<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 31, 1996
--------------------------------------
Date of Report (Date of Earliest Event Reported)
EQUITY INNS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Tennessee 34-O-23290 62-1550848
- ---------------------------- ------------------- ------------------
(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
</TABLE>
4735 Spottswood
Suite 102
Memphis, Tennessee 38117
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(Address of Principal Executive Offices) (Zip Code)
(901) 761-9651
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
-------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On May 31, 1996, Equity Inns, Inc. (the "Company"), Equity
Inns Partnership, L.P. (the "Partnership") and Promus Hotels, Inc. ("Promus")
executed a Stock Purchase Agreement, pursuant to which Promus agreed to
purchase up to $15 million in newly issued shares of Common Stock from the
Company over the next three years as the Company develops or converts hotels to
Promus brand hotels, as follows: (A) 374,826 shares of Common Stock at a
purchase price of $11.50 per share at the time of closing of the Company's
acquisition from Promus of the Detroit (Northville), Michigan Hampton Inn hotel
and the Hartford (Windsor Locks), Connecticut Homewood Suites hotel which
closings occurred on May 31, 1996 and (B) an additional approximately $1.5
million of Common Stock which Promus will acquire at the time the Partnership
commences development of or acquires a hotel for conversion to a Promus brand
property, at a price per share equal to the fifteen day average closing price
for the Common Stock on The Nasdaq Stock Market immediately prior to the time
of purchase. Promus may elect to purchase up to a maximum of 869,565 shares of
Common Stock by notifying the Company before October 16, 1996 of its election
to purchase such shares at a purchase price of $11.50 per share. Promus has
agreed not to sell any shares of the Company's Common Stock purchased pursuant
to the Stock Purchase Agreement for a period of one year from the date of
acquisition of such shares of Common Stock without the prior written consent of
the Company. Simultaneously with the closing of the Stock Purchase Agreement
and the contemporaneous closings of the acquisitions of the Hampton Inn hotel
in Detroit (Northville), Michigan and the Homewood Suites hotel in Hartford
(Windsor Locks), Connecticut, described below, the Company issued 347,826
shares of its Common Stock to Promus in a direct public offering at the price
of $11.50 per share, which price per share represented the price to public in
the Company's third follow-on offering consummated on April 16, 1996.
Also on May 31, 1996, the Partnership and Trust Leasing, Inc.
(formerly named McNeill Hotel Co., Inc.), the lessee of the Company's hotels
(the "Lessee"), entered into a Development Agreement with Promus pursuant to
which (i) Promus agreed to sell to the Partnership four Homewood Suites hotels
under development by Promus in Clearwater, Florida, Phoenix (Camelback),
Arizona, Scottsdale, Arizona, and San Antonio, Texas (collectively, the "PHI
Development Hotels") for purchase prices aggregating approximately $362
million, subject to certain adjustments; (ii) the Partnership agreed to develop
one Hampton Inn & Suites hotel in Bartlett, Tennessee; (iii) Promus agreed to
give the Partnership a right of offer to develop up to three additional
Promus-brand hotel properties (the "Additional Hotels") approved by Promus for
development each year for the next four years; (iv) the Partnership agreed to
lease the hotels described above to the Lessee and the Lessee agreed to enter
into Management Agreements with Promus, each for a term corresponding to the
term of the hotel lease; and (v) the Partnership agreed to use its reasonable
best efforts to develop or acquire up to $100 million of Promus brand hotel
properties over the next four years, including the PHI Development Hotels, the
Bartlett hotel, the Detroit and Hartford hotels and the Additional Hotels.
On May 31, 1996, the Partnership completed the acquisitions of the
125-room Hampton Inn hotel in Detroit (Northville), Michigan and the 132-suite
Homewood Suites hotel in Hartford (Windsor Locks), Connecticut from Promus. The
aggregate purchase prices for these hotels were approximately $18.9 million,
which was paid through borrowings under the Company's line of credit and the
proceeds from Promus' purchase of Common Stock pursuant to the Stock Purchase
Agreement. Neither the Detroit nor the Hartford hotel acquisitions constitute,
either individually or in the aggregate, acquisitions of a "significant amount
of assets" as defined under Item 2 of Form 8-K. Both hotels will be leased by
the Partnership to the Lessee pursuant to Percentage Leases which provide for
rent based, in part, on the room revenues from the hotels, and both hotels will
be managed on behalf of the Lessee pursuant to Management Agreements between
the Lessee and Promus.
2
<PAGE> 3
The following table sets forth (i) the annual Base Rent, (ii) the
annual Percentage Rent formulas, and (iii) the term of each lease for each of
the Detroit (Northville), Michigan and the Hartford (Windsor Locks),
Connecticut hotels.
<TABLE>
<CAPTION>
ACQUIRED EXPIRATION OF
HOTEL BASE RENT PERCENTAGE RENT FORMULA LEASE TERM
<S> <C> <C> <C>
Hampton Inn $623,500 37% of room revenue up to 5/31/2006
Detroit (Northville), $1,578,850, plus 73% of
Michigan room revenue in excess of
$1,578,850
Homewood Suites $879,500 37% of room revenue up to 5/31/2006
Hartford (Windsor Locks), $2,488,897 plus 75% of
Connecticut room revenue in excess of
$2,488,897
</TABLE>
ITEM 7. EXHIBITS.
10.1* Stock Purchase Agreement dated as of May 31, 1996 by and among Equity
Inns, Inc., Equity Inns Partnership, L.P. and Promus Hotels, Inc.
10.2* Development Agreement dated as of May 31, 1996 between Equity Inns
Partnership, L.P., Trust Leasing, Inc. and Promus Hotels, Inc.
10.3* Form of Management Agreement between Equity Inns Partnership, L.P.,
Trust Leasing, Inc. and Promus Hotels, Inc.
- --------------
* Filed herewith.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY INNS, INC.
June 7th, 1996 /s/ Howard A. Silver
-------------------------
Howard A. Silver
Vice President of Finance,
Secretary, Treasurer and
Chief Financial Officer
4
<PAGE> 5
EXHIBIT INDEX
10.1* Stock Purchase Agreement dated as of May 31, 1996 by and among Equity
Inns, Inc., Equity Inns Partnership, L.P. and Promus Hotels, Inc.
10.2* Development Agreement dated as of May 31, 1996 between Equity Inns
Partnership, L.P., Trust Leasing, Inc. and Promus Hotels, Inc.
10.3* Form of Management Agreement between Equity Inns Partnership, L.P.,
Trust Leasing, Inc. and Promus Hotels, Inc.
- --------------
* Filed herewith.
5
<PAGE> 1
EXHIBIT 10.1
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:
<PAGE> 2
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:
<TABLE>
<CAPTION>
Hotel No. of Rooms Number of Shares
----- ------------ ----------------
<S> <C> <C>
Homewood Suites 123 $1,537,500 divided by the
Phoenix-Camelback, Arizona Purchase Price
Homewood Suites 114 $1,425,000 divided by the
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
</TABLE>
(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.
<PAGE> 3
(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
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:
(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
<PAGE> 4
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.
(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.
<PAGE> 5
(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 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 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
<PAGE> 6
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 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.
<PAGE> 7
(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.
<PAGE> 8
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
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Name: Phillip H. McNeill, Sr.
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Title:Chairman of the Board and Chief
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Executive Officer
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<PAGE> 1
EXHIBIT 10.2
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement"), dated as of
______________________, 1996, made between PROMUS HOTELS, INC., a Delaware
corporation ("PHI"), EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited
partnership ("ENNS"), and TRUST LEASING, INC., a Tennessee corporation,
successor-in-interest to McNeill Hotel Co., Inc., a Tennessee corporation
("TLI"), recites and provides:
ARTICLE I
PURCHASE AND SALE OF
COMMON STOCK OF ENNS AND TLI
1.1 Purchase and Sale of ENNS Common Stock. PHI, Equity Inns,
Inc. (the "REIT") and TLI have entered into a Stock Purchase Agreement of even
date herewith providing for the purchase by PHI of shares of common stock of
the REIT, and under certain circumstances TLI, simultaneously with or in
consideration of the closing of ENNS' purchase of hotel properties pursuant to
this Agreement.
ARTICLE II
PURCHASE AND SALE OF HOTELS
2.1 Purchase and Sale of Hotels.
(a) General Provisions.
(1) PHI has agreed to sell and ENNS has agreed to
purchase a Homewood Suites in Hartford, Connecticut and a Hampton Inn in
Northville, Michigan (collectively, the "Developed Hotels") in accordance with
the terms of the Purchase and Sale Agreements attached hereto as Exhibits A and
B, respectively (collectively, the "Developed Hotels Purchase Agreements").
(2) PHI shall sell and ENNS shall purchase four
Homewood Suites to be developed by PHI in Clearwater, Florida,
Phoenix-Camelback, Arizona, Scottsdale, Arizona, and San Antonio, Texas
(collectively, the "PHI Development Hotels") in accordance with the terms of
purchase and sale agreements in a form to be negotiated in good faith by the
parties hereto (the "PHI Development Purchase Agreement").
(3) ENNS has purchased from PHI land in Bartlett,
Tennessee, on which ENNS shall develop a Hampton Inn and Suites (the "ENNS
Development Property"), in accordance with a purchase agreement attached hereto
as Exhibit C (the "Bartlett Agreement").
(4) The purchase prices for the Developed Hotels,
the PHI Development Hotels, and the ENNS Development Property (collectively,
the "Hotels") is as set forth on Exhibit D. The project budget for each Hotel
is set forth on Exhibit E.
