EXHIBIT 4.2(C)
AMENDMENT NO. 2 TO THE THIRD AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
EQUITY INNS PARTNERSHIP, L.P.
This Amendment No. 2 (this "Amendment") to the Third Amended and
Restated Agreement of Limited Partnership of Equity Inns Partnership, L.P. dated
June 25, 1997 (the "Partnership Agreement") is entered into as of August 11,
2003, by and among Equity Inns, Inc., a Tennessee corporation (the
"Corporation"), Equity Inns Trust, a Maryland real estate investment trust (the
"General Partner"), and the limited partners (the "Limited Partners") of Equity
Inns Partnership, L.P. (the "Partnership"). All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Partnership Agreement.
WHEREAS, the Corporation, which is the sole shareholder of the General
Partner, on even date herewith, has issued 3,000,000 shares of its 8.75% Series
B Cumulative Preferred Stock, $.01, par value per share, having a liquidation
preference equivalent to $25.00 per share (the "Series B Preferred Stock"), and
has sold such Series B Preferred Stock in an underwritten public offering and
may issue and sell up to an aggregate of 450,000 additional shares of Series B
Preferred Stock (the "Series B Offering");
WHEREAS, the Corporation desires to contribute the net proceeds of the
sale of the Series B Preferred Stock through the General Partner to the
Partnership in exchange for the issuance to the General Partner of preferred
partnership interests in the Partnership as set forth herein;
WHEREAS, the General Partner is authorized to cause the Partnership to
issue interests in the Partnership to the General Partner in exchange for such
contribution of such net proceeds made by the Corporation through the General
Partner;
WHEREAS, the Partnership will use the net proceeds to redeem from the
General Partner currently outstanding Series A Preferred Units in the
Partnership (as set forth herein).
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Partnership Agreement as follows:
Section 1. Contribution.
The Corporation hereby contributes through the General Partner to the
Partnership the entire net proceeds received by the Corporation from the
issuance of the Series B Preferred Stock. As provided in Section 4.02(g) of the
Partnership Agreement, the Corporation shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the gross proceeds raised
in connection with the issuance of such shares of Series B Preferred Stock,
which is $75,000,000, plus up to an additional $11,250,000 of proceeds from up
to 450,000 additional shares of Series B Preferred Stock, and the Partnership
shall be deemed simultaneously to have paid, pursuant to Section 6.05(b) of the
Partnership Agreement, for the costs and expenses relating to the offer,
registration and sale of the Series B Preferred Stock.
Section 2. Issuance of Series B Preferred Units.
In consideration of the contribution to the Partnership made by the
Corporation through the General Partner pursuant to Section 1 hereof, the
Partnership hereby issues to the General Partner 3,000,000 Series B Preferred
Units (as defined below) and may issue to the General Partner an additional
450,000 Series B Preferred Units.
Section 3. Definitions.
Article I of the Partnership Agreement is hereby amended by inserting
in the appropriate alphabetical locations the following definitions of Series B
Preferred Return, Series B Preferred Stock and Series B Preferred Units, as
follows:
"Series B Preferred Return" means an annualized amount equal to $2.1875
per Series B Preferred Unit.
"Series B Preferred Stock" means the 8.75% Series B Cumulative
Preferred Stock, $.01 par value, of the Corporation.
"Series B Preferred Units" means the Preferred Units issued to the
General Partner in exchange for the net proceeds of the issuance by the
Corporation of its Series B Preferred Stock, which Series B Preferred Units
shall have the designations, preferences, privileges, limitations and relative
rights set forth in Section 4.02(c)(ii) hereof.
Section 4. Redemption of Series A Preferred Units.
The Partnership hereby redeems the Series A Preferred Units in the
Partnership. Effective upon the redemption of the Series A Preferred Units,
Section 4.02(c)(i) of the Partnership Agreement, as set forth in Section 4 of
Amendment No. 1 to the Partnership Agreement dated June 25, 1998, shall be
deleted in its entirety and Section 4.02(c)(i) shall hereinafter read
"[Intentionally Left Blank]".
Section 5. Creation of Series B Preferred Units.
Article IV of the Partnership Agreement is hereby amended by adding
Section 4.02(c)(ii) as follows:
"(ii) 8.75% Series B Cumulative Preferred Units.
(1) Designation and Number. A series of Preferred Units, designated the
"8.75% Series B Cumulative Preferred Units" (the "Series B Preferred
Units"), is hereby established. The number of Series B Preferred Units
shall be as set forth on Exhibit A hereto.
