-----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, UzQtjZlEXl/g99bRJNS/Y6U28u6KQdZArGVVfMPtCCNaiCsbX081POjzUDpNW/E+ 16bDhuyWqNhzl8YbgMKKJg== 0000950147-96-000458.txt : 19961001 0000950147-96-000458.hdr.sgml : 19961001 ACCESSION NUMBER: 0000950147-96-000458 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19960930 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GUARANTEED HOTEL INVESTORS 1985 LP CENTRAL INDEX KEY: 0000773933 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 860537905 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15771 FILM NUMBER: 96636684 BUSINESS ADDRESS: STREET 1: 17207 NORTH PERIMETER DR STREET 2: THE PERIMETER CENTER CITY: SCOTTSDALE STATE: AZ ZIP: 85255 BUSINESS PHONE: 6025854500 MAIL ADDRESS: STREET 1: 17207 N PERIMETER DR CITY: SCOTTSDALE STATE: AZ ZIP: 85255-5402 FORMER COMPANY: FORMER CONFORMED NAME: INSURED HOTEL INVESTORS 1985 LP DATE OF NAME CHANGE: 19851008 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FFCA INVESTOR SERVICES CORP 85-A CENTRAL INDEX KEY: 0000778969 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 860537910 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-99418-01 FILM NUMBER: 96636685 BUSINESS ADDRESS: STREET 1: 17207 N PERIMETER DR CITY: SCOTSDALE STATE: AZ ZIP: 85255-5402 BUSINESS PHONE: 6025854500 MAIL ADDRESS: STREET 1: 17207 N PERIMETER DR CITY: SCOTTSDALE STATE: AZ ZIP: 85255-5402 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 --------------------------------------------- [ ] 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 0-15771 GUARANTEED HOTEL INVESTORS 1985, L.P. and FFCA INVESTOR SERVICES CORPORATION 85-A - -------------------------------------------------------------------------------- (Exact name of Co-Registrants as Specified in their Organizational Documents) Delaware 86-0537905 - -------------------------------------------------------------------------------- (Partnership State of Organization) (Partnership I.R.S. Employer Identification Number) Delaware 86-0537910 - -------------------------------------------------------------------------------- (Corporation State of Incorporation) (Corporation I.R.S. Employer Identification Number) The Perimeter Center 17207 North Perimeter Drive Scottsdale, Arizona 85255 - -------------------------------------------------------------------------------- (Address of principal executive offices) (zip code) Co-Registrants' telephone number including area code (602) 585-4500 ------------------------- 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 ----- ----- PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements. GUARANTEED HOTEL INVESTORS 1985, L.P. (A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION) BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 (Unaudited)
September 30, December 31, 1996 1995 ------------- ------------ (Note 1) ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ - $ 6,255,398 Funds held in trust (Note 2) - - Accounts receivable, trade - 718,454 Other receivables - 861,550 Prepaids and other - 412,582 ------------- ------------ Total current assets - 8,247,984 ------------- ------------ PROPERTY AND EQUIPMENT: Land and improvements - 5,396,153 Buildings and improvements - 41,350,548 Furniture and equipment - 8,038,759 ------------- ------------ 54,785,460 Less - Accumulated depreciation and amortization - (9,013,099) ------------- ------------ - 45,772,361 Operating stock - 337,148 - 46,109,509 ------------- ------------ Total assets $ - $ 54,357,493 ============= ============ LIABILITIES AND PARTNERS' CAPITAL --------------------------------- CURRENT LIABILITIES: Distribution payable to limited partners $ - $ 1,002,104 Payable to general partner - 10,101 Accounts payable and accrued liabilities - 1,724,774 Property taxes payable - 508,630 Current portion of capital lease obligations - 111,689 ------------- ------------ Total current liabilities - 3,357,298 ------------- ------------ PARTNERS' CAPITAL (DEFICIT): General partner - (324,955) Limited partners (Note 1) - 51,325,150 ------------- ------------ Total partners' capital - 51,000,195 ------------- ------------ Total liabilities and partners' capital $ - $ 54,357,493 ============= ============
