EXHIBIT 1.1
EQUITY INNS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
March 25, 2002
XXXXXXX XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Equity Inns, Inc., a Tennessee corporation (the "Company"), proposes to
issue and sell an aggregate of 3,100,000 shares (the "Firm Shares") of its
Common Stock, $.01 par value per share (the "Common Stock"), to Xxxxxxx Xxxxx
Barney Inc. (the "Underwriter"). The Company also proposes to sell to the
Underwriter, upon the terms and conditions set forth in Section 2 hereof, up to
an additional 465,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"Shares."
Upon consummation of the transactions contemplated hereby and
application of the net proceeds from the sale of the Firm Shares, the Company,
through its wholly-owned subsidiary, Equity Inns Trust, a Maryland real estate
investment trust (the "Trust"), will own an approximate 97.1% general
partnership interest in Equity Inns Partnership, L.P. (the "Partnership"), a
Tennessee limited partnership and will own 100% of the Series A Preferred Units
(as defined herein) of the Partnership. The Company, through the Partnership and
its other subsidiaries, currently owns 96 hotels (the "Hotels"). Other
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Registration Statement (as defined herein).
The Company wishes to confirm as follows its agreement with you in
connection with your purchase of the Shares.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 333-48169) under the Act, including a prospectus relating to the Company's
common stock, $.01 par value per share, and preferred stock, $.01 par value per
share, and such amendments to such registration statement as
may have been required prior to the date hereof have been filed with the
Commission, and such amendments have been similarly prepared. Such registration
statement and any post-effective amendments thereto have become effective under
the Act. The Company also has filed, or proposes to file, with the Commission
pursuant to Rule 424(b) under the Act, a prospectus supplement specifically
relating to the Shares.
The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it became effective, as supplemented or amended prior to the
execution of this Agreement, including all information (if any) deemed to be a
part of such registration at the time it became effective pursuant to Rule 430A
under the Act. If it is contemplated, at the time this Agreement is executed,
that a post-effective amendment to the registration statement will be filed and
must be declared effective before the offering of the Shares may commence, the
term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post- effective amendment. The term "Prospectus" as
used in this Agreement means the base prospectus in the form included in the
Registration Statement at the time it was declared effective (the "Base
Prospectus") together with the prospectus supplement relating to the offering of
the Shares dated the date hereof in the form first filed with the Commission on
or after the date hereof pursuant to Rule 424(b) under the Act. Any reference in
this Agreement to the registration statement, the Registration Statement, the
Base Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Registration Statement or the Prospectus,
as the case may be, and any reference to any amendment or supplement to the
Registration Statement or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term "Incorporated Documents" means the documents which are
incorporated by reference in the Registration Statement, the Prospectus, or any
amendment or supplement thereto during the period the Prospectus is required to
be delivered in connection with the sale of the Shares by the Underwriter or any
dealer.
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriter and, upon the basis of the representations, warranties and
agreements of the Company, the Trust and the Partnership contained in this
Agreement and subject to all the terms and conditions set forth in this
Agreement, the Underwriter agrees to purchase from the Company, at a purchase
price of $7.58 per Share (the "Purchase Price Per Share"), the Firm Shares.
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriter, and, upon the basis of the
representations, warranties and agreements of the Company, the Trust and the
Partnership contained in this Agreement and subject to all the terms and
conditions set forth in this Agreement, the Underwriter shall have the right to
purchase from the Company, at the Purchase Price Per Share, pursuant to an
option (the "Over-allotment Option")
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which may be exercised at any time and from time to time prior to 9:00 P.M., New
York City time, on the 30th day after the date of the Prospectus (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange (the "NYSE") is open for trading),
up to an aggregate of 465,000 Additional Shares. Additional Shares may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares.
3. Terms of Public Offering. The Company has been advised that
you propose to make a public offering of the Shares as soon after this Agreement
has become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriter of and payment for the Firm Shares shall be made at the office of
King & Spalding, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, at 10:00 A.M.,
New York City time, on March 28, 2002 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between you
and the Company.
Delivery to the Underwriter of and payment for any Additional Shares to
be purchased by the Underwriter shall be made at the office of King & Spalding
mentioned above at such time and on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you to the Company of your determination to purchase a number,
specified in such notice, of Additional Shares. The place of closing for any
Additional Shares and the Option Closing Date for such Shares may be varied by
agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by wire transfer of immediately available funds to the Company.
5. Agreements of the Company. The Company agrees with the
Underwriter as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the
Registration Statement to be declared effective before the offering of
the Shares may commence, the Company will endeavor to cause such
post-effective amendment to become effective as soon as possible and
will advise you
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promptly and, if requested by you, will confirm such advice in writing,
when such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: of any request
by the Commission for amendment of or a supplement to the Registration
Statement or the Prospectus or for additional information; of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction or
the initiation of any proceeding for such purpose; and within the
period of time referred to in paragraph (f) below, of any change in the
Company's condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the happening of
any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or
supplemented) untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectus (as then
amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or necessary
in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time
the Commission shall issue any stop order suspending the effectiveness
of the Registration Statement, the Company will make every reasonable
effort to obtain the withdrawal of such order at the earliest possible
time.
(c) The Company will furnish to you, without charge and
upon your request, (i) such number of conformed copies of the
Registration Statement as originally filed and of each amendment
thereto, but without exhibits, as you may reasonably request, (ii) such
number of copies of the Incorporated Documents, without exhibits, as
you may reasonably request, and (iii) one copy of the exhibits to the
Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectus or, prior to the end of the period of time referred to in
the first sentence in subsection (e) below, file any document which
upon filing, becomes an Incorporated Document, of which you shall not
previously have been advised or to which, after you shall have received
a copy of the document proposed to be filed, you shall reasonably
object.
(e) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period
as in the opinion of counsel for the Underwriter a prospectus is
required by the Act to be delivered in connection with sales by the
Underwriter or any dealer, the Company will expeditiously deliver to
the Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as you may
reasonably request. Subject to the provisions of subsection (g) below,
the Company consents to the use of the Prospectus (and of any amendment
or supplement
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thereto) in accordance with the provisions of the Act and with the
securities or Blue Sky laws or real estate syndication laws of the
jurisdictions in the United States in which the Shares are offered by
the Underwriter and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period
of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by the Underwriter or any dealer. If
during such period of time any event shall occur that in the judgment
of the Company or in the opinion of counsel for the Underwriter is
required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the
Act or any other law, the Company will forthwith prepare and, subject
to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and
will expeditiously furnish to the Underwriter and dealers a reasonable
number of copies thereof. In the event that the Company and you agree
that the Prospectus should be amended or supplemented, the Company, if
requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
(f) The Company will cooperate with you and with counsel
for the Underwriter in connection with the registration or
qualification of the Shares for offering and sale by the Underwriter
and by dealers under the securities or Blue Sky laws or real estate
syndication laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary
or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to
take any action which would subject it to service of process in suits,
other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.