(2) Rank. The Series B Preferred Units will, with respect to
distribution rights and rights upon liquidation, dissolution or winding
up of the Partnership, rank (i) senior to all classes or series of
Common Units of the Partnership, and to all Partnership Units ranking
junior to the Series B Preferred Units with respect to distribution
rights or rights upon liquidation, dissolution or winding up of the
Partnership; (ii) on a parity with all Partnership Units issued by the
Partnership the terms of which specifically provide that such
Partnership Units rank on a parity with the Series B Preferred Units
with respect to distribution rights or rights upon liquidation,
dissolution or winding up of the Partnership; and (iii) junior to all
existing and future indebtedness of the Partnership. The term
"Partnership Units" does not include convertible debt securities, which
will rank senior to the Series B Preferred Units prior to conversion.
(3) Distributions.
(a) Holders of the Series B Preferred Units are entitled to
receive, when and as distributed by the General Partner out of
available cash flow, preferential cumulative cash distributions in an
amount equal to the excess, if any, of (i) the cumulative Series B
Preferred Return for the current and all prior years over (ii) the sum
of all prior Series B Preferred Return distributions pursuant to this
Section 4.02(c)(ii)(3). Distributions on the Series B Preferred Units
shall be cumulative from the date of original issue and shall be
payable quarterly in arrears on or before the last day of January,
April, July and October of each year, or, if not a Business Day (as
defined below), the next succeeding business day (each, a "Distribution
Payment Date"). The first distribution will be paid on or before
October 31, 2003. The first distribution will be prorated for less than
a full quarter. Any distribution payable on the Series B Preferred
Units for any partial distribution period will be computed on the basis
of a 360-day year consisting of twelve 30 day months. Distributions
will be payable to holders of record as they appear in the ownership
records of the Partnership at the close of business on the applicable
record date, which shall be the last Business Day of each of March,
June, September and December immediately preceding such Distribution
Payment Date, or on such other date designated by the General Partner
of the Partnership for the payment of distributions that is not more
than 30 nor less than 10 days prior to such Distribution Payment Date
(each, a "Distribution Record Date"). "Business Day" shall mean any
day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in New York City are authorized
or required by law, regulation or executive order to close.
(b) The amount of any distributions accrued on any Series B
Preferred Units at any Distribution Payment Date shall be the amount of
any unpaid distributions accumulated thereon, to and including such
Distribution Payment Date, whether or not earned or declared, and the
amount of distributions accrued on any Series B Preferred Units at any
date other than a Distribution Payment Date shall be equal to the sum
of the amount of any unpaid distributions accumulated thereon, to and
including the last preceding Distribution Payment Date, whether or not
earned or declared, plus an amount calculated on the basis of the
Series B Preferred Return for the period after such last preceding
Distribution Payment Date to and including the date as of which the
calculation is made based on a 360-day year of twelve 30-day months.
(c) Except as provided in subsection (a) hereof, the holder of
the Series B Preferred Units will not be entitled to any distributions
in excess of full cumulative distributions as described above and shall
not be entitled to participate in the earnings or assets of the
Partnership, and no interest, or sum of money in lieu of interest,
shall be payable in respect of any distribution payment or payments on
the Series B Preferred Units which may be in arrears.
(d) No distributions on Series B Preferred Units shall be
declared by the General Partner or paid or set apart for payment by the
Partnership if the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness,
prohibit such declaration, payment or setting apart for payment or
provide that such declaration, payment or setting apart for payment
would constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.
Notwithstanding the foregoing, distributions on the Series B Preferred
Units will accrue whether or not the Partnership has earnings, whether
or not there is available cash flow for the payment of such
distributions and whether or not such distributions are declared.
Accrued but unpaid distributions on the Series B Preferred Units will
not bear interest and holders of the Series B Preferred Units will not
be entitled to any distributions in excess of full cumulative
distributions described above.