(5) The Closing Dates for ENNS' acquisition of
the Developed Hotels shall be as set forth in the Developed Hotels Purchase
Agreements. The Closing Dates for each PHI Development Hotel shall be within
30 days subsequent to the date each such PHI Development Hotel is "Ready for
Occupancy" as such term is defined in the PHI Development Purchase Agreement.
(6) At each closing of a Hotel, the purchase
price for such Hotel shall be paid to PHI or its designee in immediately
available funds and PHI shall deliver good and marketable title to each Hotel
<PAGE> 2
including, if applicable, to the real estate, improvements, personal property
and inventory, free and clear of all liens, leases, and other encumbrances.
(7) ENNS shall have the right to terminate any or
all of the purchase agreements with respect to a Hotel or an Additional Hotel
in accordance with the terms of such agreements.
(b) Provisions regarding PHI Development Hotels.
(1) If actual development and construction costs
of PHI to complete construction of a PHI Development Hotel, exclusive of any
fees for management, development or similar fees, fees payable to PHI or other
soft costs (the "Excess Project Costs") exceeds the purchase price as set forth
on Exhibit D for such PHI Development Hotel, then PHI shall give written notice
to ENNS (the "Increased Cost Notice"). The Increased Cost Notice shall set
forth by line item the increased costs for development and construction of such
PHI Development Hotel, together with all available documentation and
information supporting such costs. ENNS shall elect by written notice to PHI,
no later than 30 days following the later of either (A) receipt by ENNS of the
Increased Cost Notice or (B) seven days following the date such PHI Development
Hotel is Ready for Occupancy as such term is defined in the PHI Development
Purchase Agreement, to (i) purchase such PHI Development Hotel for a purchase
price equal to the purchase price for such PHI Development Hotel as set forth
on Exhibit D plus the Excess Project Costs as set forth in the Increased Cost
Notice or (ii) terminate its right to acquire such PHI Development Hotel.
(2) In no event shall ENNS be entitled to any
savings if the actual costs of developing and constructing any PHI Development
Hotel is less than the purchase price set forth on Exhibit D for such PHI
Development Hotel.
(c) Provisions regarding the ENNS Development Property.
Subsequent to the acquisition by ENNS of the ENNS Development Property, PHI
shall cooperate in developing the hotel to be located on the ENNS Development
Property and agrees to consider granting a franchise to TLI to operate the
hotel as a Hampton Inn, Hampton Inn and Suites or a Homewood Suites hotel, as
applicable, upon completion of development. In no event shall PHI be entitled
to any savings if the actual costs of developing and constructing the ENNS
Development Property are less than the project budget set forth on Exhibit E
for the ENNS Development Property. PHI shall not be responsible for any costs,
fees or expenses that exceed either the purchase price or the project budget
for the ENNS Development Property set forth on Exhibits D and E.
ARTICLE III
PURCHASE OF ADDITIONAL HOTELS
3.1 Offer of Additional Hotels. For a period of four consecutive
12-month periods (the "Offer Period") beginning on the closing date of the
acquisition by ENNS of the first PHI Development Hotel, PHI shall use its
reasonable best efforts to offer to ENNS (each, an "Offer") the exclusive and
initial opportunity to purchase upon completion by PHI or to develop up to
three Homewood Suites hotels, Hampton Inn hotels or any other hotel franchise
brand offered by PHI (each, an "Additional Hotel"), which shall be in addition
to and exclusive of the Hotels. PHI shall not be required to offer more than
40% of any such projects. Notwithstanding the foregoing sentence, PHI shall be
under no obligation to provide any Offers to ENNS.
3.2 Notice of Offer. During the Offer Period, PHI shall submit to
ENNS with each Offer a description of the Additional Hotel and shall provide to
ENNS the same type of documentation presented to ENNS in connection with the
PHI Development Hotels, including without limitation, the purchase price for
the site for the Additional Hotel, marketing studies, development budgets,
operating budgets, financial projections, and, if available, title information
and property surveys (collectively, the "Offer Documentation"). ENNS shall
have 45 days following receipt of all the Offer Documentation to evaluate the
Offer Documentation. If ENNS fails to notify PHI in writing of its intent to
accept the Offer and, if applicable, to undertake either acquisition or
development of the Additional Hotel described in the Offer within 45 days
following receipt by ENNS of the Offer Documentation, then ENNS shall be deemed
to have waived its right to accept such Offer.
<PAGE> 3
3.3 Exercise of Offer. If ENNS notifies PHI that it will accept
an Offer, then simultaneously with such acceptance ENNS shall provide to PHI a
duplicate purchase agreement (an "Additional Hotel Agreement") executed by ENNS
in substantially the same form as the PHI Development Purchase Agreement if PHI
is to develop the Additional Hotel or in substantially the same form as the
Bartlett Agreement if ENNS is to develop the Additional Hotel with
modifications or amendments necessary to conform such Additional Hotel
Agreement to the specifics of such Additional Hotel including purchase price,
number of rooms and legal description. Within five days of receipt of such
Additional Hotel Agreement, PHI shall execute and return one Additional Hotel
Agreement to ENNS. The purchase price for an Additional Hotel to be developed
by PHI shall be equal to the actual development and construction costs of PHI
to complete construction of such Additional Hotel, exclusive of any fees for
management, development or similar fees, fees payable to PHI or other soft
costs. The purchase price for an Additional Hotel to be developed by ENNS
shall be negotiated in good faith between the parties.
3.4 Other Obligations of ENNS. During the Offer Period, ENNS
shall use its reasonable best efforts to expend an aggregate of $100,000,000 to
(a) develop hotels which will operate under the Promus brand name, including
the Additional Hotels and the Hotels and (b) acquire existing hotels for
conversion to Promus brand hotels, subject to the offer and identification of
acceptable development opportunities, adequate market conditions and
availability of capital to ENNS.
ARTICLE IV
LEASES AND MANAGEMENT
4.1 Leases. ENNS, as lessor, and TLI, as lessee, shall enter into
a percentage lease for each Hotel and each Additional Hotel in substantially
the same form as Exhibit F effective as of the date of ENNS' acquisition of
such Hotel or Additional Hotel, except that the percentage lease for the ENNS
Development Property shall be executed on the day that the hotel located on the
ENNS Development Property begins operation. PHI acknowledges that the rental
provisions in the percentage leases for the PHI Development Hotels, the ENNS
Development Property and the Additional Hotels will be negotiated on a
case-by-case basis by ENNS and TLI.
4.2 Management Agreements. Simultaneously with the execution of a
percentage lease for a Hotel or an Additional Hotel, TLI shall enter into a
management agreement with PHI for such Hotel or Additional Hotel for a period
of 10 years and otherwise in accordance with the terms of the management
agreement attached hereto as Exhibit G.
ARTICLE V
PHI'S REPRESENTATIONS AND WARRANTIES
To induce ENNS to enter into this Agreement and to purchase the Hotels
and the Additional Hotels, PHI hereby makes the following representations,
warranties and covenants, upon each of which PHI acknowledges and agrees that
ENNS is entitled to rely and has relied:
5.1 Organization and Power. PHI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite powers and all governmental licenses, authorizations,
consents and approvals to carry on its business as now conducted and to enter
into and perform its obligations hereunder and under any document or instrument
required to be executed and delivered on behalf of PHI hereunder.
5.2 Authorization and Execution. This Agreement has been duly
authorized by all necessary action on the part of PHI, has been duly executed
and delivered by PHI, constitutes the valid and binding agreement of PHI and is
enforceable in accordance with its terms. There is no other person or entity
whose consent is required in connection with PHI's performance of its
obligations hereunder.
<PAGE> 4
5.3 Noncontravention. The execution and delivery of, and the
performance by PHI of its obligations under, this Agreement do not and will not
contravene, or constitute a default under, any provision of applicable law or
regulation, the organizational documents governing PHI or any agreement,
judgment, injunction, order, decree or other instrument binding upon PHI, or
result in the creation of any lien or other encumbrance on any asset of PHI.
5.4 Litigation. There is no action, suit or proceeding, pending
or known to be threatened, against or affecting PHI in any court or before any
arbitrator or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (a "Governmental Body") which (a) in any manner raises any question
affecting the validity or enforceability of this Agreement or any other
agreement or instrument to which PHI is a party or by which it is bound and
that is to be used in connection with, or is contemplated by, this Agreement,
(b) could materially and adversely affect the business, financial position or
results of operations of PHI, or (c) could materially and adversely affect the
ability of PHI to perform its obligations hereunder, or under any document to
be delivered pursuant hereto.
5.5 Bankruptcy. PHI has not commenced any bankruptcy, insolvency
or similar proceeding, nor has any such proceeding been commenced against PHI.
5.6 Brokerage Commission. PHI has not engaged the services of,
nor is it or will it become liable to, any real estate agent, broker, finder or
any other person or entity for any brokerage or finder's fee, commission or
other amount with respect to the transactions described herein. PHI shall
indemnify, defend and hold ENNS and TLI harmless against all loss, liability
and expense, including reasonable attorneys' fees and costs, suffered by ENNS
and TLI due to a breach of the foregoing representation and warranty.
ARTICLE VI
ENNS' REPRESENTATIONS AND WARRANTIES
To induce PHI to enter into this Agreement and to sell the Hotels and
the Additional Hotels, ENNS hereby makes the following representations,
warranties and covenants, upon each of which ENNS acknowledges and agrees that
PHI is entitled to rely and has relied:
6.1 Organization and Power. ENNS is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Tennessee, and has all partnership powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now
conducted and to enter into and perform its obligations under this Agreement
and any document or instrument required to be executed and delivered on behalf
of ENNS hereunder.