(g) The Company will make generally available to its
security holders a consolidated earnings statement, which need not be
audited, which shall satisfy the provisions of Section 11(a) of the
Act.
(h) The Company will furnish to its shareholders, as soon
as practicable after the end of each respective period, annual reports
(including financial statements audited by independent public
accountants), and during the period of three years hereafter, the
Company will furnish to you concurrently with mailing, a copy of each
report of the Company mailed to shareholders, and from time to time
such other information concerning the Company as you may reasonably
request.
(i) If this Agreement shall terminate or shall be
terminated after execution by the Underwriter because of any failure or
refusal on the part of the Company to comply with the
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terms or fulfill any of the conditions of this Agreement to be complied
with or fulfilled by the Company, the Company agrees to reimburse you
for all reasonable out-of-pocket expenses (including fees and expenses
of your counsel) incurred by you in connection with this Agreement.
(j) The Company will apply the net proceeds from the sale
of the Shares substantially in accordance with the description set
forth under the caption "Use of Proceeds" in the Prospectus.
(k) The Company will timely file the Prospectus pursuant
to Rule 424(b) under the Act and will advise you or your counsel of the
time and manner of such filing.
(l) Except as stated in this Agreement and in the
Prospectus, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(m) The Company will use its best efforts to list the
Shares on the NYSE.
(n) Subject to the determination by the Board of
Directors of the Company to the contrary, the Company will use its best
efforts to meet the requirements to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended (the "Code")
and to cause the Partnership to be treated as a partnership for federal
income tax purposes.
(o) Except as provided in this Agreement, the Company
will not offer, sell, contract to sell, pledge or otherwise dispose of
any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or grant any options or warrants to
purchase Common Stock for a period of 45 days after the date of the
Prospectus Supplement, without the prior written consent of the
Underwriter, except for options or Common Stock issued pursuant to
stock option or stock purchase plans as described in the Prospectus or
the Incorporated Documents.
6. Representations and Warranties of the Company, the Trust and
the Partnership. The Company, the Trust and the Partnership, jointly and
severally, represent and warrant to the Underwriter that:
(a) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other
jurisdiction.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Act, set
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forth in the General Instructions to Form S-3. When the Registration
Statement or any amendment thereto was declared effective, and on the
Closing Date (or the Option Closing Date, as the case may be) it (i)
contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed
with the Commission pursuant to Rule 424(b) and at the Closing Date (or
the Option Closing Date, as the case may be), the Prospectus, as
amended or supplemented at any such time, (i) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (ii) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The representation and warranty in this paragraph
(b) does not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Company in writing by or on behalf of
the Underwriter expressly for use therein.
(c) The Incorporated Documents when they were filed (or,
if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder, any further Incorporated Documents so filed will, when they
are filed, conform in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder; no such
document when it was filed (or, if an amendment with respect to any
such document was filed, when such amendment was filed) contained an
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 not misleading; and no such further document, when
it is filed, will contain an untrue statement of a material fact or
will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Tennessee with all requisite corporate power and authority to own
and lease its properties and to conduct its business as now conducted.
The Company has been duly qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which
the ownership or leasing of its properties or the nature or conduct of
its business as now conducted requires such qualification, except where
the failure to do so would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole. Except as set forth on
Exhibit 21.1 to its Form 10-K for the year ended December 31, 2001, the
Company does not own or control,
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directly or indirectly, any corporation, limited partnership, limited
liability company, association or other entity.
(e) The Trust has been duly organized and is validly
existing as a real estate investment trust in good standing under the
laws of the State of Maryland with all requisite power and authority to
own and lease its properties and to conduct its business as now
conducted. The Trust has been duly qualified to do business and is in
good standing in each other jurisdiction in which the ownership or
leasing of its properties or the nature or conduct of its business as
now conducted requires such qualification, except where the failure to
do so would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. The Trust is wholly owned by the
Company.
(f) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Tennessee
Revised Uniform Limited Partnership Act (the "Tennessee Act") with all
requisite partnership power and authority to own and lease its
properties and to conduct its business as now conducted. The
Partnership has been duly qualified or registered to do business and is
in good standing as a foreign partnership in each other jurisdiction in
which the ownership or leasing of its properties or the nature or
conduct of its business as now conducted requires such qualification,
except where the failure to do so would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. The Trust
is the sole general partner of the Partnership and holds approximately
96.8% of the outstanding Partnership Units. At the Closing Date,
following the contribution of the net proceeds of the Offering to the
Partnership, the Trust will be the sole general partner of the
Partnership and will be the holder of approximately 97.1% of the units
of limited partnership interest in the Partnership ("Partnership
Units") and the holder of all of the outstanding 9 1/2% Series A
Preferred Units (the "Series A Preferred Units").
(g) Each subsidiary of the Company other than the
Partnership and the Trust has been duly incorporated or organized, as
appropriate, and is validly existing as a corporation, limited
partnership or limited liability company, as appropriate, in good
standing under the laws of the jurisdiction of its incorporation or
organization with all requisite corporate, limited partnership or
limited liability company power and authority to own and lease its
properties and to conduct its business as now conducted. Each such
subsidiary has been duly qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which
the ownership or leasing of its properties or the nature or conduct of
its business as now conducted requires such qualification, except where
the failure to do so would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company's ownership
percentage of each subsidiary of the Company is set forth on Schedule
A-1.
(h) The Company has full corporate right, power and
authority to enter into this Agreement, to issue, sell and deliver the
Shares as provided herein and to consummate the
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transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable in accordance
with its terms, except to the extent that enforceability may be limited
by bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity principles and except to the extent the indemnification and
contribution provisions set forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the public policy
underlying such laws.
(i) The Trust has full legal right, power and authority
to enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed
and delivered by the Trust and constitutes a valid and binding
agreement of the Trust, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights, or by general equity
principles and except to the extent the indemnification and
contribution provisions set forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the public policy
underlying such laws.
(j) The Partnership has full partnership right, power and
authority to enter into this Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered on behalf of the Partnership by the
Trust, as the sole general partner of the Partnership, and constitutes
a valid and binding agreement of the Partnership enforceable in
accordance with its terms, except to the extent that enforceability may
be limited by bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting creditors' rights, or by
general equity principles and except to the extent the indemnification
and contribution provisions set forth in Section 7 of this Agreement
may be limited by federal or state securities laws or the public policy
underlying such laws.
(k) Each of the Third Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended by Amendment No. 1
dated as of the Closing Date (the "Partnership Agreement"), the
Consolidated Lease Agreements by and between certain subsidiaries of
Equity Inns TRS Holdings, Inc. (each, a "Lessee") and the Partnership
pursuant to which the Lessees lease the Hotels from the Partnership
(the "Percentage Leases") and the management agreements with respect to
each of the Hotels (the "Management Agreements") have been duly
authorized, executed and delivered by the parties thereto and
constitute valid and binding agreements, enforceable in accordance with
their respective terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting creditors' rights or by
general equity principles. (This Agreement, the Partnership Agreement
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and the Percentage Leases sometimes are hereinafter referred to as the
"Operative Documents.")
