EXHIBIT 99.5
INVESTMENT OPTION AGREEMENT
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INVESTMENT OPTION AGREEMENT (this "Agreement"), dated as of
February 24, 1999 among CNL Hospitality Partners, LP, a Delaware limited
partnership ("Hospitality Partners"), CNL Group, Inc., a Florida
corporation ("CNL"), and Five Arrows Realty Securities II L.L.C., a
Delaware limited liability company ("Five Arrows").
W I T N E S S E T H:
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WHEREAS, Five Arrows, CNL Hospitality Properties, Inc. ("CHP")
and Hospitality Partners, 100% of the partnership interests of which are
owned by CHP through its wholly owned subsidiaries, have formed CNL
Hotel Investors, Inc., a Maryland corporation ("Hotel Investors"), to be
operated as a real estate investment trust ("REIT") within the meaning
of Section 856 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, in accordance with and subject to the terms and
conditions contained in the Subscription and Stockholders' Agreement,
(the "Hotel Investors Subscription Agreement"), dated as of the date
hereof, among Five Arrows, CHP and Hospitality Partners, Five Arrows has
agreed to contribute to Hotel Investors up to a maximum amount of
$50,886,508.86; and
WHEREAS, pursuant to and in accordance with the terms set
forth in the Hotel Investors Subscription Agreement, Five Arrows will
purchase from Hotel Investors up to 50,886 shares of Hotel Investors' 8%
Class A Cumulative Preferred Stock, par value $.01 per share,
liquidation preference $1,000 per share (the "Class A Preferred Stock")
and up to 50,886 shares of Hotel Investors' common stock, par value $.01
per share (the "Hotel Investors Common Stock"); and
WHEREAS, a purpose of Hotel Investors is to acquire from
various sellers 100% of the partnership interests in eight partnerships
that own the eight (8) hotels identified on Exhibit A of the Hotel
Investors Subscription Agreement or such other hotels as may be
consented to by Five Arrows (the "Hotels"); and
WHEREAS, pursuant to and in accordance with the terms set
forth in the Securities Purchase Agreement (the "CHP Securities Purchase
Agreement"), dated as of the date hereof, by and among Five Arrows, CHP
and Hotel Investors, Five Arrows has agreed to purchase from CHP up to
1,578,947 shares of CHP common stock, par value $.01 per share (the "CHP
Common Stock"), at a price per share of $9.50, for an aggregate
purchase price of $14,999,996.50; and
WHEREAS, pursuant to the Securities Purchase Agreement (the
"Advisors Securities Purchase Agreement"), dated as of the date hereof,
by and between Five Arrows and CNL Hospitality Advisors, Inc., a Florida
corporation ("CNL Advisors"), Five Arrows has agreed to purchase from
CNL Advisors 200 shares of CNL Advisors' Class A Common Stock, par value
$1.00 per share (the "Advisors Common Stock"), representing 10% of the
issued and outstanding shares of Advisors Common Stock, at a price per
share of $7,500, for an aggregate purchase price of $1,500,000; and
WHEREAS, pursuant to the terms set forth in the Hotel
Investors Subscription Agreement and the Articles Supplementary of Hotel
Investors designating the Class A Preferred Stock (the "Articles
Supplementary"), it is contemplated that Hotel Investors will purchase
at least seven of the Hotels before December 31, 1999 or the
Distribution Rate on the Class A Preferred Stock may be increased in
accordance with the Articles Supplementary; and
WHEREAS, Capitalized terms not otherwise defined herein shall
have the meaning ascribed to such terms in the Articles Supplementary.
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Election to Increase Distribution Rate. If Five
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Arrows has elected, pursuant to and in accordance with the Articles
Supplementary to increase the Distribution Rate as provide therein, Five
Arrows shall deliver a notice (the "Increase Notice") concurrently with
the notice under Section 3(e) of the Articles Supplementary, notifying
Hotel Investors and Hospitality Partners of its election to increase the
Distribution Rate.
