANAGEMENT CONTRACTS: - -------------------------------------------------------------------------------- Lakeview Resort Club $ 0.00 - -------------------------------------------------------------------------------- Victorian Village $ 7,000 - -------------------------------------------------------------------------------- Carriage House $ 15,000 - -------------------------------------------------------------------------------- Center Plaza Associates $228,000 - -------------------------------------------------------------------------------- OTHER ASSETS: - -------------------------------------------------------------------------------- 100% of stock of Lakeview of $480,000 Rochester, Inc. (owns 80% of plus pro rata share of cash in Joint Cheat Progressive Venture) Venture less cost of sale (Sewer Plant) - -------------------------------------------------------------------------------- Total: $1,325,000 ================================================================================
15 MANAGEMENT AND CONCESSION AGREEMENTS (Detailed Description) 1. Management Contract between SMP II Limited Partnership and The Kahler Corporation, dated September 10, 1986 2. Management Agreement between Broadway Terraces Association, Inc. and Kahler Real Estate Management, Inc. dated February 8, 1984 3. Management Agreement between Lakeview Resort Club Property Owners Association, Inc. and Lakeview of Rochester, Inc., dated May 1, 1984 4. Management Contract between Green Oaks Associates and the Kahler Corporation, dated July 2, 1990 5. Management Contract between Improvement Limited Partnership and The Kahler Corporation dated July 8, 1992 6. Management Contract between Modern Woodmen of America, Royal Neighbors of America, The Rock Island Bank, N.A. and The Kahler Corporation dated April 9, 1997 7. Management Contract between J.C.S.II Development Group, Inc. and Lakeview of Rochester, Inc., dated April 30, 1990 8. Management Contract between Red Fox Motor Hotel Corporation and The Kahler Corporation, dated December 20, 1994 9. License Agreement between the City of Rochester and Kahler Development Corporation, dated August 13, 1991 (Food and Beverage Concessions) 10. Manual Food Service Agreement between The Ogden Egyptian Center and Kahler of Ogden, Incorporated, date 10/20/96 (Food Services Program fo The Ogden Egyptian Center, peery's Egyptian Theater, and David Eccles Conference Center) -12- 16 SCHEDULE 1.1(b) CURRENT ASSETS AND LIABILITIES (attached) 17
Proration Item San Marcos Suites Canyon Springs Pocatello Park Holiday Inn Chandler Boise Twin Falls Pocatello Rochester AZ ID ID ID MN - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 29,500.00 5,500.00 4,550.00 6,100.00 10,400.00 Guest Ledger DR 43,301.00 20,869.00 16,533.00 5,045.00 30,386.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 0.00 City Ledger DR 125,316.00 119,197.00 106,714.00 84,164.00 88,422.00 Provision for Doubtful Accounts CR (16,008.00) (6,995.00) (2,981.00) (9,532.00) (2,170.00) Unrealized Credit Card Comm Expense CR (2,150.00) (1,700.00) (1,500.00) (1,250.00) (1,700.00) Advance Deposit Ledger CR (2,311.00) (5,705.00) (1,353.00) (1,142.00) (6,617.00) Accounts Receivable - General DR 21,881.00 100.00 483.00 0.00 1,232.00 Returned Checks DR 195.00 303.00 1,070.00 (39.00) 0.00 Food Inventory DR 54,540.00 4,527.00 14,110.00 29,868.00 17,956.00 Beverage Inventory DR 34,669.00 1,881.00 7,113.00 6,653.00 6,397.00 Retail Inventory DR 51,520.00 0.00 761.00 395.00 0.00 Linen Inventory - Rooms Division DR Rented 30,000.00 15,762.00 13,500.00 10,000.00 Linen Inventory - F&B Division DR Rented 1,834.00 3,850.00 1,875.00 Rented China Inventory DR 38,622.00 13,853.00 6,750.00 6,930.00 11,018.00 Glass Inventory DR 11,987.00 1,651.00 1,680.00 2,627.00 573.00 Silver Inventory DR 9,270.00 3,455.00 1,075.00 5,764.00 1,794.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 0.00 Guest Supplies DR 5,843.00 3,252.00 5,500.00 3,500.00 0.00 Chemical Supplies DR 2,155.00 720.00 0.00 1,414.00 3,246.