6.2 Authorization and Execution. This Agreement has been duly
authorized by all necessary action on the part of ENNS, has been duly executed
and delivered by ENNS, constitutes the valid and binding agreement of ENNS and
is enforceable in accordance with its terms. There is no other person or
entity whose consent is required in connection with ENNS' performance of its
obligations hereunder.
6.3 Noncontravention. The execution and delivery of this
Agreement and the performance by ENNS of its obligations hereunder do not and
will not contravene, or constitute a default under, any provisions of
applicable law or regulation, ENNS' partnership agreement or any agreement,
judgment, injunction, order, decree or other instrument binding upon ENNS or
result in the creation of any lien or other encumbrance on any asset of ENNS.
6.4 Litigation. There is no action, suit or proceeding, pending
or known to be threatened, against or affecting ENNS in any court or before any
arbitrator or before any Governmental Body which (a) in any manner raises any
question affecting the validity or enforceability of this Agreement or any
other agreement or instrument to which ENNS is a party or by which it is bound
and that is to be used in connection with, or is contemplated by, this
Agreement, (b) could materially and adversely affect the business, financial
position or
<PAGE> 5
results of operations of ENNS, or (c) could materially and adversely affect the
ability of ENNS to perform its obligations hereunder, or under any document to
be delivered pursuant hereto.
6.5 Bankruptcy. ENNS has not commenced any bankruptcy, insolvency
or similar proceeding, nor has any such proceeding been commenced against ENNS.
6.6 Brokerage Commission. ENNS has not engaged the services of,
nor is it or will it become liable to, any real estate agent, broker, finder or
any other person or entity for any brokerage or finder's fee, commission or
other amount with respect to the transaction described herein. ENNS shall
indemnify, defend and hold PHI harmless against all loss, liability and
expense, including reasonable attorneys' fees and costs, suffered by PHI due to
a breach of the foregoing representation and warranty.
ARTICLE VII
TLI'S REPRESENTATIONS AND WARRANTIES
To induce PHI to enter into this Agreement and to sell the Hotels and
the Additional Hotels, TLI hereby makes the following representations,
warranties and covenants, upon each of which TLI acknowledges and agrees that
PHI is entitled to rely and has relied:
7.1 Organization and Power. TLI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee,
and has all corporate powers and all governmental licenses, authorizations,
consents and approvals to carry on its business as now conducted and to enter
into and perform its obligations under this Agreement and any document or
instrument required to be executed and delivered on behalf of TLI hereunder.
7.2 Authorization and Execution. This Agreement has been duly
authorized by all necessary action on the part of TLI, has been duly executed
and delivered by TLI, constitutes the valid and binding agreement of TLI and is
enforceable in accordance with its terms. There is no other person or entity
whose consent is required in connection with TLI's performance of its
obligations hereunder.
7.3 Noncontravention. The execution and delivery of this
Agreement and the performance by TLI of its obligations hereunder do not and
will not contravene, or constitute a default under, any provisions of
applicable law or regulation, TLI's articles of incorporation, bylaws or any
agreement, judgment, injunction, order, decree or other instrument binding upon
TLI or result in the creation of any lien or other encumbrance on any asset of
TLI.
7.4 Litigation. There is no action, suit or proceeding, pending
or known to be threatened, against or affecting TLI in any court or before any
arbitrator or before any Governmental Body which (a) in any manner raises any
question affecting the validity or enforceability of this Agreement or any
other agreement or instrument to which TLI is a party or by which it is bound
and that is to be used in connection with, or is contemplated by, this
Agreement, (b) could materially and adversely affect the business, financial
position or results of operations of TLI, or (c) could materially and adversely
affect the ability of TLI to perform its obligations hereunder, or under any
document to be delivered pursuant hereto.
7.5 Bankruptcy. TLI has not commenced any bankruptcy, insolvency
or similar proceeding, nor has any such proceeding been commenced against TLI.
7.6 Brokerage Commission. TLI has not engaged the services of,
nor is it or will it become liable to, any real estate agent, broker, finder or
any other person or entity for any brokerage or finder's fee, commission or
other amount with respect to the transaction described herein. TLI shall
indemnify, defend and hold PHI harmless against all loss, liability and
expense, including reasonable attorneys' fees and costs, suffered by PHI due to
a breach of the foregoing representation and warranty.
<PAGE> 6
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Completeness; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto. This Agreement may be
modified only by a written instrument duly executed by the parties hereto.
8.2 Assignments. Neither ENNS nor TLI may assign their rights
hereunder without the prior consent of PHI; provided, however, TLI may assign
its rights hereunder to a successor of substantially all of the assets of TLI.
PHI may assign its rights hereunder to an affiliate or a successor of
substantially all of the assets of PHI without the consent of ENNS or TLI
otherwise PHI may not assign its rights hereunder without the prior consent of
ENNS and TLI.
8.3 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
8.4 Days. If any action is required to be performed, or if any
notice, consent or other communication is given, on a day that is a Saturday or
Sunday or a legal holiday in the jurisdiction in which the action is required
to be performed or in which is located the intended recipient of such notice,
consent or other communication, such performance shall be deemed to be
required, and such notice, consent or other communication shall be deemed to be
given, on the first business day following such Saturday, Sunday or legal
holiday. Unless otherwise specified herein, all references herein to a "day"
or "days" shall refer to calendar days and not business days.
8.5 Governing Law. This Agreement and all documents referred to
herein shall be governed by and construed and interpreted in accordance with
the laws of the State of Tennessee.
8.6 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear on each counterpart
hereof. All counterparts hereof shall collectively constitute a single
agreement.
8.7 Severability. If any term, covenant or condition of this
Agreement, or the application thereof to any person or circumstance, shall to
any extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to other persons or
circumstances, shall not be affected thereby, and each term, covenant or
condition of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
8.8 Costs. Except as otherwise expressly provided herein, each
party hereto shall be responsible for its own costs in connection with this
Agreement and the transactions contemplated hereby, including without
limitation fees of attorneys, engineers and accountants.
8.9 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
transmitted by facsimile transmission, sent prepaid by Federal Express (or a
comparable overnight delivery service) or sent by the United States mail,
certified, postage prepaid, return receipt requested, at the addresses and with
such copies as designated below. Any notice, request, demand or other
communication delivered or sent in the manner aforesaid shall be deemed given
or made (as the case may be) when actually delivered to the intended recipient.
If to PHI: Promus Hotels, Inc.
785 Crossover Lane, Suite 141
Memphis, Tennessee 38117
Attn: Ronald Halpern, Esquire
Vice President and Deputy
General Counsel
Fax: 901/374-5050
<PAGE> 7
If to ENNS: Equity Inns Partnership, L.P.
c/o Equity Inns, Inc.
4735 Spottswood Avenue, Suite 102
Memphis, Tennessee 38117
Attn: Mr. Phillip H. McNeill, Sr.
Fax: 901/761-3945
If to TLI: Trust Leasing, Inc.
c/o Equity Inns, Inc.
4735 Spottswood Avenue, Suite 102
Memphis, Tennessee 38117
Attn: President
Fax: 901/761-3945
Or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or
designate different or other persons or entities to receive copies by notifying
the other party in a manner described in this Section.
8.10 Incorporation by Reference. All of the exhibits attached
hereto are by this reference incorporated herein and made a part hereof.
8.11 Survival. All of the representations, warranties, covenants
and agreements of PHI, ENNS, and TLI made in, or pursuant to, this Agreement
shall survive closing of the transactions described herein and shall not merge
into any deed delivered in connection with such transactions or any other
document or instrument executed and delivered in connection herewith.
8.12 Further Assurances. PHI, ENNS, and TLI each covenant and
agree to sign, execute and deliver, or cause to be signed, executed and
delivered, and to do or make, or cause to be done or made, upon the written
request of the other party, any and all agreements, instruments, papers, deeds,
acts or things, supplemental, confirmatory or otherwise, as may be reasonably
required by either party hereto for the purpose of or in connection with
consummating the transactions described herein.
8.13 No Partnership. This Agreement does not and shall not be
construed to create a partnership, joint venture or any other relationship
between the parties hereto.
8.14 Time of Essence. Time is of the essence with respect to every
provision hereof.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE> 8
IN WITNESS WHEREOF, PHI, ENNS, and TLI have caused this Agreement to
be executed in their names by their respective duly-authorized representatives.
PHI:
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PROMUS HOTELS, INC., a Delaware corporation
By: /s/ Thomas L. Keltner
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Name: Thomas L. Keltner
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Title: Sr. Vice President
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ENNS:
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EQUITY INNS PARTNERSHIP, L.P., a Tennessee limited
partnership
By: EQUITY INNS TRUST, a Maryland real estate
investment trust, its general partner
By: /s/ Phillip H. McNeill
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Name: Phillip H. McNeill
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Title: CEO
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TLI:
---
TRUST LEASING INC., a Tennessee corporation
By: /s/ M. Spence Ray
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Name: M. Spence Ray
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Title: Vice President
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<PAGE> 9
LIST OF EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Purchase and Sale Agreement - Homewood Suites, Hartford, Connecticut
Exhibit B - Purchase and Sale Agreement - Hampton Inn, Northville, Michigan
Exhibit C - Bartlett Purchase Agreement
Exhibit D - Allocation of Purchase Price Among Hotels
Exhibit E - Project Budget for PHI Development Hotels and ENNS Development Properties
Exhibit F - Percentage Lease Form
Exhibit G - Form of Management Agreement
</TABLE>
<PAGE> 1
EXHIBIT 10.3
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement"), made and entered into as of
this _____ day of May, 1996 ("Effective Date"), between (i) Trust Leasing,
Inc., a Tennessee corporation formerly known as McNeill Hotel Co., Inc.