GUARANTEED HOTEL INVESTORS 1985, L.P. (A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION) STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended 9/30/96 (Note 1) 9/30/95 9/30/96 (Note 1) 9/30/95 --------------- ------------ --------------- ------------ REVENUE: Room $ - $ 4,171,739 $ 7,520,812 $ 13,857,553 Food and beverage - 466,419 792,450 2,149,271 Other revenue 195,295 1,186,930 1,153,161 2,147,607 ------------ ------------ ------------ ------------ 195,295 5,825,088 9,466,423 18,154,431 ------------ ------------ ------------ ------------ EXPENSES: Property operating costs and expenses - 1,641,869 2,309,881 5,473,020 General and administrative - 663,244 2,608,831 2,337,459 Advertising and promotion - 513,995 733,503 1,648,739 Utilities - 298,084 382,011 885,526 Repairs and maintenance - 268,573 321,719 812,917 Taxes and insurance - 409,644 1,450,423 1,261,815 Interest expense and other - 28,659 29,723 87,856 Depreciation and amortization - 608,440 623,395 1,841,023 Loss on disposition of property - 59,742 52,120 62,709 ------------ ------------ ------------ ------------ - 4,492,250 8,511,606 14,411,064 ------------ ------------ ------------ ------------ NON OPERATING INCOME (EXPENSE): Gain on sale of hotels (Note 1) - - 28,003,339 - General partner fee - - (982,620) - Financial advisory fee - - (732,500) - ------------ ------------ ------------ ------------ - - 26,288,219 - ------------ ------------ ------------ ------------ NET INCOME $ 195,295 $ 1,332,838 $ 27,243,036 $ 3,743,367 ============ ============ ============ ============ NET INCOME ALLOCATED TO: General partner $ 1,953 $ 13,328 $ 272,430 $ 37,434 Limited partners 193,342 1,319,510 26,970,606 3,705,933 ------------ ------------ ------------ ------------ $ 195,295 $ 1,332,838 $ 27,243,036 $ 3,743,367 ============ ============ ============ ============ NET INCOME PER LIMITED PARTNERSHIP UNIT (based on 200,000 units held by limited partners) $.97 $6.60 $134.85 $18.53 ==== ===== ======= =======
GUARANTEED HOTEL INVESTORS 1985, L.P. (A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION) STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (Unaudited)
Limited Partners General ---------------------------- Partner Number Total Amount of Units Amount Amount ------------ ------------ ------------ ------------ BALANCE, December 31, 1995 $ (324,955) 200,000 $ 51,325,150 $ 51,000,195 Net income 272,430 - 26,970,606 27,243,036 General partner contribution of deficit in capital account 62,626 - - 62,626 Distribution to partners from operations (10,101) - (1,000,000) (1,010,101) Initial liquidating distribution to limited partners (Note 1) - - (70,000,000) (70,000,000) Liquidating distribution to limited partners (Note 1) - - (4,795,656) (4,795,656) Distribution to trust (Note 2) - - (2,500,000) (2,500,000) Return of the assignor limited partner's initial capital contribution - - (100) (100) ------------ ------------ ------------ ------------ BALANCE, September 30, l996 $ - 200,000 $ - $ - ============ ============ ============ ============
GUARANTEED HOTEL INVESTORS 1985, L.P. (A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
1996 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 27,243,036 $ 3,743,367 Adjustments to net income: Depreciation and amortization 623,395 1,841,023 Gain on sale of hotels (28,003,339) - Loss on disposition of property 52,120 62,709 Change in assets and liabilities: Decrease (increase) in accounts receivable, trade 718,454 (21,002) Decrease (increase) in other receivables 890,701 (860,756) Decrease in prepaids and other 412,582 360,679 Decrease in disputed liabilities - (1,112,714) Increase (decrease) in accounts payable and accrued liabilities (1,802,089) 60,984 Increase (decrease) in property taxes payable (508,630) 405,352 ------------ ------------ Net cash provided by (used in) operating activities (373,770) 4,479,642 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions or improvements of property - (1,020,288) Proceeds from sale of hotels 73,250,000 - Proceeds from sale of furniture 125,398 16,593 Decrease in operating stock 30,680 16,277 ------------ ------------ Net cash provided by (used in) investing activities 73,406,078 (987,418) ------------ ------------ CASH FLOWS FOR FINANCING ACTIVITIES: Limited partner liquidating distributions (Note 1) (74,795,656) - Distributions to partners from operations (2,020,202) (3,030,303) Distribution to trust (2,500,000) - General partner contribution of deficit in capital account 62,626 - Return of assignor limited partner's initial capital contribution (100) - Payments on capital lease obligations (34,374) (136,105) ------------ ------------ Net cash used in financing activities (79,287,706) (3,166,408) ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,255,398) 325,816 CASH AND CASH EQUIVALENTS, beginning of period 6,255,398 5,652,192 ------------ ------------ CASH AND CASH EQUIVALENTS, end of period $ - $ 5,978,008 ============ ============