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 43,584.00 Deposits DR 700.00 1,700.00 0.00 0.00 0.00 Tenant Security Deposits (Sub Schedule) CR (500.00) 0.00 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR (1,962.00) 0.00 0.00 0.00 0.00 Accounts Payable CR (347,149.00) (61,653.00) (81,549.00) (110,514.00) (73,810.00) Workers Compensation accrual CR (125,981.00) (40,532.00) (29,414.00) (48,719.00) (28,476.00) Accrued Health Insurance CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR 393.00 175.00 0.00 39.00 0.00 Employee Liability - Accrued Payroll CR (187,960.00) (61,710.00) (46,890.00) (60,990.00) (67,040.00) Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR (70.00) (34.00) 0.00 0.00 (45.00) Employee Liability - Union Annuity CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (68,955.00) (16,295.00) (17,773.00) (16,739.00) (38,679.00) Employee Liability - State Tax Withheld CR 0.00 (5,347.50) (6,425.00) (7,492.50) 0.00 Employee Liability - Health FSA CR (152.00) 42.00 552.00 Employee Liability - Employer Taxes CR (66,350.00) (14,267.50) (10,992.50) (23,632.50) (14,232.50) Sales Tax CR (86,458.50) (47,653.50) (2,658.15) (29,161.50) (49,266.00) Deferred Revenue CR (22,628.00) 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net (498,742.50) (52,875.50) (15,542.65) (140,785.50) (57,027.50) ====================================================================================================================================
Proration Item Kahler Hotel Kahler Plaza Hotel Inn & Suites Colonial Park Green Oaks Rochester Rochester Rochester Helena Ft. Worth MN MN MN MT TX - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 23,495.00 5,750.00 3,150.00 9,060.00 9,500.00 Guest Ledger DR 326,644.00 358,075.00 154,602.00 22,985.00 9,165.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 0.00 City Ledger DR 1,038,049.00 48,780.00 17,635.00 82,276.00 198,198.00 Provision for Doubtful Accounts CR (15,643.00) (11,761.00) (8,293.00) (4,943.00) (4,918.00) Unrealized Credit Card Comm Expense CR (7,200.00) (3,050.00) (2,800.00) (2,000.00) (2,000.00) Advance Deposit Ledger CR (6,126.00) (5,644.00) (3,168.00) (1,185.00) (11,880.00) Accounts Receivable - General DR (15,300.00) 41,322.00 1,523.00 150.00 6.00 Returned Checks DR 0.00 0.00 0.00 0.00 (177.00) Food Inventory DR 119,418.00 22,260.00 11,650.00 11,939.00 19,112.00 Beverage Inventory DR 100,092.00 12,379.00 2,345.00 9,079.00 8,637.00 Retail Inventory DR 0.00 0.00 26,530.00 0.00 637.00 Linen Inventory - Rooms Division DR 20,500.00 12,700.00 9,700.00 29,000.00 35,000.00 Linen Inventory - F&B Division DR Rented Rented Rented 5,000.00 6,000.00 China Inventory DR 17,800.00 24,500.00 5,000.00 7,400.00 7,500.00 Glass Inventory DR 4,600.00 2,000.00 850.00 1,155.00 4,000.00 Silver Inventory DR 26,400.00 5,100.00 1,200.00 1,058.00 2,500.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 0.00 Guest Supplies DR 27,284.00 8,000.00 4,000.00 260.00 2,000.00 Chemical Supplies DR 4,000.00 1,500.00 600.00 2,400.00 1,000.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 0.00 Deposits DR 5,050.00 0.00 0.00 0.00 500.00 Tenant Security Deposits (Sub Schedule) CR (8,726.00) (1,030.00) (552.00) 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR (40,987.00) (22,061.00) (490.00) (2,847.00) (274.00) Accounts Payable CR (376,416.00) (40,177.00) (38,362.00) (84,700.00) (106,851.00) Workers Compensation accrual CR (167,559.00) (34,245.00) (30,914.00) (79,279.00) (120,077.00) Accrued Health Insurance CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR 1,653.00 0.00 (263.00) 0.00 (61.00) Employee Liability - Accrued Payroll CR (317,292.50) (72,655.00) (67,512.50) (67,275.00) (95,927.50) Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR (189.00) (25.00) (61.00) (25.00) (30.00) Employee Liability - Union Annuity CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (255,289.00) (37,155.00) (29,352.00) (31,971.00) (64,979.00) Employee Liability - State Tax Withheld CR 0.00 0.00 0.00 (6,932.50) 0.00 Employee Liability - Health FSA CR 773.00 (71.00) 255.00 (1,320.00) Employee Liability - Employer Taxes CR (90,695.00) (20,900.00) (13,927.50) (10,605.00) (45,765.00) Sales Tax CR (202,626.00) (102,793.50) (60,979.50) (31,437.00) (97,122.00) Deferred Revenue CR 0.00 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net 211,709.50 190,798.50 (17,634.50) (142,757.50) (246,306.50) ====================================================================================================================================