("Lessee"), whose address is 4735 Spottswood, Suite 201, Memphis, Tennessee
38117, (ii) Equity Inns Partnership, L.P., a Tennessee limited partnership
("Owner"), whose address is 4735 Spottswood, Suite 102, Memphis, Tennessee
38117, and (iii) Promus Hotels, Inc., a Delaware corporation ("Manager"), whose
address is 755 Crossover Lane, Memphis, TN 38117, recites and provides as
follows.
RECITALS
WHEREAS, Owner has acquired the Hotel from Manager and agreed to lease
the Hotel (as defined below) to Lessee pursuant to a Percentage Lease in the
form attached hereto as Exhibit "B-1" (the Percentage Lease); and
WHEREAS, Lessee desires to engage Manager, and Manager desires to be
engaged by Lessee, to manage the Hotel on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
THE HOTEL
The subject matter of this Agreement is the management of the "Hotel,"
as defined in the Homewood Suites License Agreement attached hereto as Exhibit
"A" (hereinafter collectively referred to as the "License Agreement"). The
License Agreement shall exclusively govern Lessee's right to use the Homewood
Suites "System" (as defined in the License Agreement) in the operation of the
Hotel. Lessee hereby expressly acknowledges that it shall not derive any
rights in or to the use of the "Homewood Suites" name or the Homewood Suites
System from this Agreement.
ARTICLE 2.
TERM
SECTION 2.01. TERM. The term shall commence on the Effective Date
and, subject to the terms contained herein, continue for the term of years from
the Effective Date set forth on Exhibit "B" ("Term").
SECTION 2.02. EXTENSION OF TERM. The Term of this Agreement may be
extended in the manner set forth on Exhibit "B."
ARTICLE 3.
MANAGER'S OBLIGATIONS
SECTION 3.01. MANAGER'S OBLIGATIONS. Manager shall, on behalf of
Lessee and at Lessee's expense, direct the operation of the Hotel pursuant to
the terms of this Agreement and meeting the standards imposed under the License
Agreement. Manager shall be exclusively responsible for directing the
day-to-day activities of the Hotel and establishing all policies and procedures
relating to the management and operation of the Hotel. Except as specifically
otherwise provided, all cost(s) and expense(s) incurred by Manager in
association with the performance of the obligations hereinafter set forth shall
be operating costs and shall accordingly be paid from
<PAGE> 2
the Bank Account(s) as hereinafter defined in Section 3.01(iii) below depending
upon such categorization. Manager, during the Term, shall have the following
obligations:
(i) Personnel. Manager shall be the sole judge of the fitness
and qualification of all personnel working at the Hotel
("Hotel Personnel") and shall have the sole and absolute
right to hire, supervise, order, instruct, discharge and
determine the compensation, benefits and terms of
employment of all Hotel Personnel. All Hotel Personnel
shall be employees of Manager. Manager shall also have the
right to use employees of Manager, Manager's parent and
subsidiary and affiliated companies, not located at the
Hotel to provide services to the Hotel ("Off-Site
Personnel"). The expenses of Off-Site Personnel shall be
prorated based on the actual amount of time spent on Hotel
matters compared to total time worked. All expenses, costs
(including, but not limited to, salaries, benefits and
severance pay), liabilities and claims which are related to
Hotel Personnel and Off-Site Personnel shall be operating
expenses, as appropriate. The expenses of Off- Site
Personnel allocated to the Hotel will be included in the
annual operating or capital budget. Any such expenses
included in either the operating or capital budget shall be
classified as operating expenses or capitalized, as
appropriate.
Manager shall provide Lessee an opportunity to provide
input on each proposed general manager for the Hotel prior
to the appointment of said individual to the position of
Hotel general manager. Manager shall make a final decision
on the appointment of such individual to the position of
Hotel general manager.
(ii) Hotel Policies. Manager shall determine the terms of guest
admittance to the Hotel, establish room rates, and rates
for the use of rooms for commercial purposes. Lessee
through quarterly meetings will have the opportunity to
provide input on the setting of room rates, however, the
final decision will rest with the Manager.
(iii) Bank Accounts. Manager shall open and operate the Hotel's
bank accounts with funds provided Lessee based upon
pre-established annual budgets, established pursuant to
Section 3.01(v) below and agreed to by Lessee, Owner and
Manager. All sums received from the operation of the Hotel
and all items paid by Manager arising by virtue of Manager's
operation of the Hotel shall pass through bank account(s)
established by Manager in Lessee's name at such banks as
Manager and Lessee shall mutually agree ("Bank Account(s)");
only Manager's designees shall be exclusively authorized to
operate and draw from the Bank Account(s). Each fiscal
month Manager, on behalf of Lessee, shall disburse funds
from the Bank Account(s) in the order of priority and to the
extent available in accordance with the priority schedule
set forth on Exhibit "B".
(iv) Operating Budgets. Manager shall, not less than forty-five
(45) days prior to the commencement of each full fiscal
year, submit to Lessee and Owner, for their approval, a
proposed Operating Budget for the ensuing full or partial
fiscal year, as the case may be.
Lessee's and Owner's approval of the Operating Budget shall
not be unreasonably withheld and shall be deemed given
unless a specific written objection thereto is delivered by
Lessee or Owner to Manager within thirty (30) days after
submission. Lessee and Owner shall review the Operating
Budget on a line-by-line basis. To be effective, any
notice which disapproves a proposed Operating Budget must
contain specific objections in reasonable detail to
individual line items.
If the initial Operating Budget contains disputed budget
item(s), said item(s) shall be deemed adopted until Lessee
and Owner, on the one hand, and Manager, on the other hand,
have resolved the item(s) objected to by Owner or Lessee or
until the Accountant(s) (hereinafter defined in Section
10.02.2) have resolved the item(s) objected to by Lessee or
<PAGE> 3
Owner. Thereafter, if Lessee or Owner disapproves or
raises objections to a proposed Operating Budget in the
manner and within the time period provided therefor, and
Lessee and Owner, on the one hand, and Manager, on the
other hand, are unable to resolve the disputed or
objectionable matters submitted by Lessee or Owner prior to
the commencement of the applicable fiscal year, the
undisputed portions of the proposed Operating Budget shall
be deemed to be adopted and approved and the corresponding
line item contained in the Operating Budget for the
preceding fiscal year shall be adjusted as set forth herein
and shall be substituted in lieu of the disputed items in
the proposed Operating Budget. Those line items which are
in dispute shall be determined by increasing the preceding
fiscal year's corresponding line items by an amount
determined by Manager which does not exceed the Consumer
Price Index for all Urban Consumers published by the bureau
of Labor Statistics of the United States Department of
Labor, U.S. City Average, all items (1984-1986=100) for the
fiscal year prior to the fiscal year with respect to which
the adjustment to the line item is being calculated or any
successor or replacement index thereto. The resulting
Operating Budget obtained in accordance with the preceding
sentence shall be deemed to be the Operating Budget in
effect until such time as Manager, on the one hand, and
Lessee and Owner, on the other hand, have resolved the items
objected to by Lessee or Owner.
Manager shall revise the Operating Budget from time to
time, as necessary, to reflect any unpredicted significant
changes, variables or events or to include significant,
additional, unanticipated items of income or expense.
Manager shall be permitted to reallocate part or all of the
amount budgeted with respect to any line item to another
line item and to make such other modifications to the
Operating Budget as Manager deems reasonably necessary.
Lessee and Owner acknowledge that the Operating Budget is
intended only to be a reasonable estimate of the Hotel's
income and expenses for the ensuing fiscal year. Manager
shall not be deemed to have made any guarantee, warranty or
representation whatsoever in connection with the Operating
Budget;
(v) Operating Statement. Manager shall prepare and furnish
Lessee and Owner, with a detailed operating statement
setting forth the results of the Hotel's operations.
Manager shall use its best efforts to provide such reports
within ten (10) days after the end of each fiscal month,
and shall provide such reports in no event later than
fifteen (15) days after the end of each fiscal month.
Within forty-five (45) days after the end of each fiscal
year, Manager shall furnish Lessee and Owner with a
detailed operating statement setting forth the results of
the Hotel's operations for the fiscal year;
(vi) Capital Budgets. Manager shall, not less than sixty (60)
days prior to the commencement of each fiscal year, submit
to Lessee and Owner a recommended "Capital Budget" for the
ensuing full or partial fiscal year, as the case may be,
for furnishings, equipment and ordinary Hotel capital
replacement items as shall be required to operate the Hotel
in accordance with the standards referred to in the License
Agreement. Owner, Lessee and Manager shall meet to discuss
the proposed Capital Budget and Owner and Lessee shall be
required to make specific written objections to a proposed
Capital Budget in the manner and within the same time
periods specified in Section 3.02 (iv) with respect to an
Operating Budget. Lessee agrees not to unreasonably
withhold or delay its consent. If Owner and Lessee do not
approve the Capital Budget, then the Manager will be
entitled to spend up to four (4%) of adjusted gross revenue
for capital expenditures, until the disputed Capital Budget
has been settled in accordance with Subsection 10.02.1 (e)
of this Agreement.
(vii) General Maintenance Non-Capital Replacements. Manager
shall supervise the maintenance, repair and replacement of
non-Capital Replacements.
