|
EXHIBIT
10.2
EXECUTION COPY
STOCK PURCHASE
AGREEMENT
Stock Purchase Agreement,
dated as of April 27, 2005 (this “Agreement”), between
BIP REIT Private Limited, a company organized under the laws of the
Republic of Singapore (together with its successors and assigns,
the “Purchaser”), and Sunstone Hotel Investors, Inc., a
corporation organized under the laws of the State of Maryland (the
“Company”).
W I T N E S S E T
H:
WHEREAS, the Company desires
to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, shares of common stock, par value $0.01
per share, of the Company (“Common Stock”) upon the
terms and subject to the conditions set forth herein;
and
WHEREAS, simultaneously with
the consummation of the transactions contemplated by this
Agreement, the Company is entering into a Purchase and Sale
Agreement, dated as of the date hereof, by and between the Company
and Marriott International, Inc. (“Marriott”), attached
hereto as Exhibit A (the “Acquisition Agreement”),
pursuant to which the Company will acquire certain of the hotel
properties currently owned by CTF Holdings, Ltd. (the “CTF
Acquisition”) pursuant to the terms and conditions
thereof;
WHEREAS, simultaneously with
the consummation of the transactions contemplated by this
Agreement, the Company and the Purchaser are entering into an
escrow agreement, dated as of the date hereof, among the Company,
the Purchaser and Citibank, N.A., as Escrow Agent, attached hereto
as Exhibit B (the “Escrow Agreement”), pursuant to
which the Purchaser is delivering to the Escrow Agent an amount
equal to the Purchase Price (as defined herein) for the Shares by
wire transfer of immediately available funds and pursuant to which
the Company is delivering to the Escrow Agent one or more
certificates evidencing the Shares; and
WHEREAS, simultaneously with
the consummation of the transactions contemplated by this
Agreement, the Company and the Purchaser are entering into a
registration rights agreement, dated as of the date hereof, between
the Company and the Purchaser, attached hereto as Exhibit C (the
“Registration Rights Agreement”).
NOW, THEREFORE, in
consideration of the foregoing and the respective representations,
warranties, covenants, agreements, undertakings and obligations set
forth herein and other consideration the sufficiency and adequacy
of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Purchase and Sale .
(a) Upon the terms and
subject to the conditions set forth in this Agreement, upon the
execution of this Agreement, the Company is issuing and selling to
the Purchaser, and the Purchaser is purchasing from the Company,
3,750,000 shares (the “Shares”) of Common Stock at a
price per share of $20.65 (the “Per Share Price”), for
a total purchase price of $77,437,500 (the “Purchase
Price”).
(b) The closing of the sale
to, and purchase by, the Purchaser of the Shares (the
“Closing”) is occurring at 7:00 a.m., California time,
or as promptly as practicable thereafter, on the date hereof (the
“Closing Date”). Delivery of the applicable closing
documents and certificates is being made at the offices of Sullivan
& Cromwell LLP, 1888 Century Park East, Los Angeles, CA 90067
or such other place as has been agreed upon by the Company and the
Purchaser.
(c) Upon the earlier of (i)
the date of the closing of the CTF Acquisition, (ii) the date that
is one business day after receipt of notice from Purchaser or (iii)
the date that is two business days prior to the next record date
for the payment of dividends on the Common Stock, the Company will
deliver to the Escrow Agent one or more certificates (registered in
such names and in such denominations as the Purchaser has
requested) evidencing all of the Shares purchased hereunder, duly
endorsed in blank for transfer, with any transfer taxes payable in
connection with the transfer of the Shares to the Purchaser duly
paid, to be held by the Escrow Agent pursuant to the Escrow
Agreement.
(d) Within 5 business days of
the Closing, the Purchaser will deliver to the Escrow Agent the
Purchase Price in immediately available funds to an account
designated by the Escrow Agent, to be held by the Escrow Agent
pursuant to the Escrow Agreement.