Proration Item Residence Inn Hilton University Park Provo Park Olympia Park Provo Salt Lake City Salt Lake Provo Park City UT UT UT UT UT - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 2,300.00 22,400.00 10,000.00 16,400.00 15,000.00 Guest Ledger DR 50,227.00 36,488.00 40,290.00 29,657.00 24,148.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 0.00 City Ledger DR 64,603.00 655,495.00 377,016.00 505,856.00 301,191.00 Provision for Doubtful Accounts CR (1,506.00) (12,992.00) (15,935.00) (8,246.00) (10,800.00) Unrealized Credit Card Comm Expense CR (1,000.00) (3,700.00) (2,200.00) (3,000.00) (2,400.00) Advance Deposit Ledger CR (438.00) (16,773.00) (924.00) (2,710.00) (31,128.00) Accounts Receivable - General DR 1,403.00 (6,844.00) 2,033.00 13,546.00 (144.00) Returned Checks DR 130.00 1,452.00 635.00 0.00 (204.00) Food Inventory DR 0.00 45,135.00 28,604.00 55,017.00 13,280.00 Beverage Inventory DR 546.00 34,467.00 17,790.00 16,210.00 8,943.00 Retail Inventory DR 0.00 0.00 40,051.00 11,289.00 11,888.00 Linen Inventory - Rooms Division DR 24,071.00 63,000.00 23,048.00 29,000.00 48,663.00 Linen Inventory - F&B Division DR 113.00 6,867.00 14,257.00 13,200.00 2,097.00 China Inventory DR 4,464.00 34,500.00 9,770.00 37,500.00 2,865.00 Glass Inventory DR 595.00 7,425.00 6,764.00 3,600.00 1,211.00 Silver Inventory DR 2,893.00 2,266.00 2,550.00 11,250.00 3,157.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 922.00 0.00 Guest Supplies DR 11,369.00 14,000.00 13,560.00 4,000.00 13,964.00 Chemical Supplies DR 1,160.00 2,500.00 2,890.00 900.00 1,859.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 2,550.00 Deposits DR 84.00 0.00 0.00 485.00 0.00 Tenant Security Deposits (Sub Schedule) CR 0.00 (2,100.00) 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR 0.00 (23,335.00) (8,156.00) 0.00 0.00 Accounts Payable CR (86,771.00) (645,559.00) (154,851.00) (341,944.00) (174,007.00) Workers Compensation accrual CR (8,367.00) (85,106.00) (12,335.00) (51,513.00) (46,341.00) Accrued Health Insurance CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR 236.00 1,014.00 0.00 1,408.00 150.00 Employee Liability - Accrued Payroll CR (26,982.50) (207,672.50) (105,040.00) (147,577.50) (111,115.00) Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Union Annuity CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (5,745.00) (75,392.00) (43,352.00) (44,653.00) (47,623.00) Employee Liability - State Tax Withheld CR (2,737.50) (30,632.50) (12,320.00) (15,735.00) (15,287.50) Employee Liability - Health FSA CR 0.00 753.00 396.00 320.00 832.00 Employee Liability - Employer Taxes CR (4,087.50) (63,245.00) (22,195.00) (26,405.00) (36,710.00) Sales Tax CR (52,039.50) (294,957.00) (117,918.70) (184,767.00) (141,931.50) Deferred Revenue CR 0.00 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net (25,480.00) (540,546.00) 94,427.30 (75,990.50) (165,893.00) ====================================================================================================================================
Proration Item Ogden Park Lakeview Resort Kahler Natalies Hallmark Ogden Morgantown Corporate Rochester UT WV MN MN - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 11,875.00 12,650.00 100.00 450.00 Guest Ledger DR 44,092.00 94,436.00 0.00 0.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 City Ledger DR 190,134.00 504,397.00 0.00 378.00 Provision for Doubtful Accounts CR (511.00) (17,484.00) 0.00 0.00 Unrealized Credit Card Comm Expense CR (2,300.00) (3,700.00) 0.00 (100.00) Advance Deposit Ledger CR (3,953.00) (186,945.00) 0.00 0.00 Accounts Receivable - General DR 9,061.00 53,231.00 94,068.00 0.00 Returned Checks DR 638.00 106.00 2,712.00 0.00 Food Inventory DR 34,151.00 52,838.00 0.00 0.00 Beverage Inventory DR 9,296.00 30,792.00 0.00 0.00 Retail Inventory DR 13,353.00 0.00 0.00 116,640.00 Linen Inventory - Rooms Division DR 30,454.00 25,000.00 0.00 0.00 Linen Inventory - F&B Division DR 1,486.00 4,680.00 0.00 0.00 China Inventory DR 4,040.00 24,000.00 0.00 0.00 Glass Inventory DR 1,406.00 7,000.00 0.00 0.00 Silver Inventory DR 1,872.00 4,800.00 0.00 0.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 Guest Supplies DR 11,549.00 9,492.00 0.00 0.00 Chemical Supplies DR 1,639.00 33,905.00 0.00 0.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 42,922.00 0.00 0.00 Deposits DR 0.00 0.00 300.00 0.00 Tenant Security Deposits (Sub Schedule) CR (500.00) 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR (466.00) 0.00 0.00 0.00 Accounts Payable CR (183,792.00) (249,524.00) (1,546,659.00) (18,633.00) Workers Compensation accrual CR (40,747.00) 0.00 940,188.00 (242.00) Accrued Health Insurance CR 0.00 0.00 (350,000.00) 0.00 Employee Liability - Misc. Payroll CR 692.00 (7,197.00) 0.00 0.00 Employee Liability - Accrued Payroll CR (109,920.00) (225,310.00) (95,717.50) (2,945.00) Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR 0.00 0.00 (38.00) 0.00 Employee Liability - Union Annuity CR 0.00 0.00 (1,250,078.00) 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 (301,514.00) 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (52,853.00) (92,357.00) (65,699.00) (2,510.00) Employee Liability - State Tax Withheld CR (15,132.50) (13,907.50) 0.00 0.00 Employee Liability - Health FSA CR (282.00) (85.00) (2,663.00) Employee Liability - Employer Taxes CR (20,045.00) (108,550.00) (27,350.00) (267.50) Sales Tax CR (134,971.50) (103,648.50) (2,064.00) (2,925.00) Deferred Revenue CR 0.00 (447.00) 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 (150,000.00) 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net (199,735.00) (108,906.00) (2,754,414.50) 89,845.50 ====================================================================================================================================
Note: 210,211,215 Includes Recorded and Accrued Liabilities Note: 221 Accrued Payroll represents 2Weeks & 2 Days @ 10/15/97 Note: 243 Sales Tax Represents 1.5 Month Liability for Sept and Oct 18
CONFERENCE CENTERS MANAGED ENTITIES Kahler Ogden Park Proration Item Hospitality Svcs Egyptian Center Kahler Park Plaza One Euro Suites Red Fox Inn Rochester Ogden Hibbing Rock Island Morgantown Waverly MN UT MN IL WV IA - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 3,600.00 1,775.00 0.00 0.00 0.00 0.00 Guest Ledger DR 0.00 0.00 0.00 0.00 0.00 0.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 0.00 0.00 City Ledger DR 1,552.00 180,003.00 0.00 0.00 0.00 0.00 Provision for Doubtful Accounts CR 0.00 (2,000.00) 0.00 0.00 0.00 0.00 Unrealized Credit Card Comm Expense CR 0.00 0.00 0.00 0.00 0.00 0.00 Advance Deposit Ledger CR 0.00 0.00 0.00 0.00 0.00 0.00 Accounts Receivable - General DR 0.00 0.00 0.00 0.00 0.00 0.00 Returned Checks DR 0.00 0.00 0.00 0.00 0.00 0.00 Food Inventory DR 12,640.00 29,898.00 0.00 0.00 0.00 0.00 Beverage Inventory DR 4,163.00 4,221.00 0.00 0.00 0.00 0.00 Retail Inventory DR 0.00 0.00 0.00 0.00 0.00 0.00 Linen Inventory - Rooms Division DR 0.00 0.00 0.00 0.00 0.00 0.00 Linen Inventory - F&B Division DR 0.00 15,300.00 0.00 0.00 0.00 0.00 China Inventory DR 2,000.00 21,350.00 0.00 0.00 0.00 0.00 Glass Inventory DR 300.00 15,150.00 0.00 0.00 0.00 0.00 Silver Inventory DR 500.00 10,530.00 0.00 0.00 0.00 0.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 0.00 0.00 Guest Supplies DR 1,000.00 0.00 0.00 0.00 0.00 0.00 Chemical Supplies DR 150.00 2,250.00 0.00 0.00 0.00 0.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 0.00 0.00 Deposits DR 0.00 1,000.00 0.00 0.00 0.00 0.00 Tenant Security Deposits (Sub Schedule) CR 0.00 0.00 0.00 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR 0.00 0.00 0.00 0.00 0.00 0.00 Accounts Payable CR (14,828.00) (23,760.00) 0.00 0.00 0.00 0.00 Workers Compensation accrual CR (3,099.00) (4,658.00) 0.00 0.00 0.00 0.00 Accrued Health Insurance CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Accrued Payroll CR (5,677.50) (14,595.00) 0.00 0.00 0.00 0.00 Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Union Annuity CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (2,526.00) (6,807.00) 0.00 0.00 0.00 0.00 Employee Liability - State Tax Withheld CR 0.00 (2,300.00) 0.00 0.00 0.00 0.00 Employee Liability - Health FSA CR 0.00 0.00 0.00 0.00 Employee Liability - Employer Taxes CR (1,377.50) (2,070.00) 0.00 0.00 0.00 0.00 Sales Tax CR (4,884.00) (14,845.50) 0.00 0.00 0.00 0.00 Deferred Revenue CR 0.00 0.00 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net (6,487.00) 210,441.50 0.00 0.00 0.00 0.00 ====================================================================================================================================
TCS ASSOCIATIONS Proration Item T C S T C S Victorian Village Carriage House Rochester Salt Lake City Park City Park City MN UT UT UT - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 100.00 0.00 0.00 0.00 Guest Ledger DR 0.00 0.00 0.00 0.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 City Ledger DR 802,803.00 126,836.00 0.00 0.00 Provision for Doubtful Accounts CR (4,248.00) (2,800.00) 0.00 0.00 Unrealized Credit Card Comm Expense CR 0.00 0.00 0.00 0.00 Advance Deposit Ledger CR 0.00 0.00 0.00 0.00 Accounts Receivable - General DR 100.00 0.00 0.00 0.00 Returned Checks DR 0.00 0.00 0.00 0.00 Food Inventory DR 0.00 0.00 0.00 0.00 Beverage Inventory DR 0.00 0.00 0.00 0.00 Retail Inventory DR 0.00 0.00 0.00 0.00 Linen Inventory - Rooms Division DR 0.00 0.00 0.00 0.00 Linen Inventory - F&B Division DR 0.00 0.00 0.00 0.00 China Inventory DR 0.00 0.00 0.00 0.00 Glass Inventory DR 0.00 0.00 0.00 0.00 Silver Inventory DR 0.00 0.00 0.00 0.