Exhibit 10.51
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Stock Purchase Agreement") is made and
entered as of this 31st day of May, 1996, by and among PROMUS HOTELS, INC., a
Delaware corporation ("Promus"), EQUITY INNS, INC., a Tennessee corporation (the
"Company") and EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited partnership
(the "Partnership").
RECITALS
WHEREAS, Promus owns, operates and franchises hotels under, among others,
the trademarks and service marks "Hampton Inn," "Hampton Inn & Suites" and
"Homewood Suites;" and
WHEREAS, the Partnership, for which a wholly owned subsidiary of the
Company serves as sole general partner, and Promus have entered into (i) a
Purchase and Sale Agreement dated March 18, 1996 with respect to the
Partnership's purchase and Promus' sale of a 125 room Hampton Inn hotel in
Detroit (Northville), Michigan and (ii) a Purchase and Sale Agreement dated
March 18, 1996 with respect to the Partnership's purchase and Promus' sale of a
132 suite Homewood Suites hotel in Hartford (Windsor Locks), Connecticut (each
an "Acquisition Hotel" and collectively, the "Acquisition Hotels"); and
WHEREAS, upon purchase of the Acquisition Hotels, the Partnership intends
to lease the Acquisition Hotels to Trust Leasing, Inc., a Tennessee corporation
formerly named McNeill Hotel Co., Inc. (the "Lessee") and the Lessee and Promus
intend to enter into management agreements pursuant to which Promus will manage
the Acquisition Hotels on behalf of the Lessee for a ten-year period; and
WHEREAS, as of the date hereof, the Partnership, the Lessee and Promus
have entered into a Development Agreement (the "Development Agreement")
providing for, among other things, as further set forth therein (A) the
acquisition by the Partnership of three Homewood Suites hotels currently under
development by Promus in (i) Phoenix-Camelback, Arizona, (ii) Scottsdale,
Arizona, (iii) San Antonio, Texas and (iv) a new Homewood Suites hotel in
Clearwater, Florida (each, a "PHI Development Hotel" and collectively, the "PHI
Development Hotels"), (B) the development by the Partnership of a new Hampton
Inn & Suites hotel in Bartlett, Tennessee (the "Bartlett Hotel"); (C) the
agreement by Promus to give the Partnership a right of first offer with respect
to the development of up to three additional Promus brand hotels approved by
Promus for development each year over a four-year period with certain
limitations as set forth in the Development Agreement (the "Promus First Offer
Hotels"); (D) the Company's agreement to seek to develop new Promus brand hotels
or acquire existing hotels for conversion to Promus brand hotels (each, an
"Additional Hotel" and, together with the Acquisition Hotels, PHI Development
Hotels, the Bartlett Hotel and the Promus First Offer Hotels, the "Hotels"); and
(E) the Partnership's agreement to lease the Hotels to
the Lessee and the management of the Hotels by Promus pursuant to a management
agreement between Promus and the Lessee; and
WHEREAS, the parties desire to set forth herein the terms and conditions
on which Promus agrees to purchase from the Company shares of common stock of
the Company, par value $.01 per share ("Common Stock");
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. Agreement to Purchase and Sell Common Stock of the Company.
