<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 1996
REGISTRATION NO. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
RFS HOTEL INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 62-1534743
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
889 RIDGE LAKE BOULEVARD, SUITE 100
MEMPHIS, TENNESSEE 38120
(901) 767-5154
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT M. SOLMSON
889 RIDGE LAKE BOULEVARD, SUITE 100
MEMPHIS, TENNESSEE 38120
(901) 767-5154
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
DAVID C. WRIGHT
HUNTON & WILLIAMS
2000 RIVERVIEW TOWER
900 SOUTH GAY STREET
KNOXVILLE, TENNESSEE 37902
(423) 549-7700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT IN LIGHT OF MARKET
CONDITIONS AND OTHER FACTORS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX.[ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX.[x]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING.[ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING.[ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX.[x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Aggregate Amount Offering Price Per Aggregate Amount of
Securities to be Registered(1) to be Registered Unit(2) Offering Price(2) Registration
Fee(3)
<S> <C> <C> <C> <C>
Preferred Stock
Depositary Shares (4) }$250,000,000 (5) }$250,000,000 $86,207
Common Stock
</TABLE>
(1) This Registration Statement also covers delayed delivery contracts that
may be issued by the Registrant under which the party purchasing such
contracts may be required to purchase Offered Securities. Such
contracts may be issued together with the specific Offered Securities
to which they relate. In addition, Offered Securities registered
hereunder may be sold either separately or as units comprising more
than one type of Offered Security registered hereunder.
(2) Estimated solely for purposes of calculating the registration fee. No
separate consideration will be received for Common Stock or Preferred
Stock as may from time to time be issued upon conversion of Preferred
Stock.
(3) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended.
(4) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In the
event the Registrant elects to offer to the public fractional interests
in shares of the Preferred Stock registered hereunder, Depositary
Receipts will be distributed to those persons purchasing such
fractional interests and such shares will be issued to the Depositary
under the Deposit Agreement.
(5) Omitted pursuant to General Instruction II.D of Form S-3.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION, DATED MAY 8, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
RFS HOTEL INVESTORS, INC.
COMMON STOCK
PREFERRED STOCK
DEPOSITARY SHARES
-----------------
RFS Hotel Investors, Inc. (the "Company") may issue from time to time
(i) shares of Common Stock, $.01 par value ("Common Stock"), (ii) shares of
Preferred Stock, $.01 par value ("Preferred Stock") and (iii) depositary shares
representing entitlement to all rights and preferences of a fraction of a share
of Preferred Stock of a specified series and represented by depositary receipts
("Depositary Shares") having an aggregate initial public offering price not to
exceed $250,000,000. The Common Stock, Preferred Stock and the Depositary
Shares offered hereby (collectively, the "Offered Securities") may be offered in
separate series, in amounts, at prices and on terms to be determined at the time
of sale and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable, (i) in the case of Common Stock,
the number of shares and initial public offering price; (ii) in the case of
Preferred Stock, the series designation and number of shares, the dividend,
liquidation, redemption, conversion, voting and other rights, the initial public
offering price and whether interests in the Preferred Stock will be represented
by Depositary Shares. In addition, such specific terms may include limitations
on direct or beneficial ownership and restrictions on transfer of the Offered
Securities, in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for federal income tax
purposes.
The applicable Prospectus Supplement will also contain information,
where applicable, concerning certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered thereby.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company, or to or through underwriters or
dealers. If any designated agents or any underwriters are involved in the sale
of Offered Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement with, between or among them will be set forth
or will be calculable from the information set forth, in the applicable
Prospectus Supplement. See "Plan of Distribution." No Offered Securities may
be sold without delivery of the applicable Prospectus Supplement describing such
Offered Securities and the method and terms of the offering thereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE DATE OF THIS PROSPECTUS IS __________, 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its Regional Offices at Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661 and Suite 1300, 7 World Trade Center, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees.
This Prospectus is part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules of the Commission. For further
information, reference is made to the Registration Statement. In addition, the
Company's Common Stock is quoted on the Nasdaq Stock Market, and reports and
other information concerning the Company may be inspected at the Nasdaq Stock
Market at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are hereby incorporated by reference in this Prospectus: (i)
the Company's Annual Report on Form 10-K for the year ended December 31, 1995,
(ii) the description of the Common Stock contained in the Company's Registration
Statement on Form 8-A filed on July 30, 1993, under the Exchange Act, including
any reports filed under the Exchange Act for the purpose of updating such
description, (iii) the Company's Form 8-K filed with the Commission on March 14,
1996 and (iv) the proxy statement filed with the Commission on March 18, 1996
for the Company's annual meeting of shareholders for 1996. All documents filed
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act prior to the termination of the offering of all of the Offered Securities
shall be deemed to be incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, in any accompanying Prospectus Supplement relating to a
specific offering of Offered Securities or in any other subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or any accompanying Prospectus
Supplement.
The Company will provide on request and without charge to each person
to whom this Prospectus is delivered a copy (without exhibits) of any or all
documents incorporated by reference into this Prospectus. Requests for such
copies should be directed to RFS Hotel Investors, Inc. 889 Ridge Lake Boulevard,
Suite 100, Memphis, Tennessee 38120, Attention: Secretary, (901) 767-5154.
2
<PAGE> 4
THE COMPANY
The Company is a self-administered real estate investment trust
("REIT") formed as a Tennessee corporation in 1993 to make investments in hotel
properties. The Company completed its initial public offering in August 1993.
The Company is the sole general partner of RFS Partnership, L.P. (the
"Partnership") and owns an approximately 98.7% interest in the Partnership.
Substantially all of the Company's business activities are conducted through the
Partnership. At April 30, 1996, the Partnership owned 48 hotel properties with
an aggregate of 6,724 rooms located in 22 states and had entered into contracts
to acquire or is developing seven additional hotel properties with an aggregate
of 764 rooms. In order to qualify as a REIT for federal income tax purposes,
neither the Company nor the Partnership can operate hotels. As a result, the
Partnership leases all of its hotel properties to RFS, Inc. (the "Lessee")
pursuant to leases ("Percentage Leases") which provide for rent equal to the
greater of (i) fixed base rent or (ii) percentage rent based on a percentage of
gross room revenue, and food and beverage revenue, if any at the hotels. The
Lessee operates 44 of the 48 hotels leased from the Partnership at April 30,
1996 and the remaining hotels are operated by third parties pursuant to
management agreements with the Lessee. Prior to February 27, 1996,
substantially all of the equity interests of the Lessee were owned by Robert M.
Solmson and H. Lance Forsdick. Messrs. Solmson and Forsdick are directors, and
Mr. Solmson is Chairman of the Board and Chief Executive Officer, of the
Company. Effective February 27, 1996, a wholly-owned subsidiary of Doubletree
Corporation was merged into the Lessee, with the Lessee surviving the Merger as
a wholly-owned subsidiary of Doubletree Corporation.
The Company is a Tennessee corporation. Its executive offices are
located at 889 Ridge Lake Boulevard, Suite 100, Memphis, Tennessee and its
telephone number is (901) 767-5154.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company intends to contribute the net proceeds of any sale of Offered Securities
by the Company to the Partnership in exchange for additional units of
partnership interest. Unless otherwise set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of any Offered Securities will be
used by the Company and the Partnership for general corporate purposes, which
may include repayment of indebtedness, acquisition and development of additional
hotel properties and to fund improvements to hotel properties.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
For the Period Year Ended December 31,
August 13, 1993 ------------------------
to December 31, 1993 1994 1995
-------------------- ---- ----
<S> <C> <C> <C>
Ratio of Earnings to 207:1 102:1 35:1
Fixed Charges
</TABLE>
For purposes of computing this ratio, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before minority
interest. Fixed charges consist of interest cost, whether expensed or
capitalized, and amortization of loan costs.
Prior to the completion of the Company's initial public offering
("IPO") on August 13, 1993 and intent to qualify as a REIT, the Company's
predecessor entities operated in a manner so as to minimize net taxable income
and were capitalized primarily with debt. As a result, the Company's
predecessor entities had net aggregate losses for the fiscal years ended
December 31, 1990 and 1991 and the period January 1, 1993 to August 12, 1993.
Consequently, the computation of the ratio of earnings to fixed charges for
such periods indicates that earnings were inadequate to cover fixed charges by
approximately $1.8
3
<PAGE> 5
million, $1.3 million and $.4 million for the fiscal years ended December 31,
1991 and 1992, and the period January 1, 1993 to August 12, 1993, respectively.
The completion of the Company's IPO on August 13, 1993, permitted the Company
to reduce indebtedness, resulting in an improved ratio of earnings to fixed
charges beginning in the period from August 13, 1993 (closing of the IPO) to
December 31, 1993.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Under the Company's Charter (the "Charter"), the Company is authorized
to issue 100,000,000 shares of Common Stock, $.01 par value, and 5,000,000
shares of Preferred Stock, $.01 par value. At April 30, 1996, there were
24,369,000 shares of Common Stock outstanding and 973,684 shares of Series A
Preferred Stock outstanding.