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 Guest Supplies DR 0.00 0.00 0.00 0.00 Chemical Supplies DR 97,522.00 6,909.00 0.00 0.00 Shelf Inventory DR 273,858.00 17,666.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 Deposits DR 0.00 150.00 0.00 0.00 Tenant Security Deposits (Sub Schedule) CR 0.00 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR 0.00 0.00 0.00 0.00 Accounts Payable CR (232,659.00) (21,233.00) 0.00 0.00 Workers Compensation accrual CR (112,845.00) (28,504.00) 0.00 0.00 Accrued Health Insurance CR 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR (211.00) 0.00 0.00 0.00 Employee Liability - Accrued Payroll CR (118,600.00) (33,915.00) 0.00 0.00 Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR (45.00) 0.00 0.00 0.00 Employee Liability - Union Annuity CR (32,050.00) 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (72,802.00) (21,928.00) 0.00 0.00 Employee Liability - State Tax Withheld CR 0.00 (4,345.00) 0.00 0.00 Employee Liability - Health FSA CR (734.00) 0.00 0.00 0.00 Employee Liability - Employer Taxes CR (28,767.50) (11,485.00) 0.00 0.00 Sales Tax CR (2,389.50) (21,310.50) 0.00 0.00 Deferred Revenue CR 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net 569,032.00 6,040.50 0.00 0.00 ====================================================================================================================================
OTHER PENDING Center Property Cheat Proration Item New Heat Plant Plaza Association Owners Association Progressive Ventures Rochester Rochester Morgantown Morgantown MN MN WV WV - ------------------------------------------------------------------------------------------------------------------------------------ House Funds DR 0.00 0.00 0.00 0.00 Guest Ledger DR 0.00 0.00 0.00 0.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 City Ledger DR 0.00 0.00 0.00 0.00 Provision for Doubtful Accounts CR 0.00 0.00 0.00 0.00 Unrealized Credit Card Comm Expense CR 0.00 0.00 0.00 0.00 Advance Deposit Ledger CR 0.00 0.00 0.00 0.00 Accounts Receivable - General DR 0.00 0.00 0.00 0.00 Returned Checks DR 0.00 0.00 0.00 0.00 Food Inventory DR 0.00 0.00 0.00 0.00 Beverage Inventory DR 0.00 0.00 0.00 0.00 Retail Inventory DR 0.00 0.00 0.00 0.00 Linen Inventory - Rooms Division DR 0.00 0.00 0.00 0.00 Linen Inventory - F&B Division DR 0.00 0.00 0.00 0.00 China Inventory DR 0.00 0.00 0.00 0.00 Glass Inventory DR 0.00 0.00 0.00 0.00 Silver Inventory DR 0.00 0.00 0.00 0.00 Amusement Ticket Inventories DR 0.00 0.00 0.00 0.00 Guest Supplies DR 0.00 0.00 0.00 0.00 Chemical Supplies DR 0.00 0.00 0.00 0.00 Shelf Inventory DR 0.00 0.00 0.00 0.00 Prepaid Expense (Sub Schedule) DR 0.00 0.00 0.00 0.00 Deposits DR 0.00 0.00 0.00 0.00 Tenant Security Deposits (Sub Schedule) CR 0.00 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR 0.00 0.00 0.00 0.00 Accounts Payable CR 0.00 0.00 0.00 0.00 Workers Compensation accrual CR 0.00 0.00 0.00 0.00 Accrued Health Insurance CR 0.00 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR 0.00 0.00 0.00 0.00 Employee Liability - Accrued Payroll CR 0.00 0.00 0.00 0.00 Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR 0.00 0.00 0.00 0.00 Employee Liability - Union Annuity CR 0.00 0.00 0.00 0.00 Employee Liability - Profit Sharing CR 0.00 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR 0.00 0.00 0.00 0.00 Employee Liability - State Tax Withheld CR 0.00 0.00 0.00 0.00 Employee Liability - Health FSA CR 0.00 0.00 0.00 0.00 Employee Liability - Employer Taxes CR 0.00 0.00 0.00 0.00 Sales Tax CR 0.00 0.00 0.00 0.00 Deferred Revenue CR 0.00 0.00 0.00 0.00 L/T Pension & Post Retirement CR 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net 0.00 0.00 0.00 0.00 ====================================================================================================================================
