EXHIBIT 10.1
EXECUTION COPY
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PURCHASE AGREEMENT
among
EQUITY INNS, INC.,
EQUITY INNS PARTNERSHIP, L.P.,
EQUITY INNS STATUTORY TRUST I
and
XXXXXXX XXXXX INTERNATIONAL
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Dated as of June 17, 2005
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PURCHASE AGREEMENT
($50,000,000 Trust Preferred Securities)
THIS PURCHASE AGREEMENT, dated as of June 17, 2005 (this "Purchase
Agreement"), is entered into among Equity Inns, Inc., a Tennessee corporation
(the "Parent REIT"), Equity Inns Partnership, L.P., a limited partnership
organized under the laws of Tennessee (the "Company"), and Equity Inns Statutory
Trust I, a Delaware statutory trust (the "Trust", and together with the Company,
the "Sellers"), and Xxxxxxx Xxxxx International, a company organized under the
laws of Wales and England, or its assignee. (the "Purchaser").
WITNESSETH:
WHEREAS, the Sellers propose to issue and sell Fifty Thousand (50,000)
Floating Rate Preferred Securities of the Trust, having a stated liquidation
amount of $1,000 per security, bearing a fixed rate of 6.93% per annum through
the interest payment date in June 2010 and a variable rate, reset quarterly,
equal to LIBOR (as defined in the Indenture (as defined below)) plus 2.85%
thereafter (the "Preferred Securities");
WHEREAS, the entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), and will be used by
the Trust to purchase Fifty One Million Five Hundred Fifty Thousand Dollars
($51,550,000) in principal amount of the unsecured junior subordinated notes of
the Company (the "Junior Subordinated Notes");
WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of the Closing Date, among the Company, as depositor,
JPMorgan Chase Bank, National Association, a national banking association, as
property trustee (in such capacity, the "Property Trustee"), Chase Bank USA,
National Association, a national banking association, as Delaware trustee (in
such capacity, the "Delaware Trustee"), the Administrative Trustees named
therein (in such capacities, the "Administrative Trustees") and the holders from
time to time of undivided beneficial interests in the assets of the Trust; and
WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the "Indenture"), between
the Company and JPMorgan Chase Bank, National Association, a national banking
association, as indenture trustee (in such capacity, the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
1. DEFINITIONS. The Preferred Securities, the Common Securities
and the Junior Subordinated Notes are collectively referred to herein as the
"Securities." This Purchase Agreement, the Indenture, the Trust Agreement and
the Securities are collectively referred to
herein as the "Operative Documents." All other capitalized terms used but not
defined in this Purchase Agreement shall have the respective meanings ascribed
thereto in the Indenture.
2. PURCHASE AND SALE OF THE PREFERRED SECURITIES.
(a) The Trust agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Trust, the Preferred Securities for an amount (the
"Purchase Price") equal to Fifty Million Dollars ($50,000,000). The Purchaser
shall be responsible for the rating agency costs and expenses. The Trust shall
use the Purchase Price, together with the proceeds from the sale of the Common
Securities, to purchase the Junior Subordinated Notes.
(b) Delivery or transfer of, and payment for, the Preferred
Securities shall be made at 10:00 A.M. Chicago time (11:00 A.M. New York time),
on June 17, 2005 or such later date (not later than July 17, 2005) as the
parties may designate (such date and time of delivery and payment for the
Preferred Securities being herein called the "Closing Date"). The Preferred
Securities shall be transferred and delivered to the Purchaser against the
payment of the Purchase Price to the Sellers made by wire transfer in
immediately available funds on the Closing Date to a U.S. account designated in
writing by the Company at least two business days prior to the Closing Date.
(c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two business days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser in Chicago, Illinois, not later than 1:00 P.M.,
Chicago time (2:00 P.M. New York time), on the business day prior to the Closing
Date. The closing for the purchase and sale of the Preferred Securities shall
occur at the offices of Mayer, Brown, Xxxx & Maw LLP, 00 Xxxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, or such other place as the parties hereto shall agree.
3. CONDITIONS. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:
(a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Preferred Securities.
(b) [Reserved.]
(c) (i) Hunton & Xxxxxxxx, LLP, counsel for the Company, the
Parent REIT and the Trust (the "Company Counsel"), shall have delivered an
opinion, dated the Closing Date, addressed to the Purchaser and JPMorgan Chase
Bank, National Association, in substantially the form set out in Annex A-I and
Annex A-II hereto and (ii) the Parent REIT shall have furnished to the Purchaser
an Officer's Certificate of its Chief Financial Officer, dated the Closing Date,
addressed to the Purchaser, in substantially the form set out in Annex A-III
hereto. In rendering their opinion, the Company Counsel may rely as to factual
matters upon certificates or other documents furnished by officers, directors
and trustees of the Parent REIT, the Company and the Trust and by government
officials (provided, however, that copies of any such certificates or documents
are delivered to the Purchaser) and by and upon such other documents as such
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counsel may, in their reasonable opinion, deem appropriate as a basis for the
Company Counsel's opinion. The Company Counsel may specify the jurisdictions in
which they are admitted to practice and that they are not admitted to practice
in any other jurisdiction and are not experts in the law of any other
jurisdiction. If the Company Counsel is not admitted to practice in the State of
New York, the opinion of the Company Counsel may assume, for purposes of the
opinion, that the laws of the State of New York are substantively identical, in
all respects material to the opinion, to the internal laws of the state in which
such counsel is admitted to practice. Such Company Counsel Opinion shall not
state that they are to be governed or qualified by, or that they are otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(d) The Purchaser and the Company shall have been furnished the
opinion of Mayer, Brown, Xxxx & Maw LLP, special tax counsel for the Purchaser,
dated the Closing Date, addressed to the Purchaser, JPMorgan Chase Bank,
National Association, and the Company in substantially the form set out in Annex
B hereto.
(e) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated
the Closing Date, addressed to the Purchaser, JPMorgan Chase Bank, National
Association, the Delaware Trustee and the Company, in substantially the form set
out in Annex C hereto.
(f) The Purchaser shall have received the opinion of Gardere Xxxxx
Xxxxxx LLP, special counsel for the Property Trustee and the Indenture Trustee,
dated the Closing Date, addressed to the Purchaser, in substantially the form
set out in Annex D hereto.
(g) The Purchaser shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, P.A., special Delaware counsel for the Delaware Trustee, dated
the Closing Date, addressed to the Purchaser and JPMorgan Chase Bank, National
Association, in substantially the form set out in Annex E hereto.
(h) The Parent REIT shall have furnished to the Purchaser a
certificate of the Parent REIT, signed by the Chief Executive Officer, President
or an Executive Vice President, and Chief Financial Officer, Treasurer or
Assistant Treasurer of the Parent REIT, and the Trust shall have furnished to
the Purchaser a certificate of the Trust, signed by an Administrative Trustee of
the Trust, in each case dated the Closing Date, and, in the case of the Parent
REIT, as to (i) and (ii) below and, in the case of the Trust, as to (i) below.
(i) the representations and warranties in this Purchase
Agreement of the Parent REIT and the Company are true and correct on and
as of the Closing Date with the same effect as if made on the Closing
Date, and the Parent REIT, the Company and the Trust have complied with
all the agreements and satisfied all the conditions on either of their
part to be performed or satisfied at or prior to the Closing Date; and
(ii) since the date of the Interim Financial Statements (as
defined below), there has been no material adverse change in the condition
(financial or other), earnings, business or assets of the Parent REIT and
its subsidiaries, taken as a whole,
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whether or not arising from transactions occurring in the ordinary course
of business (a "Material Adverse Change").
(i) Subsequent to the execution of this Purchase Agreement, there
shall not have been any Material Adverse Change, the effect of which is, in the
Purchaser's reasonable judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the Preferred
Securities.
(j) Prior to the Closing Date, the Parent REIT, the Company and
the Trust shall have furnished to the Purchaser and its counsel such further
information, certificates and documents as the Purchaser or its counsel may
reasonably request.
If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents required to be delivered pursuant to in
this Purchase Agreement shall not be reasonably satisfactory in form and
substance to the Purchaser or its counsel, this Purchase Agreement and all the
Purchaser's obligations hereunder may be canceled at, or at any time prior to,
the Closing Date by the Purchaser. Notice of such cancellation shall be given to
the Parent REIT, the Company and the Trust in writing or by telephone or
facsimile confirmed in writing.
Each certificate signed by any trustee of the Trust or any officer of the
Parent REIT and delivered to the Purchaser or the Purchaser's counsel in
connection with the Operative Documents and the transactions contemplated hereby
and thereby shall be deemed to be a representation and warranty of the Trust,
the Parent REIT and/or the Company, as the case may be, and not by such trustee
or officer in any individual capacity.
4. REPRESENTATIONS AND WARRANTIES OF THE PARENT REIT, THE COMPANY
AND THE TRUST. The Company, the Parent REIT and the Trust jointly and severally
represent and warrant to, and agree with the Purchaser, as follows:
(a) None of the Parent REIT, the Company or the Trust, nor any of
their "Affiliates" (as defined in Rule 501(b) of Regulation D ("Regulation D")
under the Securities Act (as defined below)), nor any person acting on its or
their behalf, has, directly or indirectly, made offers or sales of any security,
or solicited offers to buy any security, under circumstances that would require
the registration of any of the Securities under the Securities Act of 1933, as
amended (the "Securities Act").
(b) None of the Parent REIT, the Company or the Trust, nor any of
their Affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the Securities.
(c) The Securities (i) are not and have not been listed on a
national securities exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of an open-end
investment company, unit investment trust or face-amount certificate company
that are, or are required to be, registered under section 8 of the Investment
Company Act of 1940, as
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amended (the "Investment Company Act"). There are no other requirements of Rule
144A(d)(3) promulgated pursuant to the Securities Act ("Rule 144A(d)(3)").
(d) None of the Parent REIT, the Company or the Trust, nor any of
their Affiliates, nor any person acting on its or their behalf, has engaged, or
will engage, in any "directed selling efforts" within the meaning of Regulation
S under the Securities Act with respect to the Securities.
(e) None of the Parent REIT, the Company or the Trust is and,
immediately following consummation of the transactions contemplated hereby and
the application of the net proceeds therefrom, will not be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of section 3(a) of the Investment Company Act.
(f) None of the Parent REIT, the Company or the Trust has paid or
agreed to pay to any person any compensation for soliciting another to purchase
any of the Securities, except for the preferred securities commission and/or the
sales commission the Parent REIT has agreed to pay to Xxxxx Bros. & Company (or
to Parent REIT's or the Company's introducing agent on behalf of Xxxxx Bros. &
Company) pursuant to the letter agreement between Parent REIT and Xxxxx Bros. &
Company, dated June 1, 2005.
(g) The Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act, 12
Del. C. Section.3801, et seq. (the "Statutory Trust Act") with all requisite
power anD authority to own property and to conduct the business it transacts and
proposes to transact and to enter into and perform its obligations under the
Operative Documents to which it is a party. The Trust is duly qualified to
transact business as a foreign entity and is in good standing in each
jurisdiction in which such qualification is necessary, except where the failure
to so qualify or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, business or assets of the
Trust, whether or not occurring in the ordinary course of business. The Trust is
not a party to or otherwise bound by any agreement other than the Operative
Documents. The Trust is and will be, under current law, classified for U.S.
federal income tax purposes as a grantor trust and not as an association or
publicly traded partnership taxable as a corporation.