(a) (i) Stock Purchases Upon Closing of Hotel Acquisitions. Subject to the
limitation that the aggregate purchase prices for Common Stock purchased by
Promus from the Company hereunder shall not exceed Fifteen Million Dollars
($15,000,000) (as such amount may be adjusted pursuant to Section 5 below, the
"Aggregate Subscription Limit"), Promus hereby subscribes for and agrees to
purchase from the Company, and the Company agrees to sell to Promus, shares of
Common Stock of the Company subject to the terms and conditions herein set
forth, at purchase prices determined in accordance with Section 2 below (each
such determination being herein referred to as a "Purchase Price"), as follows:
(A) At the time of closing of the Partnership's acquisition of each
Acquisition Hotel, which closings are expected to occur on or about
the date of this Stock Purchase Agreement, Promus will purchase from
the Company 173,913 newly issued shares of the Company's Common
Stock for each Acquisition Hotel;
(B) At the time of closing of the Partnership's acquisition of each
PHI Development Hotel pursuant to the Development Agreement and upon
opening of the Bartlett Hotel, Promus will purchase from the Company
a number of newly issued shares of Common Stock determined as set
forth below:
Hotel No. of Rooms Number of Shares
----- ------------ ----------------
Homewood Suites 123 $1,537,500 divided by the
Phoenix-Camelback, Arizona Purchase Price
Homewood Suites 114 $1,425,000 divided by the
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Scottsdale, Arizona Purchase Price
Homewood Suites 123 $1,537,500 divided by the
San Antonio, Texas Purchase Price
Homewood Suites 112 $1,400,000 divided by the
Clearwater, Florida Purchase Price
Hampton Inn & Suites 124 $1,550,000 divided by the
Bartlett, Tennessee Purchase Price
(C) At the time of closing of the Partnership's acquisition of each
Promus First Offer Hotel or an Additional Hotel, Promus shall
purchase from the Company, and the Company shall issue to Promus, a
number of newly issued shares of Common Stock determined by
multiplying the number of guest rooms in the Promus First Offer
Hotel or the Additional Hotel by $12,500 and dividing the product
obtained by the Purchase Price.
(ii) Option to Purchase Within Six Months. Notwithstanding the provisions
of Section 1(a)(i), Promus may elect to purchase up to a maximum of
869,565 shares of Common Stock by notifying the Company prior to October
16, 1996 of its election to purchase such shares at a purchase price per
share of $11.50. The aggregate purchase price for any shares of Common
Stock purchased under this Section 1(a)(ii) shall be applied to the
Aggregate Subscription Limit. Notwithstanding Promus' exercise of the
option set forth in this Section 1(a)(ii) and the possibility that the
Aggregate Subscription Limit will be reached prior to the acquisition or
development of all the PHI Development Hotels and the Bartlett Hotel and
the entering into of management agreements for such hotels between Promus
and the Lessee as contemplated in the Development Agreement, the
Partnership's obligations under the Development Agreement shall remain in
full effect.
(b) Ownership Limitation. If the Company's counsel determines that any
purchase by Promus of Common Stock hereunder (an "Incremental Purchase"), will
violate the stock ownership limitations set forth in the Amended and Restated
Charter of the Company (the "Limit") and that no waiver of such Limit can be
made without jeopardizing the Company's status as a real estate investment
trust, upon notice from the Company to the Partnership, rather than purchasing
shares of Common Stock, (i) Promus shall purchase from the Partnership and the
Partnership shall issue to Promus a number of units of limited partnership
interest in the Partnership ("Units") equal to the number of shares of Common
Stock which Promus would otherwise purchase in the
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Incremental Purchase at a price per Unit equal to the Purchase Price and (ii)
Promus shall be admitted as a limited partner of the Partnership with respect to
such Units and (iii) Promus and the Partnership shall execute all documents
reasonably necessary for Promus' admission as a Limited Partner of the
Partnership. Such Units shall be redeemable at Promus' option in accordance with
the terms of the Second Amended and Restated Agreement of Limited Partnership of
the Partnership (the "Partnership Agreement"). Notwithstanding the provisions of
Section 1(c) below, Promus may sell without restriction shares acquired upon
redemption of Units any time following the one year anniversary of Promus'
acquisition of the Units so redeemed, without regard to the date that the Common
Stock was acquired. References in this Agreement to "Common Stock" shall be
deemed to be references to "Units" when the provisions of this Section 1(b) are
applicable and when the context requires.
(c) Lock-Up Period for the Company's Common Stock. The shares of Common
Stock issuable to Promus hereunder shall be registered under the Securities Act
of 1933, as amended (the "Securities Act"). Without the prior written consent of
the Company, Promus may not sell any of the shares of Common Stock purchased
pursuant to this Stock Purchase Agreement for a period of one year after the
date of acquisition of such Common Stock by Promus. In the event that under the
Securities Act Promus cannot re-sell all or a portion of the Common Stock
acquired hereunder in a "brokers' transaction", as that term is defined in
Section 4(4) of the Securities Act, without further registration under the
Securities Act, the Company shall, following written notice from Promus
explaining in reasonable detail why further registration under the Securities
Act is necessary for Promus' resale of Common Stock acquired hereunder, use its
reasonable best efforts to cause to become effective under the Securities Act a
registration statement covering the resale by Promus of such shares of Common
Stock acquired by Promus hereunder.