<PAGE> 4
(viii) Operating Equipment. Manager shall select and purchase all
operating equipment for the Hotel such as linens, utensils,
uniforms and other similar items.
(ix) Operating Supplies. Manager shall select and purchase all
operating supplies for the Hotel such as food, beverages,
fuel, soap, cleansing items, stationery and other
consumable items.
(x) Accounting Standards. Manager shall maintain the books and
records reflecting the operations of the Hotel in
conformity with generally accepted accounting practices
consistently applied, and shall adopt and follow the fiscal
accounting periods utilized by Manager in its normal course
of business. The Hotel-level generated accounting records
reflecting detailed day-to-day transactions of the Hotel's
operations, shall be kept by Manager at the Hotel or at the
Manager's regional offices or corporate headquarters, or at
such other location as Manager shall reasonably determine.
Manager shall receive a monthly fee for accounting services
provided to the Hotel ("Accounting Fee"). The Accounting
Fee may be adjusted by Manager from time to time as set
forth in the Annual Operating Budget. The Accounting Fee
is set forth on Exhibit "B."
(xi) Marketing and Advertising. Manager shall advertise and
promote the Hotel in coordination with the sales and
marketing programs of Manager and other Homewood Suites
hotels. Manager may participate in sales and promotional
campaigns and activities involving complimentary rooms.
Manager, in marketing and advertising the Hotel, shall have
the right to use marketing and advertising services of
employees of Manager and its parent and affiliated
companies not located at the Hotel. Manager may charge the
Hotel for personnel and other costs and expenses incurred
in providing such services; provided that (i) Manager's
allocation of such costs and expenses among hotels,
including the Hotel, shall be pro rated among all hotels
owned or managed by Manager and (ii) the annual allocation
of such costs and expenses to the Hotel shall not exceed
$10,000.00. Such costs and expenses shall be reflected in
the budgets and operating statements required to be
prepared and submitted by Manager under this Management
Agreement.
(xii) Permits and Licenses. Manager shall assist Owner and
Lessee in obtaining the various permits and licenses
required to operate the Hotel in accordance with the terms
of this Agreement and the License Agreement.
(xiii) Meetings. A representative of Manager's corporate staff
(at the officer level) shall meet with the representative
of Lessee quarterly to review and discuss the previous and
future quarter's operating statement, cash flow, budget,
capital expenditures, important personnel matters and the
general concerns of Lessee, Owner and Manager ("Quarterly
Meeting");
(xiv) Insurance. Manager or Lessee shall procure and maintain
throughout the Term the insurance coverages set forth on
Exhibit "D;"
(xv) Chain Services. Lessee and Manager contemplate that
certain services (collectively, "Chain Services"), such as
advertising, training and computer payroll, can be provided
for the Hotel better, more efficiently and more
economically on a central, regional or group basis rather
than on an individual basis. Manager may provide Chain
Services to the Hotel, and in such event the Hotel's fair
and equitable share of the cost thereof shall constitute an
operating expense, so long as (i) the cost of the Chain
Services shall be allocated on a fair and equitable basis
among the Hotel and the other hotels benefitting therefrom;
(ii) the basis for such allocation shall be explained by
Manager in each Annual Operating Budget; and (iii) both the
cost of the Chain Services and the allocation of a share of
that cost to the Hotel and such other hotels shall be
subject to audit by Lessee pursuant to the terms of Section
4.01(viii) of this Agreement.
<PAGE> 5
(xvi) G&A Expenses. No part of Manager's central office overhead
or general or administrative expenses, including the cost
of travel by Manager's corporate or regional officers or
for travel related to any other hotel operated by Manager
or its Affiliates, shall be deemed to be an operating
expense.
(xvii) Labor Relations. All employees working at the Hotel are
and will be employees of the Manager, and are not and will
not be employees of the Lessee, the Owner or any of their
affiliates. Prior to entering into any collective
bargaining agreement concerning any employees of the Hotel,
Manager will so inform Lessee, but Lessee shall have no
right of approval or disapproval, and Manager shall have
complete discretion and authority to negotiate, enter into
and perform such agreements. To the extent applicable,
Manager: (a) represents that it is an equal opportunity
employer as described in Section 202 of Executive Order
11246 dated September 24, 1965, as amended, and as such
agrees to comply with the provisions of Paragraphs 1
through 7 of Section 202 of said Executive Order during the
performance of this Operating Agreement, (b) agrees to
comply with the affirmative action requirements of Part
60.741 of Title 41, Code of Federal Regulations, with
respect to handicapped workers during the performance of
this Operating Agreement, (c) agrees to comply with the
affirmative action requirements of Part 60.250 of Title 41,
Code of Federal Regulations, with respect to Disabled
Veterans and Veterans of the Vietnam Era during the
performance of this Operating Agreement, and (d) shall
submit to Lessee in the form approved by the Director of
the Office of Federal Contract Compliance, U.S. Department
of Labor, a certification that Manager does not and will
not maintain any facilities that provide for their
employees in a segregated manner, or permit their employees
to perform their services at any location under its control,
where segregated facilities are maintained, and that Manager
will obtain a similar certification from its contractors. By
so agreeing, neither party intends to imply that the
aforementioned Executive Orders and federal regulations are
applicable to Manager.
(xxi) Capital Leases. Notwithstanding anything herein to the
contrary, all obligations and payments required of Owner or
the Lessee under any lease characterized as a capital
obligation under generally accepted accounting principles
shall be owed and paid by the Owner or Lessee, and not
Manager, and such obligation shall not be an operating or
capital expense charged to the Hotel for purposes of this
Agreement.
ARTICLE 4.
LESSEE'S OBLIGATIONS
SECTION 4.01. LESSEE'S OBLIGATIONS. During the Term, Lessee shall
have the obligations set forth below:
(i) License Agreement. Lessee shall comply in all respects
with all of the terms and conditions of the License
Agreement (specifically including, but not limited to,
Licensee's obligation to pay the fees, charges and
contributions set forth in the License Agreement) and keep
the License Agreement in full force and effect from the
Effective Date through the remainder of the Term. Nothing
in this Agreement shall be interpreted in a manner which
would relieve Lessee of any of its obligations under the
License Agreement.
(ii) Licenses and Permits. Manager shall obtain and maintain,
with Lessee's assistance and cooperation, all governmental
permissions, licenses and permits necessary to enable
Manager to operate the Hotel in accordance with the terms
of this Agreement and the License Agreement.
<PAGE> 6
(iii) Insurance. Lessee shall procure and maintain throughout
the Term the insurance coverages set forth on Exhibit "E".
Lessee may, should it elect to do so, delegate such
responsibility to Owner, although as between Lessee and
Manager, such obligation shall remain primarily the
obligation of Lessee, notwithstanding any such delegation.
(iv) Operating Funds. Lessee shall provide all funds necessary
to enable Manager to arrange and operate the Hotel in
accordance with the terms of this Agreement and the License
Agreement. Lessee agrees to deliver to Manager for deposit
into the Bank Account(s) on the date of purchase the amount
specified on Exhibit "B" which amount shall be the "Minimum
Balance" to be maintained by Lessee during the first year
of the Hotel's operation. The Minimum Balance thereafter
shall be no less than the Hotel's operating costs for the
preceding fiscal month. The Minimum Balance shall serve as
working capital for the Hotel's operations. Lessee agrees,
upon Manager's written request, to immediately furnish
Manager with sufficient funds to make up any deficiency in
the Minimum Balance.
(v) Capital Funds. Owner shall, consistent with the Annual
Budget approved by Owner (or as otherwise provided for
herein), expend such amounts for renovation programs,
furnishings, equipment and ordinary Hotel capital
replacement items as are required from time to time to (a)
maintain the Hotel in good order and repair; (b) comply
with the standards referred to in the License Agreement;
and (c) comply with governmental regulations and orders.
Owner shall cooperate with Manager in establishing
appropriate procedures and timetables for Owner to
undertake capital replacement projects.
(vi) Payments to Manager. Lessee shall promptly pay to Manager
all amounts due Manager under this Agreement.
(vii) Representative. Lessee, Owner and Manager shall each
appoint a representative to represent them in all matters
relating to this Agreement and/or the Hotel (each
"Representative"). The initial Representatives shall be
the individuals named on Exhibit "B." Manager shall have
the right to deal solely with the Representatives on all
such matters. Manager, Lessee and Owner may change their
respective Representatives, from time to time by providing
written notice to Manager in the manner provided for
herein. The Representatives shall attend Quarterly
Meetings. Notwithstanding the foregoing, Owner, Lessee or
Manager may request a meeting at any reasonable time to
discuss significant unforeseen issues.
(viii) Audits. Lessee and Owner shall have the right to have
their independent accounting firms examine, audit and copy
the books and records of the Hotel at any reasonable time
upon forty-eight (48) hours notice to Manager. Manager
agrees to cooperate in any such audits.
(ix) Quiet and Peaceable Operation. Lessee shall ensure that
Manager is able to peaceably and quietly operate the Hotel
in accordance with the terms of this Agreement, free from
molestation, eviction and disturbance by Lessee or by any
other person or persons claiming by, through or under
Lessee.
(x) Complimentary Rooms. The Lessee and Owner shall have the
right, within reason, to receive a reasonable number of
complimentary rooms.
(xi) Modifications to Percentage Lease Rentals. Owner and
Lessee agree that the base and/or percentage rent due under
the Percentage Lease referred to in Exhibit "B" and
attached hereto as Exhibit "B-1" will not be increased
(except for increases in the Consumer Price Index as
provided for in the Percentage Lease) without the express
written consent of Manager.
<PAGE> 7
ARTICLE 5.