The following information with respect to the capital stock of the
Company is subject to the detailed provisions of the Charter and the Company's
Bylaws, as currently in effect. These statements do not purport to be complete,
or to give full effect to the provisions of statutory or common law, and are
subject to, and are qualified in their entirety by reference to, the terms of
the Charter and Bylaws, which are filed as exhibits to the Registration
Statement.
COMMON STOCK
Subject to the provisions of the Charter described under "Restrictions
on Transfer of Capital Stock", the holders of Common Stock are entitled to one
vote per share on all matters voted on by shareholders, including elections of
directors. Except as otherwise required by law or provided in any resolution
adopted by the Board of Directors with respect to any series of Preferred Stock,
the holders of shares of Common Stock exclusively possess all voting power. The
Charter does not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of Preferred Stock,
the holders of Common Stock are entitled to such distributions as may be
declared from time to time by the Board of Directors from funds available
therefor, and upon liquidation are entitled to receive pro rata all assets of
the Company available for distribution to such holders subject to rights of
holders of any outstanding series of Preferred Stock. All shares of Common
Stock issued will be fully paid and nonassessable, and the holders thereof will
not have preemptive rights.
The Transfer Agent for the Common Stock is SunTrust Bank, Atlanta,
Georgia. The Common Stock is traded on the Nasdaq Stock Market under the
symbol "RFSI." The Company will apply to the Nasdaq Stock Market to list the
additional shares of Common Stock to be sold pursuant to any Prospectus
Supplement, and the Company anticipates that such shares will be so listed.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets
forth certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in that Prospectus
Supplement. The description set forth below is subject to and qualified in its
entirety by reference to the Articles of Amendment to the Charter fixing the
preferences, limitations and relative rights of a particular series of Preferred
Stock.
GENERAL. Under the Charter, the Board of Directors of the Company is
authorized, without further shareholder action, to provide for the issuance of
up to 5,000,000 shares of Preferred Stock, in such series, with such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or other provisions, as may be fixed
by the Board of Directors. As a result, the Board of Directors may afford the
holders of any series or class of Preferred Stock preferences, powers, and
rights, voting or otherwise, senior to the rights of holders of Common Stock.
4
<PAGE> 6
The Preferred Stock will have the dividend, liquidation, redemption,
conversion and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of Preferred Stock offered thereby for specific terms, including: (i) the title
and liquidation preference per share of such Preferred Stock and the number of
shares offered; (ii) the price at which such series will be issued; (iii) the
dividend rate (or method of calculation), the dates on which dividends shall be
payable and the dates from which dividends shall commence to accumulate; (iv)
any redemption or sinking fund provisions of such series; (v) any conversion
provisions of such series; and (vi) any additional dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions of such series.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of Preferred Stock, each series will rank on a parity as to dividends and
distributions in the event of a liquidation with each other series of Preferred
Stock and, in all cases, will be senior to the Common Stock.
DIVIDEND RIGHTS. Holders of Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of Directors, out of
assets of the Company legally available therefor, cash dividends at such rates
and on such dates as are set forth in the Prospectus Supplement relating to such
series of Preferred Stock. Such rate may be fixed or variable or both and may
be cumulative, noncumulative or partially cumulative.
If the applicable Prospectus Supplement so provides, as long as any
shares of Preferred Stock are outstanding, no dividends will be declared or paid
or any distributions be made on the Common Stock, other than a dividend payable
in Common Stock, unless the accrued dividends on each series of Preferred Stock
have been fully paid or declared and set apart for payment and the Company shall
have set apart all amounts, if any, required to be set apart for all sinking
funds, if any, for each series of Preferred Stock.
If the applicable Prospectus Supplement so provides, when dividends
are not paid in full upon any series of Preferred Stock and any other series of
Preferred Stock ranking on a parity as to dividends with such series of
Preferred Stock, all dividends declared upon such series of Preferred Stock and
any other series of Preferred Stock ranking on a parity as to dividends will be
declared pro rata so that the amount of dividends declared per share on such
series of Preferred Stock and such other series will in all cases bear to each
other the same ratio that accrued dividends per share on such series of
Preferred Stock and such other series bear to each other.
Each series of Preferred Stock will be entitled to dividends as
described in the Prospectus Supplement relating to such series, which may be
based upon one or more methods of determination. Different series of Preferred
Stock may be entitled to dividends at different dividend rates or based upon
different methods of determination. Except as provided in the applicable
Prospectus Supplement, no series of Preferred Stock will be entitled to
participate in the earnings or assets of the Company.
RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Stock will be entitled to receive out of the assets of the
Company available for distribution to shareholders the amount stated or
determined on the basis set forth in the Prospectus Supplement relating to such
series, which may include accrued dividends, if such liquidation, dissolution or
winding up is involuntary or may equal the current redemption price per share
(otherwise than for the sinking fund, if any provided for such series) provided
for such series set forth in such Prospectus Supplement, if such liquidation,
dissolution or winding up is voluntary, and on such preferential basis as is set
forth in such Prospectus Supplement. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to Preferred Stock of any series and any other shares of stock of the
Company ranking as to any such distribution on a parity with such series of
Preferred Stock are not paid in full, the holders of Preferred Stock of such
series and of such other shares will share ratably in any such distribution of
assets of the Company in proportion to the full respective preferential amounts
to which they are entitled or on such other basis as is set forth in the
applicable Prospectus Supplement. The rights, if any, of the holders of any
series of Preferred Stock to participate in the assets of the Company remaining
after the holders of other series of Preferred Stock have
5
<PAGE> 7
been paid their respective specified liquidation preferences upon any
liquidation, dissolution or winding up of the Company will be described in the
Prospectus Supplement relating to such series.
REDEMPTION. A series of Preferred Stock may be redeemable, in whole or
in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund, in each case upon terms, at the times,
the redemption prices and for the types of consideration set forth in the
Prospectus Supplement relating to such series. The Prospectus Supplement
relating to a series of Preferred Stock which is subject to mandatory redemption
shall specify the number of shares of such series that shall be redeemed by the
Company in each year commencing after a date to be specified, at a redemption
price per share to be specified, together with an amount equal to any accrued
and unpaid dividends thereon to the date of redemption.
If, after giving notice of redemption to the holders of a series of
Preferred Stock, the Company deposits with a designated bank funds sufficient to
redeem such Preferred Stock, then from and after such deposit, all shares called
for redemption will no longer be outstanding for any purpose, other than the
right to receive the redemption price and the right to convert such shares into
other classes of stock of the Company. The redemption price will be stated in
the Prospectus Supplement relating to a particular series of Preferred Stock.
Except as indicated in the applicable Prospectus Supplement, the
Preferred Stock is not subject to any mandatory redemption at the option of the
holder.
SINKING FUND. The Prospectus Supplement for any series of Preferred
Stock will state the terms, if any, of a sinking fund for the purchase or
redemption of that series.
CONVERSION AND PREEMPTIVE RIGHTS. The Prospectus Supplement for any
series of Preferred Stock will state the terms, if any, on which shares of that
series are convertible into or redeemable for shares of Common Stock or another
series of Preferred Stock. The Preferred Stock will have no preemptive rights.
VOTING RIGHTS. Except as indicated in the Prospectus Supplement
relating to a particular series of Preferred Stock, or except as expressly
required by Tennessee law, a holder of Preferred Stock will not be entitled to
vote. Except as indicated in the Prospectus Supplement relating to a particular
series of Preferred Stock, in the event the Company issues full shares of any
series of Preferred Stock, each such share will be entitled to one vote on
matters on which holders of such series of Preferred Stock are entitled to vote.
Under Tennessee law, the affirmative vote of the holders of a majority
of the outstanding shares of all series of Preferred Stock entitled to vote,
voting as a separate voting group, or of all outstanding votes of all series of
Preferred Stock equally affected, as a voting group, will be required for (i)
the authorization of any class of stock ranking prior to or on a parity with
Preferred Stock or the increase in the number of authorized shares of any such
stock, (ii) any increase in the number of authorized shares of Preferred Stock
and (iii) certain amendments to the Charter that may be adverse to the rights of
Preferred Stock outstanding.
TRANSFER AGENT AND REGISTRAR. The transfer agent, registrar and
dividend disbursement agent for a series of Preferred Stock will be selected by
the Company and be described in the applicable Prospectus Supplement. The
registrar for shares of Preferred Stock will send notices to shareholders of any
meetings at which holders of Preferred Stock have the right to vote on any
matter.
SERIES A PREFERRED STOCK. In February 1996, the Company issued 973,684
shares of Series A Preferred Stock ("Series A Preferred") to a wholly-owned
subsidiary of Doubletree Corporation. The Series A Preferred has a par value
of $.01 per share and a preference value of $19.00 per share (the "Preference
Amount"). Each share of Series A Preferred is entitled to a fixed annual
dividend of $1.45 per share payable when, as and if declared by the Board of
Directors. Dividends on the Series A Preferred are cumulative. Accumulated but
unpaid dividends on the Series A Preferred bear interest at a per annum rate of
7.6%. The Series A Preferred is senior to the Common Stock and any other
capital stock of the Company which does not by its terms rank senior to or pari
6
<PAGE> 8
passu with the Series A Preferred with respect to dividends and payments in the
event of liquidation, dissolution or winding up of the Company.