(e) At the Closing, the
Company is delivering to the Purchaser legal opinions, dated as of
the Closing Date and addressed to the Purchaser, attached hereto as
Exhibit D (i) to the effect that the Shares have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, the Shares will be validly issued, fully
paid and non-assessable and (ii) to the effect that, commencing
with its initial taxable year ended December 31, 2004, the Company
has been organized in conformity with the requirements for
qualification and taxation as a “real estate investment
trust” (“REIT”) under the Internal Revenue Code
of 1986, as amended (the “Code”), and its method of
operation has enabled, and its proposed method of operation will
enable, it to meet, the requirements for qualification and taxation
as a REIT under the Code.
2
2. Representations and Warranties of
the Company.
The Company hereby represents
and warrants to the Purchaser as follows as of the Closing
Date:
(a) Organization of the
Company . The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of Maryland, has the corporate power and authority to own its
properties and to conduct its business as presently conducted as
described in the documents filed by the Company under the
Securities Act of 1933, as amended (the “Securities
Act”) and the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and is duly qualified to transact
business and is in good standing in the jurisdictions set forth on
Schedule 2(a) hereto, which are the only jurisdictions in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole (a “Material
Adverse Effect”).
(b) Organization of
Subsidiaries . Each “significant subsidiary” of the
Company (as such term is defined in Rule 1-02(w) of Regulation S-X)
(collectively, the “Significant Subsidiaries”) has been
duly incorporated or organized, is validly existing as a
corporation or limited liability company, as the case may be, in
good standing under the laws of the jurisdiction of its
incorporation or formation, has the power and authority (corporate
and otherwise) to own its properties and to conduct its business as
presently conducted as described in the documents filed by the
Company under the Securities Act and the Exchange Act and is in
good standing in each jurisdiction set forth on Schedule 2(b)
hereto, which are the only jurisdictions in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or be in
good standing would not have a Material Adverse Effect.
(c) Authority;
Validity . The Company has the requisite corporate power and
authority to execute, deliver and perform all of its obligations
under this Agreement, the Escrow Agreement and the Registration
Rights Agreement and to consummate the transactions contemplated
herein and therein. The Company has taken all necessary action,
corporate or otherwise, in order to execute, deliver and perform
all of its obligations under this Agreement, the Escrow Agreement
and the Registration Rights Agreement and to consummate the
transactions contemplated herein and therein. Each of this
Agreement, the Escrow Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its respective
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating
to or affecting creditors’ rights and to general equity
principles and except as rights to indemnity and contribution
contained in the Registration Rights Agreement may be limited by
state or federal securities laws or the public policy underlying
such laws.
3
(d) No Conflicts .
Neither the execution and delivery of this Agreement, the Escrow
Agreement or the Registration Rights Agreement by the Company, nor
the consummation by the Company of the transactions contemplated
hereby or thereby, including the issuance and sale of the Shares,
nor the compliance by the Company with all of the provisions of
this Agreement, the Escrow Agreement or the Registration Rights
Agreement and all other transactions herein and therein
contemplated by the Company, does or will: (i) conflict with, or
result in any breach of, or constitute a default under nor
constitute any event which (with notice, lapse of time, or both)
would constitute a breach of or default under (A) any provisions of
the charter (including, without limitation, the articles
supplementary) or bylaws or other organizational documents of the
Company or any Significant Subsidiary, (B) any provision of any
license, lease, indenture, mortgage, deed of trust, loan, credit,
operating agreement, property management agreement or other
agreement or instrument to which any of them is a party or by which
any of them or their respective properties or assets may be bound
or affected, including any agreement or instrument relating to the
CTF Acquisition, (C) any law or regulation binding upon or
applicable to the Company or any Significant Subsidiary or any of
their respective properties or assets or (D) any decree, judgment
or order applicable to the Company or any Significant Subsidiary;
or (ii) result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or assets of the Company or
any Significant Subsidiary.
(e) Consents, etc. No
approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any governmental authority
or agency or any securities exchange or any other person or entity
is necessary or required in connection with the execution and
delivery of this Agreement, the Escrow Agreement and the
Registration Rights Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby or thereby or
the enforcement hereof or thereof against the Company, other than
the filings with the Securities and Exchange Commission (the
“Commission”) required to comply with its obligations
under the Registration Rights Agreement. As of the Closing Date the
Company does not have assets the aggregate fair market value of
which is in excess of $53.1 million that are not “exempt
assets” as such term is defined under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated pursuant thereto.