(l) Each material 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 of the Shares, the
execution, delivery and performance of this Agreement, and the
consummation by the Company, the Trust and the Partnership of the
transactions contemplated hereby has been made or obtained and is in
full force and effect except such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Shares by the Underwriter.
(m) Neither the issuance, sale and delivery by the
Company of the Shares, nor the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated
hereby by the Company, the Trust or the Partnership, as applicable,
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
the passage of time or both) constitute a default under the charter,
by-laws, Declaration of Trust, certificate of limited partnership,
partnership agreement, limited liability company certificate of
formation or operating agreement, as the case may be, of the Company or
any of its subsidiaries; any material indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or to which
they, any of them, any of their respective properties or other assets
or any Hotel is subject; or, to the Company's knowledge, any applicable
statute, judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to any of the foregoing or any
of their respective properties; or result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or asset of
any of the foregoing.
(n) The issuance of the Shares to be issued and sold to
the Underwriter hereunder has been validly authorized by the Company.
When issued and delivered against payment therefor as provided in this
Agreement, the Shares will be duly and validly issued, fully paid and
nonassessable. No statutory or other preemptive rights of shareholders
exist with respect to any of the Shares. No person or entity holds a
right to require or participate in the registration under the Act of
the Shares pursuant to the Registration Statement. No person or entity
has a right of participation or first refusal with respect to the sale
of the Shares by the Company. The form of certificates evidencing the
Shares complies with all applicable requirements of Tennessee law.
(o) The Company's authorized, issued and outstanding
capital stock is as disclosed in the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
are validly issued, fully paid and nonassessable. None of the issued
shares of capital stock of the Company has been issued or is owned or
held in violation of
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any statutory or other preemptive rights of shareholders. Except as
disclosed in the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the
Company.
(p) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered
under the Act or exempt from the registration requirements of the Act
by reason of Sections 3(b), 4(2) or 4(6) thereof and were duly
registered or were issued pursuant to an available exemption from the
registration requirements under the applicable state securities or Blue
Sky laws.
(q) All of the issued shares of beneficial interest of
the Trust have been duly authorized and validly issued, are fully paid
and nonassessable and are held by the Company. None of the issued
shares of beneficial interest of the Trust has been issued or is owned
or held in violation of any preemptive right. There is no outstanding
option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any shares of beneficial
interest of the Trust or any security convertible into or exchangeable
for shares of beneficial interest of the Trust. All of the outstanding
shares of beneficial interest of the Trust have been issued, offered
and sold in compliance with all applicable laws (including, without
limitation, federal and state securities laws).
(r) All of the issued Partnership Units of the
Partnership have been duly and validly authorized and issued and are
fully paid and nonassessable. None of the issued Partnership Units has
been issued or is owned or held in violation of any preemptive right.
All of the outstanding Partnership Units have been issued, offered and
sold in compliance with all applicable laws (including, without
limitation, federal and state securities laws).
(s) The financial statements of the Company incorporated
by reference in the Registration Statement and Prospectus present
fairly the financial position of the Company as of the dates indicated
and the results of operations and cash flows for the Company for the
periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statement
schedules included in the Registration Statement fairly present the
information shown therein and have been compiled on a basis consistent
with the financial statements incorporated by reference in the
Registration Statement and the Prospectus. No other financial
statements or schedules are required by Form S-3 or otherwise to be
included in the Registration Statement or the Prospectus. The unaudited
pro forma financial information (including the related notes)
incorporated by reference in the Prospectus complies as to form in all
material respects to the applicable accounting requirements of the Act
and the Act Regulations, and management of the Company believes that
the assumptions underlying the pro forma adjustments are reasonable.
Such pro forma adjustments have been properly applied to the historical
amounts in the compilation of the information and such information
fairly presents with respect to the Company, the financial
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position, results of operations and other information purported to be
shown therein at the respective dates and for the respective periods
specified.
(t) PricewaterhouseCoopers LLP, who have examined and are
reporting upon the audited financial statements and schedules of the
Company incorporated by reference in the Registration Statement, are,
and were during the period covered by their report incorporated by
reference in the Registration Statement and the Prospectus, independent
public accountants within the meaning of the Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder.
(u) None of the Company or any of its subsidiaries has
sustained, since December 31, 2001, any material loss or interference
with its business from fire, explosion, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor
dispute or arbitrators' or court or governmental action, order or
decree; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
otherwise stated in the Registration Statement and Prospectus, there
has not been (i) any material change in the capital stock, shares of
beneficial interests or partnership interests, as applicable, long-term
debt, obligations under capital leases or short-term borrowings of the
Company or any of its subsidiaries, (ii) any material adverse change,
or any development which could reasonably be seen as involving a
prospective material adverse change, in or affecting the business,
prospects, properties, assets, results of operations or condition
(financial or other) of the Company and its subsidiaries, taken as a
whole, (iii) any liability or obligation, direct or contingent,
incurred or undertaken by the Company or any of its subsidiaries which
is material to the business or condition (financial or other) of the
Company and its subsidiaries, taken as a whole, except for liabilities
or obligations incurred in the ordinary course of business, (iv) any
declaration or payment of any dividend or distribution of any kind on
or with respect to the capital stock, shares of beneficial interest or
partnership interests, as applicable, of the Company or any of its
subsidiaries except as set forth in the Registration Statement; or (v)
any transaction that is material to the Company and its subsidiaries,
taken as a whole, except transactions in the ordinary course of
business or as otherwise disclosed in the Registration Statement or the
Prospectus.
(v) The Partnership or its subsidiaries has good and
marketable title in fee simple to all real property and the
improvements located thereon owned by it, including the Hotels, free
and clear of all liens, encumbrances, claims, security interests,
restrictions and defects except such as are described in the Prospectus
or in connection with the Company's $125 million unsecured line of
credit (the "Line of Credit"), the collateralized mortgage bonds issued
by EQI Financing Partnership I, L.P., the mortgage financing in the
maximum principal amount of $97.02 million with GMAC Commercial
Mortgage Corporation (the "1997 GMAC Financing"), the mortgage
financing in the maximum principal amount of $36 million with GMAC
Commercial Mortgage Corporation (the "2000 GMAC Financing"), the
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two mortgage financings in the maximum principal amount of
approximately $69.7 million with General Electric Capital Corporation
(the "2000 GECC Financings"), and the single mortgages on the Nashville
(Xxxxxx Parkway), Tennessee Hotel, the San Antonio, Texas Hotel and the
Boise, Idaho Hotel (such three mortgages, the 1997 GMAC Financing, the
2000 GMAC Financing and the 2000 GECC Financings being, collectively,
the "Financings"), or the title insurance policies relating to such
properties. Neither the Company nor the Trust owns or leases any real
property as lessee. Except for the ground leases relating to the
Camelback (Phoenix), Arizona Hotel, the Tinton Falls, New Jersey Hotel,
the Norfolk, Virginia Hotel, the Xxxx Burnie (Baltimore), Maryland
Hotel, the Mountain Brook (Birmingham), Alabama Hotel, the Atlanta
(Northlake), Georgia Hotel, the Memphis (Sycamore), Tennessee Hotel and
the Nashville (Xxxxxx Parkway), Tennessee Hotel (collectively, the
"Leases"), the Partnership does or will not lease any real property as
lessee. The Leases are valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use
made, and proposed to be made, of such property, by the Partnership.