The holders of Series A Preferred are entitled to that number of votes
equal to the number of shares of Common Stock into which the Series A Preferred
is convertible from time to time, as such number may be adjusted from time to
time as described below. Currently, the holder of the Series A Preferred Stock
is entitled to one vote per share. The holders of the Series A Preferred will
vote together as a group with the holders of the Common Stock on all matters
submitted to the Company's shareholders for approval. Any proposed amendment to
the Company's Charter which creates a class of Preferred Stock ranking senior to
the Series A Preferred requires the approval of the holders of 66-2/3% of the
outstanding Series A Preferred.
Upon liquidation, dissolution or winding up of the Company, the holders
of each share of Series A Preferred will be entitled to receive the Preference
Amount plus all accrued but unpaid dividends through the date of liquidation,
dissolution or winding up. Each share of Series A Preferred may be converted
into one share of Common Stock, subject to adjustments for stock splits, stock
dividends or similar events, at any time after February 27, 2003. Additionally,
at any time after February 27, 2003, the Company may redeem the Series A
Preferred for a price per share equal to the Preference Amount, plus all accrued
and unpaid dividends to and including the date fixed for redemption, subject to
the rights of the holder of Series A Preferred Stock to convert their shares to
shares of the Company's Common Stock after notice to the holders thereof and
opportunity for conversion. The holders of Series A Preferred Stock are not
entitled to any preemptive rights.
If the Company no longer qualifies as a REIT, the Company must redeem
all shares of Series A Preferred Stock held by the current holder for a price
per share equal to the greater of (i) the Preference Amount or (ii) the weighted
average of the sales prices for the Company's common Stock for all transactions
reported on the Nasdaq Stock Market, or other principal exchange on which the
Company's Common Stock is then traded, during the ten (10) business days
preceding the second business day prior to the date of redemption.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event, the
Company will issue to the public receipts for Depositary Shares, each of which
will represent a fraction (to be set forth in the Prospectus Supplement relating
to a particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and the depositary named in the applicable Prospectus
Supplement (the "Depositary"). Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled, in proportion to the
applicable fraction of a share of Preferred Stock represented by such Depositary
Share, to all the rights and preferences of the Preferred Stock represented
thereby (including dividend, voting, redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference in the Registration Statement of which
this Prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
7
<PAGE> 9
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
number of such Depositary Shares owned by such holders. The Depositary shall
distribute only such amount, however, as can be distributed without attributing
to any holder of Depositary Shares a fraction of one cent, and the balance not
so distributed shall be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement will also contain provisions relating to the
manner in which any subscription or similar rights offered by the Company to
holders of the Preferred Stock shall be made available to the holders of
Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock represented by Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of Preferred Stock held by the Depositary. The redemption price
per Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of Preferred Stock.
Whenever the Company redeems shares of Preferred Stock held by the Depositary,
the Depositary will redeem as of the same redemption date the number of
Depositary Shares representing the shares of Preferred Stock so redeemed. If
fewer than all the Depositary Shares are to be redeemed, the Depositary Shares
to be redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be outstanding and all rights of the holders of
the Depositary Shares will cease, except the right to receive the money,
securities, or other property payable upon such redemption and any money,
securities, or other property to which the holders of such Depositary Shares
were entitled upon such redemption upon surrender to the Depositary of the
Depositary Receipts evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of Preferred Stock represented by
such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all action which may be deemed necessary by the Depositary in
order to enable the Depositary to do so. The Depositary may abstain from voting
shares of Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Shares representing such Preferred
Stock.
8
<PAGE> 10
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the Depositary Shares then outstanding. The Deposit Agreement may
be terminated by the Company or the Depositary only if (i) all outstanding
Depositary Shares have been redeemed or (ii) there has been a final distribution
in respect of the Preferred Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution has been
distributed to the holders of Depositary Receipts.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Company will pay charges of the Depositary in connection with the initial
deposit of the Preferred Stock and any redemption of the Preferred Stock.
Holders of Depositary Receipts will pay other transfer and other taxes and
governmental charges and such other charges, including a fee for the withdrawal
of shares of Preferred Stock upon surrender of Depositary Receipts, as are
expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to holders of Depository Receipts all
reports and communications from the Company that are delivered to the
Depositary and that the Company is required to furnish to holders of Preferred
Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting Preferred Stock for deposit, holders
of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company
notice of its election to do so, and the Company may at any time remove the
Depositary in which event the Company will appoint a successor Depositary after
delivery of the notice of resignation or removal.
RESTRICTIONS ON OWNERSHIP
In order to safeguard the Company against an inadvertent loss of REIT
status, the Deposit Agreement will contain provisions restricting the ownership
and transfer of Depositary Shares. Such restrictions will be described in the
applicable Prospectus Supplement and will be referenced on the applicable
Depositary Receipts.
RESTRICTIONS ON TRANSFER OF CAPITAL STOCK
For the Company to qualify as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code"), shares of capital stock must be held by a
minimum of 100 persons for at least 335 days in each taxable year or during a
proportionate part of a shorter taxable year. In addition, at all times during
the second half of each taxable year, no more than 50% in value of the shares
of beneficial interest of the Company may be owned, directly or indirectly and
by applying certain constructive ownership rules, by five or fewer individuals
(the "5/50 Rule").
9
<PAGE> 11
Because the Board of Directors believes it is essential for the Company to
continue to qualify as a REIT, the Charter restricts the acquisition of shares
of Common Stock (the "Ownership Limitation"). The Board of Directors intends to
include in the Articles of Amendment to the Charter with respect to any future
series of Preferred Stock restrictions on the acquisition of shares of such
series similar to those applicable to Common Stock.
The Ownership Limitation provides that, subject to certain exceptions
specified in the Charter, no shareholder may own, or be deemed to own by virtue
of the attribution provisions of the Code, more than 9.9% of the outstanding
shares of Common Stock. The Board of Directors may, but in no event is required
to, waive the Ownership Limitation if evidence satisfactory to the Board of
Directors is presented that ownership in excess of such amount will not
jeopardize the Company's status as a REIT. As a condition of such waiver, the
Board of Directors may require opinions of counsel satisfactory to it or an
undertaking from the applicant with respect to preserving the REIT status of the
Company. If shares in excess of the Ownership Limitation, or shares which would
cause the Company to be beneficially owned by fewer than 100 persons, are issued
or transferred to any person, such issuance or transfer shall be null and void
and the intended transferee will acquire no rights to the shares.
The Ownership Limitation will not be automatically removed even if the
REIT provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Any change in the Ownership Limitation would require an amendment to
the Charter. In addition to preserving the Company's status as a REIT, the
Ownership Limitation may have the effect of precluding an acquisition of control
of the Company without the approval of the Board of Directors. All certificates
representing shares of capital stock will bear a legend referring to the
restrictions described above.
All persons who own, directly or by virtue of the attribution
provisions of the Code, 5% or more of the outstanding Common Stock and any
shareholder requested by the Company must file an affidavit with the Company
containing the information specified in the Charter with respect to their
ownership of shares within 30 days after January 1 of each year. In addition,
each shareholder shall, upon demand, be required to disclose to the Company in
writing such information with respect to the direct, indirect and constructive
ownership of shares as the Board of Directors deems necessary to comply with the
provisions of the Code applicable to a REIT or to comply with the requirements
of any taxing authority or governmental agency.
Any transfer of shares which would prevent the Company from continuing
to qualify as a REIT under the Code will be void ab initio to the fullest extent
permitted under applicable law and the intended transferee of such shares will
be deemed never to have had an interest in such shares. Further, if, in the
opinion of the Board of Directors, (i) a transfer of shares would result in any
shareholder or group of shareholders acting together owning in excess of the
Ownership Limitation or (ii) a proposed transfer of shares may jeopardize the
qualification of the Company as a REIT under the Code, the Board of Directors
may, in its sole discretion, refuse to allow the shares to be transferred to the
proposed transferee. Finally, the Company may, in the discretion of the Board
of Directors, redeem any stock held of record by any shareholder in excess of
the Ownership Limitation, for a price equal to the lesser of (i) the market
price on the date of notice of redemption; (ii) the market price on the date of
purchase; or (iii) the maximum price allowed under the applicable provisions of
the Tennessee Business Corporation Act.
PLAN OF DISTRIBUTION
The Company may sell Offered Securities in or outside the United States
to or through underwriters or may sell Offered Securities to investors directly
or through designated agents. Any such underwriter or agent involved in the
offer and sale of the Offered Securities will be named in the applicable
Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as agents to offer and sell the Offered Securities
upon the terms and conditions set forth in any Prospectus Supplement.
Underwriters may sell Offered Securities to or through dealers, and such dealers
may receive compensation in the form of
10
<PAGE> 12
discounts, concessions or commissions (which may be changed from time to time)
from the underwriters and/or from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities and any discounts,
concessions or commissions allowed by underwriters to participating dealers will
be set forth in the applicable Prospectus Supplement. Underwriters, dealers and
agents participating in the distribution of the Offered Securities may be deemed
to be underwriters, and any discounts and commissions received by them from the
Company or from purchasers of Offered Securities and any profit realized by them
on resale of the Offered Securities may be deemed to be underwriting discounts
and commissions under the Securities Act. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act.