GUARANTEED HOTEL INVESTORS 1985, L.P. (A LIMITED PARTNERSHIP IN PROCESS OF LIQUIDATION) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (Unaudited) 1) BASIS OF PRESENTATION AND DISTRIBUTION OF PARTNERSHIP ASSETS: On April 26, 1996, the Partnership closed the sale of its three hotel properties (its only real property assets) for a net cash sales price of $73,250,000. In connection with the sale, the limited partners approved a formal plan of liquidation. The General Partner has concluded the affairs of the Partnership, including the liquidation and distribution of assets to the investors in accordance with the Partnership agreement and, on September 30, 1996, the Partnership filed its certificate of dissolution. Investors in the Partnership ceased to be limited partners upon dissolution of the Partnership and instead, they became beneficiaries of the trust accounts referred to below. The Partnership made an initial liquidating distribution aggregating $70 million to the limited partners in May 1996. On September 30, 1996, the Partnership made an additional liquidating distribution to the limited partners aggregating approximately $4.8 million. The remaining unrestricted cash totaling $1 million has been transferred to a trust (separate, and in addition to, the Funds Held in Trust discussed in Note 2 below) to be used to pay the remaining accounts payable and accrued liabilities outstanding upon dissolution of the Partnership. These liabilities relate primarily to estimates of potential tax assessments which may result from the final Florida and Texas sales tax audits of the hotels. Management believes its estimates are reasonable; however the actual liabilities may be less than the amounts reported; therefore, any amounts remaining in the trust after all liabilities have been settled (including interest thereon) will be distributed to the investors upon liquidation of the trust. 2) FUNDS HELD IN TRUST: On April 26, 1996, a trust fund of $2.5 million was established by the Partnership which will be available only to satisfy claims made by the buyer, arising from the Partnership's obligations under the sales agreement during the eighteen-month period ending October 26, 1997. If, as of October 26, 1997, no claims have been made by the buyer or if final decisions have been rendered for all disputed claims, the remaining balance of the trust fund (including interest thereon) will be disbursed to the investors. If, however, there exist disputed claims as of October 26, 1997, no disbursements will be made from the trust fund until a final decision has been reached as to all disputed claims; provided, however, that no later than April 26, 1999 the remaining balance of the trust fund will be disbursed to the investors, and the buyer will have no further recourse as to such disputed claims. As of September 30, 1996, there have been no claims made by the buyer. PART I - FINANCIAL INFORMATION - -------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources On April 26, 1996, the Partnership closed a transaction with Starwood Lodging Trust operating through its affiliate, SLT Realty Limited Partnership (collectively, the "Buyer"), whereby the Buyer acquired fee simple title to the Partnership's three hotels located in Irving, Texas; Fort Lauderdale, Florida; and Tampa, Florida (the "Properties") from the Partnership for a cash payment to the Partnership of $73,250,000. The Buyer is not affiliated with the Partnership or its general partner, FFCA Management Company Limited Partnership, a Delaware limited partnership (the "General Partner"). The sale of the Properties represents the disposition of substantially all of the Partnership's assets and the Partnership has no further liability in connection with any of the Properties. In connection with the sale, the limited partners approved a plan of liquidation and the General Partner has concluded the affairs of the Partnership, which includes the liquidation and distribution of assets to the investors in accordance with the Partnership agreement and filed a certificate of dissolution of the Partnership on September 30, 1996. The Partnership made an initial liquidating distribution aggregating $70 million to the limited partners in May 1996. On September 30, 1996, the Partnership made an additional liquidating distribution to the limited partners aggregating $4.8 million. The remaining unrestricted cash totaling $1 million has been transferred to a trust (separate, and in addition to, the Trust Fund discussed below) to be used to pay the remaining accounts payable and accrued liabilities outstanding upon dissolution of the Partnership. These liabilities relate primarily to estimates of potential tax assessments which may result from the final