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EXECUTION COPY
EXHIBIT 99.1
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PARTNERSHIP INTEREST ASSIGNMENT AGREEMENT
among
RED LION PROPERTIES, INC.,
▇▇▇▇▇▇ HOTEL PROPERTIES, L.P.,
WEST DOUGHBOY LLC
and
▇▇▇▇▇▇ LODGING COMPANY
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December 30, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 ASSIGNMENT; SUBSTITUTION; INDEMNIFICATION . . . . . . . . . . 2
SECTION 1.1 Interest . . . . . . . . . . . . . . . . . . . . . .. . 2
SECTION 1.2 Consideration . . . . . . . . . . . . . . . . . . . .. . 2
SECTION 1.3 Intent of Substitution . . . . . . . . . . . . . . .. . 2
SECTION 1.4 Indemnification . . . . . . . . . . . . . . . . . . .. . 2
ARTICLE 2 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 3
SECTION 3.1 Mutual . . . . . . . . . . . . . . . . . . . . . . .. . 3
SECTION 3.2 Transferee . . . . . . . . . . . . . . . . . . . . .. . 4
SECTION 3.3 Transferor . . . . . . . . . . . . . . . . . . . . .. . 4
SECTION 3.4 Ownership . . . . . . . . . . . . . . . . . . . . . .. . 4
ARTICLE 4 CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . 4
SECTION 4.2 Conditions to Obligations of Transferee,
Operating Partnership and Parent . . . . . . . . . . . . 5
SECTION 4.3 Conditions to Obligations of Transferor . . . . . . . . 5
ARTICLE 5 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5.1 Termination . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5.2 Effects of Termination . . . . . . . . . . . . . . . . 5
ARTICLE 6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.1 Certain Definitions. . . . . . . . . . . . . . . . . . . 6
SECTION 6.2 Survival of Representations and Warranties . . . . . . . 6
SECTION 6.3 Further Assurances . . . . . . . . . . . . . . . . . . . 6
SECTION 6.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6.6 Waivers and Amendments; Remedies . . . . . . . . . . . . 8
SECTION 6.7 Binding Effect; No Assignment; Third Party Beneficiary . 8
SECTION 6.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6.10 Definitional Provisions . . . . . . . . . . . . . . . . . 9
SECTION 6.11 Severability . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . 9
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PARTNERSHIP INTEREST ASSIGNMENT AGREEMENT, dated December 30,
1997, among ▇▇▇▇▇▇ HOTEL PROPERTIES, L.P., an Ohio limited partnership (the
"OPERATING PARTNERSHIP"), WEST DOUGHBOY LLC, an Ohio limited liability company
(the "Transferee"), ▇▇▇▇▇▇ LODGING COMPANY, an Ohio corporation (the "Parent"),
and RED LION PROPERTIES, INC., a Delaware corporation (the "TRANSFEROR").
a. The Parent, the Operating Partnership, the
Transferor, Red Lion Inns Operating L.P., a Delaware limited partnership (the
"SUBSIDIARY PARTNERSHIP"), Red Lion Inns Limited Partnership, a Delaware
limited partnership (the "COMPANY"), ▇▇▇▇▇▇ Acquisition Partnership, L.P., a
Delaware limited partnership ("MERGER SUB"), ▇▇▇▇▇▇ Acquisition Corporation I,
Inc., an Ohio corporation and ▇▇▇▇▇▇ Acquisition Corporation II, Inc. an Ohio
corporation have entered into an Agreement and Plan of Merger of even date
herewith (the "MERGER AGREEMENT"), pursuant to which, among other things,
Merger Sub is expected to be merged (the "MERGER") with and into the Company.
b. The Transferor is the beneficial and record owner of
the 1% general partner partnership interest (the "INTEREST") in the Subsidiary
Partnership. The Transferor wishes to assign the Interest to the Transferee,
and the Operating Partnership wishes for the Transferee, and the Transferee
wishes, to accept such assignment and assume all rights, obligations and
liabilities of the Transferor with respect to the Interest as part of the
transactions contemplated by the Merger Agreement, and concurrently with, the
Merger and each of them intends concurrently therewith that the Transferee
shall become a substitute general partner of the Subsidiary Partnership with
respect to the Interest, subject to the terms of the Amended and Restated
Agreement of Limited Partnership of the Subsidiary Partnership (the
"PARTNERSHIP AGREEMENT") and this Agreement.