Unless otherwise specified in the related Prospectus Supplement, each
series of Offered Securities will be a new issue with no established trading
market, other than the Common Stock which is currently traded on the Nasdaq
Stock Market. The Company may elect to list any series of Preferred Stock or
Depositary Shares on the Nasdaq Stock Market or on an exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in a series of Offered Securities, but will not be obligated to do so and
may discontinue any market marking at any time without notice. Therefore, no
assurance can be given as to the liquidity of the trading market for the Offered
Securities.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize dealers acting as the Company's agents to solicit offers by
certain institutions to purchase Offered Securities from the Company at the
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts (the "Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will
be for an amount not less than, and the principal amount of Offered Securities
sold pursuant to Contracts shall not be less nor more than, the respective
amounts stated in such Prospectus Supplement. Institutions with which
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Offered Securities covered by
its Contract shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject and
(ii) the Company shall have sold to such underwriters the total principal amount
of the Offered Securities less the principal amount thereof covered by
Contracts. A commission indicated in the Prospectus Supplement will be paid to
agents and underwriters soliciting purchases of Offered Securities pursuant to
Contracts accepted by the Company. Agents and underwriters shall have no
responsibility in respect of the delivery or performance of Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, the Company in the
ordinary course of business.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the
Company by Hunton & Williams.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in its annual report on Form 10-K for the period ended December 31,
1995 have been audited by Coopers & Lybrand L.L.P., independent accountants, as
set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
11
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . . . . . . . $86,207
NASD filing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,500
Nasdaq listing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . 40,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . 125,000
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,793
--------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Charter and agreements between the Company and its
officers and directors obligate the Company to indemnify and advance expenses
to present and former directors and officers to the maximum extent permitted by
Tennessee law. The Tennessee Business Corporation Act ("TBCA") permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, settlements, penalties, fines or reasonable expenses
incurred with respect to a proceeding to which they may be made a party by
reason of their service in those or other capacities if (i) such persons
conducted themselves in good faith, (ii) they reasonably believed, in the case
of conduct in their official capacities with the corporation, that their conduct
was in its best interests and, in all other cases, that their conduct was at
least not opposed to its best interests, and (iii) in the case of any criminal
proceeding, they had no reasonable cause to believe that their conduct was
unlawful.
Any indemnification by the Company pursuant to the provisions of the
Charter or agreements described above shall be paid out of the assets of the
Company and shall not be recoverable from the shareholders. To the extent that
the foregoing indemnification provisions purport to include indemnification for
liabilities arising under the Securities Act of 1933, in the opinion of the
Securities and Exchange Commission such indemnification is contrary to public
policy and, therefore, unenforceable.
The TBCA permits the charter of a Tennessee corporation to include a
provision eliminating or limiting the personal liability of its directors to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that such provision cannot eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law,
or (iii) for unlawful distributions that exceed what could have been distributed
without violating the TBCA or the corporation's charter. The Company's Charter
contains a provision eliminating the personal liability of its directors or
officers to the Company or its shareholders for money damages to the maximum
extent permitted by Tennessee law from time to time.
The Third Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement") of the Partnership provides, generally, for the
indemnification of an "indemnitee" against losses, claims, damages, liabilities
(joint and several), judgments, fines, settlements and other amounts (including
reasonable expenses) that relate to the operations of the Partnership unless it
is established that (i) the act or omission of the Indemnitee was
12
<PAGE> 14
material and either was committed in bad faith or pursuant to active and
deliberate dishonesty, (ii) the Indemnitee actually received an improper
personal benefit in money, property or services, or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. For this purpose, the term "Indemnitee" includes any
person made a party to a proceeding by reason of his status as a director or
officer of the Partnership, and such other persons (including affiliates of the
Company) as the Company, may designate from time to time in its sole and
absolute discretion. Any such indemnification will be made only out of assets
of the Partnership, and in no event may an Indemnitee subject the limited
partners of the Partnership to personal liability by reason of the
indemnification provisions in the Partnership Agreement. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted pursuant to the foregoing provisions or otherwise, the Partnership has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy and, therefore, unenforceable. The
Partnership has purchased liability insurance for the purpose of providing a
source of funds to pay indemnification described above.
ITEM 16. EXHIBITS
4.1 Charter of RFS Hotel Investors, Inc.
4.2 Bylaws of RFS Hotel Investors, Inc.
4.3 Third Amended and Restated Agreement of Limited Partnership of
RFS Partnership, L.P.
5.1 Opinion of Hunton & Williams
12.1 Statement regarding computation of ratios
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Hunton & Williams (included in Exhibit 5.1)
24.1 Power of Attorney (located on the signature page of this
Registration Statement)
13
<PAGE> 15
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that the undertakings set forth in subparagraphs
(i) and (ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that the in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted against
the registrant by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee on the 8th day of May,
1996.
RFS HOTEL INVESTORS, INC.,
a Tennessee corporation
By: /s/ Robert M. Solmson
--------------------------------
Robert M. Solmson
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Minor W. Perkins and Michael J. Pascal, and each or either of them, his
true and lawful attorney-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any registration statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
as amended, and to cause the same to be filed, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby granting to said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
whatsoever requisite or desirable to be done in and about the premises, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all acts and things that said attorneys-in-fact
and agents, or either of them, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 8th day of May, 1996 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title and Capacity
- --------- ------------------
<S> <C>
/s/ Robert M. Solmson Chairman of the Board, Chief Executive Officer and
- --------------------------------- Director (Principal Executive Officer)
Robert M. Solmson
/s/ Michael J. Pascal Secretary and Treasurer (Principal Financial
- --------------------------------- Officer and Principal Accounting Officer)
Michael J. Pascal
/s/ Bruce E. Campbell Director
- ---------------------------------
Bruce E. Campbell
/s/ H. Lance Forsdick Director
- ---------------------------------
H. Lance Forsdick
/s/ Harry J. Phillips, Sr. Director
- ---------------------------------
Harry J. Phillips, Sr.
/s/ Michael S. Starnes Director
- ---------------------------------
Michael S. Starnes
/s/ John W. Stokes, Jr. Director
- ---------------------------------
John W. Stokes, Jr.
</TABLE>
15
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<S> <C>
4.1 Charter of RFS Hotel Investors, Inc.
4.2 Bylaws of the RFS Hotel Investors, Inc. (previously filed as
Exhibit 3.2 to the Company's form S-11 Registration Statement,
Registration No. 33-63696 and incorporated herein by reference)
4.3 Third Amended and Restated Agreement of Limited Partnership of
RFS Partnership, L.P.
5.1 Opinion of Hunton & Williams
12.1 Statement regarding computation of ratios
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Hunton & Williams (included in Exhibit 5.1)
24.1 Power of Attorney (located on the signature page of this
Registration Statement)
</TABLE>
16
<PAGE> 1
EXHIBIT 4.1
ARTICLES OF AMENDMENT
TO THE
SECOND RESTATED CHARTER OF
RFS HOTEL INVESTORS, INC.
UNDER SECTION 48-16-102(D) OF THE TENNESSEE BUSINESS CORPORATION ACT.
1. The name of the Corporation is RFS Hotel Investors, Inc.
2. Article 5 of the Corporation's Amended and Restated Charter is hereby
amended to add the following at the end thereof:
"The distinctions, designations, rights, preferences and restrictions
of the Series A Convertible Preferred Stock are determined and fixed as follows:
A. Designation. A series of the Preferred Stock
designated Convertible Preferred Stock, Series A (hereinafter referred
to as the "Series A Preferred Stock") is hereby established, and the
number of shares constituting the series shall be Nine Hundred Seventy
Three Thousand Six Hundred Eighty Four (973,684). Shares of this
series shall have an initial preference value of $19.00 per share (the
"Stated Value") and a par value of $0.01.
B. Relative Seniority. In respect of rights to receive
dividends and to participate in distributions or payments in the event
of any liquidation, dissolution or winding up of the Corporation, the
Series A Preferred Stock shall rank senior to the Common Stock and any
other capital stock of the Corporation which does not, by its terms,
rank senior to or pari passu with, as to dividends and/or upon
liquidation, the Series A Preferred Stock (collectively, "Junior
Stock").
C. Voting Rights. Except as otherwise required by law,
the holders of the Series A Preferred Stock shall be entitled to that
number of votes equal to the number of shares of the Corporation's
Common Stock, $0.01 par value per share, into which the Series A
Preferred Stock may then be converted (or would be converted, if not
then convertible), voting together as a single voting group with the
holders of the shares of the Common Stock, on all matters submitted to
the Corporation's shareholders for approval. The holders of Series A
Preferred Stock shall have the right to vote separately as a class on
any amendment to the Charter which creates a class of preferred stock
ranking senior to the Series A Preferred Stock as to dividends and/or
upon liquidation, which amendment shall require the approval of the
holders of 66 2/3% of the outstanding shares of Series A Preferred
Stock.
<PAGE> 2
D. Dividends.
(i) Holders of shares of the Series A Preferred
Stock shall be entitled to receive, when, as, and if declared by the
Board of Directors, dividends on their shares of the Series A
Preferred Stock as provided in this Section D.