2. Purchase Price. The Purchase Price for shares of Common Stock purchased by
Promus under Section 1(a)(i)(A) will be $11.50 per share. The Purchase Price for
shares of Common Stock purchased under Sections 1(a)(i)(B) and 1(a)(i)(C) shall
be an amount per share equal to the weighted average of the sales prices of the
Company's Common Stock as reported on the Nasdaq Stock Market for the fifteen
(15) business days ending on the business day immediately preceding any closing
date of a purchase and sale of Common Stock hereunder.
3. Purchase Closings. Subject to the provisions of Section 1(a)(ii), each
closing of a purchase and sale of Common Stock hereunder shall occur on the
respective closing dates of the Partnership's purchase of the Acquisition
Hotels, a PHI Development Hotel or any Additional Hotel and the opening date of
the Bartlett Hotel. At each closing of a purchase of Common Stock hereunder:
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(a) The Company shall issue to Promus a certificate representing the
number of shares of Common Stock purchased by Promus at each such closing; and
(b) (i) The Company shall receive as a credit against the contract
purchase price for each PHI Development Hotel, the Bartlett Hotel and any
Additional Hotel or (ii) Promus shall pay to the Company, by wire transfer or by
certified or bank cashier's check, in same day funds, the aggregate Purchase
Price for all shares of Common Stock being purchased by Promus simultaneously
with the closing of the Partnership's acquisitions of such hotels as determined
under Section 1 above.
4. Term. Promus' obligations in connection with this Stock Purchase Agreement
shall terminate upon the earlier to occur of (i) the date on which Promus shall
have purchased shares of Common Stock hereunder having purchase prices
aggregating the Aggregate Subscription Limit or (ii) delivery of written notice
by the Company to Promus that the Company has terminated Promus' obligations
hereunder, or (iii) May 31, 2001.
5. Purchase of Lessee Common Stock. Notwithstanding the foregoing, in the event
the Lessee shall complete an initial public offering of its common stock on or
prior to December 31, 1996, and Promus shall purchase in such initial public
offering, at the price to the public, shares of the Lessee's common stock having
an aggregate price of at least One Million Dollars ($1,000,000), the Aggregate
Subscription Limit hereunder shall be reduced to Fourteen Million Dollars
($14,000,000). Any purchase of stock of Lessee pursuant to this Section 5 shall
apply against the next to accrue obligations of Promus to purchase Common Stock
of the Company pursuant to Section 1(a) up to the aggregate purchase price for
the stock of the Lessee purchased by Promus in the Lessee's initial public
offering, not to exceed $1,000,000. Acquisitions of stock of the Lessee shall
not modify the Company's obligations with respect to the acquisition or
development of all the PHI Development Hotels, the Bartlett Hotel and the
entering into of management agreements for such hotels, in any respect.
6. Representations and Warranties of Promus. Promus hereby represents and
warrants to the Company as follows:
(a) Promus has full legal right, power and authority to enter into this Stock
Purchase Agreement and to consummate the transactions contemplated herein. This
Stock Purchase Agreement has been duly authorized by all necessary corporate
action on behalf of Promus and constitutes the valid and binding obligation of
Promus, enforceable in accordance with its terms, except as may be limited or
otherwise affected by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the rights of creditors generally.
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(b) Neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby by Promus will conflict
with or result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or passage of time or both) constitute
a default under, any agreement to which Promus is a party, the certificate of
incorporation or bylaws of Promus, any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which Promus is a
party or to which any of its properties or other assets is subject, or any
applicable statute, judgment, decree, rule or regulation of any court or
governmental agency or body applicable to Promus or its assets, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of Promus.
(c) No consent, license, permit or filing with or approval by any governmental
authority or any other person or entity is required in connection with Promus'
execution, delivery and performance of this Stock Purchase Agreement except such
as has been obtained by Promus.