MANAGEMENT FEE
SECTION 5.01. MANAGEMENT FEE. Manager is authorized by Lessee to pay
itself from the Bank Account(s) the Management Fees calculated and payable in
the manner set forth on Exhibit "C."
ARTICLE 6.
CLAIMS AND LIABILITY
SECTION 6.01. CLAIMS AND LIABILITY. Lessee and Manager mutually agree
for the benefit of each other to look only to the appropriate insurance
coverages in effect pursuant to this Agreement in the event any demand, claim,
action, damage, loss, liability or expense occurs as a result of injury to
person or damage to property regardless of whether any such demand, claim,
action, damage, loss, liability or expense is caused or contributed to, by or
results from the negligence of Lessee or Manager or their subsidiaries,
affiliates, employees, directors, officers, agents or independent contractors,
and regardless whether the injury to person or damage to property occurs in and
about the Hotel or elsewhere as a result of the performance of this Agreement.
Nevertheless, in the event the insurance proceeds are insufficient or there is
no insurance coverage to satisfy the demand, claim, action, loss, liability or
expense and the same did not arise out of the negligence or willful misconduct
of Manager, Lessee agrees, at its expense, to indemnify and hold Manager and
its subsidiaries, affiliates, officers, directors, employees, agents or
independent contractors harmless to the extent of the excess liability. If
such claim or liability arises out of the negligence or willful misconduct of
Manager, then Manager agrees at its expense to indemnify and hold Lessee, Owner
and their subsidiaries, affiliates, officers, directors, employees, agents or
independent contractors harmless to the extent of the excess liability.
SECTION 6.02. SURVIVAL. The provisions of this Article 6 shall
survive any cancellation, termination or expiration of this Agreement and shall
remain in full force and effect until such time as the applicable statute of
limitations shall extinguish all demands, claims, actions, damages, losses,
liabilities or expenses which are the subject of the provisions of this Article
6.
ARTICLE 7.
CLOSURE, EMERGENCIES AND DELAYS
SECTION 7.01. EVENTS OF FORCE MAJEURE. If at any time during the Term
of this Agreement it becomes necessary, in Manager's opinion, to cease
operation of the Hotel in order to protect the Hotel and/or the health, safety
and welfare of the guests and/or employees of the Hotel for reasons beyond the
reasonable control of Manager, such as, but not limited to, acts of war,
insurrection, civil strife and commotion, labor unrest, governmental
regulations and orders, shortage or lack of adequate supplies or lack of
skilled or unskilled employees, contagious illness, catastrophic events or acts
of God ("Force Majeure"), then in such event or similar events Manager may
close and cease operation of all or any part of the Hotel, reopening and
commencing operation when Manager deems that such may be done without jeopardy
to the Hotel, its guests and employees.
Manager and Lessee agree, except as otherwise provided herein and in
the event of Force Majeure causes Manager to cease operation of all of the
Hotel, that the time within which either party is required to perform an
obligation and Manager's right to manage the Hotel under this Agreement shall
be extended for a period of time equivalent to the period of delay caused by an
event of Force Majeure.
SECTION 7.02. EMERGENCIES. If a condition of an emergency nature
should exist which requires that immediate repairs be made for the preservation
and protection of the Hotel, its guests or employees, or to assure the
continued operation of the Hotel, Manager is authorized to take all actions and
to make all expenditures necessary to repair and correct such condition,
regardless of whether provisions have been made in the applicable budget for
such emergency expenditures. Expenditures made by Manager in connection with
an
<PAGE> 8
emergency shall be paid, in Manager's sole discretion, out of the Bank
Account(s). Lessee shall immediately replenish such funds paid from the Bank
Account(s).
ARTICLE 8.
CONDEMNATION AND CASUALTY
SECTION 8.01. CONDEMNATION. If the Hotel is taken in any eminent
domain, expropriation, condemnation, compulsory acquisition or similar
proceeding by a competent authority, this Agreement shall automatically
terminate as of the date of taking or condemnation. Any compensation due
Lessee for the taking or condemnation of the physical facility comprising the
Hotel shall be paid as set forth in the Percentage Lease. Manager, however,
with the full cooperation of Lessee, shall have the right to file a claim with
the appropriate authorities for the loss of Management Fee income for the
remainder of the Term and any extension thereof because of the condemnation or
taking, so long as such claim can be filed in a separate proceeding and does
not adversely affect the payment as set forth in the Percentage Lease. Subject
to the terms of the Percentage Lease, if only a portion of the Hotel is so
taken and the taking does not make it unreasonable or imprudent, in Manager's
and Lessee's opinion, to operate the remainder as a hotel of the type
immediately preceding such taking, this Agreement shall not terminate. Subject
to the terms of the Percentage Lease, any compensation shall be used, however,
in whole or in part, to render the Hotel a complete and satisfactory
architectural unit as a hotel of the same type and class as it was immediately
preceding such taking or condemnation.
SECTION 8.02. CASUALTY. In the event of a fire or other casualty,
Lessee shall comply with the terms of the License Agreement and this Agreement
shall remain in full force and effect so long as the License Agreement remains
in full force and effect, except that the Management Fee shall be abated until
any damage to the Hotel is repaired and the Hotel is open for business.
ARTICLE 9.
DEFAULT AND TERMINATIONS RIGHTS
SECTION 9.01. MANAGER DEFAULTS. Each of the following shall
constitute an Event of Default by Manager:
(i) The failure of Manager to pay any sum of money to Lessee
provided for herein when the same is payable, if such
failure is not cured within ten (10) days after written
notice specifying such failure is given by Lessee to
Manager. If any sum of money is not paid within ten (10)
days following the date same becomes due and payable under
this Agreement, such sum shall bear interest from the date
due until actually paid at a rate equal to the lesser of
twelve percent (12%) per annum or the highest annual
interest rate permitted by law, provided that any interest
so payable shall not constitute an operating expense under
this Agreement.
(ii) An assignment by Manager in violation of the provisions of
Section 11.05 hereof.
(iii) If Manager shall fail to keep, observe or perform any other
material covenant, agreement, term or provision of this
Agreement to be kept, observed or performed by Manager.
(iv) If Manager shall fail to maintain and operate the Hotel in
accordance with the standards required under Section 3.01
and such failure shall not be due to a refusal on the part
of Owner and Lessee to approve the Annual Operating Budget
submitted by Manager under Section 3.01(v), or Lessee's
failure to provide funds requested pursuant to the
provision of Section 4.01(vi) and shall continue for a
period of thirty (30) days after written notice by Lessee
to Manager specifying the matters or conditions which
constitute the basis for such Event of Default, provided
that if such failure is incapable of cure within such
thirty (30) day period and if Manager shall promptly
diligently and continuously pursue the cure
<PAGE> 9
thereof, then Manager shall have a period of ninety (90)
days after notice thereof by Lessee to Manager within which
to effectuate the cure. If, at the end of such ninety (90)
day period the cure has not been effectuated notwithstanding
Manager's diligent and continuous attempts to cure, then at
the request of Manager, Lessee shall extent the cure period
for up to an additional thirty (30) days, if in Lessee's
reasonable opinion, the default is capable of cure within
such additional period as Lessee may permit and the
extension will not have a materially negative affect on the
financial performance of the Hotel.
(v) If Manager shall apply for or consent to the appointment of
a receiver, trustee or liquidator of Manager or of all of a
substantial part of its assets, admit in writing its
inability to pay its debts as they come due, make a general
assignment for the benefit of creditors, take advantage of
any insolvency law, or file an answer admitting the material
allegations of a petition filed against Manager in any
bankruptcy, reorganization or insolvency proceeding, or if
an order, judgment or decree shall be entered by any court
of competition jurisdiction, on the application of a
creditor, adjudicating Manager bankrupt or insolvent or
approving a petition seeking reorganization of Manager or
appointing a receiver, trustee or liquidator of Manager or
of all of its assets or a decree to that effect shall
continue unstayed and in effect for any period of ninety
(90) consecutive days.
(vi) The filing of a voluntary petition in bankruptcy or
insolvency or a petition for liquidation or reorganization
under any bankruptcy law by Manager, or Manager shall
consent to, acquiesce in or fail timely to controvert an
involuntary petition in bankruptcy, insolvency or an
involuntary petition for liquidation or reorganization
filed against it.
(vii) The filing against Manager of a petition seeking
adjudication of Manager as insolvent or seeking liquidation
or reorganization or appointment of a receiver, trustee or
liquidator of all or a substantial part of Manager's
assets, if such petition is not dismissed within ninety
(90) days.
(viii) Failure of Manager (but excluding such a failure which
results from the default by Lessee in paying amounts
payable hereunder by Lessee) to maintain at all times
throughout the term hereof all of the insurance required to
be maintained by Manager hereunder, if such failure is not
cured within thirty (30) days after written notice
specifying such failure is given by Lessee to Manager.
(ix) If there shall occur an Event of Default or Termination
under the Percentage Lease due to Manager default
hereunder.
(x) If there shall occur a default under the License Agreement
which may, if uncured, permit Licensor to terminate the
License Agreement and such default shall continue beyond
applicable grace periods, if any.
SECTION 9.02. LESSEE DEFAULTS. Each of the following shall constitute
an Event of Default by Lessee:
(i) The failure of Lessee to pay or furnish to Manager any
money Lessee is required to pay or furnish to Manager in
accordance with the terms hereof on the date the same is
payable. If any sum of money is not paid within ten (10)
days following the date same becomes due and payable under
this Agreement, provided that any interest so payable shall
not constitute an operating expense under this Agreement.
