Exhibit 10.29
Form of Offer Letter
July 16, 1996
The Limited Partners of
Delray Beach Hotel Properties Limited
Jamestown Hotel Properties, L.P.
Muar Lakes Hotel Properties, L.P.
900 Jefferson Road Hotel Properties, L.P.
Ridge Road Hotel Properties, L.P.
and the General Partners of Brookwood Hotel Properties
Attention: Hotel Investor
Dear Hotel Investor:
We have all discussed ways to reduce the ongoing risks to, and
increase the liquidity of, the partners in the various hotel properties managed
by Hudson Hotels Corporation. Various proposals have been suggested, including a
proposal to "roll-up" the individual partnerships into a REIT. Having carefully
analyzed the costs associated with, and limitations imposed by, the organization
and operation of a REIT structure, Hudson Hotels has determined that this is not
appropriate at this time.
However, Hudson Hotels remains committed to providing liquidity to
its loyal hotel investors. To accomplish this, Hudson is prepared to make the
following offer to each investor in the partnerships listed above, to acquire
those partnership interests in exchange for shares of common stock of Hudson
Hotels, upon the following terms and conditions:
1. The partnership interests shall be valued by applying an 11.5%
capitalization rate to the average of the last three years cash
flow of each property (less an asset placement reserve),
subtracting the outstanding principal of mortgage debt, and (for
each partner) multiplying the resulting value times each
partner's percentage interest. The resulting valuation of your
interest in each partnership is shown on Schedule A attached
hereto.
2. No alternative valuations will be obtained by Hudson. The Company
will not obtain new appraisals nor any fairness opinion regarding
the method of establishing value or the value itself. The Company
believes that the method of valuation, and the cap rate used, is
consistent with those currently being used to value similar
properties for acquisition.
3. The value of the shares to be exchanged for the partnership
interests will be set at the average closing price for the five
trading days immediately preceding the effective date of the
exchange, which will be July 31, 1996. The number of shares to be
exchanged will be determined by dividing each partner's total
value by the per share value so established. Schedule A also
shows the number of shares to be issued, using an assumed price
of $8.00. A higher value would mean fewer shares would be issued,
and vice versa.
4. Hudson Hotels will agree to indemnify each exchanging investor
for any loss, damage or expense which the investor may incur upon
exercise of the lender's rights under any guaranty previously
granted by the investor with respect to these properties. It is
anticipated that the guarantees will be eliminated upon the
refinance of each property.
5. The shares of Hudson Hotels stock to be issued in exchange for
the partnership interests will initially be restricted shares
bearing a restrictive legend. However, Hudson will agree to
register those shares within six months following the effective
date.
6. This offer is for all of the partnership interests listed on
Schedule A. Each investor may accept the offer in whole, or
reject it in whole; the investor may not, however, pick and
choose which partnerships to exchange and which to keep.
7. At its option, Hudson shall not be obligated to proceed if it
does not receive agreements to exchange from at least 75% in
interest (including the percentage already owned by Hudson, if
any) of the investors in each property. In addition, at its
option Hudson shall not be obligated to go forward if the value
of the shares to be exchanged is less than $7.00.
Enclosed with this letter are the most recent financial information
available for each hotel property in question, together with Hudson's most
recent Form 10-KSB, Form 10-QSB and proxy statement. This information is being
provided to assist each investor in making the decision whether to accept the
exchange offer set forth herein.
The exchange may have tax consequences to each investor, depending
upon your current tax situation. We urge each investor to seek the independence
advice of your tax advisor and legal counsel to assess this offer.
No investor is required to accept the proposed exchange. An investor
who elects not to accept will retain his or her partnership interest in each of
the partnerships without any consequences or changes in the existing partnership
structure.
Hudson Hotels believes that this offer will provide the investor with
a reasonable current value for the partnership interests, with improved
potential for capital appreciation and liquidity, and with the potential to
eliminate, in the future, all contingent liabilities relating to guarantees on
the properties. We believe that the offer serves the best interests of all
parties.
This offer is good until July 31, 1996 (the Effective Date). To accept this
offer, please execute and return the enclosed copy of this letter, the Transfer
Agreement and the Assignment. You may feel free to contact myself or Bruce Sahs
at Hudson, or our attorney, Alan S. Lockwood, at 716-232-5300 to discuss this
offer.
Sincerely,
HUDSON HOTELS CORPORATION
-----------------------------
E. Anthony Wilson, President
Agreed and Offer Accepted:
- -----------------------------
Hotel Investor
ASL/sjc
Enclosures
Form of Transfer Agreement
TRANSFER AGREEMENT
This Agreement is made as of the 31st day of July, 1996, by and between
Hotel Investor, with an address at _____________________ (the "Seller") and
Hudson Hotels Properties Corp., a New York corporation with an office at One
Airport Way, Suite 200, Rochester International Airport, Rochester, New York
14624 (the "Company").
WHEREAS, the Seller owns the percentage interests set forth on Schedule
A, attached hereto, in the Partnerships listed in Schedule A (the
"Partnerships") subject to the provisions set forth in the Partnership
Agreements of such Partnerships; and
WHEREAS, the Seller wishes to sell to the Company and the Company wishes
to purchase from the Seller all of the Seller's partnership interests (the
interests being sold herein referred to as the "Partnership Interests") in the
Partnerships set forth in Schedule A.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the parties agree as follows:
I. SALE OF PARTNERSHIP INTERESTS. The Seller agrees to sell and the
Company agrees to purchase the Partnership Interests in the
Partnerships pursuant to the terms and conditions set forth herein.