(f) CTF Acquisition .
Each of the representations and warranties of the Company in the
Acquisition Agreement are true and correct in all material
respects. The Company has the requisite corporate power and
authority to execute, deliver and perform all of its obligations
under the Acquisition Agreement and to consummate the transactions
contemplated therein. The Company has taken all necessary action,
corporate or otherwise, in order to execute, deliver and perform
all of its obligations under the Acquisition Agreement and to
consummate the transactions contemplated therein. The Acquisition
Agreement has been duly executed and delivered by the Company and,
to the knowledge of the Company, Marriott, and assuming the due
authorization, execution and delivery thereof by Marriott,
constitutes a legal, valid and binding agreement of the Company
and, to the knowledge of the Company, Marriott, enforceable against
the Company and, to the
4
knowledge of the Company, Marriott in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors’ rights and
to general equity principles. Upon the consummation of the
transactions contemplated by the Acquisition Agreement, the Company
will own, subject to the terms and conditions of the Acquisition
Agreement, all of the assets to be acquired pursuant to the
Acquisition Agreement free and clear of any Encumbrances (as such
term is defined in the Acquisition Agreement).
(g) Capitalization
.
(i) Without giving effect to
the transactions contemplated by this Agreement, the authorized
capital stock of the Company consists of (i) 500,000,000 shares of
Common Stock, of which 34,533,321 shares were issued and
outstanding and (ii) 100,000,000 shares of preferred stock, of
which (a) 5,000,000 shares are designated as 8% Series A Cumulative
Redeemable Preferred Stock (the “Series A Preferred
Stock”), of which 4,100,000 are issued and outstanding and
(b) 750,000 shares are designated as 8.0% Series B Cumulative
Redeemable Preferred Stock (the “Series B Preferred
Stock”), all of which are issued and outstanding. The
outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and non-assessable,
free and clear of all liens, encumbrances, equities or claims. None
of the outstanding shares of capital stock of the Company are
entitled to or were issued in violation of preemptive or similar
rights of any securityholder in the Company. The authorized capital
stock of the Company conforms in all material respects to the
description thereof contained or incorporated by reference in the
documents filed by the Company under the Securities Act and the
Exchange Act.
(ii) Except for the shares of
Common Stock reserved for issuance (i) upon conversion of the
Common Units issued to the Contributing Entities in connection with
the Formation and Structuring Transactions and (ii) in connection
with the Company’s 2004 long-term incentive plan and senior
management incentive plan described in the SEC Documents, no shares
of Common Stock of the Company are reserved for any
purpose.
(h) Validity of the
Shares . The Shares have been duly authorized for issuance and
sale to the Purchaser pursuant to this Agreement and, when issued
and delivered in accordance with this Agreement, will be validly
issued, fully paid and non-assessable, free and clear of all liens,
encumbrances, equities or claims and free of restrictions on
transfer other than restrictions on transfer set forth under this
Agreement, the Company’s charter or the Escrow Agreement. The
issuance of the Shares to the Purchaser pursuant to this Agreement
will not be subject to any preemptive or similar rights. The
certificates to be
5
used to evidence the Shares are in
proper form and comply in all material respects with all applicable
legal requirements and the requirements of the charter and bylaws
of the Company.
(i) Subsidiary
Securities . All of the issued and outstanding shares of
capital stock or other ownership interests of each Significant
Subsidiary have been duly and validly authorized and issued, are
fully paid and are non-assessable and are owned directly or
indirectly by the Company or Sunstone Hotel Partnership, LLC, a
Delaware limited liability company (the “Operating
Partnership”) (other than the common membership interests
(the “Common Units”) of the Operating Partnership
issued to Sunstone Hotel Investors, L.L.C., Sunstone/WB Hotel
Investors IV, LLC, WB Hotel Investors, LLC and Sunstone/WB
Manhattan Beach, LLC (collectively, the “Contributing
Entities”) in connection with the transactions contemplated
by the Structuring and Contribution Agreement dated as of July 2,
2004, by and among the Operating Partnership, the Company, the
Contributing Entities and Alter SHP, LLC (the “Formation and
Structuring Transactions”)).