(ii) If Lessee shall apply for or consent to the appointment of
a receiver, trustee or liquidator of Lessee of all or a
substantial part of its assets, or admit in writing its
inability to pay its debts as they come due, make a general
assignment for the benefit of creditors, take
<PAGE> 10
advantage of any insolvency law, or file an answer admitting
the material allegations of a petition filed against Lessee
in any bankruptcy, reorganization or insolvency proceeding,
or if an order, judgment or decree shall be entered by any
court of competent jurisdiction, on the application of a
creditor, adjudicating Lessee a bankrupt or insolvent or
approving a petition seeking reorganization of Lessee or
appointing a receiver, trustee or liquidator of Lessee or of
all or a substantial part of its assets, and such order,
judgment or decree shall continue unstayed and in effect for
any period of sixty (60) consecutive days.
(iii) The filing of a voluntary petition in bankruptcy or
insolvency or a petition for liquidation or reorganization
under any bankruptcy law by Lessee, or Lessee shall consent
to, acquiesce in or fail timely to controvert an
involuntary petition in bankruptcy, insolvency or an
involuntary petition for liquidation or reorganization
filed against it.
(iv) The filing against Lessee of a petition seeking
adjudication of Lessee as insolvent or seeking liquidation
or reorganization or appointment of a receiver, trustee or
liquidator of all or a substantial part of Lessee's assets,
if such petition is not dismissed within ninety (90) days.
(v) Failure of Lessee to maintain at all times throughout the
term hereof all of the insurance required to be maintained
by Lessee under Section 4.01(iii), if such failure is not
cured within thirty (30) days after written notice
specifying such failure is given by Manager to Lessee.
(vi) The failure of Lessee to perform, keep or fulfill any of
the other covenants, undertakings, obligations or
conditions set forth in this Agreement, or the failure of
Lessee to approve expenditures or to authorize procedures
necessary to maintain the standards of the Hotel in
accordance with the License Agreement, if such failure is
not cured within sixty (60) days after written notice
specifying such failure is given by Manager to Lessee,
provided, however, that if such failure is incapable of
cure within said sixty (60) day period, and Lessee proceeds
during such sixty (60) day period, and Lessee proceeds
during such sixty (60) day period to commence to cure with
all due diligence such failure until the same is cured,
then no Event of Default shall be in existence under this
Paragraph.
SECTION 9.03. TERMINATION UPON EVENT OF DEFAULT; OTHER REMEDIES. Upon
the occurrence of an Event of Default, the non-defaulting party may: (i)
terminate this Agreement, effective thirty (30) days after the giving of
written notice of termination to the defaulting party, provided that
termination may be effective immediately in the case of willful misconduct,
criminal conduct or misappropriation of funds; and (ii) pursue any and all
other remedies available to the non-defaulting party at law or in equity.
SECTION 9.04. MANAGER'S EARLY TERMINATION RIGHT. Manager, at its
option, may terminate this Agreement upon sixty (60) days written notice to
Lessee.
SECTION 9.05. RIGHT TO TERMINATE UPON SALE OR FORECLOSURE. Upon any
sale by Owner of the Hotel, Lessee shall have the right to terminate this
Agreement; provided, however, that the Lessee shall provide to Manager within
one-hundred twenty (120) days of such sale either (i) a cash amount equal to
50% of the fair market value (as determined under the Percentage Lease of the
Lessee's then-remaining leasehold estate in the Hotel as of the closing date of
the sale (the "Cash Amount") or (ii) written notice of its offer to have
Manager manage a substitute hotel facility (a "Substitute Hotel") under a
comparable Management Agreement; provided further, however, that if the Lessee
provides Manager with an offer to manage a Substitute Hotel and Manager rejects
the offer within fifteen (15) days, Lessee shall deliver the Cash Amount to
Manager within ten (10) days of such rejection. Lessee shall also have the
right to terminate this Agreement upon a foreclosure by, the taking of
possession by or a transfer in lieu of foreclosure to a holder of a lien on the
Hotel, without penalty to the
<PAGE> 11
Lessee. The rights of the Lessee hereunder may be assigned to any first
mortgagee of the Hotel and exercised by such assignee.
SECTION 9.06. EMPLOYMENT SOLICITATION RESTRICTION UPON TERMINATION.
Lessee and its affiliates and subsidiaries and their successors hereby agree
not to solicit the employment of the Hotel general manager or assistant general
manager at any time during the term of this Agreement without Manager's prior
written approval. Furthermore, Lessee and its affiliates and subsidiaries and
successors agree not to employ the Hotel's general manager or assistant general
manager for a period of 12 months after the termination or expiration of this
Agreement, without Manager's prior written approval. Manager agrees not to
employ any of Lessee's general or assistant managers for a period of twelve
(12) months after the termination or expiration of this Agreement, without
Lessee's prior written approval.
ARTICLE 10.
APPLICABLE LAW AND ARBITRATION
SECTION 10.01. APPLICABLE LAW. The interpretation, validity and
performance of this Agreement shall be governed by the procedural and
substantive laws of Tennessee and any and all disputes, except those
specifically referred to below, shall be brought and maintained within that
state. If any judicial authority holds or declares that the law or another
jurisdiction is applicable, this Agreement shall remain enforceable under the
laws of that jurisdiction.
SECTION 10.02. ARBITRATION OF FINANCIAL MATTERS.
SUBSECTION 10.02.1. MATTERS TO BE SUBMITTED TO
ARBITRATION. In the case of a dispute with respect to any of the following
matters, either party may submit such matter to arbitration which shall be
conducted by the Accountants (as hereinafter defined in Subsection 10.02.2);
(a) computation of the Management Fees;
(b) reimbursements due to Manager under the provisions of
Section 11.15;
(c) any adjustment in the Minimum Balance
under the provisions of Section 4.01(iv);
(d) any adjustment in dollar amounts of insurance
coverages required to be maintained; and
(e) any dispute concerning the approval of an Operating
Budget or Capital Budget.
All disputes concerning the above matters shall be submitted to the
Accountants. Notwithstanding the foregoing, the parties may, by mutual
agreement, elect to conduct any such arbitration before non-accountant
recognized experts in matters concerning the operation of hotels. The rules of
the American Arbitration Association will govern). Except as specified in
Section 10.02.3 hereof with respect to decisions that exceed the authority of
the Accountants, the decision of the Accountants with respect to any matters
submitted to them under this Subsection 10.02.1 shall be binding on Lessee,
Owner and Manager.
SUBSECTION 10.02.2. THE ACCOUNTANTS. The "Accountants"
shall be the lodging group or hospitality section of one of three firms of
certified public accountants of recognized national standing in the hotel
industry. Until otherwise agreed to by the parties, the three firms shall be
Arthur Andersen & Co., Coopers and Lybrand, L.L.P. and PKF Consulting, Inc.,
notwithstanding any existing relationships which may exist between Lessee and
such accounting firms or Manager and such accounting firms. The party desiring
to submit any matter to arbitration under Subsection 10.02.1 shall do so by
written notice to the other party, which notice shall set forth the items to be
arbitrated and such party's choice of one of the three accounting firms. The
party receiving such notice shall within fifteen (15) days after receipt of
such notice either approve such choice, or designate one of the remaining two
firms by written notice back to the first party, and the first party shall
within fifteen (15) days after receipt of such notice either approve such
choice or disapprove the same. If both parties shall have approved one of the
three (3) firms under the preceding sentence, then such firm shall be the
"Accountants" for the purposes of arbitrating the dispute; if the parties are
unable to agree on an accounting
<PAGE> 12
firm, then the third firm, which was not designated by either party, shall be
the "Accountants" for such purpose. The Accountants shall be required to render
a decision in accordance with the procedures described in Subsection 10.02.3
within fifteen (15) days after being notified of their selection. The fees and
expenses of the Accountants will be paid by the non-prevailing party.
SUBSECTION 10.02.3. PROCEDURES. In all arbitration
proceedings submitted to the Accountants, the Accountants shall be required to
agree upon and approve the substantive position advocated by Lessee or Manager
with respect to each disputed item. Any decision rendered by the Accountants
that does not reflect the position advocated by Lessee or Manager shall be
beyond the scope of authority granted to the Accountants and, consequently, may
be overturned by either party. All proceedings by the Accountants shall be
conducted in accordance with the Uniform Arbitration Act, except to the extent
the provisions of such act are modified by this Agreement or the mutual
agreement of the parties. Unless otherwise agreed, all arbitration proceedings
shall be conducted at the Hotel.
SECTION 10.03. PERFORMANCE DURING DISPUTES. It is mutually agreed
that during any kind of controversy, claim, disagreement or dispute, including
a dispute as to the validity of this Agreement, Manager shall remain in
possession of the Hotel as Manager; and Lessee and Manager shall continue their
performance of the provisions of this Agreement and its exhibits, but unless
otherwise agreed by the parties all funds shall be held in a separate escrow
account pending the resolution of such dispute. Either party shall be entitled
to injunctive relief from a civil court or other competent authority to
maintain possession in the event of a threatened eviction during any dispute,
controversy, claim or disagreement arising out of this Agreement.
ARTICLE 11.
GENERAL PROVISIONS
SECTION 11.01. AUTHORIZATION. Lessee and Manager represent and
warrant to each other that their respective corporations have full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. On request, each party shall furnish the other evidence of such
authority.
SECTION 11.02. RELATIONSHIP. None of Manager, Lessee and Owner, or
any combination thereof, shall be construed as joint venturers or partners of
each other by reason of this Agreement and none of them shall have the power to
bind or obligate the other except as set forth in this Agreement.