(ii) Dividends on shares of Series A Preferred
Stock shall accumulate from the date of issue of the Series A
Preferred Stock, prorated for any partial period on the basis of a
360-day year consisting of twelve 30-day months, and shall be paid,
when, as, and if declared by the Board of Directors, in cumulative
cash dividends, only out of funds legally available therefor, at the
fixed per annum rate of $1.45 per share of Series A Preferred Stock.
The term "date of issue" or any similar phrase herein shall mean the
date on which the Corporation initially issues the Series A Preferred
Stock, regardless of any transfer or re-issuance of share
certificates representing the Series A Preferred Stock, including,
without limitation, any re-issuance of share certificates pursuant to
Section H(i) or H(ii).
(iii) Dividends on shares of Series A Preferred
Stock shall accrue at the rate and in the manner described herein,
whether or not such dividends shall have been declared and whether or
not there shall be (at the time such dividends accrue or become
payable or at any other time), profits, surplus or other funds of the
Corporation legally available for the payment of cash dividends.
Dividends on shares of Series A Preferred Stock, if declared, shall be
payable at the fixed quarterly rate of $0.3625 per share at such time
as quarterly dividends are paid on the Common Stock, commencing with
the first such dividend following the Closing Date (each of such dates
referred to herein as a "Dividend Payment Date"). The first quarterly
dividend on the Series A Preferred Stock shall be pro rated as
described in Section D(ii) above. All accumulated but unpaid
dividends on Series A Preferred Stock shall be payable in preference
to and in priority over any dividends or distributions on Junior
Stock.
(iv) So long as any shares of Series A Preferred
Stock shall remain outstanding, no cash dividend shall be declared or
paid upon, nor shall any cash distribution be made upon, any Junior
Stock, nor shall any shares of Junior Stock be purchased or redeemed
by the Corporation, nor shall any moneys be paid to or made available
for a sinking fund for the purchase or redemption of any Junior Stock,
unless in each instance accrued dividends on all outstanding shares of
the Series A Preferred Stock for all Dividend Payment Dates shall have
been paid in full.
(v) The amount of any dividends accrued on any
shares of Series A Preferred Stock at any Dividend Payment Date shall
be the amount of any unpaid dividends accumulated thereon, to and
including such Dividend Payment Date, whether or not earned or
declared, and the amount of dividends accrued on any shares of Series
A Preferred Stock at any date other than a Dividend Payment Date shall
be equal to the sum of the amount of any unpaid dividends accumulated
thereon, to and including the last preceding Dividend Payment Date,
whether or not earned or declared, plus an amount calculated on the
basis of the annual dividend rate for the period after such last
preceding
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<PAGE> 3
Dividend 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.
(vi) No holder of shares of Series A Preferred
Stock shall be entitled to any dividends in excess of full cumulative
dividends at the fixed annual rate provided herein, on shares of
Series A Preferred Stock. Accumulated but unpaid dividends on the
Series A Preferred Stock shall bear interest at a per annum rate of
7.6%. Except as provided herein, the Series A Preferred Stock shall
not be entitled to participate in the earnings or assets of the
corporation.
E. Conversion.
(i) Optional Conversion. No holder of shares of
Series A Preferred Stock shall have the right to convert any shares of
Series A Preferred Stock prior to the seventh (7th) anniversary of the
date of the initial issuance of the Series A Preferred Stock. On and
after the seventh anniversary of the date of the initial issuance of
the Series A Preferred Stock, each holder of shares of Series A
Preferred Stock shall have the right, at such holder's option, to
convert, without payment of any additional consideration, any or all
of the shares of Series A Preferred Stock held by such holder into the
number of shares of Common Stock obtained by multiplying the number of
shares of Series A Preferred Stock to be converted by the conversion
rate determined from time to time pursuant to this Section E (the
"Conversion Rate"). The initial Conversion Rate shall be 1.0.
(ii) Mechanics of Conversion. In order for any
holder of shares of Series A Preferred Stock to convert any such
shares into shares of Common Stock, such holder shall surrender the
certificate or certificates evidencing the shares to be converted,
duly endorsed, at the principal office of the Corporation and shall
give written notice to the Corporation at such office of the election
to convert such shares into shares of Common Stock. The notice shall
state the number of shares of Series A Preferred Stock to be converted
and the name of the holder or the name(s) of the nominee(s) of such
holder in which any certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder or such nominee(s), a
certificate or certificates for the number of full shares of Common
Stock to which such holder or such nominee(s) is entitled, together
with a new certificate for the number of any shares of Preferred Stock
not converted. Any conversion shall be deemed to occur immediately
prior to the close of business on the date of surrender of the shares
to be converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(iii) No Fractional Shares. No fractional shares
of Common Stock or scrip shall be issued upon conversion of shares of
Series A Preferred Stock. If a holder surrenders for conversion more
than one share of Series A Preferred Stock at any time, the number of
full shares of Common Stock issuable upon conversion thereof shall be
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<PAGE> 4
computed using the aggregate number of shares of Series A Preferred
Stock so surrendered. Instead of issuing any fractional shares of
Common Stock that would otherwise be issuable upon conversion of any
of the shares of Series A Preferred Stock, the Corporation shall round
down to the nearest whole number of shares of Common Stock and pay to
such holder cash equal to the fair market value of such fraction on
the date of conversion (as determined in good faith by the Board of
Directors).
(iv) Adjustment of Number of Shares of Common
Stock Issuable upon Conversion of the Series A Preferred Stock. The
Conversion Rate shall be subject to adjustment from time to time as
follows:
(a) Effect of "Split-ups" and
"Split-downs"; Stock Dividends. If at any time or
from time to time the Corporation shall subdivide as
a whole, by reclassification, by the issuance of a
stock dividend or by making a distribution on the
Common Stock payable in Common Stock, or otherwise,
the number of shares of Common Stock, the Conversion
Rate shall be increased proportionately as of the
effective or record date of such action. The
issuance of such a stock dividend shall be treated as
a subdivision of the whole number of shares of Common
Stock outstanding immediately before the record date
for such dividend into a number of shares equal to
such whole number of shares so outstanding plus the
number of shares issued as a stock dividend. In case
at any time or from time to time the Corporation
shall combine as a whole, by reclassification or
otherwise, the number of shares of Common Stock then
outstanding into a lesser number of shares of Common
Stock, with or without par value, the Conversion Rate
shall be reduced proportionately as of the effective
date of such action.
(b) Effect of a Diluting Issue. For
purposes of this Section D(iv)(b) and Section
D(iv)(c), Current Market Price shall mean, per share
of Common Stock, a price equal to the weighted
average of the sales prices for the Common Stock on
the Nasdaq Stock Market or principal exchange on
which the Common Stock is then traded on the date of
determination. If the Corporation shall issue rights
or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the
Current Market Price of the Common Stock (determined
on the record date for the determination of
shareholders entitled to receive such rights or
warrants), then the Conversion Rate shall be adjusted
by multiplying the Conversion Rate in effect on such
record date by a fraction of which the numerator
shall be the sum of: (A) the number of shares of
Common Stock outstanding immediately prior to such
record date and (B) the number of additional shares
of Common Stock issuable upon exercise of the rights
or warrants, and of which the denominator shall be
the sum of: (1) the number of shares of Common Stock
outstanding immediately prior to such record date and
(2) the number of shares of Common Stock that could
be
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<PAGE> 5
purchased, at the Current Market Price, on the record
date, using the aggregate consideration that would be
received by the Corporation from the exercise of all
such rights or warrants. If all shares of Common
Stock issuable upon exercise of the rights or warrants
are not issued pursuant to the exercise of such rights
or warrants prior to the expiration thereof, the
Conversion Rate shall be adjusted to the Conversion
Rate that would then be in effect had the adjustment
to the Conversion Rate made upon the issuance of such
rights or warrants been made upon the basis of the
issuance of rights or warrants in respect of only the
number of shares of Common Stock actually issued
pursuant to the exercise of the rights or warrants.
(c) Effect of Other Distributions. If
the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock
consisting of evidences of its indebtedness, cash or
other assets (including shares of capital stock of
the Corporation other than Common Stock but
excluding: (i) rights or warrants referred to in
subsection (b) of this Section D and (ii) subject to
the provisions of Section D(iv) above, any regular
quarterly dividend or distribution paid in cash or
any special dividend or distribution necessary to
maintain the Corporation's status as a real estate
investment trust under the Internal Revenue Code of
1986, as amended (the "Code")) then the Conversion
Rate in effect on the record date for such dividend
or distribution shall be adjusted by multiplying such
Conversion Rate by a fraction of which the numerator
shall be the Current Market Price per share of the
Common Stock on such record date and of which the
denominator shall be the Current Market Price less
the fair market value (as determined in good faith by
the Board of Directors of the Corporation) on such
record date of the portion of the assets or evidences
of indebtedness so paid or distributed applicable to
one share of Common Stock.
(d) Effect of Merger or Consolidation.