The Leases conform in all material respects to the description thereof,
if any, set forth in the Registration Statement; and no notice has been
given or material claim asserted by anyone adverse to the rights of the
Partnership under any of the Leases or affecting the right to the
continued possession of the leased property. Except with respect to the
Line of Credit, the EQI Financing Partnership I, L.P. agreements and
the agreements relating to the Financings, the Company and its
subsidiaries have good title to all personal property owned by them,
free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed in
the Prospectus or do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to be
made of such property by the Company and its subsidiaries. Except as
disclosed in the Registration Statement, no person has an option or
right of first refusal to purchase all or part of any Hotel or any
interest therein. Each of the Hotels complies with all applicable
codes, laws and regulations (including, without limitation, building
and zoning codes, laws and regulations and laws relating to access to
the Hotels) and except for such failures to comply that would not
individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business
affairs or business prospects of the Company and its subsidiaries,
taken as a whole. Neither the Company, the Trust nor the Partnership
has knowledge of any pending or threatened condemnation proceedings,
zoning change, or other proceeding or action that will in any manner
affect the size of, use of, improvements on, construction on or access
to the Hotels, except such proceedings or actions that would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of the
Company and its subsidiaries, taken as a whole.
(w) Neither the Company nor any of its subsidiaries is in
violation of its respective charter, bylaws, declaration of trust,
certificate of limited partnership or partnership agreement, as the
case may be, and no default exists, and no event has occurred, nor
state of facts exists, which, with notice or after the lapse of time to
cure or both, would constitute a
-13-
default in the due performance and observance of any obligation,
agreement, term, covenant, consideration or condition contained in any
indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which any such entity is a party or to
which any such entity or any of its properties is subject, except as
may be properly described in the Prospectus or such as in the aggregate
do not now have or will not in the future have a material adverse
effect on the financial position, results of operations or business of
the Company and its subsidiaries, taken as a whole. Neither the Company
nor any of its subsidiaries is in violation of, or in default with
respect to, any statute, rule, regulation, order, judgment or decree,
except as may be properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material
adverse effect on the financial position, results of operations or
business of the Company and its subsidiaries, taken as a whole.
(x) There is not pending or, to the knowledge of the
Company, the Trust, or the Partnership, threatened, any action, suit,
proceeding, inquiry or investigation against the Company or any of its
subsidiaries or any of their respective officers and directors or to
which the properties, assets or rights of any such entity are subject,
before or brought by any court or governmental agency or body or board
of arbitrators, which would have a material adverse effect on the
business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole, or which could adversely affect the consummation of
the transactions contemplated by this Agreement.
(y) The descriptions in the Registration Statement and
the Prospectus of the contracts, leases and other legal documents
therein described present fairly the information required to be shown,
and there are no contracts, leases, or other documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required. To the best knowledge of
the Company, the Trust and the Partnership, there are no statutes or
regulations applicable to the Company or any of its subsidiaries or
certificates, permits or other authorizations from governmental
regulatory officials or bodies required to be obtained or maintained by
the Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement or the Prospectus which have
not been so disclosed and properly described therein. All agreements,
if any, between the Company or any of its subsidiaries and third
parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company or such subsidiary, respectively,
enforceable in accordance with their respective terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or
affecting creditors' rights and by general equitable principles.
(z) The Company and its subsidiaries own, possess or have
obtained all material permits, licenses, franchises (including, with
respect to the Partnership, the franchises
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relating to the Hotels), certificates, consents, orders, approvals and
other authorizations of governmental or regulatory authorities or other
entities as are necessary to own or lease, as the case may be, its
respective properties and to carry on its business as presently
conducted, or as contemplated in the Prospectus to be conducted, and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to revocation or modification of any such
licenses, permits, franchises, certificates, consents, orders,
approvals or authorizations.
(aa) Each of the Company and its subsidiaries owns or
possesses adequate license or other rights to use all trademarks,
service marks, trade names, copyrights, software and design licenses,
trade secrets, manufacturing processes, other intangible property
rights and know-how (collectively "Intangibles") necessary to entitle
the Company and its subsidiaries to conduct their business now, and as
proposed to be conducted or operated as described in the Prospectus,
and neither the Company nor any of its subsidiaries has received notice
of infringement or of conflict with (and knows of no such infringement
of or conflict with) asserted rights of others with respect to any
Intangibles which could have a material adverse effect on the business,
prospects, properties, assets, results of operation or condition
(financial or otherwise) of the Company and its subsidiaries, taken as
a whole.
(bb) To the best of the Company's, the Trust's and the
Partnership's knowledge, the Company's and its subsidiaries' system of
internal accounting controls taken as a whole is sufficient to meet the
broad objectives of internal accounting control insofar as those
objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the
Company's financial statements; and, to the best of the Company's, the
Trust's, and the Partnership's knowledge, none of the Company or any of
its subsidiary or any employee or agent thereof, has made any payment
of funds of the Company or any of its subsidiary, as the case may be,
or received or retained any funds and no funds of the Company or any of
its subsidiaries, as the case may be, have been set aside to be used
for any payment, in each case in violation of any law, rule or
regulation.
(cc) Each of the Company, the Trust (to the extent not
consolidated with the Company) and the Partnership (to the extent not
consolidated with the Company) has filed on a timely basis all
necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all
taxes shown as due thereon, except where the Company or such subsidiary
is contesting such taxes in good faith and has made adequate reserves
therefor; and no tax deficiency has been asserted against any such
entity, nor does any such entity know of any tax deficiency which is
likely to be asserted against any such entity which if determined
adversely to any such entity, could have a material adverse effect on
the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole. All tax liabilities are adequately provided for on
the respective books of such entities.
-15-
(dd) Each of the Company, the Trust, the Partnership, and
their officers, directors or affiliates has not taken and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in or constitute the
stabilization or manipulation of any security of the Company or to
facilitate the sale or resale of the Shares.
(ee) The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and an application for listing the Shares on
the NYSE has been filed.
(ff) The Company has not incurred any liability for a fee,
commission or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement other than as contemplated hereby or as described in the
Registration Statement.