(h) The Trust Agreement has been duly authorized by the Company
and, on the Closing Date specified in Section 2(b), will have been duly executed
and delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether the issue
of enforceability is considered in a proceedings at law or equity). Each of the
Administrative Trustees of the Trust is an employee of Parent REIT or the
Company or a subsidiary thereof and has been duly authorized by the Company to
execute and deliver the Trust Agreement.
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(i) The Indenture has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by the Indenture
Trustee, will be a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights generally and to general principles of
equity (regardless of whether the issue of enforceability is considered in a
proceedings at law or equity).
(j) The Preferred Securities and the Common Securities have been
duly authorized by the Trust and, when issued and delivered against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and non-assessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement, enforceable against the Trust in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether the issue of enforceability is
considered in a proceedings at law or equity). The issuance of the Securities is
not subject to any preemptive or other similar rights. On the Closing Date, all
of the issued and outstanding Common Securities will be directly owned by the
Company free and clear of any pledge, security interest, claim, lien or other
encumbrance of any kind (each, a "Lien").
(k) The Junior Subordinated Notes have been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture and,
when authenticated in the manner provided for in the Indenture and delivered to
the Trust against payment therefor in accordance with the Junior Subordinated
Note Purchase Agreement, will constitute legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights generally and to general principles of equity
(regardless of whether the issue of enforceability is considered in a
proceedings at law or equity).
(l) This Purchase Agreement has been duly authorized, executed and
delivered by Parent REIT, the Company and the Trust.
(m) Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by Parent REIT, the Company or the
Trust, nor the consummation of the transactions contemplated herein or therein,
(i) will conflict with or constitute a violation or breach of the Trust
Agreement or the charter or bylaws of Parent REIT, the Company or any subsidiary
of Parent REIT or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, governmental authority, agency or
instrumentality or court, domestic or foreign, having jurisdiction over the
Trust or Parent REIT or any of its subsidiaries or their respective properties
or assets (collectively, the "Governmental Entities"), (ii) will conflict with
or constitute a
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violation or breach of, or a default or Repayment Event (as defined below)
under, or result in the creation or imposition of any Lien upon any property or
assets of the Trust, Parent REIT or any of Parent REIT's subsidiaries pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which (A) the Trust, Parent REIT or any of its
subsidiaries is a party or by which it or any of them may be bound, or (B) to
which any of the property or assets of any of them is subject, or any judgment,
order or decree of any court, Governmental Entity or arbitrator, except, in the
case of this clause (ii), for such conflicts, breaches, violations, defaults,
Repayment Events (as defined below) or Liens which (X) would not, singly or in
the aggregate, adversely affect the consummation of the transactions
contemplated by the Operative Documents and (Y) would not, singly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), earnings, business, liabilities and assets of Parent REIT and its
subsidiaries taken as a whole, whether or not occurring in the ordinary course
of business (a "Material Adverse Effect") or (iii) require the consent,
approval, authorization or order of any court or Governmental Entity. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust or Parent REIT
or any of its subsidiaries prior to its scheduled maturity.
(n) The Company has been duly formed and is validly existing as a
limited partnership in good standing under the Tennessee Revised Uniform Limited
Partnership Act, with all requisite power and authority to own, lease and
operate its properties and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing as
a foreign entity in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be so
qualified would not, singly or in the aggregate, have a Material Adverse Effect.
The Parent REIT 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 power and authority (corporate or otherwise) to own, lease and operate
its properties and conduct the business it transacts and proposes to transact,
and is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its activities requires
such qualification, except where the failure of the Parent REIT to be so
qualified would not, singly or in the aggregate, have a Material Adverse Effect.
(o) The Parent REIT has no subsidiaries that are material to its
business, financial condition or earnings other than those subsidiaries listed
in Schedule 1 attached hereto (collectively, the "Significant Subsidiaries").
Each Significant Subsidiary has been duly organized and is validly existing as a
entity in good standing under the laws of the jurisdiction in which it is
chartered or organized, with all requisite power and authority (corporate or
otherwise) to own, lease and operate its properties and conduct the business it
transacts and proposes to transact. Each Significant Subsidiary is duly
qualified to transact business and is in good standing as a foreign entity in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure to be so qualified would not, singly or
in the aggregate, have a Material Adverse Effect.
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(p) Each of the Trust, the Parent REIT and each of the Parent
REIT's subsidiaries hold all necessary approvals, authorizations, orders,
licenses, consents, registrations, qualifications, certificates and permits
(collectively, the "Governmental Licenses") of and from Governmental Entities
necessary to conduct their respective businesses as now being conducted, and
neither the Trust, the Parent REIT nor any of the Parent REIT's subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Government License, except where the failure to be so licensed or
approved or the receipt of an unfavorable decision, ruling or finding, would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity or the failure of such Governmental Licenses to be in full force and
effect, would not, singly or in the aggregate, have a Material Adverse Effect;
and the Parent REIT and its subsidiaries are in compliance with all applicable
laws, rules, regulations, judgments, orders, decrees and consents applicable to
their respective businesses, except where the failure to be in compliance would
not, singly or in the aggregate, have a Material Adverse Effect.
(q) All of the issued and outstanding shares of capital stock or
partnership interests, as the case may be, of the Parent REIT and each of its
subsidiaries are validly issued, fully paid and non-assessable, as applicable;
except as set forth on Schedule 4(q), all of the issued and outstanding capital
stock of each subsidiary of the Parent REIT is wholly-owned by the Parent REIT,
directly or through subsidiaries, free and clear of any Lien, claim or equitable
right; and none of the issued and outstanding capital stock of the Parent REIT
or any subsidiary was issued in violation of any preemptive or similar rights
arising by operation of law, under the charter or by-laws of such entity or
under any agreement to which the Parent REIT or any of its subsidiaries is a
party.
(r) Neither the Parent REIT nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or similar organizational
documents or (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the Parent
REIT or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of any of them is subject,
except, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.
(s) There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Parent REIT, the Company or the Trust after due inquiry,
threatened against or affecting the Trust, the Parent REIT or the Company or any
of the Parent REIT's subsidiaries, except for such actions, suits or proceedings
that, if adversely determined, would not, singly or in the aggregate, adversely
affect the consummation of the transactions contemplated by the Operative
Documents or have a Material Adverse Effect; and the aggregate of all pending
legal or governmental proceedings to which the Trust or the Parent REIT or any
of its subsidiaries is a party or of which any of their respective properties or
assets is subject, including ordinary routine litigation incidental to the
business, are not expected to result in a Material Adverse Effect.
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(t) The accountants of the Parent REIT who certified the Financial
Statements (as defined below) are independent public accountants of the Parent
REIT and its subsidiaries within the meaning of the Securities Act, and the
rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder.
(u) The audited consolidated financial statements (including the
notes thereto) and schedules of the Parent REIT and its consolidated
subsidiaries for the fiscal year ended December 31, 2004 (the "Financial
Statements") and the interim unaudited consolidated financial statements of the
Parent REIT and its consolidated subsidiaries for the quarter ended March 31,
2005 (the "Interim Financial Statements") filed with the Commission are the most
recent available audited and unaudited consolidated financial statements of the
Parent REIT and its consolidated subsidiaries and fairly present in all material
respects, in accordance with U.S. generally accepted accounting principles
("GAAP"), the financial position of the Parent REIT and its consolidated
subsidiaries, and the results of operations and changes in financial condition
as of the dates and for the periods therein specified, subject, in the case of
Interim Financial Statements, to year-end adjustments (which are expected to
consist solely of normal recurring adjustments). Such consolidated financial
statements and schedules have been prepared in accordance with GAAP consistently
applied throughout the periods involved (except as otherwise noted therein).
(v) None of the Trust, the Parent REIT nor any of its subsidiaries
has any material liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including
any liability for taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit,
proceeding, hearing, charge, complaint, claim or demand against the Parent REIT
or its subsidiaries that could give rise to any such liability), except for (i)
liabilities set forth in the Financial Statements or the Interim Financial
Statements and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
the Trust, the Parent REIT and all of its subsidiaries since the date of the
most recent balance sheet included in such Financial Statements.
(w) Since the respective dates of the Financial Statements and the
Interim Financial Statements, there has not been (A) any Material Adverse Change
or (B) any dividend or distribution of any kind declared, paid or made by the
Parent REIT on any class of its capital stock other than regular quarterly
dividends on the Parent REIT's common stock.
(x) The documents of the Parent REIT filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Parent REIT's most recent Annual Report on Form 10-K,
at the time they were or hereafter are filed by the Parent REIT with the
Commission (collectively, the "1934 Act Reports"), complied and will comply in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder (the "1934 Act Regulations"), and,
at the date of this Purchase Agreement and on the Closing Date, do not and will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances
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under which they were made, not misleading; and other than such instruments,
agreements, contracts and other documents as are filed as exhibits to the Parent
REIT's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K, there are no instruments, agreements, contracts or
documents of a character described in Item 601 of Regulation S-K promulgated by
the Commission to which the Parent REIT or any of its subsidiaries is a party.
The Parent REIT is in compliance with all currently applicable requirements of
the Exchange Act that were added by the Xxxxxxxx-Xxxxx Act of 2002.
(y) No labor dispute with the employees of the Trust, the Parent
REIT or any of its subsidiaries exists or, to the knowledge of the
administrative trustees or executive officers, as the case may be, of the Trust,
the Company or the Parent REIT, is imminent, except those which would not,
singly or in the aggregate, have a Material Adverse Effect.
(z) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Governmental Entity, other
than those that have been made or obtained and any that are required under the
securities or blue sky laws of the jurisdictions in which the Securities are
offered,, is necessary or required for the performance by the Trust, the Parent
REIT or the Company of their respective obligations under the Operative
Documents, as applicable, or the consummation by the Trust, the Parent REIT and
the Company of the transactions contemplated by the Operative Documents.
(aa) Each of the Trust, the Parent REIT and each subsidiary of the
Parent REIT has good and marketable title to all of its respective real and
personal properties, in each case free and clear of all Liens and defects,
except for those (i) related to debt financings disclosed in the 1934 Act
Reports and (ii) that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Trust, the
Parent REIT or any subsidiary of the Parent REIT holds properties are in full
force and effect, except where the failure of such leases and subleases to be in
full force and effect would not, singly or in the aggregate, have a Material
Adverse Effect, and none of the Trust, the Parent REIT or any subsidiary of the
Parent REIT has any notice of any claim of any sort that has been asserted by
anyone adverse to the rights of the Trust, the Parent REIT or any subsidiary of
the Parent REIT under any such leases or subleases, or affecting or questioning
the rights of such entity to the continued possession of the leased or subleased
premises under any such lease or sublease, except for such claims that would
not, singly or in the aggregate, have a Material Adverse Effect.
(bb) [Reserved].
(cc) Commencing with its taxable year ended December 31, 2004, the
Parent REIT has been, and upon the completion of the transactions contemplated
hereby, the Parent REIT will continue to be, organized and operated in
conformity with the requirements for qualification and taxation as a real estate
investment trust (a "REIT") under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Parent REIT's method of
operation enables it to continue to meet the requirements for qualification and
taxation as a REIT under the Code, and no actions have been taken (or not taken
which are required to be taken) which would cause such qualification to be lost.
The Parent REIT expects to continue to be organized and to operate in a manner
so as to qualify as a REIT in the taxable year ending
11
December 31, 2005 and succeeding taxable years unless and until the Board of
Directors of the Parent REIT determines that the Parent REIT not continue to be
so qualified.