2. Buy-Back Option.
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(a) Hospitality Partners and CNL Group shall have the
option (the "Option"), exercisable in writing (the "Option Notice") no
later than 15 days following the delivery to Hotel Investors and
Hospitality Partners of the Increase Notice, to irrevocably agree to (i)
purchase from Five Arrows (a) all shares of Class A Preferred Stock
owned by Five Arrows, at price per share equal to the liquidation
preference thereof, plus all accrued and unpaid dividends thereon
through the date of repurchase hereunder, (b) all shares of Hotel
Investors Common Stock owned by Five Arrows, at price per share equal to
$.01, (c) all shares of CHP Common Stock owned by Five Arrows, at price
per share equal to $9.50, and (d) all shares of Advisors Common Stock
and all shares of CNL Advisors' Class B Common Stock (if any) owned by
Five Arrows, at a price per share equal to their original purchase
price, and (ii) repay the outstanding principal of the Note (as defined
in the CHP Securities Purchase Agreement) plus all accrued and unpaid
interest thereon.
(b) If Hospitality Partners elects to exercise the Option,
Hospitality Partners and CNL Group shall pay to Five Arrows the
aggregate of all amounts listed in Section 2(a) above, and shall
consummate such purchase and repayment within 15 days after delivery of
the Option Notice to Five Arrows.
(c) Five Arrows shall not be required to repay or refund
to CNL Group, Hospitality Partners or any of their respective affiliates
any fees or reimbursed out-of-pocket costs expenses paid to Five Arrows
pursuant to the Hotel Investors Subscription Agreement.
3. Governing Law. The interpretation and construction of
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this Agreement, and all matters relating hereto, shall be governed by
the laws of the State of New York applicable to agreements executed and
to be performed solely within such State.
4. Prevailing Party. The prevailing party or parties in
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any litigation shall be entitled to receive from the losing party or
parties all costs and expenses, including reasonable counsel fees,
incurred by the prevailing party or parties.
5. Captions. The Article and Section captions used herein
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are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
6. Notices. All notices, statements, instructions or
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other documents required to be given hereunder, shall be in writing and
shall be given either by hand delivery, by overnight delivery service,
by facsimile transmission or by mailing the same in a sealed envelope,
first-class mail, postage prepaid and either certified or registered,
return receipt requested, addressed as follows:
if to Five Arrows, to:
Five Arrows Realty Securities II L.L.C.
c/o Rothschild Realty, Inc.
1251 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to its counsel:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No. (000) 000-0000
Attention: Xxxxx Xxxxx
if to Hospitality Partners or Hotel Investors, to:
CNL Hospitality Properties, Inc.
CNL Hotel Investor, Inc.
c/o CNL Hospitality Group
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No. (000) 000-0000
Attention: C. Xxxxx Xxxxxxxxxx
with a copy to its counsel:
Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxx X. XxXxxxxxx
Five Arrows, by written notice given to Hospitality Partners or Hotel
Investors in accordance with this Section 6, and Hospitality Partners
and Hotel Investors by written notice to Five Arrows, may change the
address to which notices, statements, instruction or other documents are
to be sent to such party. All notices, statements, instructions and
other documents delivered hereunder shall be deemed effective upon
receipt.
7. Successors and Assigns. This Agreement shall be
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binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Five Arrows shall not, at any
time before January 31, 2000, be permitted to transfer any shares of
Class A Preferred Stock, Hotel Investors Common Stock, CHP Common Stock,
Advisors Common Stock, CNL Advisors' Class B Common Stock or the Note to
any party unless such party agrees to be bound hereby.
8. Counterparts. This Agreement may be executed in two or
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more counterparts, all of which taken together shall constitute one
instrument.
9. Entire Agreement. This Agreement contains the entire
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understanding of the parties hereto with respect to the subject matter
contained herein and therein and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
10. Amendments. This Agreement may not be changed orally,
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but only by an agreement in writing signed by the parties hereto.
11. Severability. In case any provision in this Agreement
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shall be held invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby.
12. Termination of Agreement. The Agreement may be
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terminated upon mutual written agreement of the parties.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first above written.
CNL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title:
CNL HOSPITALITY PARTNERS, LP
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title:
FIVE ARROWS REALTY SECURITIES II L.L.C.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Manager