Florida and Texas sales tax audits of the hotels. Management believes its estimates are reasonable; however the actual liabilities may be less than the amounts reported; therefore, any amounts remaining in the trust after all liabilities have been settled (including interest thereon) will be distributed to the investors upon liquidation of the trust. In conjunction with the sales transaction, the investors of the Partnership also approved the payment of a fee in the amount of $982,620 to the General Partner for substantial and unanticipated services rendered to the Partnership from January 1, 1991 to the date of liquidation of the Partnership. This fee was paid to the General Partner in May 1996. In conjunction with the sale of the Properties, $2.5 million of the sales price was deposited in trust with a bank (the "Trust Fund"). The Trust Fund (including interest income) will be available only to satisfy claims made by the Buyer, arising from the Partnership's obligations under the sales agreement during an eighteen-month period commencing upon the sale date. If, at the end of such eighteen-month period, no claims have been made by the Buyer or if final decisions have been rendered for all disputed claims, the remaining balance of the Trust Fund will be disbursed to the investors. If, however, there exist disputed claims at the end of such eighteen-month period, no disbursements will be made from the Trust Fund until a final decision has been reached as to all disputed claims; provided, however, that no later than three years after the acquisition of the hotels by the Buyer the remaining balance of the Trust Fund will be disbursed to the investors, and the Buyer will have no further recourse as to such disputed claims. Results of Operations The Partnership had no hotel operations during the quarter ended September 30, 1996 (the quarter) due to the sale of the hotel assets on April 26, 1996 as discussed above, as compared to a full quarter of hotel operations for the same period of the prior year. During the quarter, the Partnership's only source of revenue was investment interest income from temporary investments pending the dissolution of the Partnership and final distribution of cash to the limited partners on September 30, 1996. General and administrative costs for the nine months ended September 30, 1996 include costs related to the wind-down and liquidation of the Partnership. PART II - OTHER INFORMATION - ----------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) For electronic filing purposes only, this report contains the following exhibits filed as part of this Form 10-Q with the Securities and Exchange Commission. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. Exhibit No. Description ----------- ----------- 27 Financial Data Schedule 10.13 Second Liquidating Trust and Escrow Agreement (b) During the quarter covered by this report, the Partnership did not file any reports on Form 8-K. FFCA INVESTOR SERVICES CORPORATION 85-A BALANCE SHEET - SEPTEMBER 30, 1996 ASSETS Cash $ - Investment in Guaranteed Hotel Investors 1985, L.P., at cost - ---- Total Assets - ==== LIABILITY Payable to Parent $ - STOCKHOLDER'S EQUITY Common Stock; $l par value; 100 shares authorized, issued and outstanding - ---- Liability and Stockholder's Equity $ - ==== Note: FFCA Investor Services Corporation 85-A (85-A) was organized on June 28, 1985 to act as the assignor limited partner in Guaranteed Hotel Investors 1985, L.P. (GHI-85). Other than to serve as assignor limited partner, 85-A had no other business purpose and did not engage in any other activity or incur any debt. Simultaneous with the filing of GHI's certificate of dissolution on September 30, 1996; 85-A filed its certificate of dissolution. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the co-registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GUARANTEED HOTEL INVESTORS 1985, L.P. By FFCA MANAGEMENT COMPANY LIMITED PARTNERSHIP General Partner By PERIMETER CENTER MANAGEMENT COMPANY Corporate General Partner Date: September 30, 1996 By /s/ John R. Barravecchia --------------------------------------------- John R. Barravecchia, Chief Financial Officer SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the co-registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FFCA INVESTOR SERVICES CORPORATION 85-A Date: September 30, 1996 By /s/ John R. Barravecchia -------------------------------------------- John R. Barravecchia, President EXHIBIT INDEX The following is a complete list of exhibits filed as part of this Form 10-Q. For electronic filing purposes only, this report contains Exhibit 27, Financial Data Schedule. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. Sequentially Exhibit No. Description Numbered Page - ----------- ----------- ------------- 10.13 Second Liquidating Trust and Escrow Agreement EX-10.13 2 SECOND LIQUIDATING TRUST AND ESCOW AGREEMENT SECOND LIQUIDATING TRUST AND ESCROW AGREEMENT THIS SECOND LIQUIDATING TRUST AND ESCROW AGREEMENT (this "Agreement") is entered into and effective as of September 30, 1996 (the "Effective Date") by and between GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited partnership ("GHI"), and NORWEST BANK ARIZONA, NATIONAL ASSOCIATION, a national banking association principally located in the State of Arizona ("Escrow Agent"). PRELIMINARY STATEMENTS Unless otherwise expressly provided herein, all defined terms used in this Agreement shall have the meanings set forth in Section 1 of this Agreement. On the Closing Date, GHI sold the Hotel Properties to Buyer pursuant to the terms of the Purchase Agreement, and GHI, Buyer and Escrow Agent entered into the Initial Trust Agreement which provided for the deposit and disbursement of the Initial Escrow Funds. GHI now desires to enter into this Agreement for the purpose of appointing Escrow Agent to receive and hold the Escrow Funds in escrow and disburse such Escrow Funds as contemplated by this Agreement, including, without limitation, to satisfy (i) possible sales tax obligations of GHI resulting from its ownership and operation of the Hotel Properties prior to the Closing Date, and (ii) other possible obligations of GHI which were unknown to GHI as of the Closing Date but which are disclosed to and acknowledged by GHI subsequent to the Closing Date. This Agreement shall govern the terms upon which Escrow Agent shall distribute the Escrow Funds. AGREEMENT In consideration of the premises set forth above and other good and valuable consideration, the receipt of which is acknowledged, the parties agree as follows: 1. Definitions. The following terms shall have meanings set forth in this Section 1 for all purposes of this Agreement: "Buyer" means SLT Realty Limited Partnership, a Delaware limited partnership. "Closing Date" means April 26, 1996. "Escrow Funds" means the sum of $1,000,000 to be deposited by GHI into an interest bearing trust account with Escrow Agent pursuant to this Agreement on the Effective Date. The term "Escrow Funds" shall include all interest accruing thereon. "General Partner" means FFCA Management Company Limited Partnership, a Delaware limited partnership, whose general partner is Perimeter Center Management Company, a Delaware corporation. "Hotel Properties" has the meaning set forth in the Purchase Agreement. "Initial Escrow Funds" means the sum of $2,500,000 deposited by GHI with Escrow Agent from the Purchase Price (as defined in the Purchase Agreement), which Initial Escrow Funds will be distributed by Escrow Agent to Investors and/or Buyer pursuant to the Initial Trust Agreement. "Initial Trust Agreement" means that certain Liquidating Trust and Escrow Agreement entered into among GHI, Buyer and Escrow Agent as of the Closing Date. "Investors" means each person who holds one or more Units in GHI and was reflected as an Investor on the books and records of GHI on the Closing Date. "Purchase Agreement" means that certain Purchase Agreement dated as of October 27, 1995 between GHI and Buyer, as amended. "Unit" means one or more units of assigned limited partnership interests in GHI. 2. Appointment of Escrow Agent. (a) Effective as of the Effective Date, Escrow Agent is appointed escrow agent to hold and disburse the Escrow Funds in accordance with the instructions set forth herein. Escrow Agent agrees, upon such appointment, to act as escrow agent under this Agreement. (b) Escrow Agent shall have no powers or rights with respect to holding, investing and disbursing the Escrow Funds other than as expressly set forth in this Agreement. (c) Escrow Agent shall be responsible for providing to each Investor periodic reports containing unaudited financial statements and certain other information and will file such reports on Forms 10-K and 8-K with the Securities and Exchange Commission in accordance with applicable securities laws. Such reports shall include, without limitation, an annual written report, certified by Escrow Agent, setting forth: (i) an unaudited balance sheet of the Escrow Fund account as of the end of the calendar year and the investment status of any funds held in the Escrow Fund account; 2 (ii) the amount of all liabilities discharged during such calendar year; (iii) the amount of all distributions, if any, made to Investors during such calendar