(dd) The Parent REIT and each of the Significant Subsidiaries have
timely and duly filed all Tax Returns required to be filed by them or have
obtained a valid extension for such filines, and all such Tax Returns are true,
correct and complete in all material respects. The Parent REIT and each of the
Significant Subsidiaries have timely and duly paid in full all material Taxes
required to be paid by them (whether or not such amounts are shown as due on any
Tax Return). There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Parent REIT or any of the
Significant Subsidiaries, and, to the knowledge of the Parent REIT, no such
audits or assessments are threatened. As used herein, the terms "Tax" or "Taxes"
mean (i) all federal, state, local, and foreign taxes, and other assessments of
a similar nature (whether imposed directly or through withholding), including
any interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term "Tax Returns" means all federal, state, local, and foreign Tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto filed or required to be filed with any
Governmental Entity.
(ee) There are no rulemaking or similar proceedings before the
United States Internal Revenue Service or comparable federal, state, local or
foreign government bodies which involve or affect the Parent REIT or any
subsidiary, which, if the subject of an action unfavorable to the Parent REIT or
any subsidiary, could result in a Material Adverse Effect.
(ff) The books, records and accounts of the Parent REIT and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Parent REIT and its subsidiaries. The Parent REIT and each of
its subsidiaries maintains a system of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(gg) The Parent REIT and the Significant Subsidiaries maintain
insurance against losses and risks in such amounts as they deem adequate. All
policies of insurance and fidelity or surety bonds insuring the Parent REIT or
any of the Significant Subsidiaries or the Parent REIT's or Significant
Subsidiaries' respective businesses, assets, employees, officers and directors
are in full force and effect. The Parent REIT and each of the Significant
Subsidiaries are in compliance with the terms of such policies and instruments
in all +material respects. Neither the Parent REIT nor any Significant
Subsidiary has reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain substantially
similar coverage from similar insurers as may be necessary to continue its
business
12
at a cost that would not have a Material Adverse Effect. Within the past twelve
months, neither the Parent REIT nor any Significant Subsidiary has been denied
any insurance coverage which it has sought or for which it has applied.
(hh) The Parent REIT and its subsidiaries or, to the Parent REIT's
knowledge, any person acting on behalf of the Parent REIT and its subsidiaries
including, without limitation, any director, officer, agent or employee of the
Parent REIT or its subsidiaries has not, directly or indirectly, while acting on
behalf of the Parent REIT and/or its subsidiaries (i) used any corporate,
partnership or company funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate, partnership or
company funds; (iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any other unlawful payment.
(ii) [Reserved].
(jj) (Neither the Parent REIT nor any of its subsidiaries has
released (as such term is defined in CERCLA (as defined below), authorized or
conducted, or has knowledge of, the generation, transportation, storage,
presence, use, treatment, disposal, release or other handling of any Hazardous
Materials (as defined below) on, in, under or affecting any of the real
properties currently or previously owned, leased or operated by the Parent REIT
or any of its subsidiaries (the "Properties") at any time, except in material
compliance with applicable laws. Except as disclosed in the 1934 Act Reports or
as would not have a Material Adverse Effect, (i) neither the Parent REIT nor any
of its subsidiaries intends to use the Properties or any subsequently acquired
properties, other than in compliance with applicable Environmental Laws, (ii)
neither the Parent REIT nor any of its subsidiaries has received any notice of,
or has any knowledge of any occurrence or circumstance which, with notice or
passage of time or both, would give rise to a claim under or pursuant to any
Environmental Law with respect to the Properties, any other real properties
previously owned, leased or operated by the Parent REIT or any of its
subsidiaries, or their respective assets or arising out of the conduct of the
Parent REIT or its subsidiaries, (iii) none of the Properties are included or,
to the Parent REIT's or the Company's knowledge, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA by the United States
Environmental Protection Agency or, to the Parent REIT's or the Company's
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Law or issued by any other Governmental
Entity, (iv) none of the Parent REIT, any of its subsidiaries or agents or, to
the Parent REIT's or the Company's knowledge, any other person or entity for
whose conduct any of them is or may be held responsible, has generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced or processed any Hazardous Material at any of the
Properties, except in compliance with all applicable Environmental Laws, and has
not transported or arranged for the transport of any Hazardous Material from the
Properties or any other real properties previously owned, leased or operated by
the Parent REIT or any of its subsidiaries to another property, except in
compliance with all applicable Environmental Laws, (v) no lien has been imposed
on the Properties by any Governmental Entity in connection with the presence on
or off such Property of any Hazardous Material, and (vi) none of the Parent
REIT, any of its subsidiaries or, to the Parent REIT's or the Company's
knowledge, any other person or entity for whose conduct
13
any of them is or may be held responsible, has entered into or been subject to
any consent decree, compliance order, or administrative order with respect to
the Properties or any facilities or improvements or any operations or activities
thereon.
As used herein, "Hazardous Materials" shall include, without limitation,
any flammable materials, explosives, radioactive materials, hazardous materials,
hazardous substances, hazardous wastes, toxic substances or related materials,
asbestos, petroleum, petroleum products and any hazardous material as defined by
any federal, state or local environmental law, statute, ordinance, rule or
regulation, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 5101-5127, the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sections 6901-6992k, the Emergency Planning and
CommuniTY Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. Sections 2601-2692, the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42
U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 651-678, and Any analogous state laws, as any of the above may be
amended from time to time and in the regulations promulgated pursuant to each of
the foregoing (including environmental statutes and laws not specifically
defined herein) (individually, an "Environmental Law" and collectively, the
"Environmental Laws") or by any Governmental Entity.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Parent REIT, the Company and
the Trust as follows:
(a) The Purchaser is aware that the Securities have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United States or to "U.S. persons" (as defined in Regulation S under
the Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.
(b) The Purchaser is an "accredited investor," as such term is
defined in Rule 501(a) of Regulation D under the Securities Act.
(c) Neither the Purchaser, nor any of the Purchaser's affiliates,
nor any person acting on the Purchaser's or the Purchaser's Affiliate's behalf
has engaged, or will engage, in any form of "general solicitation or general
advertising" (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Preferred Securities.
(d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Securities and that it is unlikely that a public
market will ever exist for the Securities, (ii) the Purchaser is purchasing the
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such
14
Securities pursuant to an effective registration statement under the Securities
Act or pursuant to an exemption therefrom or in a transaction not subject
thereto, and the Purchaser agrees to the legends and transfer restrictions
applicable to the Securities contained in the Indenture, and (iii) the Purchaser
has had the opportunity to ask questions of, and receive answers and request
additional information from, the Parent REIT and the Company and is aware that
it may be required to bear the economic risk of an investment in the Securities.
The Purchaser will not distribute the Securities in such a manner as to cause
the Company or the Trust to become subject to the reporting requirements of the
Exchange Act.
(e) The Purchaser is a company with limited liability duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction in which it is organized with all requisite (i) power and authority
to execute, deliver and perform the Operative Documents to which it is a party,
to make the representations and warranties specified herein and therein and to
consummate the transactions contemplated herein and (ii) right and power to
purchase the Securities.
(f) This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and no filing with, or authorization, approval,
consent, license, order registration, qualification or decree of, any
governmental body, agency or court having jurisdiction over the Purchaser, other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Purchase Agreement or
to consummate the transactions contemplated herein.
(g) The Purchaser is a "Qualified Purchaser" as such term is
defined in Section 2(a)(51) of the Investment Company Act.
6. COVENANTS AND AGREEMENTS OF THE PARENT REIT, THE COMPANY AND
THE TRUST. The Company, the Parent REIT and the Trust jointly and severally
agree with the Purchaser as follows:
(a) During the period from the date of this Agreement to the
Closing Date, the Company, the Parent REIT and the Trust shall use their
commercially reasonable efforts and take all action necessary or appropriate to
cause their representations and warranties contained in Section 4 hereof to be
true as of the Closing Date, after giving effect to the transactions
contemplated by this Purchase Agreement, as if made on and as of the Closing
Date.
(b) The Company, the Parent REIT or the Trust, as the case may be,
will promptly advise the Purchaser of the receipt by the Company, the Parent
REIT or the Trust, as the case may be, of any notification with respect to the
suspension of the qualification of the Preferred Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(c) None of the Parent REIT, the Company or the Trust will, nor
will either of them permit any of its Affiliates to, nor will either of them
permit any person acting on its or their behalf (other than the Purchaser) to,
resell any Preferred Securities that have been acquired by any of them.
15
(d) None of the Parent REIT, the Company or the Trust will, nor
will either of them permit any of their Affiliates or any person acting on their
behalf to, engage in any "directed selling efforts" within the meaning of
Regulation S under the Securities Act with respect to the Securities.
(e) None of the Parent REIT, the Company or the Trust will, nor
will either of them permit any of their Affiliates or any person acting on their
behalf to, directly or indirectly, make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act.
(f) None of the Parent REIT, the Company or the Trust will, nor
will either of them permit any of its Affiliates or any person acting on their
behalf to, engage in any form of "general solicitation or general advertising"
(within the meaning of Regulation D) in connection with any offer or sale of any
of the Securities.
(g) So long as any of the Securities are outstanding, (i) the
Securities shall not be listed on a national securities exchange registered
under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) none of the Parent REIT, the Company or the Trust
shall be an open-end investment company, unit investment trust or face-amount
certificate company that is, or is required to be, registered under section 8 of
the Investment Company Act, and, the Securities shall otherwise satisfy the
eligibility requirements of Rule 144A(d)(3).
(h) The Parent REIT and the Trust shall furnish to (i) the
holders, and subsequent holders of the Preferred Securities, (ii) Xxxxx Bros. &
Company (at 000 Xxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, or such other address as
designated by Xxxxx Bros. & Company) and (iii) any beneficial owner of the
Securities reasonably identified to the Parent REIT and the Trust (which
identification may be made by either such beneficial owner or by Xxxxx Bros. &
Company), a duly completed and executed certificate in the form attached hereto
as Annex F, including the financial statements referenced in such Annex, which
certificate and financial statements shall be so furnished by the Parent REIT
and the Trust not later than forty five (45) days after the end of each of the
first three fiscal quarters of each fiscal year of the Parent REIT and not later
than ninety (90) days after the end of each fiscal year of the Parent REIT.
(i) Each of the Parent REIT and the Trust will, during any period
in which it is not subject to and in compliance with section 13 or 15(d) of the
Exchange Act, or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, shall provide to
each holder of the Securities and to each prospective purchaser (as designated
by such holder) of the Securities, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. If the Parent REIT and the Trust are
required to register under the Exchange Act, such reports filed in compliance
with Rule 12g3-2(b) shall be sufficient information as required above. This
covenant is intended to be for the benefit of the Purchaser, the holders of the
Securities, and the prospective purchasers designated by the Purchaser and such
holders, from time to time, of the Securities.
16
(j) None of the Parent REIT, the Company or the Trust will, until
one hundred eighty (180) days following the Closing Date, without the
Purchaser's prior written consent, offer, sell, contract to sell, grant any
option to purchase or otherwise dispose of, directly or indirectly, (i) any
Preferred Securities or other securities substantially similar to the Preferred
Securities other than as contemplated by this Purchase Agreement or (ii) any
other securities convertible into, or exercisable or exchangeable for, any
Preferred Securities or other securities substantially similar to the Preferred
Securities. For the avoidance of doubt, the parties hereby agree that trust
preferred securities issued by a subsidiary, financing trust, other than the
Trust, with (i) a different interest rate, (ii) different interest payment
dates, and (iii) a different maturity date, in each case than the Preferred
Securities, shall be deemed to not be substantially similar to the Preferred
Securities.