(j) Registration
Rights . Except as disclosed in the Company’s definitive
Proxy Statement for the 2005 Annual Meeting of Stockholders filed
with the Commission on April 8, 2005 under “Certain
Relationships and Related Transactions” or on Schedule 2(j)
hereto, there are no contracts, agreements or understandings
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company and
there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require
the Company to include such securities with any shares of Common
Stock registered pursuant to a registration statement filed by the
Company.
(k) No Violations .
Neither the Company nor any of its Significant Subsidiaries is in
(i) violation of its organizational documents, or (ii) default
(whether with or without the giving of notice or passage of time or
both) in the performance or observance of any obligation,
agreement, covenant or condition contained in any lease, indenture,
mortgage, deed of trust, loan agreement, operating agreement,
property management agreement, franchise agreement or other
agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except in the case of clause
(ii) to the extent that such default would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(l) SEC Documents .
Since October 27, 2004, the Company has timely filed, and as of the
Closing the Company will have timely filed, all reports, schedules,
forms, statements and other documents required to be filed by it
with the Commission pursuant to the reporting requirements of the
Exchange Act (all of the foregoing filed prior to the Closing and
after October 27, 2004, and all exhibits included therein and
financial
6
statements and schedules thereto and
documents incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). As of their
respective filing dates, the SEC Documents complied with the
requirements of the Exchange Act or the Securities Act, as the case
may be, and the rules and regulations of the Commission promulgated
thereunder applicable to the SEC Documents and none of the SEC
Documents, at the time they were filed with the Commission,
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements and schedules, including the notes thereto, filed with
the Commission as a part of the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2004 present
fairly in all material respects the combined financial position of
the entities presented therein, as of and at the dates indicated
and the results of their operations and cash flows for the periods
specified. Such financial statements and schedules have been
prepared in conformed with accounting principles generally accepted
in the United States applied on a consistent basis through the
periods specified, except as may be expressly stated in the related
notes thereto.
(m) Changes . Except
as disclosed in the SEC Documents or on Schedule 2(k)
hereto:
(i) since December 31, 2004,
there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the SEC Documents; and
(ii) neither the Company nor
any Significant Subsidiary has sustained since the date of the
latest audited financial statements included in the SEC Documents
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the SEC Documents.
(n) Properties
.
(i) The Company and its
subsidiaries have good and marketable title in fee simple to, or a
valid leasehold interest in, all real property described in the SEC
Documents as owned by them (the “Company Properties”),
and good and marketable title to all personal property owned by
them that are material to the business of the Company, in each case
free and clear of all liens, encumbrances, security interests and
defects except such as are described in the SEC Documents or such
as do not materially affect the value of such property and do not
materially
7
interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and any Company Property, buildings and equipment
held under lease by the Company and its subsidiaries and described
in the SEC Documents are held by them under valid, subsisting and
enforceable leases (such leases, the “Company Leases”)
with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries. Neither
the Company nor any of its subsidiaries is in default under any of
the Company Leases, relating to, or any of the mortgages or other
security documents or other agreements encumbering or otherwise
recorded against, the Company Properties that would reasonably be
expected to have a Material Adverse Effect, and neither the Company
nor any of its subsidiaries knows of any event, which but for the
passage of time or the giving of notice, or both, would constitute
a default under any of such documents or agreements that would
reasonably be expected to have a Material Adverse
Effect.
(ii) The Company or its
subsidiaries have either (i) an owner’s or leasehold title
insurance policy, from a nationally recognized title insurance
company licensed to issue such policy, on each Company Property
located, as the case may be, by the Company or its subsidiaries,
that insures the fee or leasehold interest, as the case may be, in
the Company Properties, which policies include only commercially
reasonable exceptions, and with coverage in amounts at least equal
to amounts that are generally
|