year; and (iv) any action taken by Escrow Agent in the performance of its duties not previously reported that materially effect the Escrow Funds. In preparing the periodic reports, Escrow Agent will rely on information provided by General Partner. Escrow Agent shall be indemnified in accordance with the provisions set forth in Section 9 of this Agreement for all losses, costs and expenses arising from and related to the preparation and distribution of the periodic reports to Investors. (d) Escrow Agent may resign upon 30-days advance written notice to General Partner. If a successor escrow agent is not appointed by General Partner within the 30-day period following such notice, Escrow Agent may petition any court of competent jurisdiction to name a successor escrow agent. 3. Purpose of Agreement. This Agreement is being executed, and the Escrow Funds are being deposited with Escrow Agent, for the purpose of liquidating and distributing the Escrow Funds. 4. Deposit of Escrow Funds. On the Effective Date GHI agrees to deposit with Escrow Agent the Escrow Funds. The Escrow Funds shall be credited by Escrow Agent and recorded in a separate, segregated account. Escrow Agent is directed and is hereby authorized to deposit, transfer, hold and invest all funds received in the Escrow Funds account, including principal and interest, in the account described on the attached Exhibit A (the "Fund"), during the period of escrow. The Escrow Agent may sell all or any interest in the Fund only to the extent necessary to make any disbursement under the terms of Section 5 of this Agreement or to the extent necessary to make any distribution to Investors under the terms of Section 7 of this Agreement. Escrow Agent shall not otherwise sell, transfer or convey all or any interest in the Fund. 5. Disbursement of Escrow Funds. (a) Escrow Agent shall only disburse the Escrow Funds pursuant to directions to be provided by General Partner as described in this Section or to the Investors upon termination of this Agreement as contemplated by Section 7; provided, however, Escrow Agent shall not disburse Escrow Funds to GHI or to General Partner. Escrow Agent shall be authorized and is directed by General Partner to withdraw from the Escrow Funds its fee for acting as Escrow Agent as contemplated by Section 10. (b) General Partner may, from time to time, prior to the termination of this Agreement, deliver to Escrow Agent a written direction (each, a "Direction") signed by a duly authorized officer of General Partner stating: 3 (i) that GHI is obligated to the persons and/or entities named in such Direction in the amount or amounts set forth in such Direction (each, an "Obligation", and collectively, the "Obligations"), which Obligations may include, without limitation, possible sales tax obligations of GHI resulting from its ownership and operation of the Hotel Properties prior to the Closing Date and other possible obligations of GHI which were unknown to GHI as of the Closing Date but which are disclosed to and acknowledged by GHI subsequent to the Closing Date; (ii) the basis for the Obligations, set forth in reasonable detail; and (iii) directing Escrow Agent to distribute from the Escrow Funds to each such person and/or entity a sum of money equal to the corresponding Obligation, which distribution shall otherwise be made in accordance with the directions set forth in such Direction. Each Direction delivered to Escrow Agent shall be accompanied by copies of all relevant third-party documentation supporting such Obligation. Escrow Agent shall, within seven days after its receipt of each Direction, promptly pay to the applicable persons and/or entities from the Escrow Funds an amount equal to the corresponding Obligations due such persons and/or entities. If the Escrow Funds are not sufficient to pay in full the Obligations set forth in such Directions, Escrow Agent shall pay to such persons and/or entities such Escrow Funds as are available in accordance with the directions of General Partner, but in no event shall General Partner or the Investors have any obligation or liability for that portion of the Obligations which exceed the amount of Escrow Funds. (c) General Partner shall also have the right to notify Escrow Agent at any time prior to the termination of this Agreement to distribute all or a portion of the Escrow Funds then held by Escrow Agent to the Investors, and Escrow Agent shall promptly make such distributions in accordance with the applicable procedures set forth in Section 7. 