(gg) Except as otherwise disclosed in the Prospectus,
neither the Company nor any of its subsidiaries has authorized or
conducted or has knowledge of the generation, transportation, storage,
presence, use, treatment, disposal, release, or other handling of any
hazardous substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminant, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product or waste
(including crude oil or any fraction thereof), natural gas, liquefied
gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any
environmental law (collectively, "Hazardous Materials"), on, in, under
or affecting any real property currently leased or owned or by any
means controlled by the Company or any of its subsidiaries, including
the Hotels (the "Real Property") except as in material compliance with
applicable laws; except as otherwise disclosed in the Prospectus, to
the knowledge of the Company, the Trust and the Partnership, the Real
Property and the Company's and its subsidiaries' operations with
respect to the Real Property are in compliance with all federal, state
and local laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management of
waste, discharges of materials into the environment, health, safety,
natural resources, and the environment (collectively, "Environmental
Laws"), and the Company and its subsidiaries have, and are in
compliance with, all licenses, permits, registrations and government
authorizations necessary to operate under all applicable Environmental
Laws. Except as otherwise disclosed in the Prospectus, neither the
Company nor any of its subsidiaries has received any written or oral
notice from any governmental entity or any other person and there is no
pending or threatened claim, litigation or any administrative agency
proceeding that: (i) alleges a violation of any Environmental Laws by
the Company or any of its subsidiaries; (ii) alleges that the Company
or any of its subsidiaries is a liable party or a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
state superfund law; (iii) has resulted in or could result in the
attachment of an environmental lien on any of the Real Property; or
(iv) alleges that the Company or any of its subsidiaries is liable for
any contamination of the environment, contamination of the Real
Property, damage to natural
-16-
resources, property damage, or personal injury based on their
activities or the activities of their predecessors or third parties
(whether at the Real Property or elsewhere) involving Hazardous
Materials, whether arising under the Environmental Laws, common law
principles, or other legal standards.
(hh) The Company was organized and has operated in
conformity with the requirements for qualification as a real estate
investment trust under the Code for each of its taxable years ended
December 31, 1994 through December 31, 2001, and the Company's method
of operation enables it to meet the requirements for taxation as a real
estate investment trust under the Code. The Partnership is treated as a
partnership for federal income purposes and not as a corporation or an
association taxable as a corporation.
(ii) None of the Company, the Trust or the Partnership is,
or will become as a result of the transactions contemplated hereby, "an
investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(jj) The Partnership is not currently prohibited, directly
or indirectly, from making distributions to the Trust, from repaying to
the Trust any loans or advances to the Partnership or from transferring
any of the Partnership's property or assets to the Trust, except as
disclosed in the Prospectus and under the Line of Credit, the
agreements relating to the Financings and the EQI Financing Partnership
I, L.P. agreements.
(kk) The Trust is not currently prohibited, directly or
indirectly, from making distributions to the Company, from repaying to
the Company any loans or advances to the Trust or from transferring any
of the Trust's property or assets to the Company, except as disclosed
in the Prospectus and under the Line of Credit, the agreements relating
to the Financings and the EQI Financing Partnership I, L.P. agreements.
Any certificate signed by any officer of the Company on behalf
of the Company, or by an officer of the Trust on behalf of the Trust or the
Partnership and delivered to you or to counsel for the Underwriter shall be
deemed a representation and warranty by such entity to the Underwriter as to the
matters covered thereby.
7. Indemnification and Contribution. (a) The Company, the Trust
and the Partnership, jointly and severally, agree to indemnify and hold
harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be
-17-
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities
or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made
therein or omitted therefrom in reliance upon and in conformity with
the information furnished in writing to the Company by the Underwriter
expressly for use in connection therewith. The foregoing indemnity
agreement shall be in addition to any liability which the Company, the
Trust or the Partnership may otherwise have.
(b) If any action, suit or proceeding shall be brought
against the Underwriter or any person controlling the Underwriter in
respect of which indemnity may be sought against the Company, the Trust
or the Partnership, the Underwriter or such controlling person shall
promptly notify the Company, the Trust or the Partnership, but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) above unless and to the extent it
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) above. The Company, the Trust or
the Partnership shall assume the defense thereof, including the
employment of counsel and payment of all reasonable fees and expenses.
The Underwriter or any such controlling person shall have the right to
employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling
person unless the Company, the Trust or the Partnership have agreed in
writing to pay such fees and expenses, the Company, the Trust or the
Partnership have failed to assume the defense and employ counsel, or
the named parties to any such action, suit or proceeding (including any
impleaded parties) include both such Underwriter or such controlling
person and the Company, the Trust or the Partnership and such
Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Company,
the Trust or the Partnership by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company,
the Trust or the Partnership shall not have the right to assume the
defense of such action, suit or proceeding on behalf of the Underwriter
or such controlling person). It is understood, however, that the
Company, the Trust or the Partnership shall, in connection with any one
such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel), at any time for the
Underwriter and all controlling persons not having actual or potential
differing interests with you or among themselves, which firm shall be
designated in writing by Xxxxxxx Xxxxx Xxxxxx Inc., and that all such
fees and expenses shall be reimbursed as they are incurred. The
Company, the Trust or the Partnership shall not be liable for any
settlement of any such action, suit or proceeding effected without its
written
-18-
consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or
proceeding, the Company, the Trust or the Partnership agree to
indemnify and hold harmless the Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless
the Company, the Trust, the Partnership, their respective directors and
officers who sign the Registration Statement, and any person who
controls the Company, the Trust or the Partnership within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company, the Trust and the
Partnership to the Underwriter, but only with respect to information
furnished in writing by or on behalf of the Underwriter expressly for
use in the Registration Statement or the Prospectus, or any amendment
or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, the Trust, the Partnership or any of their
respective directors, any such officer, or any such controlling person
based on the Registration Statement or the Prospectus, or any amendment
or supplement thereto, and in respect of which indemnity may be sought
against the Underwriter pursuant to this paragraph (c), the Underwriter
shall have the rights and duties given to the Company, the Trust and
the Partnership by paragraph (b) above (except that if the Company, the
Trust and the Partnership shall have assumed the defense thereof the
Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the Underwriter's expense),
and the Company, the Trust, the Partnership or their respective
directors, any such officer, and any such controlling person shall have
the rights and duties given to the Underwriter by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability
which the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party under paragraphs (a) or (c)
hereof in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received by the Company,
the Trust and the Partnership on the one hand and the Underwriter on
the other hand from the offering of the Shares, or if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company, the Trust and the Partnership on the one hand and the
Underwriter on the other in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Trust and the Partnership on the
one hand and the Underwriter on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of
-19-
the Shares (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the
Underwriter bear to the price to public of the Shares, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault of the Company, the Trust and the Partnership on the one
hand and the Underwriter on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company,
the Trust or the Partnership on the one hand or by the Underwriter on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(e) The Company, the Trust, the Partnership and the
Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by a pro rata
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 7, the Underwriter shall not be required
to contribute any amount in excess of the underwriting discount or
commission applicable to the Shares purchased by the Underwriter
hereunder. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or
contribution under this Section 7 shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution
agreements contained in this Section 7 and the representations and
warranties of the Company, the Trust, the Partnership and the
Underwriter set forth in this Agreement shall remain operative and in
full force and effect, regardless of any investigation made by or on
behalf of the Underwriter or any person controlling the Underwriter,
the Company, the Trust, the Partnership, their respective directors or
officers, or any person controlling the Company or the Trust or the
Partnership, acceptance of any Shares and payment therefor hereunder,
and any termination of this
-20-
Agreement. A successor to the Underwriter or any person controlling the
Underwriter, or to the Company, the Trust or the Partnership, their
respective directors or officers, or any person controlling the Company
or the Trust or the Partnership, shall be entitled to the benefits of
the indemnity, contribution, and reimbursement agreements contained in
this Section 7.