(e) Except as set forth in the next sentence, no distributions
will be declared or paid or set apart for payment on any Partnership
Units or any other series of Preferred Units ranking, as to
distributions, on a parity with or junior to the Series B Preferred
Units (other than a distribution of the Partnership's Common Units or
any other class of Partnership Units ranking junior to the Series B
Preferred Units as to distributions and upon liquidation) for any
period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on the
Series B Preferred Units for all past distribution periods and the then
current distribution period. When distributions are not paid in full
(or a sum sufficient for such full payment is not so set apart) upon
the Series B Preferred Units and any other series of Preferred Units
ranking on a parity as to distributions with the Series B Preferred
Units, all distributions declared upon the Series B Preferred Units and
any other series of Preferred Units ranking on a parity as to
distributions with the Series B Preferred Units shall be declared pro
rata so that the amount of distributions declared per Series B
Preferred Unit and such other series of Preferred Units shall in all
cases bear to each other the same ratio that accrued distributions per
Series B Preferred Unit and such other series of Preferred Units (which
shall not include any accrual in respect of unpaid distributions for
prior distribution periods if such Preferred Units do not have a
cumulative distribution) bear to each other.
(f) Except as provided in the immediately preceding paragraph,
unless full cumulative distributions on the Series B Preferred Units
have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof is set apart for payment for all
past distribution periods and the then current distribution period, no
distributions (other than a distribution of Common Units or other
Partnership Units ranking junior to the Series B Preferred Units as to
distributions and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made
upon the Common Units, or any other Partnership Units ranking junior to
or on a parity with the Series B Preferred Units as to distributions or
upon liquidation, nor shall any Common Units, or any other Partnership
Units in the Partnership ranking junior to or on a parity with the
Series B Preferred Units as to distributions or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any
monies be paid to or made available for a sinking fund for the
redemption of any such units) by the Partnership. Holders of Series B
Preferred Units shall not be entitled to any distribution, whether
payable in cash, property or securities in excess of full cumulative
distributions on the Series B Preferred Units as provided above.
(4) Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Partnership, the holders of Series B Preferred Units are entitled to be
paid out of the assets of the Partnership legally available for
distribution to its partners a liquidation preference of $25.00 per
Series B Preferred Unit (the "Liquidation Preference"), plus an amount
equal to any accrued and unpaid distributions with respect to the
Series B Preferred Units to the date of payment, but without interest,
before any distribution of assets is made to holders of Common Units or
any other class or series of Partnership Units in the Partnership that
ranks junior to the Series B Preferred Units as to liquidation rights.
The Partnership will promptly provide to the holders of Series B
Preferred Units written notice of any event triggering the right to
receive such Liquidation Preference. After payment of the full amount
of the Liquidation Preference, the holders of Series B Preferred Units
will have no right or claim to any of the remaining assets of the
Partnership. If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Partnership, the amounts payable with
respect to the Liquidation Preference, plus an amount equal to any
accrued and unpaid distributions to the date of payment, of the Series
B Preferred Units and any other units of the Partnership ranking as to
any such distribution on a parity with the Series B Preferred Units are
not paid in full, the holders of the Series B Preferred Units and of
such other units will share ratably in any such distribution of assets
of the Partnership in proportion to the full respective preference
amounts to which they are entitled. The consolidation or merger of the
Partnership with or into any other partnership, corporation, trust or
entity or of any other partnership or corporation with or into the
Partnership, or the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, shall not be deemed
to constitute a liquidation, dissolution or winding up of the
Partnership.
(5) Redemption.
(a) The Series B Preferred Units are not redeemable by the
Partnership prior to August 11, 2008. On and after August 11, 2008, the
Partnership, at its option upon not less than 30 nor more than 60 days'
written notice, may redeem the Series B Preferred Units, in whole or in
part, at any time or from time to time, for cash at a redemption price
of $25.00 per Series B Preferred Unit, plus all accrued and unpaid
distributions thereon to the date fixed for redemption, without
interest. A holder shall surrender its Series B Preferred Units at the
place designated in such notice and shall be entitled to the redemption
price and any accrued and unpaid distributions payable upon such
redemption following such surrender. If notice of redemption of any
Series B Preferred Units has been given and if the funds necessary for
such redemption have been set aside by the Partnership in trust for the
benefit of the holders of any Series B Preferred Units so called for
redemption, then from and after the redemption date distributions will
cease to accrue on such Series B Preferred Units, such Series B
Preferred Units shall no longer be deemed outstanding and all rights of
the holders of such Series B Preferred Units will terminate, except the
right to receive the redemption price. If less than all of the
outstanding Series B Preferred Units are to be redeemed, the Series B
Preferred Units to be redeemed shall be selected pro rata (as nearly as
may be practicable without creating fractional Series B Preferred
Units) or by any other equitable method determined by the General
Partner.