(k) The Parent REIT will use its reasonable best efforts to meet
the requirements to qualify as a REIT under Sections 856 through 860 of the
Code, effective for the taxable year ending December 31, 2005 (and each fiscal
quarter of such year) and succeeding taxable years, unless and until the Board
of Director's of the Parent REIT determine that the Parent REIT not continue to
be qualified as a REIT.
(l) None of the Parent REIT, the Company nor the Trust will
identify any of the Indemnified Parties (as defined below) in a press release or
any other public statement without the consent of such Indemnified Party, which
consent shall not be unreasonably withheld and shall be timely provided.
7. PAYMENT OF EXPENSES. The Company, as depositor of the Trust,
agrees to pay all costs and expenses incident to the performance of the
obligations of the Parent REIT, the Company and the Trust under this Purchase
Agreement, whether or not the transactions contemplated herein are consummated
or this Purchase Agreement is terminated, including all costs and expenses
incident to (i) the authorization, issuance, sale and delivery of the Preferred
Securities and any taxes payable in connection therewith; (ii) the fees and
expenses of qualifying the Preferred Securities under the securities laws of the
several jurisdictions as provided in Section 6(b); (iii) the fees and expenses
of the counsel, the accountants and any other experts or advisors retained by
the Parent REIT, the Company or the Trust; (iv) the fees and all reasonable
expenses of the Property Trustee, the Delaware Trustee, the Indenture Trustee
and any other trustee or paying agent appointed under the Operative Documents,
including the fees and disbursements of counsel for such trustees, which fees
shall not exceed a $2,000 acceptance fee, $3,500 for the fees and expenses of
Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware counsel retained by the
Delaware Trustee in connection with the Closing, and $4,000 in administrative
fees annually; (v) $50,000 for the fees and expenses of Mayer, Brown, Xxxx & Maw
LLP, special counsel retained by the Purchaser; and (vi) a due diligence fee in
an amount equal to $12,500 ($5,000 to be due upon execution of the Letter of
Intent) payable to Xxxxx Bros. & Company.
If the sale of the Preferred Securities provided for in this
Purchase Agreement is not consummated because any condition set forth in Section
3 hereof to be satisfied by either the Parent REIT, the Company or the Trust is
not satisfied, because this Purchase Agreement is terminated pursuant to Section
9 or because of any failure, refusal or inability on the part of the
17
Parent REIT, the Company or the Trust to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder other than by
reason of a default by the Purchaser, the Parent REIT will reimburse the
Purchaser upon demand for all reasonable out-of-pocket expenses (including the
fees and expenses of each of the Purchaser's counsel specified in the
immediately preceding paragraph) that shall have been incurred by the Purchaser
in connection with the proposed purchase and sale of the Preferred Securities.
The Parent REIT shall not in any event be liable to the Purchaser for the loss
of anticipated profits from the transactions contemplated by this Purchase
Agreement.
8. INDEMNIFICATION. (a) The Parent REIT, the Company and the
Trust agree jointly and severally to indemnify and hold harmless the Purchaser,
the Purchaser's affiliates, Xxxxx Bros. & Company and Xxxxxxx Xxxxx & Co.
(collectively, the "Indemnified Parties"), each person, if any, who controls any
of the Indemnified Parties within the meaning of the Securities Act, or the
Exchange Act, and the Indemnified Parties' respective directors, officers,
employees and agents against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any information or documents furnished or made available to the
Purchaser by or on behalf of the Parent REIT or the Company, (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iii) the
breach or alleged breach of any representation, warranty or agreement of the
Parent REIT, the Company or the Trust contained herein or or any of the other
Operative Documents, and agrees to reimburse each such Indemnified Party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Parent REIT, the Company or the Trust may otherwise have.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever due from the Trust under
paragraph (a) above.
(c) Promptly after receipt by an Indemnified Party under this
Section 8 of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) above
unless and to the extent that such failure results in the forfeiture by the
indemnifying party of material 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.
Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
that counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all
18
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. An indemnifying party will not, without the prior
written consent of the Indemnified Parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.
9. TERMINATION; REPRESENTATIONS AND INDEMNITIES TO SURVIVE. This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by written notice given to the Parent REIT, the Company and the
Trust prior to delivery of and payment for the Preferred Securities, if prior to
such time (i) a downgrading shall have occurred in the rating accorded the
Parent REIT's debt securities or preferred stock by any "nationally recognized
statistical rating organization," as that term is used by the Commission in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Parent REIT's debt securities or
preferred stock, (ii) the Trust shall be unable to sell and deliver to the
Purchaser at least $50,000,000 stated liquidation value of Preferred Securities,
(iii) a suspension or material limitation in trading in securities generally
shall have occurred on the New York Stock Exchange, (iv) a suspension or
material limitation in trading in any of the Parent REIT's securities shall have
occurred on the New York Stock Exchange, (v) a general moratorium on commercial
business activities shall have been declared either by federal or Tennessee
authorities or (vi) there shall have occurred any outbreak or escalation of
hostilities, or declaration by the United States of a national emergency or war
or other calamity or crisis the effect of which on financial markets is such as
to make it, in the Purchaser's judgment, impracticable or inadvisable to proceed
with the offering or delivery of the Preferred Securities. The respective
agreements, representations, warranties, indemnities and other statements of the
Parent REIT, the Company and the Trust or their respective officers or trustees
and of the Purchaser set forth in or made pursuant to this Purchase Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of the Purchaser, the Parent REIT, the Company or the Trust or any of
the their respective officers, directors, trustees or controlling persons, and
will survive delivery of and payment for the Preferred Securities. The
provisions of Sections 7 and 8 shall survive the termination or cancellation of
this Purchase Agreement.
10. AMENDMENTS. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.
11. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered by hand or courier or sent by facsimile and confirmed to the Purchaser
c/x Xxxxx Bros. & Company, 000 Xxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention:
Xxxxxxxx Xxxx, Facsimile: (000) 000-0000; with a copy to Mayer, Brown, Xxxx &
Maw LLP, 00 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: J. Xxxx
Xxxxxxxxx, Facsimile: (000) 000-0000 or other address as the Purchaser shall
designate for such purpose in a notice to the Company and the Trust; and if sent
to the Company or the Trust,
19
will be mailed, delivered by hand or courier or sent by facsimile and confirmed
to it at Equity Inns, Inc., 0000 Xxxx Xxxxx Xxxx., Xxxxxxxxxx, XX 00000,
Attention: J. Xxxxxxxx Xxxxxxx, Facsimile: (000) 000-0000, with a copy to Hunton
& Xxxxxxxx LLP, Riverfront Plaza, East Tower, 000 X. Xxxx Xxxxxx, Xxxxxxxx, XX
00000, Attention: Xxxxx Xxxxxx, Facsimile: (000 000-0000.
12. SUCCESSORS AND ASSIGNS. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof and their
successors, assigns, heirs and legal representatives, any right or obligation
hereunder. None of the rights or obligations of the Parent REIT, the Company or
the Trust under this Purchase Agreement may be assigned, whether by operation of
law or otherwise, without the Purchaser's prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Parent REIT's, the Company's or the Trust's consent;
provided that the assignee assumes the obligations of the Purchaser under this
Purchase Agreement.
13. APPLICABLE LAW. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).
14. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING BY
OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
15. COUNTERPARTS AND FACSIMILE. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
16. NO OBLIGATIONS OF THE PARENT REIT. The Parent REIT shall have
no liability as issuer, guarantor, obligor or otherwise of the Common
Securities, the Preferred Securities or the Junior Subordinated Notes.
20
IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of
the date first written above.
EQUITY INNS, INC.
By: /s/ J. Xxxxxxxx Xxxxxxx
-------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice
President,
Chief Financial Officer,
Secretary and Treasurer
EQUITY INNS STATUTORY TRUST I
By: EQUITY INNS PARTNERSHIP, L.P., as
Depositor
By: EQUITY INNS TRUST, its general
partner
By: /s/ J. Xxxxxxxx Xxxxxxx
-------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice
President,
Chief Financial Officer,
Secretary and Treasurer
By: EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST, its general
partner
By: /s/ J. Xxxxxxxx Xxxxxxx
-------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice
President,
Chief Financial Officer,
Secretary and Treasurer
XXXXXXX XXXXX INTERNATIONAL
By: /s/ Xxxxxxx Xxxxx International
-------------------------------
Name:
Title:
21
SCHEDULE 1
LIST OF SIGNIFICANT SUBSIDIARIES
Equity Inns Partnership, L.P. Limited Partnership Tennessee
Equity Inns Trust Real Estate Investment Trust Maryland
XxXxxxxx Hotel Group of Xxxxxxxxxxx, Xxxxxxx #0, LP Limited Partnership Georgia
EQI/WV Financing Partnership II, L.P. Limited Partnership Tennessee
EQI Financing Partnership V, LP Limited Partnership Tennessee
EQI Financing Partnership IV, LP Limited Partnership Tennessee
EQI Financing Partnership III, LP Limited Partnership Tennessee
EQI Financing Partnership II, LP Limited Partnership Tennessee
EQI Financing Partnership I, LP Limited Partnership Tennessee
EIP Orlando, LP Limited Partnership Tennessee
22
SCHEDULE 4(q)
Equity Inns Trust, a wholly owned subsidiary of the Parent REIT, owns
approximately 97.3% interest in the Company. Approximately 2.7% of the equity
interests of the Company are owned by limited partners.
23
ANNEX A-I
Pursuant to Section 3(c)(i) of the Purchase Agreement, Hunton &
Xxxxxxxx LLP, counsel for the Company, shall deliver an opinion to the effect
that:
1. Based solely on the certificate of public officials, the
Parent REIT is validly existing as a corporation in good standing under the laws
of the State of Tennessee. The Public REIT has the corporate power and authority
to own or lease its properties and to conduct its business as described in the
1934 Act Reports and to execute and deliver, and to perform its obligations
under, the Operative Documents to which it is a party.
2. Based solely on the certificates of public officials, the
Company and each Significant Subsidiary is validly existing as a limited
partnership, in good standing under the laws of the State of Tennessee. Each of
the Company and each Significant Subsidiary has the partnership power and
authority to own or lease its properties and to conduct its business as
described in the 1934 Act Reports and to execute and deliver, and to perform its
obligations under, the Operative Documents to which it is a party.
3. Neither (i) the issuance and sale of the Common Securities
pursuant to the Common Securities Subscription Agreement and the Trust
Agreement, (ii) the issuance and sale of the Preferred Securities pursuant to
the Purchase Agreement and the Trust Agreement, (iii) or the issuance and sale
of the Junior Subordinated Notes by the Company to the Trust pursuant to the
Note Purchase Agreement and the Indenture, (iv) the execution and delivery of,
and compliance with, the Operative Documents by the Company, the Parent REIT or
the Trust nor (v) the consummation of the transactions contemplated thereby will
constitute a violation of the Charter, the Bylaws, the Partnership Agreement or
the Trust Agreement.
4. The Trust Agreement has been duly authorized by all necessary
partnership action and has been duly executed and delivered by the Company, as
Depositor, and duly executed and delivered by the Administrative Trustees.
5. The Indenture has been duly authorized, executed and delivered
by the Company and assuming it has been duly authorized, executed and delivered
by the Trustee, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
6. The Junior Subordinated Notes have been duly authorized and
executed by the Company and delivered to the Trustee for authentication in
accordance with the Indenture and, when authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered to the Trust
against payment therefor as set forth in the Note Purchase Agreement, will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms.