6. Appointment of General Partner with Power of Attorney. Effective as of dissolution of GHI, GHI appoints General Partner as its true and lawful attorney-in-fact to exercise GHI's rights under this Agreement. General Partner shall notify Escrow Agent of the effective date of GHI's dissolution, and all actions to be taken by GHI, or deliveries to be made to GHI, pursuant to this Agreement subsequent to such dissolution shall be exercised by, or directed to, General Partner pursuant to the power of attorney set forth in this Section. The power of attorney set forth in this Section is coupled with an interest and is irrevocable. Notwithstanding the appointment by GHI of General Partner as its attorney-in-fact, General Partner and its officers, directors, shareholders, employees and agents shall have no personal liability to Escrow Agent, or, to the extent permitted by applicable law, the Investors as a result of such appointment and/or General Partner exercising GHI's rights under this Agreement. 7. Termination of Escrow. (a) This Agreement shall terminate upon the earlier of the termination of the Initial Trust Agreement and the distribution by Escrow Agent of all of the 4 Escrow Funds. If, at the time of the termination of the Initial Trust Agreement, Escrow Agent is still holding Escrow Funds Escrow Agent shall promptly distribute such remaining Escrow Funds to the Investors in proportion to the respective Units of the Investors. The distribution by Escrow Agent of the remaining Escrow Funds to the Investors shall, if applicable, be made simultaneously with the final distribution to the Investors under the Initial Trust Agreement. All disbursements by Escrow Agent to Investors shall be delivered to the addresses for such Investors provided to Escrow Agent by General Partner. (b) The beneficial interest of the Investors in the Escrow Funds are non-transferable, except by will, intestate succession or operation of law. Accordingly, in the absence of the foregoing circumstances, all disbursements of Escrow Funds other than to the persons and/or entities contemplated by Section 5, if any, shall be made and delivered to the Investors. 8. Notices. All notices (including Directions), certificates and distributions required or permitted to be given or delivered hereunder (other than distributions to Investors, which distributions shall be delivered as described in Section 7) shall be in writing, as applicable, and given by (i) hand delivery, (ii) facsimile, as applicable, (iii) express overnight delivery service or (iv) certified or registered mail, return receipt requested, and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by facsimile or (c) the next business day, if delivered by express overnight delivery service. Attorneys may send or receive notices and certificates on behalf of their respective clients. Notices and certificates shall be provided to the parties and addresses (or facsimile numbers, as applicable) specified below: If to GHI or Dennis L. Ruben, Esq. General Partner: Senior Vice President and General Counsel Franchise Finance Corporation of America 17207 North Perimeter Drive Scottsdale, AZ 85255 Telephone: (602) 585-4500 Telecopy: (602) 585-2226 If to Escrow Agent: Norwest Bank Arizona, National Association Fourth Floor, MS 9030 3300 N. Central Avenue Phoenix, Arizona 85012 Attention: Administrator Telephone: (602) 248-2344 Telecopy: (602) 248-1200 or to such other address as a party shall designate by written notice to all other parties to this Agreement. 5 9. Reliance. Escrow Agent may act upon any instrument or other writing believed by it in good faith to be genuine and to be signed or presented by the proper person or persons and shall not be liable in connection with the performance by it of its duties pursuant to the provisions hereof, except for its own willful default or gross negligence. Escrow Agent shall be indemnified and held harmless solely from the Escrow Funds for all losses, costs, and expenses which may be incurred by it without negligence or bad faith on the part of Escrow Agent, arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder. 10. Fee. Escrow Agent shall be entitled to compensation for its services as agreed to by GHI and Escrow Agent. The fee agreed upon for the services rendered hereunder shall only be paid from the Escrow Funds and is intended as full compensation for Escrow Agent's services as contemplated by this Agreement. Escrow Agent shall not render any material services not contemplated in this Agreement without the prior consent of General Partner. 11. Waiver and Amendment. No provisions of this Agreement shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion. 12. Captions. Captions are used throughout this Agreement for convenience of reference only and shall not be considered in any manner in the construction or interpretation hereof. 