Proration Item TOTAL TOTAL TOTAL TOTAL OWNED CONFERENCE MANAGED TCS HOTELS CENTERS HOTELS - ------------------------------------------------------------------------------------------------- House Funds DR 198,180.00 5,375.00 0.00 100.00 Guest Ledger DR 1,306,943.00 0.00 0.00 0.00 Travel Agent Liabilities CR 0.00 0.00 0.00 0.00 City Ledger DR 4,507,821.00 181,555.00 0.00 929,639.00 Provision for Doubtful Accounts CR (150,718.00) (2,000.00) 0.00 (7,048.00) Unrealized Credit Card Comm Expense CR (43,750.00) 0.00 0.00 0.00 Advance Deposit Ledger CR (288,002.00) 0.00 0.00 0.00 Accounts Receivable - General DR 217,751.00 0.00 0.00 100.00 Returned Checks DR 6,821.00 0.00 0.00 0.00 Food Inventory DR 534,405.00 42,538.00 0.00 0.00 Beverage Inventory DR 307,289.00 8,384.00 0.00 0.00 Retail Inventory DR 273,064.00 0.00 0.00 0.00 Linen Inventory - Rooms Division DR 419,398.00 0.00 0.00 0.00 Linen Inventory - F&B Division DR 61,259.00 15,300.00 0.00 0.00 China Inventory DR 256,512.00 23,350.00 0.00 0.00 Glass Inventory DR 59,124.00 15,450.00 0.00 0.00 Silver Inventory DR 86,404.00 11,030.00 0.00 0.00 Amusement Ticket Inventories DR 922.00 0.00 0.00 0.00 Guest Supplies DR 137,573.00 1,000.00 0.00 0.00 Chemical Supplies DR 61,888.00 2,400.00 0.00 104,431.00 Shelf Inventory DR 0.00 0.00 0.00 291,524.00 Prepaid Expense (Sub Schedule) DR 89,056.00 0.00 0.00 0.00 Deposits DR 8,819.00 1,000.00 0.00 150.00 Tenant Security Deposits (Sub Schedule) CR (13,408.00) 0.00 0.00 0.00 Prepaid Tenant Rents (Sub Schedule) CR (100,578.00) 0.00 0.00 0.00 Accounts Payable CR (4,722,921.00) (38,588.00) 0.00 (253,892.00) Workers Compensation accrual CR (9,659.00) (7,757.00) 0.00 (141,349.00) Accrued Health Insurance CR (350,000.00) 0.00 0.00 0.00 Employee Liability - Misc. Payroll CR (1,761.00) 0.00 0.00 (211.00) Employee Liability - Accrued Payroll CR (2,077,532.50) (20,272.50) 0.00 (152,515.00) Employee Liability - Prior Year Bonus's CR 0.00 0.00 0.00 0.00 Employee Liability - Savings Bonds CR (517.00) 0.00 0.00 (45.00) Employee Liability - Union Annuity CR (1,250,078.00) 0.00 0.00 (32,050.00) Employee Liability - Profit Sharing CR (301,514.00) 0.00 0.00 0.00 Employee Liability - Holiday CR 0.00 0.00 0.00 0.00 Employee Liability - Vacation CR (1,007,371.00) (9,333.00) 0.00 (94,730.00) Employee Liability - State Tax Withheld CR (131,950.00) (2,300.00) 0.00 (4,345.00) Employee Liability - Health FSA CR (650.00) 0.00 0.00 (734.00) Employee Liability - Employer Taxes CR (620,222.50) (3,447.50) 0.00 (40,252.50) Sales Tax CR (1,745,378.35) (19,729.50) 0.00 (23,700.00) Deferred Revenue CR (23,075.00) 0.00 0.00 0.00 L/T Pension & Post Retirement CR (150,000.00) 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------- Net (4,455,856.35) 203,954.50 0.00 575,072.50 =================================================================================================
Note: 210,211,215 Includes Recorded and Accrued Liabilities Note: 221 Accrued Payroll represents 2Weeks & 2 Days @ 10/15/97 Note: 243 Sales Tax Represents 1.5 Month Liability for Sept and Oct 19 SCHEDULE 1.1(d) EMPLOYEE BENEFIT PLANS AND AGREEMENTS Collective Bargaining or Similar Agreements 1. Working Agreement dated March 1, 1995 between Kahler Park Hotel and Hotel, Motel, Restaurant, Bar & Club Employees Union Local 99 (Term: March 1, 1997 to March 1, 2000) [Kahler Park Hotel]. 2. Collective Bargaining Agreement dated October 31, 1994 between Kahler Corporation/Lawler's, Inc. and Hotel, Hospital, Restaurant and Tavern Employees Union, Local 21 (Term: September 1, 1994 to August 31, 1997) [Rochester Hotels]. Currently being renegotiated. 3. Memorandum of Agreement dated as of May 1, 1997 between Kahler Corporation d.b.a. Plaza One, Inc. and Plumbers and Pipefitters Local Union No. 25 (Term: May 1, 1997 to April 30, 2002). Company Plans KahlerShare The Kahler Corporation Hourly Employee's Pension Plan The Kahler Corporation Employee Medical Benefit Plan (sometimes referred to as Kahler Realty Corporation Employee Medical Benefit Plan) Executive Dental Plan Kahler Group Life and Optional Life Insurance Plan Executive Long-Term Disability Plan Workers Compensation The Kahler Tax Savings Plan (Cafeteria Plan) The Plumbers and Pipefitters Local Union No. 25 Benefit Funds (Local 25, Rock Island, Illinois) (Management by Kahler of Rock Island) The Plumbers and Pipefitters National Pension Fund (Local 25, Rock Island, Illinois) (Management by Kahler of Rock Island) The Hotel and Restaurant Employees' and Bartenders' Welfare Fund (Local 99, Hibbing, Minnesota) (Employer is Improvement Limited Partnership) Informational note provided by Kahler in the Stock Purchase Agreement: ACCUMULATED BENEFIT OBLIGATIONS At December 31, 1996, the Kahler Corporation Hourly Employees Pension Plan had: an actuarial present value of vested benefit obligation of $2,866,000; an accumulated benefit obligation of $2,946,000; a fair market value of plan assets of $2,164,000; and, an unfunded projected benefit obligation (PBO) of $782,000. The weighted-average discount rate used in determining the actuarial present value of the PBO -1- 20 was 7.25%; the expected long-term rate of return on assets was 8%; the 1983 GAM mortality table was assumed; and the retirement age was assumed to be 65. Participation in such Plan is limited to Company employees in the Rochester, Minnesota area who are represented by Local 21 of the Hotel Employees and Restaurant Employees Union. Currently, there are approximately 700 such employees. Contributions to the Plan are made pursuant to the terms of a collective bargaining agreement entered into between the Company and Local 21. -2- 21 EXHIBIT A HOTELS