7. The Trust is not and, after giving effect to the issuance of
the Preferred Securities, the consummation of the transactions contemplated by
the Operative Documents and the application of the proceeds therefrom as
described in and pursuant to the terms of the Purchase Agreement and the Trust
Agreement, will not be, an "investment company" or an entity
A-I-1
"controlled by an "investment company," in each case as such term is defined in
the Investment Company Act of 1940, as amended.
8. In reliance upon the representations, warranties and covenants
made in the Common Securities Subscription Agreement, the Purchase Agreement and
the Note Purchase Agreement and the Trust Agreement, it is not necessary in
connection with the offer and sale of the Common Securities, the Preferred
Securities and the Junior Subordinated Notes pursuant to the Common Securities
Subscription Agreement, the Purchase Agreement and the Note Purchase Agreement,
respectively, to register the Common Securities, the Preferred Securities or the
Junior Subordinated Notes under the Securities Act of 1933, as amended (the
"Securities Act"), or to require qualification of the Indenture under the Trust
Indenture Act of 1939, as amended.
9. The Purchase Agreement has been duly authorized, executed and
delivered by the Company, the Parent REIT and the Trust and constitutes a legal,
valid and binding obligation of the Company, the Parent REIT and the Trust,
enforceable against the Company, the Parent REIT and the Trust in accordance
with its terms.
10. The execution, delivery and performance of the Operative
Documents and the consummation of the transactions contemplated by the Operative
Documents by the Company, the Parent REIT and the Trust do not and will not (i)
result in the creation or imposition of any material lien, claim, charge,
encumbrance or restriction upon any property or assets of the Company or the
Significant Subsidiaries, or (ii) conflict with, constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, (x) the Charter, the Bylaws or the Partnership Agreement,
or (y) any material contract filed as an exhibit to the Form 10-K for the year
ended December 31, 2004 by the Parent REIT (provided that we express no opinion
with respect to any financial covenants in any such documents) or (z) any order,
decree, or judgment of any court, arbitrator, government or governmental agency
or instrumentality known to us and binding on the Company or the Significant
Subsidiaries in each case, except as would not have a Material Adverse Effect.
11. Except for filings, registrations or qualifications that may
be required by applicable securities laws, no authorization, approval, consent
or order of, or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or authority) is
required under the laws of the State of Tennessee in connection with the offer
and sale of the Securities pursuant to the Operative Documents and the
transactions contemplated thereby.
12. To our knowledge, without having conducted a search of the
courts of any jurisdiction, there is no action, suit or proceeding of or before
any court or administrative body pending or overtly threatened in writing
against the Parent REIT or the Company wherein an unfavorable decision, ruling
or finding would have a Material Adverse Effect.
A-I-2
ANNEX A-II
Pursuant to Section 3(c)(i) of the Purchase Agreement, Hunton & Xxxxxxxx
LLP, counsel for the Parent REIT and the Company, shall deliver an opinion to
the effect that, the Parent REIT's qualified to be taxed as a REIT pursuant to
Sections 856 through 860 of the Xxx for its taxable years ended December 31,
2001 through December 31, 2004, and the Parent REIT's organization and current
proposed method of operation will enable it to continue to satisfy the
requirements for qualification and taxation as a REIT for its taxable year
ending December 31, 2005 and in the future.
A-I-1
Equity Inns, Inc.
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
June 17, 0000
Xxxxxx & Xxxxxxxx XXX
Xxxxxxxxxx Xxxxx, Xxxx Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Equity Inns, Inc.
Officer's Certificate
Ladies and Gentlemen:
In order to assist you in the preparation of the tax opinion, dated
the date hereof (the "Tax Opinion"), issued by you to Xxxxxxx Xxxxx
International ("Xxxxxxx Xxxxx") in connection with the proposed trust preferred
offering by Equity Inns Statutory Trust I, a Delaware statutory trust (the
"Issuer Trust"), pursuant to the Purchase Agreement effective as of June __,
2005, by and among Equity Inns, Inc., a Tennessee corporation (the "Company"),
Equity Inns Partnership, L.P., a Tennessee limited partnership (the "Operating
Partnership"), the Issuer Trust, and Xxxxxxx Xxxxx, the Company hereby certifies
to you that, to the best of the undersigned officer's knowledge, the following
statements are true and correct:
The representations contained in the certificates, dated September
11, 1998, June 25, 1998, February 17, 1998, March 25, 2002, July 10, 203, August
11, 2003, September 15, 2003, October 7, 2003, April 7, 2004, April 14, 2004,
August 26, 2004, October 20, 2004, October 22, 2004, March 3, 2005, and March 4,
2005 and executed by a duly appointed officer of the Company, are hereby
restated and remain true and correct as of the date hereof with respect to the
"Relevant Periods" referred to in such certificates.
During the period from January 1, 2001 through December 31, 2004
(the "Relevant Period"), none of the Company, the Operating Partnership, or any
subsidiary partnership of the Company (each, a "Subsidiary Partnership" and,
together with the Operating Partnership, the "Partnerships"), furnished or
rendered, or bore the cost of furnishing or rendering, any services to the
tenants of the hotels in which the Partnerships owned a direct or indirect
ownership interest (the "Hotels"), other than (i) the maintenance of underground
utilities and structural elements of the applicable Hotel, (ii) the payment of
real and personal property taxes, the cost of capital improvements, or the cost
of replacing or refurbishing personal property with respect to the Hotels, or
(iii) other services ("Customary Services") that (a) are usually or customarily
provided to tenants in the geographic areas in which the Hotels are located and
(b)
A-I-2
are usually and customarily rendered in connection with the rental of rooms or
other space for occupancy only and are not provided primarily for the tenants'
convenience. The services described in clauses (i) and (ii) of the preceding
sentence are usually or customarily provided by lessors of hotel properties in
the geographic areas in which the Hotels are located.
To the extent that the Company furnished or rendered services
("Noncustomary Services") other than Customary Services to the tenants of a
Hotel, the amount received for, or attributable to, such services did not exceed
1% of the Company's total receipts from the Hotel during the taxable year. For
that purpose, the amount treated as received by the Company with respect to the
Noncustomary Services is the greater of (i) the fair market value of such
services or (ii) 150% of the Company's direct cost of providing such services.
During the Relevant Period, the following requirements were met by
(i) the subsidiary of Prime Hospitality Corporation ("Prime") that leased,
operated, and managed certain of the Hotels prior to January 1, 2002 (the "Prime
Lessee"), (ii) subsidiaries of Interstate Hotels Company ("Interstate"),
including Crossroads Hospitality Company, L.L.C. ("Crossroads"), that operated
and managed certain of the Hotels, (iii) Promus Hotels, Inc. ("Promus"), (iv)
Crestline Hotels & Resorts, Inc. ("Crestline"), (v) Xxxxxxxx Holding Corp.
("Xxxxxxxx"), (vi) Xxxxx Holding Corp. ("Xxxxx"), (vii) Oradell Holding Corp.
("Oradell"), (viii) Waterford Hotel Group, Inc. ("Waterford"), (ix) Xxxxxx
Hospitality Management, LLC ("Xxxxxx"), (x) Innkeepers Hospitality Management,
Inc. ("Innkeepers"), (xi) XxXxxxxx Hotel Management, Inc. ("XxXxxxxx"), (xii)
Gateway Lodging Co., Inc. ("Gateway"), (xiii) Hospitality Group, Inc.
("Hospitality"), (xiv) any other person who managed or operated the Hotels (the
"Managers"), and (xv) any person who furnished or rendered Noncustomary Services
to the tenants of the Hotels (together with the Prime Lessee, Crossroads and the
other Interstate managers, Promus, Crestline, Caldwell, Wayne, Oradell,
Waterford, XxXxxxxx, Gateway, Hospitality, and the Managers, the "Independent
Contractors"), other than (a) Noncustomary Services falling within the 1% safe
harbor described in paragraph 2 above and (b) services that are described in
clause (i), (ii), or (iii) of paragraph 2 above:
such Independent Contractor did not own, directly or indirectly
(within the meaning of section 856(d)(5) of the Internal Revenue Code of 1986,
as amended (the "Code")), more than 35% of the stock of the Company;
if such Independent Contractor was a corporation, not more than 35%
of its stock, measured by voting power or number of shares, or, if such
Independent Contractor was a noncorporate entity, not more than 35% of the
interests in its assets or net profits was owned, directly or indirectly (within
the meaning of Code section 856(d)(5)), by one or more persons who owned 35% or
more of the stock of the Company;
neither the Company nor the Partnerships derived or received any
income from such Independent Contractor, other than rents from the Hotels, in
the case of the Prime Lessee;
such Independent Contractor was adequately compensated for its
services;
A-I-3
if such Independent Contractor was an individual, he or she was not
an officer or employee of the Company or a Partnership;
if such Independent Contractor was a corporation, none of its
officers or employees was an officer or employee of the Company or a
Partnership;
if an individual served as both (i) one of such Independent
Contractor's directors and (ii) a director and officer (or employee) of the
Company, that individual did not receive any compensation for serving as one of
such Independent Contractor's directors;
if an individual served as both (i) one of such Independent
Contractor's directors and officers (or employees) and (ii) a director of the
Company, that individual did not receive any compensation for serving as a
director of the Company;
the costs of any Noncustomary Services provided by such Independent
Contractor were borne by such Independent Contractor; and
any charge for such Noncustomary Services was made, received, and
retained by such Independent Contractor.
During the Relevant Period, the Company was managed at all times by
one or more directors, and beneficial ownership in the Company was evidenced at
all times by transferable shares.
During the Relevant Period, the Company was not chartered or
supervised as a bank, savings and loan, or similar association under state or
federal law.
During the Relevant Period, the Company did not operate as a small
business investment company under the Small Business Investment Act of 1958.
During the Relevant Period, the Company was not engaged in the
business of issuing life insurance, annuity contracts, or contracts of health or
accident insurance.
During the Relevant Period, the Company did not have, and did not
succeed to, any earnings and profits of the Company or any other corporation
accumulated during a non-REIT year.
During each taxable year of the Relevant Period, at least 95% of the
Company's gross income, excluding gross income from the sale of property held as
inventory or held primarily for sale to customers in the ordinary course of the
Company's trade or business ("Prohibited Income"), was derived from:
dividends;
interest;
A-I-4
rents from the operating leases (the "Leases") between the
Partnerships and the lessees of the Company's Hotels (the "Lessees") (including
(x) rents received from Equity Inns TRS Holdings, Inc. and its subsidiaries
(together, the "TRS Lessee"), and any other "taxable REIT subsidiary" ("TRS") of
the Company as long as the requirements set forth in paragraphs 32 through 36
below are satisfied, and (y) charges for services other than Noncustomary
Services rendered by or for the Company, whether or not such charges were
separately stated, but excluding rents attributable to personal property from
Hotels with respect to which the FMV Ratio (as defined below) exceeded 15% for
the taxable year, as described in paragraph 11 below);
gain from the sale or other disposition of stock, securities, and
real property (including interests in real property and interests in mortgages
on real property) that was not Prohibited Income;
abatements and refunds of taxes on real property;
income and gain derived from real property acquired directly by
foreclosure or deed in lieu thereof ("Foreclosure Property") that was not
Prohibited Income;
amounts received or accrued as consideration for entering into
agreements (i) to make loans secured by mortgages on real property or on
interests in real property or (ii) to purchase or lease real property (including
interests in real property and interests in mortgages on real property);
gain from the sale or other disposition of real estate assets
(including regular and residual interests in real estate mortgage investment
conduits ("REMICs"), to the extent provided in Code section 856(c)(5)(E)), that
was not Prohibited Income;
payments under interest rate swap or cap agreements, options,
futures contracts, forward rate agreements, or similar financial instruments
entered into by the Company to hedge indebtedness incurred or to be incurred to
acquire or carry real estate assets (including regular and residual interests in
REMICs, to the extent provided in Code section 856(c)(5)(E)) ("Qualified Hedging
Contracts"); and
gain from the sale or other disposition of Qualified Hedging
Contracts.