(b) Notice of redemption will be mailed or delivered to
holders of Series B Preferred Units not less than 30 nor more than 60
days prior to the redemption date. In addition to any information
required by law, each notice shall state: (i) the Redemption Date; (ii)
the Redemption Price; (iii) the number of Series B Preferred Units to
be redeemed; (iv) the place or places where the Series B Preferred
Units are to be surrendered for payment of the redemption price; and
(v) that distributions on the Series B Preferred Units to be redeemed
will cease to accrue on such redemption date. If less than all of the
Series B Preferred Units held by any holder are to be redeemed, the
notice mailed to such holder shall also specify the number of Series B
Preferred Units held by such holder to be redeemed.
(c) Immediately prior to any redemption of Series B Preferred
Units, the Partnership shall pay, in cash, any accumulated and unpaid
distributions through the redemption date, unless a redemption date
falls after a Distribution Record Date and prior to the corresponding
Distribution Payment Date, in which case each holder of Series B
Preferred Units at the close of business on such Distribution Record
Date shall be entitled to the distribution payable on such shares on
the corresponding Distribution Payment Date notwithstanding the
redemption of such shares before such Distribution Payment Date.
(d) If the Partnership exercises its optional redemption right
with respect to the Series B Preferred Units pursuant to this Section
4.02(c)(ii)(5), then the Corporation must redeem a corresponding number
of shares of Series B Preferred Stock. Similarly, if the Corporation
exercises its optional redemption right with respect to shares of
Series B Preferred Stock, then the Partnership must redeem a
corresponding number of Series B Preferred Units.
(6) Conversion. Except as provided in Section 4.02(c)(ii)(5) hereof,
the Series B Preferred Units are not redeemable for, convertible into
or exchangeable for any other property or securities of the Partnership
or the General Partner."
Section 6. Allocation of Profit and Loss.
Article V, Section 5.01(e) is hereby deleted in its entirety and the
following new Section 5.01(e) is inserted in its place:
"(e) Priority Allocations With Respect To Series B Preferred
Units. After giving effect to the allocations set forth in Sections
5.01(b), (c), and (d) hereof, but before giving effect to the
allocations set forth in Section 5.01(a), Net Operating Income shall be
allocated to the General Partner until the aggregate amount of Net
Operating Income allocated to the General Partner under this Section
5.01(e) for the current and all prior years equals the aggregate amount
of the Series B Preferred Return paid to the General Partner pursuant
to Sections 4.02(c)(ii)(3) and 4.02(c)(ii)(4) hereof for the current
and all prior years. For purposes of this Section 5.01(e), "Net
Operating Income" means the excess, if any, of the Partnership's gross
income over its expenses (but not taking into account depreciation,
amortization, or any other noncash expenses of the Partnership),
calculated in accordance with the principles of Section 5.01(g)
hereof."
IN WITNESS WHEREOF, the foregoing Amendment No. 1 to the Third Amended
and Restated Agreement of Limited Partnership of Equity Inns Partnership, L.P.
has been signed and delivered as of this 11th day of August, 2003, by the
undersigned sole general partner of the Partnership, as general partner and on
behalf of the Limited Partners, and by the Corporation as non-Partner party to
the Partnership Agreement.
EQUITY INNS TRUST, a Maryland real estate
investment trust, as sole General Partner
By: /s/ Xxxxxx X. Silver
------------------------------------
Name: Xxxxxx X. Silver
Title: President and Chief Operating Officer
EQUITY INNS TRUST, a Maryland real estate
investment trust, as General Partner, on
behalf of the Limited Partners pursuant to
Section 8.02 and Article XI of the
Partnership Agreement
By: /s/ Xxxxxx X. Silver
------------------------------------
Name: Xxxxxx X. Silver
Title: President and Chief Operating Officer
EQUITY INNS, INC., a Tennessee corporation,
as a non-Partner party to the Partnership
Agreement
By: /s/ Xxxxxx X. Silver
------------------------------------
Name: Xxxxxx X. Silver
Title: President and Chief Operating Officer
Exhibit A
SERIES B PREFERRED UNITS
(Effective as of October 10, 2003)
Cash Amount of Capital Percentage of Series B
Partner and Address Contribution Preferred Units Preferred Units
------------------- ---------------------- --------------- ----------------------
Equity Inns Trust $86,250,000 3,450,000 100.0%
---------- ---------
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
$86,250,000 3,450,000 100.0%
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