If the Corporation shall, while any shares of Series
A Preferred Stock remain outstanding, enter into any
consolidation with or merge into any other
corporation wherein the Corporation is not the
surviving corporation, or wherein cash or securities
of a corporation other than the Corporation are
distributable to holders of Common Stock of the
Corporation, or sell or convey its property as an
entirety or substantially as an entirety, and in
connection with such consolidation, merger, sale or
conveyance, cash, shares of stock or other securities
shall be issuable or deliverable in exchange for the
Common Stock of the Corporation, the holder of any
shares of Series A Preferred Stock shall be entitled
to receive in connection with such merger or
consolidation, in lieu of the number of shares of
Common Stock that such holder would have been
entitled to receive upon conversion of the holder's
Series A Preferred Stock immediately before the
effective date of such consolidation, merger, sale or
conveyance, the cash, shares of stock
A-5
<PAGE> 6
or other securities to which such number of shares of
Common Stock would have been entitled at the time of
such consolidation, merger, sale or conveyance.
(e) Reorganization and Reclassification.
In case of any capital reorganization or any
reclassification of the capital stock of the
Corporation (except as provided in paragraph D(iv)(a)
above) while any shares of Series A Preferred Stock
remain outstanding, the holder of any shares of
Series A Preferred Stock shall be entitled to receive
upon such reorganization or reclassification, in lieu
of the number of shares of Common Stock that such
holder would have been entitled to receive if such
holder had converted immediately before such
reorganization or reclassification, the shares of
stock of any class or classes or other securities or
property to which such number of shares of Common
Stock would have been entitled if such shares of
Series A Preferred Stock had been converted
immediately before such reorganization or
reclassification.
(f) Definitions. For all purposes of
this section E(iv), unless the context otherwise
requires, the following terms have the following
respective meanings:
"Common Stock": (i) the Corporation's
presently authorized Common Stock, (ii) securities
issued upon conversion of the Series A Preferred
Stock and (iii) stock of the Corporation of any class
hereafter authorized that ranks, or is entitled to a
participation, as to assets or dividends,
substantially on a parity with Common Stock.
"Corporation": RFS Hotel Investors, Inc., a
Tennessee corporation, and any other corporation
assuming the Corporation's obligations with respect
to the Series A Preferred Stock pursuant to this
section E.
(v) Notice to Holders. In the event the
Corporation shall propose to take any action of the types
described in paragraph E(iv)(d), the Corporation shall give
notice to each holder of shares of Series A Preferred Stock,
which notice shall specify the record date, if any, with
respect to any such action and the date on which such action
is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect
may be known at the date of such notice) on the Conversion
Rate and the amount, number, kind or class of shares or other
securities, cash or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable
upon conversion of the shares of Series A Preferred Stock. In
the case of any action that would require the fixing of a
record date, such notice shall be given at least ten (10) days
prior to the date so fixed, and in case of all other action,
such notice shall be given at least ten (10) days prior to the
taking of such proposed action.
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<PAGE> 7
(vi) Shares Free and Clear. All shares of Common
Stock issued in connection with the conversion provisions set
forth herein shall be, upon issuance by the Corporation,
validly issued, fully paid and nonassessable and free from all
taxes, liens or charges with respect thereto created or
imposed by the Corporation.
(vii) Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the
Conversion Rate pursuant to Section E(iv) hereof, the
Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof
and furnish to each holder of shares of Series A Preferred
Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts and computations
upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any
holder of the shares of Series A Preferred Stock, furnish or
cause to be furnished to such holder a like certificate
setting forth (a) such adjustments and readjustments, (b) the
Conversion Rate at that time in effect, and (c) the number of
shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the
conversion of the shares of Series A Preferred Stock. The
Corporation shall file a like certificate among its permanent
records and at all reasonable times during business hours
shall permit inspection of such certificate by any holder of
shares of Series A Preferred Stock requesting such inspection.
(viii) Common Stock Reserved. The Corporation shall
reserve and keep available out of its authorized but unissued
shares of Common Stock such number of shares of Common Stock
as shall from time to time be sufficient to effect conversion
of the shares of Series A Preferred Stock. The Corporation
shall pay any stamp or transfer taxes payable as a result of
the issuance of Common Stock upon conversion of the Series A
Preferred Stock.
F. Liquidation Preference. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the shares of Series A Preferred Stock
then outstanding will be entitled to receive and to be paid out of the
assets of the Corporation available for distribution to its
shareholders the Stated Value per share plus all accrued and unpaid
dividends through the date of liquidation, dissolution or winding up,
as adjusted for any stock dividends, combinations or splits with
respect to such shares, before any distribution or payment is made
upon any of the shares of Junior Stock of the Corporation or any other
shares of capital stock not ranking at least pari passu with the
Series A Preferred Stock. After the payment to the holders of the
shares of the Series A Preferred Stock of the full liquidation
preference provided for in this Section F, the holders of the Series A
Preferred Stock, as such, shall have no right or claim to any of the
remaining assets of the Corporation. If upon such liquidation,
dissolution or winding up, the assets of the Corporation are
insufficient to pay the applicable liquidation preference to the
holders of shares of Series A Preferred Stock and the holders of any
other shares of capital stock of the Corporation ranking pari passu
with the Series A Preferred Stock, the assets of the Corporation will
be distributed
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<PAGE> 8
among the holders of the shares of Series A Preferred Stock and such
other shares on a pro rata basis. The Corporation will mail written
notice of such liquidation, dissolution or winding up, not less than
ten (10) days prior to the payment date stated therein, to each record
holder of shares of Series A Preferred Stock. The purchase or
redemption by the Corporation of stock of any class, in any manner
permitted by law, shall not for the purpose of this Section F be
regarded as a liquidation, dissolution or winding up of the
Corporation. Neither the consolidation or merger of the Corporation
with or into any other entity, nor the sale or transfer by the
Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of
this Section F.
G. Redemption.
(i) Mandatory Redemption. The Corporation shall
redeem all of the outstanding shares of Series A Preferred Stock then
held by Doubletree Corporation or any affiliate of Doubletree
Corporation in the event the Corporation's status as a real estate
investment trust under the Code is terminated and RFS Partnership,
L.P. (the "Partnership") elects to terminate all leases for hotel
properties then leased by the Partnership to RFS, Inc. (the "Lessee")
by paying to the Lessee the amounts specified in Section 10 of the
Master Agreement dated February 1, 1996 (the "Master Agreement") among
the Corporation, the Partnership, Doubletree Corporation and the
Lessee, for a redemption price per share equal to the greater of (i)
the Stated Value plus any accrued and unpaid dividends with respect to
each share as of the date of redemption, or (ii) the product of (A)
the weighted average of the sales prices for the Corporation's Common
Stock as reported on the Nasdaq Stock Market, or the principal
exchange on which the Corporation's Common Stock is then traded, for
the ten (10) business days prior to the second business day preceding
the date of repurchase, or if the Common Stock is no longer traded on
the Nasdaq Stock Market or a recognized exchange, the fair market
value thereof as mutually agreed by the Corporation and the Lessee, or
if the Corporation and the Lessee cannot so agree, by appraisal by an
independent third party designated by the Corporation and the Lessee
or their respective designees, multiplied by (B) the number of shares
of Common Stock into which a share of Preferred Stock then held by a
holder of the Series A Preferred Stock would be convertible, if
converted on the business day preceding the date of redemption.
(ii) Right of Optional Redemption. At any time
after the seventh (7th) anniversary of the date of issuance of the
Series A Preferred Stock, the Corporation may, at its option following
notice as described below, redeem at any time all or, from time to
time, part of the Series A Preferred Stock at a price per share,
payable in cash, equal to the Stated Value (the "Series A Redemption
Price"), together with all accrued and unpaid dividends to and
including the date fixed for redemption (the "Series A Redemption
Date"). The record holder of any shares of Series A Preferred Stock
called for redemption may convert the Series A Preferred Stock in
accordance with the provisions of Section E at any time prior to the
Series A Redemption Date.
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<PAGE> 9
(iii) Procedures for Redemption.
(a) Notice of any redemption will be
mailed by the Corporation, postage prepaid, not less than 30
nor more than 60 days prior to the Series A Redemption Date,
addressed to the respective holders of record of the Series A
Preferred Stock to be redeemed at their respective addresses
as they appear on the stock transfer records of the
Corporation. No failure to give such notice or any defect
therein or in the mailing thereof shall affect the validity of
the proceedings for the redemption of any Series A Preferred
Stock except as to the holder to whom the Corporation has
failed to give notice or except as to the holder to whom
notice was defective. In addition to any information required
by law or by the applicable rules of any exchange upon which
Series A Preferred Stock may be listed or admitted to trading,
such notice shall state: (a) the Series A Redemption Date;
(b) the Series A Redemption Price; (c) the number of shares of
Series A Preferred Stock to be redeemed; (d) the place or
places where certificates for such shares are to be
surrendered for payment of the Series A Redemption Price; and
(e) that dividends on the shares to be redeemed will cease to
accumulate on the Series A Redemption Date. If less than all
the shares of Series A Preferred held by any holder are to be
redeemed, the notice mailed to such holder shall also specify
the number of shares of Series A Preferred Stock held by such
holder to be redeemed.