c. Certain capitalized terms used herein are defined in
Section 6.1. Capitalized terms used herein without definition and
non-capitalized terms defined in the Merger Agreement and used herein shall
have the meanings assigned to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
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ARTICLE 1
ASSIGNMENT; SUBSTITUTION; INDEMNIFICATION
SECTION 1.1 Interest. Subject to the terms and
conditions of this Agreement, upon the Effective Time, the Transferor shall
sell, transfer, convey and assign and the Operating Partnership shall cause the
Transferee to, and the Transferee shall, purchase, assume and accept the
Interest in accordance with the Partnership Agreement, including Section 10.2
of the Partnership Agreement. The Operating Partnership shall at the Effective
Time cause the Transferee to agree and the Transferee agrees to be bound by the
terms of the Partnership Agreement. At the Effective Time, Transferee shall
assume all obligations of the Transferor under the Partnership Agreement and
the Transferor shall have no further obligations with respect thereto, except
as and to the extent otherwise provided in the Merger Agreement.
SECTION 1.2 Consideration. The consideration for the
Interest shall be a number of Parent Shares with a value (based upon the
Closing Share Price) equal to the product of the Share Percentage multiplied by
the Assignment Consideration Value (with cash in lieu of any fraction of a
Parent Share) plus (b) an amount in cash equal to the product of the Cash
Percentage multiplied by the Assignment Consideration Value (the
"CONSIDERATION"). At the Closing (as defined in Article 2), the Operating
Partnership shall cause the Transferee to, and the Transferee shall, deliver
the cash portion of the Consideration by wire transfer in immediately available
funds to an account previously designated by the Transferor and the Parent
Share portion of the Consideration by physical delivery to the General Partner
of a certificate representing that number of Parent Shares referred to in
clause (a) above.
SECTION 1.3 Intent of Substitution. In accordance with
Section 11.2 of the Partnership Agreement, the Transferee shall succeed the
Transferor as the general partner of the Subsidiary Partnership, and the
Transferor shall have no further interest whatsoever in the Subsidiary
Partnership. The Transferor hereby agrees and the Operating Partnership hereby
agrees to cause the Transferee to execute such other instruments, and take such
other actions, as may be deemed necessary to admit the Transferee as a
substitute general partner of the Subsidiary Partnership immediately prior to
the withdrawal of the Transferor as the general partner of the Subsidiary
Partnership.
SECTION 1.4 Indemnification. If the Subsidiary
Partnership at any time has a net worth that is less than $110,000,000.00 (the
difference between the Subsidiary Partnership's net worth at that time and
$110,000,000.00, the "Net Worth Shortfall"), the Transferee and the Operating
Partnership shall assume, to the extent of the Net Worth Shortfall and for so
long as the Net Worth Shortfall exists, all of the
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indemnification obligations of the Subsidiary Partnership set forth in the
Partnership Agreement. For purposes of this Section 1.4, the Subsidiary
Partnership's "net worth" at any time means its net worth at that time
calculated in accordance with generally accepted accounting principles,
increased by the amount of the Subsidiary Partnership's accumulated
depreciation and amortization at that time.
ARTICLE 2
CLOSING
The closing of the purchase, assignment and assumption of the
Interest (the "Closing") shall take place concurrently with, and at the same
time and place as, the closing of the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Mutual.
Each of the Operating Partnership, the Transferee and the
Parent, on the one hand, and the Transferor, on the other hand, represents and
warrants to the other as follows:
(a) Organization. It is a partnership, limited
liability company or a corporation (as the case may be) duly formed or
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. It has all power and authority (corporate,
partnership, limited liability company or otherwise) necessary to execute,
deliver and perform its obligations under this Agreement, and to consummate the
transactions contemplated hereby.