================================================================================ PART I ================================================================================ PROPERTY NUMBER DESCRIPTION OF PROPERTY --------------- ----------------------- K-4 Pocatello Park - Pocatello, ID K-5 Boise Park Suites - Boise, ID K-6 Colonial Park - Helena, MT K-7 Canyon Springs - Twin Falls, ID K-9 Kahler Plaza Hotel - Rochester, MN K-10 Retail - Kahler Plaza Hotel - Rochester, MN K-11 Retail - Kahler Hotel - Rochester, MN K-12 Kahler Inn & Suite (f/k/a Clinic View) - Rochester, MN K-14 Lakeview Resort - Morgantown, WV K-15 Green Oaks - Fort Worth, TX K-25 Kahler Park Hotel - Hibbing, MN ================================================================================ PART II ================================================================================ PROPERTY NUMBER DESCRIPTION OF PROPERTY --------------- ----------------------- K-1 Hilton Hotel - Salt Lake City, UT K-2 Olympia Park - Park City, UT K-3 Sheraton San Marcos - Chandler, AZ K-8 Kahler Hotel - Rochester, MN K-13 Holiday Inn - Rochester, MN K-21 University Park - Salt Lake City, UT K-22 Ogden Park - Ogden, UT K-23 Provo Park - Provo, UT K-24 Residence Inn - Provo, UT
EX-10.34.1 3 FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT 1 EXHIBIT 10.34.1 FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the "First Amendment") is made and entered into as of the 19th day of December 1997 by and between Sunstone Hotels, LLC, a Delaware limited liability company ("Seller"), and Sunstone Hotel Properties, Inc., a Colorado corporation ("Buyer"). RECITALS A. The Seller and Buyer have previously entered into that certain Asset Purchase Agreement dated as of October 14, 1997 (the "Asset Purchase Agreement") with respect to the acquisition (the "Kahler Acquisition") by Sunstone Hotel Investors, Inc. ("Sunstone, Inc.") of all of the capital stock of Kahler Realty Corporation, a Minnesota corporation ("Kahler"), from Westbrook Real Estate Fund I, L.P. and Westbrook Real Estate Co-Investment Partnership I, L.P. (collectively, "Westbrook"). B. As part of the Kahler Acquisition, Seller, through the merger of certain of Kahler's subsidiaries with and into Seller, now owns certain of the assets and has assumed related liabilities of Kahler and its subsidiaries, including, in addition to the capital stock of Lakeview of Rochester, Inc., a Minnesota corporation, (i) all of the capital stock of (a) Kahler of Montana, Inc., a Montana corporation which owns a 32.9% share of Copper King LC, a Montana limited liability corporation, (b) Olmsted Development, Inc., a West Virginia corporation which owns timeshare units in Lakeview Resort Club, and (c) Ten Acre S Corp., a West Virginia corporation, and (ii) 25% of the capital stock of Plaza One, Inc., an Illinois corporation (collectively the "Other Stock" and together with the Lakeview Stock, the "Capital Stock"). The management contract for Lakeview Resort Club was transferred from Seller to Buyer in the Asset Purchase Agreement. C. The Seller and Buyer now desire to amend the terms of the Asset Purchase Agreement as more particularly set forth herein. NOW, THEREFORE, in consideration of premises and the mutual covenants, promises and undertakings representations, warranties and agreements of the parties contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. The definition of "Purchased Assets" as set forth in Section 1.1 of the Purchase Agreement shall be amended by replacing the provision Section 1.1(b) in its entirety with the following: a. Capital Stock. the Capital Stock identified on Schedule 1.1(a) including the Lakeview Stock and the Other Stock. 