8. Conditions of Underwriter's Obligations. The obligation of the
Underwriter to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the
Registration Statement to be declared effective before the offering of
the Shares may commence, such post-effective amendment shall have
become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rule 424 under the
Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceeding for that purpose shall have been instituted or, to the
knowledge of the Company or the Underwriter, threatened by the
Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred any change, or any development involving
a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, or results of operations of
the Company and its subsidiaries taken as a whole not contemplated by
the Prospectus, which in your reasonable opinion would materially,
adversely affect the market for the Shares, or any event or development
relating to or involving the Company or any of its subsidiaries or any
officer or director of the Company which makes any statement made in
the Prospectus untrue or which, in the reasonable opinion of the
Company and its counsel or the Underwriter and its counsel, requires
the making of any addition to or change in the Prospectus in order to
state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such
event or development would, in your reasonable opinion materially
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an
opinion of Hunton & Xxxxxxxx, counsel for the Company, the Trust and
the Partnership, dated the Closing Date and addressed to you to the
effect that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Tennessee with the corporate power
and authority to own and lease its properties and to conduct
its
-21-
business as described in the Prospectus. To such counsel's
knowledge, except as set forth on Schedule A-1, the Company
does not own or control, directly or indirectly, any
corporation, association or other entity.
(ii) The Trust has been duly formed and is
validly existing as a real estate investment trust in
good standing under the laws of the State of Maryland with
all requisite power and authority to own and lease its
properties and to conduct its business as described in the
Prospectus.
(iii) The Partnership is a limited partnership
duly formed and validly existing under the Tennessee Act
with the partnership power and authority to own and lease
its properties and to conduct its business as described in
the Prospectus.
(iv) Each subsidiary of the Company set forth on
Schedule A-2 has been duly formed and is validly existing
as a limited partnership in good standing under the laws
of the jurisdiction of its organization with the limited
partnership power and authority to own and lease its
properties and to conduct its business as described in
the Prospectus.
(v) Each subsidiary of the Company set forth
on Schedule A-2 has been duly qualified as a foreign limited
partnership in each jurisdiction set forth on Schedule A-2
(such counsel being entitled to rely in respect of the
opinion in this clause with respect to certificates or verbal
advice of public officials in such jurisdictions).
(vi) The Company has the corporate power and
authority to enter into this Agreement, to issue, sell and
deliver the Shares as provided herein and to consummate the
transactions contemplated herein. This Agreement has been duly
authorized by all necessary corporate action and has been
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Underwriter,
constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting the rights
of creditors generally and by principles of equity, whether
considered at law or in equity, and except to the extent that
enforcement of the indemnification and contribution provisions
set forth in Section 7 of this Agreement may be limited by
federal or state securities laws or the public policy
underlying such laws.
(vii) The Trust has the legal power and
authority to enter into this Agreement and to consummate the
transactions contemplated herein. This Agreement has been
duly authorized by all necessary trust action and has been
executed and delivered by the Trust and, assuming due
authorization, execution and delivery by the Underwriter,
constitutes a valid and binding agreement of the Trust,
enforceable in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws
affecting the rights of creditors generally and by principles
of equity, whether considered at law or in equity, and except
to the extent that enforcement of the indemnification and
contribution provisions set forth in Section 7 of this
Agreement may be limited by federal or state securities laws
or the public policy underlying such laws.
-22-
(viii) The Partnership has the partnership power
and authority to enter into this Agreement and to consummate
the transactions contemplated herein. This Agreement has been
duly authorized by all necessary partnership action and has
been executed and delivered on behalf of the Partnership and,
assuming due authorization, execution and delivery by the
Underwriter, constitutes a valid and binding agreement of the
Partnership enforceable in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other laws affecting
the rights of creditors generally and by principles of equity,
whether considered at law or in equity, and except to the
extent that enforcement of the indemnification and
contribution provisions set forth in Section 7 of this
Agreement may be limited by federal or state securities laws
or the public policy underlying such laws.
(ix) The Partnership Agreement has been duly
authorized by all necessary corporate or trust action on
behalf of the Company and the Trust, respectively, and has
been executed and delivered by the parties thereto and
assuming the execution and delivery by the limited partners,
constitutes a valid and binding agreement, enforceable in
accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors
generally and by principles of equity, whether considered at
law or in equity.
(x) 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 of
the Shares, the execution, delivery and performance of this
Agreement and the consummation by the Company, the Trust and
the Partnership of the transactions contemplated hereby, has
been made or obtained and is in full force and effect, except
such as may be necessary under state securities or real estate
syndication laws or required by the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution of the Shares by the Underwriter, as
to which such counsel need express no opinion.
(xi) Neither the issuance, sale and delivery by
the Company of the Shares, nor the execution, delivery and
performance of this Agreement will (a) violate the charter,
bylaws, declaration of trust, certificate of limited
partnership or partnership agreement, as the case may be, of
the Company, the Trust or the Partnership; (b) constitute a
default under any contract or agreement filed or incorporated
by reference as an exhibit to the Registration Statement; or
(c) to such counsel's knowledge, violate any applicable
statute, judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to the
Company.
-23-
(xii) The issuance of the Shares to the
Underwriter hereunder has been validly authorized by the
Company. When issued and delivered against payment therefor as
provided in this Agreement, the Shares will be validly issued,
fully paid and nonassessable. No statutory or, to such
counsel's knowledge, other preemptive rights of shareholders
exist with respect to any of the Shares. To such counsel's
knowledge, no person or entity holds a right to require or
participate in the registration under the Act of the Shares
pursuant to the Registration Statement. To such counsel's
knowledge, no person or entity has a right of participation or
first refusal with respect to the sale of the Shares by the
Company. The form of certificates evidencing the Shares
complies with all applicable requirements of Tennessee law.