SECTION 11.03. MANAGER'S CONTRACTUAL AUTHORITY IN THE PERFORMANCE OF
THIS AGREEMENT. Manager is authorized to make, enter into and perform in the
name of and for the account of Lessee any contracts deemed necessary by Manager
to perform its obligations under this Agreement and which provide for an annual
payment not in excess of $10,000 unless otherwise provided for herein.
SECTION 11.04. FURTHER ACTIONS. Lessee and Manager agree to execute
all contracts, agreements and documents and to take all actions reasonably
necessary to comply with the provisions of this Agreement and the intent
hereof.
SECTION 11.05. SUCCESSORS AND ASSIGNS. The acquisition of Manager or
its parent company or Lessee or its parent company, or the acquisition of all
or substantially all of the assets of any such person by a third party shall
not constitute an assignment of this Agreement by Manager and this Agreement
shall remain in full force and effect between Lessee and Manager. Except as
herein provided, Manager shall not assign any of its obligations hereunder
without the prior written consent of Lessee and Owner, which shall not be
unreasonably delayed. Manager shall have the right to pledge or assign its
right to receive the Management Fees and/or any other monetary amounts payable
to Manager hereunder without the prior written consent of Lessee.
Lessee shall have the right to assign this Agreement to the person or
entity which has obtained title to the Hotel and a License Agreement.
<PAGE> 13
SECTION 11.06. NOTICES. All notices or other communications provided
for in this Agreement shall be in writing and shall be either hand delivered,
delivered by certified mail, postage prepaid, return receipt requested,
delivered by an overnight delivery service, or delivered by facsimile machine
(with an executed original sent the same day by an overnight delivery service),
addressed as set forth on Exhibit "B." Notices shall be deemed delivered on
the date that is four (4) calendar days after the notice is deposited in the
U.S. mail (not counting the mailing date) if sent by certified mail, or, if
hand delivered, on the date the hand delivery is made, or if delivered by
facsimile machine, on the date the transmission is confirmed. If given by an
overnight delivery service, the notice shall be deemed delivered on the next
business day following the date that the notice is deposited with the overnight
delivery service. The addresses given above may be changed by any party by
notice given in the manner provided herein.
SECTION 11.07. DOCUMENTS. Lessee shall furnish Manager copies of all
leases, title documents, property tax receipts and bills, insurance statements,
all financing documents (including notes and mortgages) relating to the Hotel
and such other non-confidential documents pertaining to the Hotel as Manager
shall reasonably request.
SECTION 11.08. DEFENSE. Manager shall defend and/or settle any claim
or legal action brought against Manager in connection with the operation of the
Hotel. Manager shall retain and supervise legal counsel, accountants and such
other professionals, consultants and specialists as Manager deems appropriate
to defend and/or settle any such claim or cause of action in connection with
the operation of the Hotel. All liabilities, costs, and expenses, including
attorneys' fees and disbursements, incurred in defending and/or settling any
such claim or legal action which are not covered by insurance and which were
not caused by the negligence of Manager, its officers, directors, employees, or
agents shall be paid by Lessee. The provisions of this Section 11.08 shall
survive the termination of this Agreement.
SECTION 11.09. WAIVERS. No failure or delay by Manager or Lessee to
insist upon the strict performance of any covenant, agreement, term or
condition of this Agreement, or to exercise any right or remedy consequent upon
the breach thereof, shall constitute a waiver of any such breach or any
subsequent breach of such covenant, agreement, term or condition. No covenant,
agreement, term, or condition of this Agreement and no breach thereof shall be
waived, altered or modified except by written instrument. No waiver of any
breach shall affect or alter this Agreement, but each and every covenant,
agreement, term and condition of this Agreement shall continue in full force
and effect with respect to any other then existing or subsequent breach
thereof.
SECTION 11.10. CHANGES. Any change to or modification of this
Agreement including, without limitation, any change in the application of this
Agreement to the Hotel, must be evidenced by a written document signed by both
parties hereto.
SECTION 11.11. CAPTIONS. The captions for each Article and Section
are intended for convenience only.
SECTION 11.12. SEVERABILITY. If any of the terms and provisions
hereof shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any of the other terms or provisions hereof.
If, however, any material part of a party's rights under this Agreement shall
be declared invalid or unenforceable (specifically including Manager's right to
receive its Management Fees), the party whose rights have been declared invalid
or unenforceable shall have the option to terminate this Agreement upon thirty
(30) days written notice to the other party, without liability on the part of
the terminating party.
SECTION 11.13. INTEREST. Any amount payable to Manager or Lessee by
the other which has not been paid when due shall accrue interest at the lesser
of: (a) the highest legal limit in the state in which the Hotel is located or
(b) two percentage points (2%) over the published base rate of interest charged
by Citibank, N.A., New York, New York, to borrowers on ninety (90) day
unsecured commercial loans, as the same may be changed from time to time.
<PAGE> 14
SECTION 11.14. REIMBURSEMENT. The performance by Manager of its
responsibilities under this Agreement are conditioned upon Lessee providing
sufficient funds consistent with the Annual Budget to Manager on a timely basis
to enable Manager to perform its obligations hereunder. Nevertheless, Manager
shall be entitled, at its option, to advance funds or contribute property, on
behalf of the Lessee, to satisfy obligations of Lessee in connection with the
Hotel and this Agreement. Manager shall keep appropriate records to document
all reimbursable expenses paid by Manager, which records shall be made
available for inspection by Lessee or its agents upon request. Lessee agrees
to reimburse Manager with interest upon demand for money paid or property
contributed by Manager to satisfy obligations of Lessee in connection with the
Hotel and this Agreement. Interest shall be calculated at the rate set forth
in Section 11.13 from the date Lessee was obligated to remit the funds or
contribute the property for the satisfaction of such obligation to the date
reimbursement is made.
SECTION 11.15. TRAVEL AND OUT-OF-POCKET EXPENSES. Manager shall be
reimbursed for all travel and out-of-pocket expenses of Manager's employees
reasonably incurred in the performance of this Agreement. Manager shall have
sole discretion, which shall not be unreasonably exercised, to determine the
necessity for such travel or other expenses.
SECTION 11.16. THIRD PARTY BENEFICIARY. This Agreement is
exclusively for the benefit of the parties hereto and it may not be enforced by
any party other than the parties to this Agreement and shall not give rise to
liability to any third party other than the authorized successors and assigns
of the parties hereto.
SECTION 11.17. BROKERAGE. Manager and Lessee represent and warrant
to each other that neither has sought the services of a broker, finder or agent
in this transaction, and neither has employed, nor authorized, any other person
to act in such capacity. Manager and Lessee each hereby agrees to indemnify
and hold the other harmless from and against any and all claims, loss,
liability, damage or expenses (including reasonable attorneys' fees) suffered
or incurred by the other party as a result of a claim brought by a person or
entity engaged or claiming to be engaged as a finder, broker or agent by the
indemnifying party.
SECTION 11.18. SURVIVAL OF COVENANTS. Any covenant, term or
provision of this Agreement which, in order to be effective, must survive the
termination of this Agreement, shall survive any such termination.
SECTION 11.19. ESTOPPEL CERTIFICATE. Manager and Lessee agree to
furnish to the other party, from time to time upon request, an estoppel
certificate in such reasonable form as the requesting party may request stating
whether there have been any defaults under this Agreement known to the party
furnishing the estoppel certificate and such other information relating to the
Hotel as may be reasonably requested.
SECTION 11.20. OTHER AGREEMENTS. Except to the extent as may now or
hereafter be specifically provided, nothing contained in this Agreement shall
be deemed to modify any other agreement between Lessee and Manager with respect
to the Hotel or any other property.
SECTION 11.21. PERIODS OF TIME. Whenever any determination is to be
made or action is to be taken on a date specified in this Agreement, if such
date shall fall on a Saturday, Sunday or legal holiday under the laws of the
state in which the Hotel is located, then in such event said date shall be
extended to the next day is not a Saturday, Sunday or legal holiday.
SECTION 11.22. PREPARATION OF AGREEMENT. This Agreement shall not be
construed more strongly against either party regardless of who is responsible
for its preparation.
SECTION 11.23. EXHIBITS. All exhibits attached hereto are
incorporated herein by reference and made a part hereof as if fully rewritten
or reproduced herein.
SECTION 11.24. ATTORNEY'S FEES AND OTHER COSTS. The parties to this
Agreement shall bear their own attorneys' fees in relation to negotiating and
drafting this Agreement. Should Lessee or Manager engage in
<PAGE> 15
litigation to enforce their respective rights pursuant to this Agreement, the
prevailing party shall have the right to indemnity by the nonprevailing party
for an amount equal to the prevailing party's reasonable attorneys' fees, court
costs and expenses arising therefrom.
SECTION 11.25. COUNTERPARTS. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original.
SECTION 11.27. CAPITALIZED TERMS. Capitalized terms used but
not defined herein shall be as defined in the Exhibits hereto, which shall be
incorporated by reference herein and deemed a part hereof as if fully set forth
herein.
[Signature Page to Follow]
<PAGE> 16
The parties have respectively caused this Agreement to be executed as
of the respective dates shown below.
LESSEE:
TRUST LEASING, INC.
__________________________ By: ________________________
Witness
Its: _____________________
MANAGER:
PROMUS HOTELS, INC.
__________________________ By: _________________________
Witness
Its: _____________________
OWNER:
EQUITY INNS PARTNERSHIP, L.P.
By Equity Inns Trust, General Partner
___________________________ By: _________________________
Witness
Its: _____________________