II. PURCHASE PRICE AND PAYMENT TERMS. The purchase price to be paid by the
Company to the Seller for the Partnership Interests is $__________
allocated as set forth on Schedule A. The purchase price shall be paid
by delivery of shares of the $.001 par value common stock (the "Shares")
of Hudson Hotels Corporation, the Company's parent (the "Parent"). The
number of shares to be delivered shall be determined by dividing the
price set forth above by the average closing price of the Shares for the
five (5) trading days preceding the Effective Date.
III. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Company that:
A. The Seller has full power and authority to sell the Partnership
Interests, subject only to the consent of other Partners in the
Partnership as set forth in the Partnership Agreements of the
Partnership. Execution of this Agreement shall constitute consent
by Seller to the Purchase by the Company of the other Partnership
interests in each Partnership.
B. The Seller has not pledged any of the Partnership Interests as
collateral.
C. To the best of the Seller's knowledge, there is no threatened or
pending litigation or administrative proceeding against the
Partnership Interests.
D. To the best of the Seller's knowledge, there are no materially
adverse facts relating to its ownership of the Partnership
Interests which have not been disclosed in writing to the Company
on behalf of the Subsidiary.
E. The Seller acknowledges that the Parent is a public company. The
Seller confirms that it has reviewed the periodic filings of the
Parent with the Securities and Exchange Commission, has had an
opportunity to ask questions of officials of the Parent
concerning the business of the Parent, and otherwise had full
opportunity to obtain such information as the Seller deems
necessary to make its decisions to sell the Partnership Interests
in exchange for the Shares of the Parent upon the terms and
conditions set forth in this Agreement.
F. The representations and warranties of the Seller set forth herein
shall survive the consummation of the transactions contemplated
hereby.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and the
Parent represent and warrant to the Seller as follows:
A. Organization and Standing. The Company is a corporation duly
organized and validly existing under the laws of the State of New
York and in good standing as domestic corporations under the laws
of said state.
B. Authorization. The execution, delivery and performance of the
Agreement by the Company, and the issuance and delivery of the
Shares by the Parent, have been duly authorized by all requisite
corporate action, and the Agreement constitutes a valid and
binding obligation of the Company enforceable in accordance with
its terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization or similar laws relating
to or affecting the enforcement of creditors' rights.
C. Shares. The Shares when issued to the Seller will be duly
authorized, validly issued and non-assessable.
D. No Violation. The execution, delivery and performance of this
Agreement will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Company, or cause default under
any agreement or instrument to which the Company or the Parent is
a party or by which any of its property or assets is bound.
V. UNDERTAKINGS.
A. The Seller shall cooperate with the Company to have the Company
admitted as a partner in each Partnership upon transfer of the
Partnership Interests.
B. The Parent shall undertake to register the Shares with the
Securities and Exchange Commission for sale by the Seller within
180 days following the closing hereof.
VI. INDEMNITY. The Company acknowledges that the Seller is or may be a
guarantor of the existing mortgage debt with respect to the Partnership
Interests to be transferred hereunder. The Seller acknowledges that
neither the Company nor the Partnerships in question have the
capability to obtain the release of the guarantees. As further
consideration for the transfer hereunder, the Company and the Parent
each hereby agree to fully indemnify and hold the Seller harmless from
and against any loss, damage or expense that the Seller may incur as a
result of any effort by the beneficiary of the guarantees to enforce
or collect under any such guarantee.
VII. TRANSFER DOCUMENTS. Upon closing, the Seller shall execute and deliver
to the Company appropriate assignments transferring the Partnership
Interests, and such further instruments of transfer as may be required
in order to vest and confirm the Partnership Interests in the Company.
VIII. CLOSING. Closing shall be scheduled at a time and place mutually
agreed upon by the parties hereto. Notwithstanding closing at a
subsequent date, the transaction shall be deemed effective as of the
31st of July, 1996 (the "Effective Date").
IX. MISCELLANEOUS.
A. This Agreement shall be governed by the laws of the State of New
York.
B. This Agreement represents the entire agreement between the parties,
and may not be modified, amended or terminated except by a writing
signed by the parties hereto.
C. The Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, successors and assigns,
provided, however, that none of the parties may make any
assignment of the Agreement or any interest therein, by operation
of law or otherwise, without the written consent of the other
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
-----------------------------------
Hotel Investor
HUDSON HOTELS PROPERTIES CORP.
-----------------------------------
Bruce A. Sahs, President
HUDSON HOTELS CORPORATION
-----------------------------------
E. Anthony Wilson, President
List of Partners
HUDSON PROPERTIES, MLP
ROLL-UP OF PARTNERSHIPS
PARTNER
B. August
C. August
R. August
C. Brovitz
A. Costello
S. David
R. Dorschel
G & W Land Associates (c/o W. Erdle)
R. Fox
V. Hansford
The Landsman Company (c/o E. Landsman)
S. Lane
A. Lockwood
w. maxion
K. Miller and E. Miller
L. Miller Trust
D. Mitchell
E. Pine
M. Poplock
P. Roby and K. Roby
B. Russell
LR&R (c/o R. Sands)
R. Sands
F. Shumway
E. Simon
W. Smith
D. Spoleta
M. M. Spoleta
M. D. Spoleta
L. & C. Swift
Tamarack II Associates (e/o R. Crossed)
H. Vanderbrul
J. Vigdor
RTR Transportation Corp. (c/o W. Warren)
J. Warren
Wilson Enterprises, L.P.
Hudson Hotels Corporation
Brookwood Funding Associates L.P. (c/o B. Sahs)
TOTAL SHARES ISSUED: 1,170,103