(b) If notice of redemption of any
shares of Series A Preferred Stock has been mailed in
accordance with Section G(iii)(a) above and provided that on
or before the Series A Redemption Date specified in such
notice all funds necessary for such redemption shall have been
irrevocably set aside by the Corporation, separate and apart
from its other funds in trust for the benefit of any holders
of the shares of Series A Preferred Stock so called for
redemption, so as to be, and to continue to be available
therefor, then, from and after the Series A Redemption Date,
dividends on such shares of Series A Preferred Stock shall
cease to accrue, and such shares shall no longer be deemed to
be outstanding and shall not have the status of Series A
Preferred Stock and all rights of the holders thereof as
shareholders of the Corporation (except the right to receive
the Series A Redemption Price) shall terminate. Upon
surrender, in accordance with said notice, of the certificates
for any shares of Series A Preferred Stock so redeemed
(properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state),
such shares of Series A Preferred Stock shall be redeemed by
the Corporation at the Series A Redemption Price. In case
less than all the shares of Series A Preferred Stock
represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the
unredeemed shares of Series A Preferred Stock without cost to
the holder thereof.
(c) The deposit of funds with a bank or
trust company for the purpose of redeeming Series A Preferred
shall be irrevocable except that:
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<PAGE> 10
(1) the Corporation shall be
entitled to receive from such bank or trust company
the interest or other earnings, if any, earned on any
money so deposited in trust, and the holders of any
shares redeemed shall have no claim to such interest
or other earnings; and
(2) any balance of monies so deposited
by the Corporation and unclaimed by the holders of
the Series A Preferred Stock entitled thereto at the
expiration of one hundred and ninety (190) days from
the applicable Series A Redemption Date shall be
repaid, together with any interest or other earnings
earned thereon, to the Corporation, and after any
such repayment, the holders of the shares entitled to
the funds so repaid to the Corporation shall look
only to the Corporation for payment without interest
or other earnings.
(iv) Rights to Dividends on Shares Called for
Redemption. If the Series A Redemption Date is after the record date
for a Dividend Payment Date and before the related Dividend Payment
Date, the dividend payable on such Dividend Payment Date shall be paid
to the holder in whose name the shares of Series A Preferred Stock to
be redeemed are registered at the close of business on such record
date, notwithstanding the redemption thereof between such date and the
related Dividend Payment Date or the Corporation's default in the
payment of the dividend due. Except as provided in this Section G,
the Corporation will make no payment or allowance for unpaid dividends
on Series A Preferred Stock which has been called for redemption.
H. Miscellaneous.
(i) Registration of Transfer. The Corporation
shall keep at its principal office a register for the
registration of shares of Series A Preferred Stock. Upon the
surrender at its principal office of any certificate
representing shares of Series A Preferred Stock, the
Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's
expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares
represented by the surrendered certificate. Each such new
certificate will be registered in such name and will represent
such number of shares as is requested by the holder of the
surrendered certificate and will be substantially identical in
form to the surrendered certificate.
(ii) Replacement. Upon receipt of evidence, and
an agreement to indemnify reasonably satisfactory to the
Corporation of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing one or more shares
of Series A Preferred Stock, the Corporation will (at its
expense) execute and deliver in lieu of such certificate a new
certificate representing the number of shares represented by
such lost, stolen, destroyed or mutilated certificate.
(iii) Notices. All notices referred to herein,
except as otherwise expressly provided, will be hand delivered
or made by registered or certified
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<PAGE> 11
mail, return receipt requested, postage prepaid, or by
overnight courier or telefax, and will be deemed to have been
given when so hand delivered or mailed or confirmed as
received by telefax.
(iv) No Other Rights. The holders of Series A
Preferred Stock shall have no other rights or preferences
except as set forth herein or pursuant to applicable law."
3. The Articles of Amendment to the Amended and Restated Charter
was duly adopted by the Board of Directors of the Corporation on January 24,
1996. Shareholder action was not required.
Dated February 27, 1996
RFS HOTEL INVESTORS, INC.
By: /s/ Michael J. Pascal
------------------------
Name: Michael J. Pascal
------------------------
Title: CFO/ Secretary/Treasurer
------------------------
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<PAGE> 12
SECOND
RESTATED CHARTER
OF
RFS HOTEL INVESTORS, INC.
1. Name. The name of the corporation (which is hereinafter
called the "Corporation") is RFS Hotel Investors, Inc.
2. For Profit. The Corporation is for profit.
3. Principal and Registered Office. The address of the
Corporation's registered office and its principal office is 1213 Park Place
Center, Suite 200, Memphis, Shelby County, Tennessee 38119.
4. Registered Agent. The name of the Corporation's registered
agent at that office is Robert M. Solmson.
5. Authorized Capital Stock. The total number of shares of stock
which the Corporation has authority to issue is one hundred million
(100,000,000) shares of Common Stock, $.01 par value per share, and five
million (5,000,000) shares of Preferred Stock, $.01 par value per share. The
Preferred Stock may be issued from time to time by the Board of Directors of
the Corporation, in such series and with such preferences, conversion or other
rights, voting powers, restrictions, limitation as to dividends, qualifications
or other provisions as may be fixed by the Board of Directors.
6. Directors. (a) The Corporation shall have a Board of
Directors consisting of not less than three (3) nor more than nine (9) members
unless otherwise determined from time to time by resolution adopted by the
affirmative vote of at least 80% of the
<PAGE> 13
members of the Board of Directors. However, the number of directors shall
never be less than the minimum number required by the Tennessee Business
Corporation Act. A director need not be a shareholder. Directors shall be
divided into three (3) classes as nearly equal in number as possible. The
initial term of Class I directors shall expire at the annual shareholder
meeting in 1994. The initial term of Class II directors shall expire at the
annual shareholder meeting in 1995 and the initial term of the Class III
director shall expire at the annual shareholder meeting in 1996. At each
annual shareholder meeting, the shareholders shall elect one or more directors
to serve a three-year term of the class of directors whose term is expiring at
such annual meeting and until their successors are elected and qualify.
(b) Initial Directors. The following persons are the
initial directors of the Corporation, to serve until their successors are
elected and qualified:
<TABLE>
<CAPTION>
Name Class Term Expires
---- ----- ------------
<S> <C> <C>
John W. Stokes, Jr. Class I 1994
Michael S. Starnes Class I 1994
Bruce E. Campbell, Jr. Class II 1995
H. Lance Forsdick Class II 1995
Robert M. Solmson Class III 1996
</TABLE>
(c) Independent Directors. Notwithstanding anything
herein to the contrary, at all times (except during a period not to exceed
sixty (60) days following the death, resignation, incapacity or removal from
office of a director prior to the expiration of the director's term of office),
a majority of the Board of Directors shall be comprised of persons who are not
2
<PAGE> 14
officers or employees of the Corporation or "Affiliates" of (i) any advisor to
the Corporation under an advisory agreement, (ii) any lessee of any property of
the Corporation, (iii) any subsidiary of the Corporation or (iv) any
partnership which is an Affiliate of the Corporation.
(d) Definition of Affiliate. For purposes of the
foregoing subsection, "Affiliate" of a person shall mean (i) any person that,
directly or indirectly, controls or is controlled by or is under common control
with such person, (ii) any other person that owns, beneficially, directly or
indirectly, five percent (5%) or more of the outstanding capital stock, shares
or equity interests of such person, or (iii) any officer, director, employee,
partner or trustee of such person or any person controlling, controlled by or
under common control with such person (excluding trustees and persons serving
in similar capacities who are not otherwise an Affiliate of such person). The
term "person" means and includes individuals, corporations, general and limited
partnerships, stock companies or associations, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other entities and governments and agencies and political subdivisions thereof.
For the purposes of this definition, "control" (including the correlative
meanings of the terms "controlled by" and "under control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
3
<PAGE> 15
of such person, through the ownership of voting securities, partnership
interests or other equity interests.
(e) Amendment of this Article. Notwithstanding any other
provisions of the Charter or the Bylaws of the Corporation (and notwithstanding
that some lesser percentage may be specified by law, this Charter or the Bylaws
of the Corporation), the provisions of this Article 6 shall not be amended,
altered, changed or repealed without the affirmative vote of at least 80% of the
members of the Board of Directors or the affirmative vote of the holders of not
less than 75% of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting separately as a
class.
7. Limitation on Indebtedness. The Corporation may not incur or
allow to exist as of the end of any month Indebtedness (as defined below) in an
amount in excess of thirty percent (30%) of the Corporation's investment in
hotel properties, at cost, and after giving effect to the Corporation's use of
proceeds from any Indebtedness. For purposes of the foregoing restrictions,
"Indebtedness" of the Corporation shall mean all obligations of the Corporation,
its subsidiaries or any partnership in which the Corporation serves as general
partner, for borrowed money (including all notes payable and drafts accepted
representing extensions of credit) and all obligations evidenced by bonds,
debentures, notes or other similar instruments on which interest charges are
customarily paid, including obligations under capital leases.
4
<PAGE> 16
8. Dividends. All shares of Common Stock will participate
equally in dividends payable to holders of shares of Common Stock when and as
declared by the Board of Directors and in net assets available for distribution
to holders of shares of Common stock upon liquidation or dissolution.