(b) Authorization. The execution and delivery by it
of this Agreement, the performance by it of its obligations hereunder and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary actions (corporate, partnership, limited liability
company or otherwise) on its part; subject, with respect to the Transferor, to
obtaining the requisite approval of the Unitholders of the Merger Agreement,
the other Transaction Documents and the transactions contemplated thereby, and
with respect to the Parent, to obtaining the requisite approval of the
shareholders of the Parent of the issuance of Parent Shares in connection with
the Merger and this Agreement. This Agreement has been duly
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executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with the terms of this
Agreement.
(c) No Breach. The execution, delivery or
performance by it of this Agreement will not violate any provision of its
articles or certificate of incorporation or other instrument of organization or
by-laws or similar governing regulations, each as amended to date.
SECTION 3.2 Transferee. Each of the Operating
Partnership, the Transferee and the Parent further represents and warrants to
the Transferor that the Transferee shall be purchasing the Interest for its own
account for investment and not with a view toward, or for resale in connection
with, any distribution thereof. All of the Parent Shares required to be issued
to the Transferor pursuant to this Agreement shall, when issued to the
Transferor, be duly authorized, validly issued and free and clear of any Liens.
SECTION 3.3 Transferor. The Transferor further
represents and warrants to the Operating Partnership that it is the legal,
beneficial and record owner of the Interest. At the Effective Time, the
Transferor shall convey good and valid title to the Interest, free and clear of
any Lien, to the Transferee.
SECTION 3.4 Ownership. The Transferee is a wholly owned,
direct or indirect, subsidiary of the Operating Partnership and no third person
has a right of any kind to purchase an interest therein.
ARTICLE 4
CLOSING CONDITIONS
SECTION 4.1 Mutual Conditions. The obligations of each
of the Operating Partnership, the Transferee, the Parent and the Transferor
under this Agreement to enter into and complete the Closing are subject to the
following conditions precedent:
(a) Closing of the Merger. All of the conditions
precedent to the Merger shall have been satisfied or waived and the Merger
shall have been consummated.
(b) Company Unitholders Approval. This Agreement
and the transactions contemplated hereby shall have been adopted and approved
by the affirmative vote or consent of the Unitholders owning that number of
limited
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partnership units of the Company required therefor under the agreement of
limited partnership of the Company and applicable laws.
(c) Parent Shareholder Approval. The issuance of
the Parent Shares in connection with the Merger and this Agreement shall have
been approved by the affirmative vote of the shareholders of the Parent owning
that number of Parent Shares required therefor under the Parent's articles of
incorporation, code of regulations and other organizational documents, the
rules and regulations of the NYSE and applicable law.
SECTION 4.2 Conditions to Obligations of Transferee,
Operating Partnership and Parent. The obligations of each the Operating
Partnership, the Transferee and the Parent under this Agreement to enter into
and complete the Closing are subject to the following condition precedent:
(a) Representations. Each of the representations
and warranties of the Transferor to the Transferee, the Parent and the
Operating Partnership contained herein shall be true in all material respects
with the same force and effect as though made on, at and as of the Effective
Time. The Transferor shall have delivered to each of the Transferee, the
Parent and the Operating Partnership a certificate, signed by an authorized
representative and dated the Effective Time, to the foregoing effect.
SECTION 4.3 Conditions to Obligations of Transferor. The
obligations of the Transferor under this Agreement to enter into and complete
the Closing are subject to the following condition precedent:
(a) Representations. Each of the representations
and warranties of the Transferee, the Operating Partnership and the Parent to
the Transferor contained herein shall be true in all material respects with the
same force and effect as though made on, at and as of the Effective Time. Each
of the Transferee, the Operating Partnership and the Parent shall have
delivered to the Transferor a certificate, signed by an authorized
representative and dated the Effective Time, to the foregoing effect.
ARTICLE 5
TERMINATION
SECTION 5.1 Termination. This Agreement shall terminate
upon any termination of the Merger Agreement. This Agreement may be terminated
prior to the Closing with the mutual written consent of the parties.