(d) No finder, broker, agent, financial advisor or other intermediary has acted
on behalf of Promus in connection with the purchase of the Common Stock pursuant
to this Stock Purchase Agreement or the negotiation or consummation of the
transactions hereunder.
(e) Promus is aware of the risks involved in making an investment in the Common
Stock (or Units, if required under Section 1(b)). Promus has had an opportunity
to ask questions of, and to receive answers from, representatives of the Company
concerning the terms and conditions of this investment. Promus confirms that all
information requested by Promus with respect to Promus' decision to enter into
this Stock Purchase Agreement has been made available or delivered to Promus
prior to the date hereof.
(f) There is not pending, or to the knowledge of Promus threatened, any action,
suit, proceeding, inquiry or investigation against Promus or any of its officers
or directors before or brought by any court or governmental agency or body or
board of arbitrators which could adversely affect the consummation of the
transactions contemplated by this Stock Purchase Agreement.
(g) Assuming the accuracy of the representations of the Company set forth in
Section 7 hereof, at the time of each purchase of Common Stock by Promus
hereunder, each consent, approval, authorization, order, license, certificate,
permit, registration, designation or filing by or with any governmental agency
or body necessary for Promus to purchase the Common Stock hereunder, the
execution, delivery and performance of this Stock Purchase Agreement, and the
consummation by Promus of
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the transactions contemplated hereby will have been made or obtained and will be
in full force and effect.
The foregoing representations and warranties are true and accurate as of the
date hereof and will be true as of each date of closing of a purchase and sale
of Common Stock hereunder. Promus shall deliver to the Company on the date of
each purchase of Common Stock hereunder a certificate executed by a duly
authorized officer of Promus confirming that such representations and warranties
are true and correct as of such date.
7. Representations and Warranties of the Company and the Partnership. (a)
The Company and the Partnership hereby represent and warrant (each as to
itself) to Promus as follows:
(i) The Company and the Partnership have full legal right, power and authority
to enter into this Stock Purchase Agreement and to consummate the transactions
contemplated herein. This Stock Purchase Agreement has been duly authorized by
all necessary action on behalf of the Company and the Partnership, and
constitutes the valid and binding obligation of the Company and the Partnership,
enforceable in accordance with its terms, except as may be limited or otherwise
affected by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally.
(ii) The issuance of Common Stock pursuant to this Stock Purchase Agreement has
been validly authorized by the Company. When issued to Promus upon receipt from
Promus of the Purchase Price therefor, the shares of Common Stock issuable
hereunder will be validly issued, fully paid, nonassessable shares of Common
Stock of the Company.
(iii) The issuance of the Common Stock to be issued to Promus hereunder or the
resale of such Common Stock by Promus will be registered under an effective
registration statement under the Securities Act.
(iv) Neither the issuance, sale and delivery to Promus of the Common Stock, nor
the execution, delivery and performance of this Agreement, nor the consummation
of the transactions contemplated hereby by the Company and the Partnership will
conflict with or result in a breach or violation of any of the terms and
provisions of, or (with or without the giving of notice or passage of time or
both) constitute a default under, any agreement to which either the Company or
the Partnership is a party, the charter or bylaws of the Company or the
organizational documents of the Partnership, any indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to which
either the Company or the Partnership is a party or to which any of
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their properties or other assets is subject, or any applicable statute,
judgment, decree, rule or regulation of any court or governmental agency or body
applicable to either the Company or the Partnership or their assets, or result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or the Partnership.
(v) No consent, license, permit or filing with or approval by any governmental
authority or any other person or entity is required in connection with the
Company's or the Partnership's execution, delivery and performance of this Stock
Purchase Agreement except such as has been obtained by the Company or the
Partnership.
(vi) No finder, broker, agent, financial advisor or other intermediary has acted
on behalf of the Company or the Partnership in connection with the purchase of
the Common Stock pursuant to this Stock Purchase Agreement or the negotiation or
consummation of the transactions hereunder.
(vii) There is not pending, or to the knowledge of the Company or the
Partnership threatened, any action, suit, proceeding, inquiry or investigation
against the Company or the Partnership or any of their officers or directors
before or brought by any court or governmental agency or body or board of
arbitrators which could adversely affect the consummation of the transactions
contemplated by this Stock Purchase Agreement.