(xiii) The Company has authorized capital stock as
set forth in the Prospectus under the caption "Capitalization"
and the Shares conform to the description thereof contained in
the Prospectus All of the issued shares of capital stock of
the Company have been duly authorized and validly issued, are
fully paid and nonassessable. None of the issued shares of
capital stock of the Company has been issued in violation of
any statutory or, to our knowledge, other preemptive rights of
shareholders. All sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered
under the Act or were exempt from the registration
requirements of the Act and were duly registered or were
issued pursuant to an available exemption from the
registration requirements of the applicable state securities
or blue sky laws, provided, however, that such counsel need
not express any opinion with respect to the registration or
availability of an exemption under applicable state securities
or blue sky laws for shares of capital stock issued pursuant
to an underwritten public offering.
(xiv) All of the issued shares of beneficial
interest of the Trust have been duly authorized and validly
issued and are fully paid and nonassessable and are owned by
the Company.
(xv) All of the issued Partnership Units of the
Partnership have been duly authorized and validly issued and
are fully paid and nonassessable. To such counsel's knowledge,
none of the issued Partnership Units has been issued or is
owned or held in violation of any preemptive rights. The
issuance of Partnership Units to be issued
-24-
to the Trust at the Closing Date has been duly and validly
authorized by the Partnership. When issued and delivered
against payment therefor as provided in the Partnership
Agreement, such Partnership Units will be duly and validly
issued and fully paid. The issuances of the outstanding
Partnership Units were exempt from the registration
requirements of the Act and any applicable state securities
laws.
(xvi) To such counsel's knowledge and except as
described in the Prospectus, there is not pending or
threatened, any action, suit, proceeding, inquiry or
investigation against the Company or any of its subsidiaries
or any of their respective officers and directors or to which
the properties, assets or rights of any such entity are
subject, which, if determined adversely to any such entity,
would in the aggregate have a material adverse effect on the
financial position, results of operations or business of the
Company and its subsidiaries, taken as a whole.
(xvii) The descriptions in the Registration
Statement and the Prospectus of the contracts, leases and
other legal documents therein described present fairly the
information required to be shown and there are no contracts,
leases or other documents known to such counsel of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required. To
such counsel's knowledge, there are no statutes or regulations
applicable to the Company, the Trust or the Partnership or
certificates, permits or other authorizations from
governmental regulatory officials or bodies required to be
obtained or maintained by any such entity of a character
required to be disclosed in the Registration Statement or the
Prospectus which have not been so disclosed and properly
described therein.
(xviii) The Company was organized and has operated
in conformity with the requirements for qualification and
taxation as a real estate investment trust ("REIT") pursuant
to Sections 856 through 860 of the Code for each of the
taxable years ended December 31, 1994 through 2001, and the
Company's current organization and method of operation should
permit the Company to continue to qualify as a REIT under the
Code. The Partnership is treated as a partnership for federal
income purposes and not as a corporation or an association
taxable as a corporation.
(xix) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
has been instituted or is pending or contemplated under the
Act. Other than financial statements and other financial and
operating data and schedules contained therein, as to which
counsel need express no opinion, the Registration Statement,
the Prospectus and any amendment or supplement thereto comply
as to form in all material respects with the requirements of
the Act and the Act Regulations.
-25-
(xx) Such counsel has no reason to believe that
the Registration Statement, or any further amendment thereto
made prior to the Closing Date, on its effective date and as
of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus, or any amendment or supplement thereto made prior
to the Closing Date, as of its date and as of the Closing
Date, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading (provided that such counsel need express
no belief regarding the financial statements and related
schedules and other statistical and financial data included
therein.
(xxi) The Incorporated Documents (other than the
financial statements and related schedules and other financial
and statistical data included therein, as to which such
counsel need express no opinion) when they were filed with the
Commission complied as to form in all material respects with
the requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder; and nothing has come
to such counsel's attention which causes them to believe that
any of such Incorporated Documents (other than the financial
statements and related schedules and other financial and
statistical data included therein, as to which such counsel
need express no belief), when such Incorporated Documents were
so filed, contained an untrue statement of material fact or
omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made when such documents were so filed, not
misleading.
(xxii) Neither the Company, the Trust nor the
Partnership is, or solely as a result of the consummation of
the transactions contemplated hereby will become, subject to
registration as an "investment company" under the Investment
Company Act of 1940, as amended.
(xxiii) The information in the Prospectus under the
caption "Federal Income Tax Consequences of our Status as a
REIT," to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel, is
correct and presents fairly the information required to be
disclosed therein under the Act and the Act Regulations.
(xxiv) To such counsel's knowledge, the conditions
for use of a Registration Statement on Form S-3 set forth in
the General Instructions to Form S-3 have been
-26-
satisfied with respect to the Company and the transactions
contemplated by this Agreement.
(xxv) Such counsel has been advised that the
Shares have been approved for listing on the NYSE, subject to
official notice of issuance.
(d) You shall have received on the Closing Date an
opinion of King & Spalding, counsel for the Underwriter, dated the
Closing Date and addressed to you with respect to the matters referred
to in clauses (v), (xi) and (xix) of the foregoing paragraph (c) and
such other related matters as you may request.
(e) You shall have received letters addressed to you and
dated the date hereof and the Closing Date from PricewaterhouseCoopers
LLP, independent certified public accountants, substantially in the
forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the Company,
shall be contemplated by the Commission at or prior to the Closing
Date; (ii) there shall not have been any change in the capital stock of
the Company nor any material increase in the consolidated short-term or
long-term debt of the Company (other than in the ordinary course of
business) from that set forth or contemplated in the Registration
Statement or the Prospectus (or any amendment or supplement thereto);
(iii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment
or supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Company and its subsidiaries taken as a
whole; (iv) the Company and its subsidiaries shall not have any
liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Company and its
subsidiaries, taken as a whole, other than those reflected in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto); and (v) all the representations and warranties of
the Company, the Trust, and the Partnership contained in this Agreement
shall be true and correct on and as of the date hereof and on and as of
the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by
the chief executive officer and the chief financial officer of the
Company and similar officers of the Trust as general partner of the
Partnership (or such other officers as are acceptable to you), to the
effect set forth in this Section 8(f) and in Section 8(g) hereof.
-27-
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(h) The Shares shall have been listed or approved for
listing upon notice of issuance on the NYSE.
(i) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall
have reasonably requested.
(j) You shall have received signed "lock-up" letters, in
form and substance satisfactory to you, from the officers of the
Company named in the Prospectus.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and your counsel in your reasonable discretion.
Any certificate or document signed by any officer of the
Company, the Trust or the general partner of the Partnership and delivered to
you or to counsel for the Underwriter, shall be deemed a representation and
warranty by the Company, the Trust or the Partnership, as applicable, to the
Underwriter as to the statements made therein.