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SECTION 5.2 Effects of Termination. If this Agreement is
terminated in accordance with Section 5.1 and the transactions contemplated
hereby are not consummated, this Agreement shall become void and of no further
force and effect; provided that nothing in this Section 5.2 shall relieve a
party of any liability if the termination of this Agreement is caused by
willful breach of such party; provided further, that if this Agreement is
terminated because the Merger Agreement is terminated pursuant to Section
7.1(g) or 7.1(h) of the Merger Agreement, the foregoing provisions of this
sentence shall not relieve a party from liability for breach of contract based
upon negligence in making any representation or warranty pursuant to this
Agreement as of the date hereof.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1 Certain Definitions.
(a) "AGGREGATE EQUITY VALUE" shall mean an amount
equal to the sum of (i) $35,305,000 and (ii) the value of 3,110,048 Parent
Shares determined by reference to the Closing Share Price.
(b) "ASSIGNMENT CONSIDERATION VALUE" shall mean
an amount, not to be less than zero, equal to (i) one percent (1%) of the
Aggregate Equity Value minus (ii) $987,901 which represents 99% of the
Transferor's unpaid capital contribution to the Subsidiary Partnership.
(c) "CASH PERCENTAGE" shall mean the percentage
obtained by dividing $35,305,000 by the Aggregate Equity Value.
(d) "CLOSING SHARE PRICE" shall have the meaning
assigned to such term in Schedule I to the Merger Agreement.
(e) "SHARE PERCENTAGE" shall mean the percentage
obtained by dividing the value of 3,110,048 Parent Shares (determined by
reference to the Closing Share Price) by the Aggregate Equity Value.
SECTION 6.2 Survival of Representations and Warranties.
Section 3.3 shall survive the Closing of this Agreement. None of the other
representations or warranties set forth herein shall survive the Closing.
SECTION 6.3 Further Assurances. The parties to this
Agreement agree to promptly execute, acknowledge, deliver, file or record such
further
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certificates, amendments, instruments or documents, and to do all such other
acts, as may be required by law or may be necessary or advisable to carry out
the intents and purposes of this Agreement.
SECTION 6.4 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws thereof.
SECTION 6.5 Notices. All notices required or permitted
to be given pursuant to this Agreement shall be given in the manner required by
Section 8.5 of the Merger Agreement and shall be addressed as follows:
if to the Transferor, to:
Special Committee of the Board of Directors of
Red Lion Properties, Inc.,
as General Partner of
Red Lion Inns Limited Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Red Lion Properties, Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Transferee, the Operating Partnership or
the Parent, to:
▇▇▇▇▇▇ Lodging Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 6.6 Waivers and Amendments; Remedies. This
Agreement may be amended, superseded, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity.
SECTION 6.7 Binding Effect; No Assignment; Third Party
Beneficiary. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and legal representatives. This
Agreement is not assignable except by operation of law. Except for the persons
entitled to the benefits of Section 1.4, no person shall be, or be deemed to
be, a third party beneficiary of this Agreement. Nothing expressed or implied
in this Agreement is intended or shall be
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construed to give any Person other than the parties hereto any rights or
remedies under or by reason of this Agreement or any transaction contemplated
hereby.
SECTION 6.8 Headings. The headings in this Agreement are
for reference only and shall not affect the interpretation of this Agreement.
SECTION 6.9 Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
SECTION 6.10 Definitional Provisions. The words "hereby,"
"hereof," "herein" and "hereunder," and words of like import, refer to this
Agreement as a whole and not to any particular Section or Article hereof. The
words "including" and "include" mean including without limiting the generality
of any description preceding such term.
SECTION 6.11 Severability. If any term or other provision
of this Agreement is invalid, illegal or unenforceable, all other provisions
shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 6.12 Entire Agreement. This Agreement, the
Company Confidentiality Letter, the Parent Confidentiality Letter and the other
Transaction Documents embody the entire agreement and understanding of the
parties hereto in respect of the subject matter hereof and thereof and
supersede all prior agreements and understandings, both written and oral, among
the parties, or between any of them, with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
RED LION PROPERTIES, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: VP/Treas/Sec
▇▇▇▇▇▇ HOTEL PROPERTIES, L.P.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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▇▇▇▇▇▇ LODGING COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WEST DOUGHBOY LLC
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President