During each taxable year of the Relevant Period, at least 75% of the
Company's gross income (excluding Prohibited Income) was derived from:
rents from the Leases (including (x) rents received from the TRS
Lessee and any other TRS of the Company if the requirements set forth in
paragraphs 32 through 36 below are satisfied, and (y) charges for services other
than Noncustomary Services rendered by or for the Company, whether or not such
charges were separately stated, but excluding any interest accrued on rents and
excluding rents attributable to personal property from Hotels with respect to
which the FMV Ratio exceeded 15% for the taxable year, as described in paragraph
11 below);
A-I-5
interest on obligations secured by mortgages on real property or on
interests in real property (including interest on regular or residual interests
in REMICs, to the extent provided in Code section 856(c)(5)(E));
gain from the sale or other disposition of real property (including
interests in real property and interests in mortgages on real property) that was
not Prohibited Income;
dividends or other distributions on, and gain (other than Prohibited
Income) from the sale or other disposition of, transferable shares in other real
estate investment trusts ("REITs");
abatements and refunds of taxes on real property;
income and gain (other than Prohibited Income) derived from
Foreclosure Property;
amounts received or accrued as consideration for entering into
agreements (i) to make loans secured by mortgages on real property or on
interests in real property or (ii) to purchase or lease real property (including
interests in real property and interests in mortgages on real property);
gain (other than Prohibited Income) from the sale or other
disposition of real estate assets (including regular and residual interests in
REMICs, to the extent provided in Code section 856(c)(5)(E)); and
income (i) derived from the temporary investment of new capital
attributable either (A) to the issuance of stock of the Company or (B) to a
public offering of debt obligations of the Company with maturity dates of at
least five years and (ii) received or accrued during the one-year period
beginning on the date on which the Company received such new capital.
During each taxable year of the Relevant Period, the ratio of (i)
the average of the fair market value of the personal property contained in each
Hotel at the beginning and at the end of each year to (ii) the average of the
aggregate fair market values of both the real property and personal property
comprising such Hotel at the beginning and at the end of such year (the "FMV
Ratio") did not exceed 15%, other than with respect to certain Hotels identified
by the Company. In no taxable year of the Relevant Period in which the FMV Ratio
for one or more Hotels exceeded 15% did the resulting income that was not
qualifying income for purposes of the 75% and 95% gross income tests, plus any
other such non-qualifying income of the Company, exceed 5% of the Company's
total gross income.
During the Relevant Period, the Company did not receive or accrue,
directly or indirectly, any rent, interest, contingency fees, or other amounts
that were determined in whole or in part with reference to the income or profits
derived by any person (excluding amounts received as (i) rents from the Leases
that were (A) based solely on a percentage or percentages of receipts or sales
and the percentage or percentages were fixed at the time the Leases were entered
into, were not renegotiated during the term of the Leases in a manner that had
the effect of basing rent on income or profits, and conformed with normal
business practices or (B)
A-I-6
attributable to qualified rents from subtenants as provided by Code section
856(d)(6) and (ii) interest that was (A) based solely on a fixed percentage or
percentages of receipts or sales or (B) attributable to qualified rents received
or accrued by debtors as provided by Code section 856(f)(2)).
During the Relevant Period, the Company did not receive or accrue,
directly or indirectly, any rents from real property from any of the following
(a "Related Party Tenant"):
a corporation of which the Company owned, directly or indirectly
(within the meaning of Code section 856(d)(5)), 10% or more of the stock, by
voting power or number of shares; or
a noncorporate entity in which the Company owned, directly or
indirectly (within the meaning of Code section 856(d)(5)), an interest of 10% or
more of the assets or net profits.
The phrase "Related Party Tenant" does not include the TRS Lessee or
any other TRS of the Company as long as such TRS satisfies the requirements set
forth in paragraphs 32 through 36 below. In addition, one of the Company's
Lessees, State College BBQ/Concord Joint Venture, is owned 50% by the TRS Lessee
and 50% by an unrelated entity. Although the Company indirectly owns 50% of that
Lessee, you have advised us that such arrangement will not cause our rents from
that Lessee to fail to qualify as rents from real property for purposes of the
gross income tests described in paragraphs 9 and 10 above.
During the Relevant Period, the Company did not own, directly or
indirectly (within the meaning of Code section 856(d)(5)), 10% or more of the
voting power or total number of shares (or of the assets or net profits) of any
Lessee that had not made an election to be treated as a TRS.
The Company understands that, for purposes of the representations in
paragraphs 9, 10, 12, and 13, (i) all items of income, deduction, and credit of
any corporation (other than a TRS) with respect to which the Company owns 100%
of the stock (a "Qualified REIT Subsidiary") directly or through one or more
Qualified REIT Subsidiaries or Disregarded Entities (as defined below) and any
other non-TRS limited liability company or other non-corporate entity
wholly-owned by the Company directly or through one or more Qualified REIT
Subsidiaries or non-TRS limited liability companies or other non-corporate
entities wholly-owned by a single owner and disregarded as an entity separate
from such owner for federal income tax purposes (a "Disregarded Entity") are
treated as items of income, deduction, and credit of the Company, and (ii) the
Company's proportionate share (based on its capital interest) of the income of
the Partnerships is treated as income of the Company.
During the Relevant Period, the Leases provided that rent was equal
to the greater of a fixed amount or a percentage amount that was calculated by
multiplying specified percentages by the gross room, food, or beverage revenues
for each of the Hotels in excess of certain levels (the "Percentage Rent").
During the Relevant Period, the percentages used to compute the Percentage Rent
(i) were not renegotiated during the term of the related Lease in a
A-I-7
manner that had the effect of basing the Percentage Rent on the income or
profits of any person and (ii) conformed with normal business practice.
At the close of each calendar quarter of the Relevant Period, (i) at
least 75% of the value of the Company's total assets was represented by real
estate assets (including interests in mortgages on real property and interests
in REMICs, to the extent provided in Code section 856(c)(5)(E)), cash and cash
items (including receivables), and government securities (the "75% Basket") and
(ii) with respect to the Company's securities not included in the 75% Basket,
(A) not more than 5% of the value of Company's total assets consisted of the
securities of any one issuer (excluding any Qualified REIT Subsidiary, any
Disregarded Entity and any TRS), (B) not more than 20% of the value of the
Company's total assets was represented by securities of one or more TRSs, and
(C) the Company did not hold securities possessing either more than 10% of the
total voting power or more than 10% of the total value of the outstanding
securities of any issuer (excluding any Qualified REIT Subsidiary, any
Disregarded Entity and any TRS). For purposes of the 10% value test,
"securities" does not include any of the following:
a) "straight debt" securities (i.e., a written unconditional promise
to pay on demand or on a specified date a sum certain in money if (i) the
interest rate (and interest payment dates) are not contingent on profits, the
borrower's discretion or similar factors (except as provided in Code section
856(m)(2)(B)) and (ii) the debt is not convertible, directly or indirectly, into
stock, provided that "straight debt" securities do not include any securities
issued by a corporation or partnership if the Company and any of its controlled
TRSs (i.e., TRSs in which the Company owned, directly or indirectly, more than
50% of the total voting power or the total value of the stock) hold securities
including, for this purpose any equity securities of a partnership, of such
corporation or partnership other than securities described in clauses (a)
through (f) of this paragraph 17 that have an aggregate value of more than 1% of
the corporation's or partnership's outstanding securities);
b) any loan to an individual or an estate;
c) any imputed debt obligation under a rental agreement, other than
a rental agreement with a Related Party Tenant, for the use of tangible property
under which (i) there was at least one amount allocable to the use of property
during a calendar year which was to be paid after the close of the calendar year
following the calendar year in which such use occurred or there were increases
in the amount to paid as rent under the agreement and (ii) the aggregate amount
of the consideration for the use of the property exceeded $250,000;
d) any obligation to pay rents from real property (as described in
paragraphs 8(c) and 9(a) hereof);
e) any security issued by a state or any political subdivision
thereof, the District of Columbia, a foreign government or any political
subdivision thereof, or the Commonwealth of Puerto Rico, but only if the
determination of any payment thereunder does not depend in whole or in part on
the profits of any entity not described in this clause (e) or payments on any
obligation issued by an entity not described in this clause (e);
A-I-8
f) any security issued by a REIT;
g) any debt instrument issued by a partnership and not described in
clauses (a) through (f) of this sentence to the extent of the Company's interest
as a partner in the partnership; and
h) any debt instrument issued by a partnership and not described in
clauses (a) through (f) of this sentence if at least 75% of the partnership's
gross income (excluding Prohibited Income) is derived from sources described in
paragraph 9).
The Company understands that, for purposes of this representation,
(i) all assets and liabilities of any Qualified REIT Subsidiary and any
Disregarded Entity are treated as assets and liabilities of the Company, (ii)
the term "securities" does not include the Company's equity interests in the
Partnerships or Disregarded Entities except as provided for in subclause (a)
above, (iii) the Company's proportionate share (based on its capital interest)
of the assets of the Partnerships is treated as assets of the Company, and (iv)
the term "value" means (A) fair value as determined in good faith by the Board
of Directors of the Company or (B) in the case of securities for which market
quotations are readily available, the market value of such securities.
During the Relevant Period, the Company maintained sufficient
records as to its investments to be able to show that it complied with the asset
diversification requirements described in the preceding paragraph.
For each taxable year of the Relevant Period, the deduction for
dividends paid by the Company (as defined in Code section 561, but without
regard to capital gain dividends, as defined in Code section 857(b)(3)(C))
equaled or exceeded (i) the sum of (A) 90% of the Company's real estate
investment trust taxable income (as defined in Code section 857(b)(2), but
without regard to the deduction for dividends paid and excluding any net capital
gain) and (B) 90% of the excess of its net income from Foreclosure Property over
the tax imposed on such income by Code section 857(b)(4)(A), minus (ii) any
excess noncash income (as defined in Code section 857(e)).
The dividends paid by the Company during the Relevant Period were
made pro rata, with no preference to any share as compared with other shares of
the same class and with no preference to one class of stock as compared with
another class except to the extent that the former class of stock is entitled to
such preference, determined without regard to waivers of rights by shareholders.
During the Relevant Period, the Company and the Partnerships at all
times held the Hotels (and all other assets of the Company and the Partnerships)
for investment purposes and not as (i) stock in trade or other property of a
kind which would be includible in inventory if on hand at the close of the
taxable year or (ii) property held primarily for sale to customers in the
ordinary course of the trade or business of the Company or a Partnership.
Within 30 days after the end of each taxable year of the Relevant
Period, the Company demanded written statements from its shareholders that, at
any time during the last six
A-I-9
months of such taxable year, owned 5% or more of its stock (or, (i) if the
Company had fewer than 2,000 but more than 200 shareholders of record of its
stock on any dividend record date during a taxable year, 1% or more of its
stock, or (ii) if the Company had 200 or fewer shareholders of record of its
stock on any dividend record date during a taxable year, 0.5% or more of its
stock) setting forth the following information:
the actual owners of the Company's stock (i.e., the persons who are
required to include in gross income on their returns the dividends received on
the stock); and
the maximum number of shares of the Company's stock (including the
number and face value of securities convertible into stock of the Company) that
were considered owned, directly or indirectly (within the meaning of Code
section 544, as modified by Code section 856(h)(1)(B)), by each of the actual
owners of the Company's stock at any time during the last half of such taxable
year.