13. Severability. The provisions of this Agreement shall be deemed severable. If any part of this Agreement shall be held unenforceable, the remainder shall remain in full force and effect, and such unenforceable provision shall be reformed by such court so as to give maximum legal effect to the intention of the parties as expressed therein. 14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. 15. Binding Effect. This Agreement shall be binding upon and inure to the benefit of GHI, Investors and Escrow Agent and their respective successors and assigns, including, without limitation, any United States trustee, any debtor-in-possession or any trustee appointed from a private panel. The Investors are third-party beneficiaries of this Agreement. 16. Time of the Essence. Time is of the essence with respect to each provision of this Agreement; provided, however, whenever any determination is to be made or action to be taken on a date specified in this Agreement, if such date shall fall upon a Saturday, Sunday or holiday observed by federal banks in the State of Arizona, the date for such determination or action shall be extended to the first business day immediately thereafter. 6 17. Forum Selection; Jurisdiction; Venue; Choice of Law. Each of the parties acknowledges that this Agreement was substantially negotiated in the State of Arizona, the Agreement was signed by GHI and Escrow Agent in the State of Arizona and delivered by each of the parties in the State of Arizona and there are substantial contacts between the parties and the transaction contemplated herein and the State of Arizona. For purposes of any action or proceeding arising out of this Agreement, the parties hereto hereby expressly submit to the jurisdiction of all federal and state courts located in the State of Arizona and consents that it may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, each of the parties waives and agrees not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. It is the intent of the parties hereto that all provisions of this Agreement shall be governed by and construed under the laws of the State of Arizona. 18. Federal Income Tax Matters. GHI and Escrow Agent agree that the Investors shall be treated as the owners of the corpus of the trust created under this Agreement, excluding any funds disbursed to persons and/or entities other than Investors under the terms of Section 5 of this Agreement, and shall file all of their respective returns, reports and similar information in a manner consistent with such ownership. 7 In witness whereof, the parties hereto have caused this Agreement to be signed as of the day and year first above written. GUARANTEED HOTEL INVESTORS 1985, L.P., a Delaware limited partnership By FFCA Management Company Limited Partnership, a Delaware limited partnership,its general partner By Perimeter Center Management Company a Delaware corporation, its general partner By /s/ M.H. Fleischer ---------------------------------------- Printed Name M.H. Fleischer ------------------------------ Its President and Chief Executive Officer --------------------------------------- NORWEST BANK ARIZONA, National Association By /s/ R.A. Lenio ---------------------------------------- Printed Name R.A. Lenio ------------------------------ Its Assistant Vice President -------------------------------------- 8 EXHIBIT A --------- The Escrow Agent is directed and is hereby authorized to deposit, transfer, and invest all funds received in the Escrow Funds account, including principal and interest in Government Obligations, i.e., U.S. Treasury Bills, in accordance with the following investment strategy: $250,000.00 30-day T-Bills $250,000.00 60 day T-Bills $250,000.00 90-day T-Bills $250,000.00 120-day T-Bills Further, the Escrow Agent is directed and is hereby authorized to deposit, transfer and hold any funds temporarily uninvested in the Norwest Advantage Fund Treasury Fund (a money-market "sweep" vehicle.) 9 EX-27 3 FINANCIAL DATA SCHEDULE FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000773933 GUARANTEED HOTEL INVESTORS 1985, L.P. 9-MOS DEC-31-1996 SEP-30-1996 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9,466,423 0 4,464,034 0 0 29,723 27,243,036 0 27,243,036 0 0 0 27,243,036 134.85 0
EX-27 4 FINANCIAL DATA SCHEDULE FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET. 0000778969 FFCA INVESTOR SERVICES CORPORATION 85-A 9-MOS DEC-31-1996 SEP-30-1996 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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