(viii) Assuming the accuracy of the representations of Promus set forth in
Section 6 hereof, (a) the Common Stock will be issued, offered and sold to
Promus in compliance with all applicable laws (including, without limitation,
federal and state securities laws) and (b) at the time of each issuance and sale
of Common Stock to Promus hereunder, each consent, approval, authorization,
order, license, certificate, permit, registration, designation or filing by or
with any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery by the Company and the Partnership of the Common
Stock to Promus, the execution, delivery and performance of this Stock Purchase
Agreement, and the consummation by the Company and the Partnership of the
transactions contemplated hereby will have been made or obtained and will be in
full force and effect.
The foregoing representations and warranties are true and accurate as of the
date hereof and each of the Company and the Partnership shall deliver to Promus
on the date of each purchase of Common Stock hereunder a certificate executed by
a duly authorized officer of the Company and the Partnership confirming that
such representations and warranties are true and correct as of such date.
(b) The Partnership hereby represents and warrants to Promus that any Units
issued to Promus pursuant to Section 1(b) hereof will, upon payment by Promus of
the
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purchase price therefor, be validly issued, fully paid and nonassessable, shall
not obligate Promus to restore capital to the Partnership and shall not be
subject to preemptive or similar rights.
8. Miscellaneous.
(a) All notices or other communications given or made hereunder shall be in
writing and shall be delivered or mailed by registered or certified United
States mail, return receipt requested, postage prepaid:
(1) To Promus at 755 Crossover Lane, Memphis, Tennessee 38117, Attention:
Chief Financial Officer, with a copy to the same address, Attention:
General Counsel; and
(2) To the Company at 4735 Spottswood, Suite 102, Memphis, Tennessee
38117, Attention: Chairman of the Board, with a copy to David C. Wright,
Hunton & Williams, 2000 Riverview Tower, 900 South Gay Street, Knoxville,
Tennessee 37902.
(3) To the Partnership at 4735 Spottswood, Suite 102, Memphis, Tennessee
38117, Attention: Secretary, with a copy to David C. Wright, Hunton &
Williams, 2000 Riverview Tower, 900 South Gay Street, Knoxville, Tennessee
37902.
(b) NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE
PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL OF THE TERMS AND PROVISIONS
HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TENNESSEE (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), APPLICABLE
TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED THEREIN.
(c) This Agreement supersedes all other agreements or understandings, by and
among Promus and the Company with respect to the subject matter hereof, and
constitutes the entire agreement between the parties hereto with respect to the
subscription by Promus for shares of Common Stock of the Company and, pursuant
to Section 1(b), for Units of the Partnership. This Agreement may be amended
only by an instrument in writing executed by all parties.
(d) This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto.
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(e) All terms used herein shall be deemed to include the masculine and the
feminine and the singular and the plural as the context requires. Captions
herein are for convenience of reference only and shall not alter or affect the
meaning or construction of the paragraphs hereof to which they relate.
(f) The parties hereto agree to take all actions, including the entering into of
any documents, agreements or instruments, or amendments thereof, as may be
reasonably necessary or appropriate to effectuate the intent and purposes hereof
and consummate and make effective the transactions contemplated hereby.
(g) This Agreement may be executed in two or more counterparts, any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same Agreement.
(h) This Agreement may not be assigned by any party without the prior written
consent of each other party hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement on and as of the date first above written.
PROMUS HOTELS, INC.,
a Delaware corporation
By: /s/ Thomas L. Keltner
----------------------------------
Name: Thomas Keltner
Title: Senior Vice President-
Development
EQUITY INNS, INC.,
a Tennessee corporation
By: /s/ Phillip H. McNeill
----------------------------------
Name: Phillip H. McNeill, Sr.
Title: Chairman of the Board and Chief
Executive Officer
EQUITY INNS PARTNERSHIP, L.P.
By Equity Inns Trust, general partner
By: /s/ Phillip H. McNeill
----------------------------------
Name: Phillip H. McNeill, Sr.
Title: Chairman of the Board and Chief
Executive Officer
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