During the Relevant Period, the Company maintained the written
statements described in the preceding paragraph at its offices in Memphis,
Tennessee, and the statements were available for inspection by the Internal
Revenue Service.
During the Relevant Period, the Company used the calendar year as
its taxable year.
During the Relevant Period, each Partnership operated in accordance
with the governing law of the state in which it was formed and the most recent
amendment and restatement of the partnership agreement pursuant to which it was
formed (each, a "Partnership Agreement").
During the Relevant Period, no interests in any Partnership were
traded on (i) any national securities exchange which is either registered under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), or exempted
from registration because of the limited volume of transactions, (ii) any
foreign securities exchange that, under the law of the jurisdiction in which it
is organized, satisfies regulatory requirements that are analogous to the
regulatory requirements imposed by the 1934 Act, (iii) any regional or local
exchange, or (iv) any over-the-counter market characterized by an interdealer
quotation system which regularly disseminates quotations of obligations by
identified brokers or dealers, by electronic means, or otherwise.
During the Relevant Period, the transactions in which the partners
of the Partnerships (the "Partners") acquired interests in the Partnerships were
not registered under the Securities Act of 1933, as amended.
During the Relevant Period, no Partnership had more than 100
Partners (taking into account as a Partner each person who indirectly owned an
interest in a Partnership through a partnership, grantor trust, or S corporation
(a "flow-through entity") only if (i) substantially all of the value of the
person's ownership interest in the flow-through entity was attributable to the
flow-through entity's interest in the Partnership and (ii) a principal purpose
of the use of the flow-through entity was to enable the Partnership to satisfy
the 100-partner limitation).
A-I-10
During the Relevant Period, each Partnership Agreement remained in
substantially the same form as it was upon the most recent amendment and
restatement thereof, and was not amended in any material respect (except upon
the substitution of partners in accordance with the terms of the Partnership
Agreement).
During the Relevant Period, no Partnership elected to be treated as
an association taxable as a corporation for federal income tax purposes under
Treasury regulations section 301.7701-3.
During the Relevant Period, a majority of the Company's Board of
Directors at all times consisted of independent directors.
During the Relevant Period, neither TRS Lessee nor any other TRS of
the Company directly or indirectly operated or managed any lodging facility (as
defined in Code section 856(d)(9)(D)(ii)) or health care facility (as defined in
Code section 856(e)(6)(D)(ii)) or directly or indirectly provided to any other
person (under a franchise, license, or otherwise) rights to any brand name under
which any lodging facility or health care facility was operated.
During the Relevant Period, all of the Hotels leased to the TRS
Lessee constituted "qualified lodging facilities." A qualified lodging facility
is a hotel, motel, or other establishment more than one-half of the dwelling
units in which are used on a transient basis. Further, no wagering activities
may be conducted at or in connection with such facility by any person who is
engaged in the business of accepting xxxxxx and who is legally authorized to
engage in such business at or in connection with such facility. A qualified
lodging facility includes amenities and facilities operated as part of, or
associated with, the lodging facility as long as such amenities and facilities
are customary for other properties of a comparable size and class owned by other
unrelated owners.
During the Relevant Period, the TRS Lessee engaged one or more
third-party hotel operators ("TRS Managers") to operate and manage all the
Hotels leased by the TRS Lessee. During the Relevant Period, the TRS Managers
included Crossroads, Promus, Crestline, Caldwell, Wayne, Oradell, Waterford,
Xxxxxx, Innkeepers, XxXxxxxx, Gateway, and Hospitality.
During the Relevant Period, each TRS Manager satisfied the
requirements set forth in paragraph 3 above. For purposes of this paragraph, all
references to the Company and the Partnerships shall be deemed to include the
TRS Lessee. In addition, at the time during the Relevant Period when the TRS
Lessee entered into a management agreement with each TRS Manager, such TRS
Manager (or a related person within the meaning of Code section 856(d)(9)(F))
was actively engaged in the trade or business of operating qualified lodging
facilities (within the meaning of paragraph 33 above) for one or more persons
unrelated to the Company and the TRS Lessee.
During the Relevant Period, the terms of the leases between the
Company and the TRS Lessee were arm's length and were consistent with the terms
of comparable leases in the
A-I-11
hotel industry. In addition, all dealings between the Company, on the one hand,
and its TRSs, on the other hand, were at arm's length.
During the Relevant Period, the Company did not own, directly or
indirectly, equity interests in any entity other than its Qualified REIT
Subsidiaries, the Disregarded Entities, the Partnerships, and the TRS Lessee.
During the Relevant Period, beneficial ownership of the Company was
held by 100 or more persons for at least 335 days of each taxable year.
At no time during the last half of each taxable year in the Relevant
Period was more than 50% in value of the Company's outstanding stock owned,
directly or indirectly (within the meaning of Code section 544, as modified by
Code section 856(h)(1)(B)), by five or fewer individuals. For that purpose, a
supplemental unemployment compensation benefits plan (as described in Code
section 501(c)(17)), a private foundation (as described in Code section 509(a)),
or a portion of a trust permanently set aside or to be used exclusively for
charitable purposes (as described in Code section 642(c)) is considered an
individual. However, stock held by a trust described in Code section 401(a) and
exempt from tax under Code section 501(a) (a "Qualified Trust") generally is
treated as held directly by the Qualified Trust's beneficiaries in proportion to
their actuarial interests in the Qualified Trust.
During its 2005 taxable year and future taxable years, the Company
and the Partnerships have operated, and will continue to operate, in such a
manner to continue to satisfy the representations described in paragraphs 1
through 39 above as though (i) the term "Relevant Period" included such years;
(ii) the term "Hotels" included all of the hotels in which the Company currently
owns a direct or indirect interest and any other hotel in which the Company
acquires an interest, directly or indirectly; (iii) the term "Leases" included
the operating leases with respect to the Hotels; (iv) the term "Company"
included any Qualified REIT Subsidiary and any Disregarded Entity; (v) the term
"Partnership" included any other partnership, limited liability company, or
joint venture treated as a partnership for federal income tax purposes in which
the Company acquires, directly or indirectly, an ownership interest; (vi) the
term "Partnership Agreement" included any other amendments or restatements of
the partnership agreements of the Partnerships; (vii) the term "Lessee" included
any other lessee of the Hotels that does not make a TRS election; (viii) the
term "TRS Lessee" included any other entity for which a TRS election is made and
to which the Company leases Hotels, (ix) the term "TRS Manager" included any
other entity engaged by a TRS Lessee to operate or manage the Hotels leased by
the TRS Lessee, (x) income from any transaction, including gain from the sale or
disposition of such a transaction, entered into in the normal course of the
Company's trade or business to manage interest rate risk or price changes or
currency fluctuations with respect to borrowings made or to be made, or ordinary
obligations incurred or to be incurred, by the Company to acquire or carry real
estate assets, if the transaction is clearly identified as a hedging transaction
before the close of the day on which it was acquired, originated, or entered
into and otherwise satisfies the requirements of Code section 1221(a)(7), did
not constitute gross income for the purposes of paragraph 9, (xiv) the Company's
proportionate share of the assets of a Partnership for purposes of the 10% value
test described in paragraph 17 was based on the Company's proportionate interest
in any equity or debt securities issued by the Partnership
A-I-12
(excluding securities described in clauses (a) through (f) of paragraph 17), and
(xv) in the case of a debt instrument, the term "value" for purposes of the 10%
value test means the "adjusted issue price" (as defined in Code section
1272(a)(4)) of such debt instrument.
The Company and Equity Inns TRS Holdings, Inc. jointly made a TRS
election on IRS Form 8875 for Equity Inns TRS Holdings, Inc. that was effective
January 1, 2001. Such election, as amended, listed ENN Leasing Company, Inc.,
ENN TRS, Inc., and ENN KS, Inc. as greater than 35%-owned subsidiaries eligible
for automatic TRS status pursuant to Code section 856(l)(2).
The Leases that were acquired by the TRS Lessee from former non-TRS
Lessees of the hotels were originally negotiated at arm's length and the
acquisition of such Leases by the TRS Lessee was also negotiated at
arm's-length.
The Company was not created by or pursuant to an act of a state
legislature for the purpose of promoting, maintaining, or assisting the economy
within the state by making loans that generally would not be made by banks.
The Company has not intentionally terminated or revoked, and will
not intentionally terminate or revoke, its REIT election.
The Company has used, and will use, its best efforts to enforce the
restrictions on ownership of the Company's stock that are contained in its
Charter, as amended and restated.
A-I-13
The Company understands that you will rely on the truth and accuracy
of the foregoing statements in rendering the Tax Opinion. This letter is being
furnished to you solely for your benefit and for use in rendering the Tax
Opinion and is not to be used, circulated, quoted, or otherwise referred to for
any other purpose (other than in the Tax Opinion) without the express written
consent of the Company.
Very truly yours,
EQUITY INNS, INC.,
a Tennessee corporation
By:_______________________________
Name:_____________________________
Its:______________________________
A-I-14
Pursuant to Section 3(c)(ii) of the Purchase Agreement, Xxxxx Xxxxxxx,
Chief Financial Officer of the Company, shall deliver an Officer's Certificate
to the effect that:
(i) except as set forth on Schedule 4(q) of the Purchase
Agreement, all outstanding membership interests of the Significant
Subsidiaries have been duly authorized and validly issued, and are fully
paid and nonassessable and owned of record and beneficially, directly or
indirectly, by the Parent REIT, and the issuance of the Preferred
Securities and the Common Securities is not subject to any contractual
preemptive rights known to such officer;
(ii) no consent, approval, authorization or order of any
court or Governmental Entity is required for the issue and sale of the
Common Securities, the Preferred Securities or the Junior Subordinated
Notes, the purchase by the Trust of the Junior Subordinated Notes, the
execution and delivery of and compliance with the Operative Documents by
the Company or the Trust or the consummation of the transactions
contemplated in the Operative Documents, except such approvals (specified
in such opinion) as have been obtained;
(iii) to the knowledge of such officer, there is no action,
suit or proceeding at law or in equity before or by any government,
governmental official, commission, board, other administrative agency,
authority or body, governmental instrumentality, arbitrator or court,
domestic or foreign, now pending or threatened against or affecting the
Trust, the Company or the Parent REIT or any Significant Subsidiary or any
of their properties or assets that could adversely affect the consummation
of the transactions contemplated by the Operative Documents or the
issuance and sale of the Securities as contemplated therein or could have
a Material Adverse Effect.
(iv) The execution, delivery and performance of the Operative
Documents, as applicable, by the Parent REIT, the Company and the Trust
and the consummation by the Parent REIT, the Company and the Trust of the
transactions contemplated by the Operative Documents, as applicable, will
not conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge and encumbrance upon any assets or
properties of the Company or any Significant Subsidiary under any existing
applicable law, rule or administrative regulation, except that I express
no opinion with respect to the securities laws of the State of Delaware of
any court or governmental agency or authority having jurisdiction over the
Company or any Significant Subsidiary of the Company or any of their
respective assets or properties, except where any such violation,
conflict, breach, default, lien, charge or encumbrance, would not have a
Material Adverse Effect.