The obligation of the Underwriter to purchase Additional
Shares hereunder is subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: the preparation, printing or reproduction, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Prospectus, and each amendment or
supplement to any of them; the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Prospectus, and all amendments or supplements to any of
them as may be reasonably requested for use in connection with the offering and
sale of the Shares; the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; the listing of the Shares on
the NYSE; the registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws or real estate syndication laws of the
several states as provided in Section 5(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Underwriter relating to the
preparation, reproduction, and delivery of the preliminary
-28-
and supplemental Blue Sky Memoranda and such registration and qualification);
the filing fees and the fees and expenses of counsel for the Underwriter in
connection with any filings required to be made with the NASD; the
transportation and other expenses incurred by or on behalf of the Company's
representatives in connection with presentations to prospective purchasers of
the Shares; the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: upon the execution and delivery hereof by the parties hereto; or if,
at the time this Agreement is executed and delivered, it is necessary for a
post-effective amendment to the Registration Statement to be declared effective
before the offering of the Shares may commence, when notification of the
effectiveness of or such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective, it
may be terminated by the Company, by notifying you, or by you by notifying the
Company.
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed within 24 hours by
letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of the
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, trading in the Company's
Common Stock shall have been suspended by the Commission or the NYSE or trading
in securities generally on the NYSE shall have been suspended or limited or
minimum prices shall have been established on such Exchange, a banking
moratorium shall have been declared either by Federal or New York State
authorities or there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on the financial markets is such as
to make it, in your reasonable judgment, impracticable or inadvisable to proceed
with the offering or delivery of the Shares as contemplated by the Prospectus
(exclusive of any supplement thereto). Notice of such termination may be given
to the Company by telegram, telecopy or telephone and shall be subsequently
confirmed within 24 hours by letter.
12. Information Furnished by the Underwriter. The statements set
forth in the third, eighth and ninth paragraphs under the caption "Underwriting"
in the Prospectus and in the last paragraph on the cover page of the Prospectus,
constitute the only information furnished by or on behalf of the Underwriter as
such information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered if to the Company, the Trust or the
Partnership, at the office of the Company at Equity Inns, Inc., 0000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xx. Xxxxxxx X. XxXxxxx, Xx.
or if to
-29-
you at Xxxxxxx Xxxxx Barney Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the Underwriter, the Company, the Trust and the Partnership, their respective
directors and officers, and the other controlling persons referred to in Section
7 hereof and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from the
Underwriter of any of the Shares in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-30-
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Partnership, the Trust and the Underwriter.
Very truly yours,
EQUITY INNS, INC.
By: /s/ Xxxxxx X. Silver
-------------------------------------
Xxxxxx X. Silver
President and Chief Operating Officer
EQUITY INNS TRUST
By: /s/ Xxxxxx X. Silver
-------------------------------------
Xxxxxx X. Silver
President and Chief Operating Officer
EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST
General Partner
By: /s/ Xxxxxx X. Silver
-------------------------------------
Xxxxxx X. Silver
President and Chief Operating Officer
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Confirmed as of the date first above mentioned.
XXXXXXX XXXXX XXXXXX INC.
By: /s/ Xxx Gugliemone
-----------------------------------
Xxx Gugliemone
Director
SCHEDULE A-1
DIRECT AND INDIRECT SUBSIDIARIES OF EQUITY INNS, INC.
JURISDICTION OF
INCORPORATION/
NAME ORGANIZATION Ownership Percentage
---- --------------- --------------------
Equity Inns Trust (the "Trust") Maryland 100% owned by Equity
Inns, Inc. (the "REIT")
Equity Inns Services, Inc. ("Services") Tennessee 100% owned by the
REIT
Equity Inns TRS Holdings, Inc. ("TRS Tennessee 100% owned by the
Holdings") Partnership
Equity Inns Partnership, L.P. (the Tennessee Approximately 96.8%
"Partnership") owned by the Trust;
approximately 3.2%
owned by various
limited partners
Equity Inns Partnership II, L.P. Tennessee 1% GP interest held by
the Trust; 99% LP
interest held by the
Partnership
Equity Inns/West Virginia Partnership, Tennessee 1% GP interest held by
L.P. Services; 99% LP
interest held by the
Partnership
EQI Financing Corporation Tennessee 100% owned by the
Trust
EQI Financing Partnership I, L.P. Tennessee Approximate 1%-GP
interest held by EQI
Financing Corporation;
approximately 99% LP
interest held by the
Partnership
EQI Financing Corporation II Tennessee 100% owned by the
Trust
EQI Financing Partnership II, L.P. Tennessee 1% GP interest held by
EQI Financing
Corporation II; 99% LP
interest held by the
Partnership
JURISDICTION OF
INCORPORATION/
NAME ORGANIZATION Ownership Percentage
---- --------------- --------------------
EQI/WV Financing Partnership, L.P. Tennessee 1% GP interest held by
EQI Financing
Corporation II; 99% LP
interest held by the
Partnership
EQI Financing Corporation III Tennessee 100% owned by the
Trust
EQI Financing Partnership III, L.P. Tennessee 1% GP interest held by
EQI Financing
Corporation III; 99% LP
interest held by the
Partnership
EQI Financing Corporation IV Tennessee 100% owned by the
Trust
EQI Financing Partnership IV, L.P. Tennessee 1% GP interest held by
EQI Financing
Corporation IV; 99% LP
interest held by the
Partnership
EQI Financing Corporation V Tennessee 100% owned by the
Trust
EQI Financing Partnership V, L.P. Tennessee 1% GP interest held by
EQI Financing
Corporation V; 99% LP
interest held by the
Partnership
EQI/WV Financing Corporation Tennessee 100% owned by the
Trust
EQI/WV Financing Partnership II, L.P. Tennessee 1% GP interest held by
EQI/WV Financing
Corporation; 99% LP
interest held by the
Partnership
E. Inns Orlando, Inc. Tennessee 100% owned by
Services
E.I.P. Orlando, L.P. Tennessee 1% GP interest held by
E. Inns Orlando, Inc.;
99% LP interest held by
the Partnership
JURISDICTION OF
INCORPORATION/
NAME ORGANIZATION Ownership Percentage
---- --------------- --------------------
ENN Leasing Company, Inc. Tennessee 100% owned by TRS
Holdings
ENN Leasing Company I, L.L.C. Delaware 100% owned by TRS
Holdings
ENN Leasing Company II, L.L.C. Delaware 100% owned by TRS
Holdings
ENN Leasing Company III, L.L.C. Delaware 100% owned by TRS
Holdings
ENN Leasing Company IV, L.L.C. Delaware 100% owned by TRS
Holdings
ENN Leasing Company V, L.L.C. Delaware 100% owned by TRS
Holdings
SCHEDULE A-2
SUBSIDIARIES -- GOOD STANDING
AND FOREIGN/QUALIFICATIONS
Equity Inns Partnership, L.P.--TN, FL, TX
EQI Financing Partnership I, L.P.--TN, FL, NC, TX
EQI Financing Partnership II, L.P.--TN
EQI Financing Partnership III, L.P.--TN
EQI Financing Partnership IV, L.P.--TN
EQI Financing Partnership V, L.P.--TN