2. Section 6.1(a) of the Asset Purchase Agreement shall be amended by adding the following at the end thereof: Seller shall indemnify Buyer to the extent buyer incurs liability as a result of the failure of Seller to offer the capital stock of Plaza One, Inc. owned by Seller to the owner of the remaining capital stock of same -1- 2 pursuant to the right of first refusal in Article VI, Section 3 of the Bylaws of Plaza One, Inc. 3. Sale of Property. Buyer acknowledges that Seller intends to dispose of the Lakeview Resort in Morgantown, West Virginia ("Lakeview Resort") and that Olmsted Development, Inc. and Ten Acre S Corp. shares are assets that would be appropriate to bundle with the other assets associated with the Lakeview Resort. Buyer hereby agrees upon demand from Seller to convey at the value set forth on Schedule 1.1(a) the Olmsted Development, Inc. and Ten Acre S Corp. shares to any buyer designated by Seller who has agreed to acquire the Lakeview Resort. 4. Full Force and Effect. Except as amended hereby, the Asset Purchase Agreement and all of its terms and conditions shall remain in full force and effect. (signature page follows) -2- 3 IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the day and year first above written. Seller: SUNSTONE HOTELS, LLC, a Delaware limited liability company By: SUNSTONE HOTEL INVESTORS, L.P., a Delaware limited partnership, its sole member and manager By: SUNSTONE HOTEL INVESTORS, INC., GENERAL PARTNER By: /ROBERT A. ALTER/ ---------------------- Robert Alter, President Buyer: SUNSTONE HOTEL PROPERTIES, INC., a Colorado corporation By: /RANDY HULCE/ ----------------------------------- Randy Hulce, President -3- 4 Schedule 1.1(a) MANAGEMENT AND CONCESSION CONTRACTS AND CAPITAL STOCK
================================================================================ Asset Being Fair Market Transferred Value of Asset - -------------------------------------------------------------------------------- THIRD PARTY HOTEL MANAGEMENT CONTRACT: - -------------------------------------------------------------------------------- Euro-Suites $0.00 - -------------------------------------------------------------------------------- Red Fox Inn $87,000 - -------------------------------------------------------------------------------- Plaza One $4,000 - -------------------------------------------------------------------------------- HIBBING MANAGEMENT CONTRACT, NOTE & OWNER INTERESTS: - -------------------------------------------------------------------------------- Management Contract $0.00 - -------------------------------------------------------------------------------- 25% LP Interest N/A - -------------------------------------------------------------------------------- CONCESSION CONTRACTS - -------------------------------------------------------------------------------- Rochester Civic Center $324,000 - -------------------------------------------------------------------------------- Ogden Egyptian Center $180,000 - -------------------------------------------------------------------------------- ASSOCIATORY MANAGEMENT CONTRACTS: - -------------------------------------------------------------------------------- Lakeview Resort Club $0.00 - -------------------------------------------------------------------------------- Victorian Village $7,000 - -------------------------------------------------------------------------------- Carriage House $15,000 - -------------------------------------------------------------------------------- Center Plaza Associates $228,000 - -------------------------------------------------------------------------------- OTHER ASSETS: - -------------------------------------------------------------------------------- 100% of stock of Lakeview of $480,000 Rochester, Inc. (owns 80% of Cheat plus pro rata share of cash in Progressive Venter) (Sewer Plant) Joint Venture less cost of sale - ------------------------------------------------------------------------------- 100% of stock of Kahler of Montana, $0.00 Inc. - ------------------------------------------------------------------------------- 100% of stock of Olmsted $0.00 Development, Inc. - ------------------------------------------------------------------------------- 100% of stock of Ten Acre S Corp. 40.00 - ------------------------------------------------------------------------------- 25% of stock of Plaza One, Inc. $0.00 - ------------------------------------------------------------------------------- Total: $1,325,000 ===============================================================================
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