(v) none the Parent REIT, the Trust or any Significant
Subsidiary is in breach or violation of, or default under, with or without
notice or lapse of time or both, its articles of incorporation or charter,
by-laws or other governing documents (including without limitation, the
Trust Agreement.
A-I-15
(vi) None of the Parent REIT, the Trust or any Significant
Subsidiary of the Parent REIT is in breach or violation of, or default
under, with or without notice or lapse of time or both, the Charter, the
Bylaws, the Partnership Agreement, the Trust Agreement or other governing
documents, as applicable.
(vii) The Material Contracts as set forth in the 1934 Act
Reports constitute all of the material contracts of the Company or the
Parent REIT as of the date hereof.
A-I-16
ANNEX B
Pursuant to Section 3(d) of the Purchase Agreement, Mayer, Brown,
Xxxx & Maw LLP, special tax counsel for the Purchaser, shall deliver an opinion
to the effect that:
(i) the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association or a
publicly traded partnership taxable as a corporation; and
(ii) for United States federal income tax purposes, the
Junior Subordinated Notes will constitute indebtedness of the Company.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.
B-1
ANNEX C
Pursuant to Section 3(e) of the Purchase Agreement, Xxxxxxxx, Xxxxxx
& Finger, P.A., special Delaware counsel for the Delaware Trustee, shall deliver
an opinion to the effect that:
(i) the Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a statutory
trust have been made;
(ii) under the Delaware Statutory Trust Act and the Trust
Agreement, the Trust has the trust power and authority (A) to own property
and conduct its business, all as described in the Trust Agreement, (B) to
execute and deliver, and to perform its obligations under, each of the
Purchase Agreement, the Common Securities Subscription Agreement, the
Junior Subordinated Note Purchase Agreement and the Preferred Securities
and the Common Securities and (C) to purchase and hold the Junior
Subordinated Notes;
(iii) under the Delaware Statutory Trust Act, the certificate
attached to the Trust Agreement as Exhibit C is an appropriate form of
certificate to evidence ownership of the Preferred Securities; the
Preferred Securities have been duly authorized by the Trust Agreement and,
when issued and delivered against payment of the consideration as set
forth in the Purchase Agreement, the Preferred Securities will be validly
issued and (subject to the qualifications set forth in this paragraph)
fully paid and nonassessable and will represent undivided beneficial
interests in the assets of the Trust; the holders of the Preferred
Securities will be entitled to the benefits of the Trust Agreement and, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware; and such counsel may note that the holders of the Preferred
Securities may be obligated, pursuant to the Trust Agreement, to (A)
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Preferred
Securities certificates and the issuance of replacement Preferred
Securities certificates and (B) provide security or indemnity in
connection with requests of or directions to the Property Trustee to
exercise its rights and remedies under the Trust Agreement;
(iv) the Common Securities have been duly authorized by the Trust
Agreement and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Trust Agreement and the
Common Securities Subscription Agreement, will be validly issued and fully
paid and will represent undivided beneficial interests in the assets of
the Trust entitled to the benefits of the Trust Agreement;
(v) under the Delaware Statutory Trust Act and the Trust
Agreement, the issuance of the Preferred Securities and the Common
Securities is not subject to preemptive or other similar rights;
C-1
(vi) under the Delaware Statutory Trust Act and the Trust
Agreement, the execution and delivery by the Trust of the Purchase
Agreement, the Common Securities Subscription Agreement and the Junior
Subordinated Note Purchase Agreement, and the performance by the Trust of
its obligations thereunder, have been duly authorized by all necessary
trust action on the part of the Trust;
(vii) the Trust Agreement constitutes a legal, valid and binding
obligation of the Company and the Trustees, and is enforceable against the
Company and the Trustees, in accordance with its terms subject, as to
enforcement, to the effect upon the Trust Agreement of (i) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or transfer and other similar laws relating to or
affecting the rights and remedies of creditors generally, (ii) principles
of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or
at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution;
(viii) the issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the purchase by the Trust of the
Junior Subordinated Notes, the execution, delivery and performance by the
Trust of the Purchase Agreement, the Common Securities Subscription
Agreement and the Junior Subordinated Note Purchase Agreement, the
consummation by the Trust of the transactions contemplated by the Purchase
Agreement and compliance by the Trust with its obligations thereunder do
not violate (i) any of the provisions of the Certificate of Trust or the
Amended and Restated Trust Agreement or (ii) any applicable Delaware law,
rule or regulation;
(ix) no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or
Delaware Governmental Entity or Delaware agency is necessary or required
solely in connection with the issuance and sale by the Trust of the Common
Securities or the Preferred Securities, the purchase by the Trust of the
Junior Subordinated Notes, the execution, delivery and performance by the
Trust of the Purchase Agreement, the Common Securities Subscription
Agreement and the Junior Subordinated Note Purchase Agreement, the
consummation by the Trust of the transactions contemplated by the Purchase
Agreement and compliance by the Trust with its obligations thereunder; and
(x) the holders of the Preferred Securities (other than those
holders who reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as a
result of their participation in the Trust and the Trust will not be
liable for any income tax imposed by the State of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware, (B) rely as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of the Company
and public officials and (C) take customary assumptions and exceptions as to
enforceability and other matters.
C-2
ANNEX D
Pursuant to Section 3(f) of the Purchase Agreement, Gardere Xxxxx Xxxxxx
LLP, special counsel for the Property Trustee and the Indenture Trustee, shall
deliver an opinion to the effect that:
(i) JPMorgan Chase Bank, National Association (the "Bank") is a
national banking association with trust powers, duly and validly existing under
the laws of the United States of America, with corporate power and authority to
execute, deliver and perform its obligations under the Indenture and to
authenticate and deliver the Securities, and is duly eligible and qualified to
act as Trustee under the Indenture pursuant to Section 6.1 thereof and as
Property Trustee under the Trust Agreement pursuant to Section 8.2 thereof. (The
Indenture and the Trust Agreement are each, an "Agreement" and together, the
"Agreements").
(ii) Each Agreement has been duly authorized, executed and
delivered by the Bank and constitutes the valid and binding obligation of the
Bank, enforceable against it in accordance with its terms except (A) as may be
limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, and by general
equitable principles, regardless of whether considered in a proceeding in equity
or at law and (B) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(iii) Neither the execution or delivery by the Bank of the
Agreements, the authentication and delivery of the Preferred Securities (as
defined in the Trust Agreement) and junior subordinated notes (issued under the
Indenture, and together with the Preferred Securities, the "Securities") by the
Trustee pursuant to the terms of the Agreements, nor the performance by the Bank
of its obligations under the Agreements (A) requires the consent or approval of,
the giving of notice to or the registration or filing with, any governmental
authority or agency under any existing law of the United States of America
governing the banking or trust powers of the Bank or (B) violates or conflicts
with the Articles of Association or By-laws of the Bank or any law or regulation
of the State of New York or the United States of America governing the banking
or trust powers of the Bank.
(iv) The Securities have been authenticated and delivered by a duly
authorized officer of the Bank.
In rendering such opinions, such counsel may (A) state that its
opinion is limited to the laws of the State of New York and the laws of the
United States of America, (B) rely as to matters of fact, to the extent deemed
proper, on certificates of responsible officers of JPMorgan Chase Bank, National
Association, the Company and public officials, and (C) make customary
assumptions and exceptions as to enforceability and other matters.
D-1
ANNEX E
Pursuant to Section 3(g) of the Purchase Agreement, Xxxxxxxx, Xxxxxx
& Finger, P.A., counsel for the Delaware Trustee, shall deliver an opinion to
the effect that:
(i) Chase Bank USA, National Association is duly formed and
validly existing as a national banking association under the federal
laws of the United States of America with trust powers and with its
principal place of business in the State of Delaware;
(ii) Chase Bank USA, National Association has the corporate
power and authority to execute, deliver and perform its obligations
under, and has taken all necessary corporate action to authorize the
execution, delivery and performance of, the Trust Agreement and to
consummate the transactions contemplated thereby;
(iii) The Trust Agreement has been duly authorized, executed
and delivered by Chase Bank USA, National Association and
constitutes a legal, valid and binding obligation of Chase Bank USA,
National Association, and is enforceable against Chase Bank USA,
National Association, in accordance with its terms subject as to
enforcement, to the effect upon the Trust Agreement of (i)
applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, fraudulent conveyance or transfer and similar laws
relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect
of applicable public policy on the enforceability of provisions
relating to indemnification or contribution;
(iv) The execution, delivery and performance by Chase Bank
USA, National Association of the Trust Agreement do not conflict
with or result in a violation of (A) articles of association or
by-laws of Chase Bank USA, National Association or (B) any law or
regulation of the State of Delaware or the United States of America
governing the trust powers of Chase Bank USA, National Association
or, to our knowledge, without independent investigation, of any
indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument
to which Chase Bank USA, National Association is a party or by which
it is bound or, to our knowledge, without independent investigation,
of any judgment or order applicable to Chase Bank USA, National
Association; and
(v) No approval, authorization or other action by, or filing
with, any Governmental Entity of the State of Delaware or the United
States of America governing the trust powers of Chase Bank USA,
National Association is required in connection with the execution
and delivery by Chase Bank USA, National Association of the Trust
Agreement or the performance by Chase Bank USA,
E-1
National Association of its obligations thereunder, except for the
filing of the Certificate of Trust with the Secretary of State of
the State of Delaware, which Certificate of Trust has been filed
with the Secretary of State of the State of Delaware.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the United
States governing the trust powers of Chase Bank USA, National Association, (B)
rely as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials and (C) take customary
assumptions and exceptions.
E-2
ANNEX F
OFFICER'S FINANCIAL CERTIFICATE
The undersigned, the [Chairman/Vice Chairman/Chief Executive
Officer/President/ Vice President/Chief Financial Officer/Treasurer/Assistant
Treasurer], hereby certifies, pursuant to Section 6(h) of the Purchase
Agreement, dated as of June 17, 2005, among Equity Inns, Inc. (the "Company"),
Equity Inns Partnership, L.P., Equity Inns Statutory Trust I (the "Trust") and
Xxxxxxx Xxxxx International, that, as of [date], [20__], the Parent REIT and its
consolidated subsidiaries had the following ratios and balances:
As of [Quarterly/Annual Financial Date], 20__
Senior secured indebtedness for borrowed money ("Debt") $_____
Senior unsecured Debt $_____
Subordinated Debt $_____
Total Debt $_____
Ratio of (x) senior secured and unsecured Debt to (y) total Debt _____%
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Parent REIT and its consolidated subsidiaries for
the three years ended [date], 20__ and all required Statutory Financial
Statements (as defined in the Purchase Agreement) for the year ended [date],
20__]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Parent REIT and its consolidated subsidiaries and all required
Statutory Financial Statements (as defined in the Purchase Agreement) for the
year ended [date], 20__] for the fiscal quarter ended [date], 20__.]
The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles ("GAAP"), the financial
position of the Parent REIT and its consolidated subsidiaries, and the results
of operations and changes in financial condition as of the date, and for the
[___ quarter interim] [annual] period ended [date], 20__, and such financial
statements have been prepared in accordance with GAAP consistently applied
throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer's Financial
Certificate as of this _____ day of _____________, 20__.
F-1
ANNEX F
EQUITY INNS, INC.
By:_______________________________
Name:_____________________________
Equity Inns, Inc.
0000 Xxxx Xxxxx Xxxx.
Xxxxxxxxxx, XX 00000
(000) 000-0000
F-2