9. Preemptive Rights. No holder of share of capital stock of the
Corporation shall have any preemptive or preferential right to subscribe to or
purchase (i) any shares of any class of the Corporation, whether now or
hereafter authorized; (ii) any warrants, rights or options to purchase any such
shares; or (iii) any securities or obligations convertible into any such shares
or into warrants, rights or options to purchase any such shares.
10. Limitation on Liability to Shareholders. To the maximum
extent that Tennessee law in effect from time to time permits limitation of the
liability of directors and officers, no director or officer of the Corporation
shall be liable to the Corporation or its shareholders for money damages.
Neither the amendment nor repeal of this provision, nor the adoption or
amendment of any other provision to the Charter or Bylaws inconsistent with
this provision, shall apply to or affect in any respect the applicability of
the preceding sentence with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.
11. Indemnification. Any word or words defined in Part 5 of
Chapter 18 of Title 48 of the Tennessee Code Annotated, as amended from time to
time (the "Indemnification Section") used in
5
<PAGE> 17
this Article 11, shall have the same meaning as provided in the Indemnification
Section.
The Corporation shall indemnify and advance expenses to a director,
officer, employee or agent of the Corporation in connection with a proceeding
to the fullest extent permitted by and in accordance with the Indemnification
Section.
12. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or who, while a director, officer, employee or
agent of the Corporation is or was serving at the request of the Corporation as
a director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against liability asserted against or incurred by such
person in that capacity or arising from such person's status as a director,
officer, employee or agent, whether or not the Corporation would have power to
indemnify such person against the same liability under the Indemnification
Section.
13. REIT Status. The Corporation shall seek to elect and maintain
status as a real estate investment trust ("REIT") under Section 856-860 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"). It
shall be the duty of the Board of Directors to ensure that the Corporation
satisfies the requirements for qualification as a REIT under the Code,
including, but not limited to, the ownership of its outstanding
6
<PAGE> 18
stock, the nature of its assets, the sources of its income, and the amount and
timing of its distributions to its shareholders.
14. Restrictions on Transfer.
(a) Affidavits of Transferees. Whenever it is deemed by
the Board of Directors to be prudent in protecting the tax status of the
Corporation as a REIT under the Code and regulations issued under the Code, the
Board of Directors may require to be filed with the Corporation a statement or
affidavit from each proposed transferee of shares of capital stock of the
Corporation setting forth the number of such shares already owned by the
transferee and any related person(s) specified in the form prescribed by the
Board of Directors for that purpose. Any contract for the sale or other
transfer of shares of capital stock of the Corporation shall be subject to this
provision.
(b) Affidavits of Shareholders. Prior to any transfer or
transaction which would cause a shareholder to own, directly or indirectly,
shares in excess of the "Limit" as defined in paragraph (d) of this Article 14,
and in any event upon demand of the Board of Directors, such shareholder shall
file with the Corporation an affidavit setting forth the number of shares of
capital stock of the Corporation (a) owned directly and (b) owned indirectly by
the person filing the affidavit. For purposes of this paragraph (b), shares of
capital stock now owned directly shall be deemed to be owned indirectly by a
person if that person would be the beneficial owner of such shares for purposes
of Rule 13d-3, or any successor rule thereto, promulgated under the
7
<PAGE> 19
Securities Exchange Act of 1934 (the "Exchange Act") and/or would be considered
to own such shares by reason of the attribution rules in Section 544 (as
modified by Section 856(h)) of the Code or the regulations issued thereunder.
The affidavit to be filed with the Corporation shall set forth all
information required to be reported in returns filed by shareholders under
Treasury Regulation Section 1.857-9 issued under the Code or similar
provisions of any successor regulation, and in reports to be filed under
Section 13(d), or any successor rule thereto, of the Exchange Act. The
affidavit, or an amendment thereto, shall be filed with the Corporation within
ten (10) days after demand therefor and at least fifteen (15) days prior to any
transfer or transaction which, if consummated, would cause the filing person to
hold a number of shares of capital stock of the Corporation in excess of the
"Limit" as defined in paragraph (d) of this Article 14. The Board of Directors
shall have the right, but shall not be required to cause the Corporation to
refuse to permit the transfer of any shares of capital stock of the Corporation
purportedly transferred other than in compliance with the provisions of this
paragraph (b).
(c) Void Transfers. Any acquisition of shares of capital
stock that (i) causes any person's ownership to exceed the Limit (as defined in
Section 14(d)) or (ii) would result in the disqualification of the Corporation
as a REIT under the Code shall be void ab initio to the fullest extent
permitted under applicable law and the intended transferee of those shares
shall
8
<PAGE> 20
be deemed never to have had an interest therein. If the foregoing provision is
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the transferee of those shares shall be deemed, at the
option of the Corporation, to have acted as agent on behalf of the Corporation
in acquiring those shares to hold those shares on behalf of the Corporation.
(d) Excess Shares. Notwithstanding any other provisions
hereof to the contrary and subject to the provisions of paragraph (e) of this
Article 14, no person shall at any time directly or indirectly own in the
aggregate more than 9.9% of the outstanding shares of capital stock of the
Corporation (the "Limit"). Shares which but for this Article 14 would be owned
by a person and would, at any time, be in excess of the Limit shall be deemed
"Excess Shares." For the purpose of determining ownership of Excess Shares,
"ownership" of shares shall be deemed to include shares constructively owned by
a person under the provisions of Section 544 (as modified by Section 856(h)) of
the Code. All shares of capital stock of the Corporation which any person has
the right to acquire under exercise of outstanding rights, options and
warrants, and upon conversion of any securities convertible into those shares,
if any, shall be considered outstanding for purposes of determining the
applicable Limit if such inclusion will cause such person to own more than the
Limit. The Board of Directors shall have the right, but shall not be required,
to refuse to permit the transfer of shares
9
<PAGE> 21
of capital stock on the books of the Corporation if, as a result of the
proposed transfer, any person would hold or be deemed to hold Excess Shares.
(e) Exceptions. The Limit set forth in paragraph (d) of
this Article 14 shall not apply to the acquisition of shares of capital stock
of the Corporation by an underwriter in a public offering of those shares or in
any transaction involving the issuance of shares of capital stock by the
Corporation in which the Board of Directors determines that the underwriter or
other person or party initially acquiring those shares will timely distribute
those shares to or among others so that, following such distribution, none of
those shares will be deemed to be Excess Shares. The Board of Directors in its
discretion may exempt from the Limit and from the filing requirements of
paragraph (b) of this Article 14 ownership or transfers of certain designated
shares of capital stock of the Corporation while owned by or transferred to a
person who has provided the Board of Directors with evidence and assurances
acceptable to the Board of Directors that the qualification of the Corporation
as a REIT under the Code and the regulations issued under the Code would not be
jeopardized thereby.
(f) Redemption of Excess Shares. At the discretion of
the Board of Directors, any or all Excess Shares may be redeemed by the
Corporation. Written notice of redemption (the "Notice") shall be provided to
the purported transferee of the Excess Shares not less than one week prior to
the redemption date (the
10
<PAGE> 22
"Redemption Date") determined by the Board of Directors and included in the
Notice. The redemption price per share to be paid for Excess Shares will be
equal to the lesser of (i) (a) the closing price per share of the shares on the
principal national securities exchange on which the shares are listed or
admitted to trading on the date of Notice, or (b) if the shares are not so
listed or admitted to trading, the closing bid price on the date of Notice as
reported on the National Association of Securities Deals, Inc. System, if
quoted thereon (the price per share determined under clause (a) or (b) being
herein defined as the "Market Price"), or (c) if a Market Price is not
determinable in accordance with either clause (a) or (b) of this sentence, the
net asset value per share on the date of Notice determined in good faith by the
Board of Directors, (ii) the Market Price on the date on which the person would
but for this Article 14 have been deemed to acquire ownership of the Excess
Shares, or (iii) the maximum price allowed under Part 5 of Chapter 35 of Title
48 of the Tennessee Code Annotated. The redemption price for any shares of
capital stock of the Corporation so redeemed shall be paid on the Redemption
Date. From and after the Redemption Date, the holder of any redeemed shares of
capital stock of the Corporation shall cease to be entitled to any
distributions or other benefits with respect to redeemed shares, except the
right to receive payment of the redemption price fixed as aforesaid.
(g) Application of Article. Nothing contained in this
Article 14 or in any other provision hereof shall limit the
11
<PAGE> 23
authority of the Board of Directors to take any and all other action as it in
its sole discretion deems necessary or advisable to protect the Corporation and
the interests of its shareholders by maintaining the Corporation's eligibility
to be, and preserving the Corporation's status as, a REIT under the Code.
(h) Definition of "Person". For purposes of this Article
only, the term "person" shall include individuals, corporations, limited
partnerships, general partnerships, joint stock companies or associations,
joint ventures, associations, consortia, companies, trusts, banks, trust
companies, land trusts, common law trusts, business trusts, or other entities
and governments and agencies and political subdivisions thereof.
(i) Severability. If any provision of this Article 14 or
any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issue, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of that court.
(j) Legend. Certificates representing shares of capital
stock of the Corporation shall bear a legend referencing the restrictions set
forth in this Article 14.
Dated: March 6, 1995
12
<PAGE> 1
EXHIBIT 4.3
THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
RFS PARTNERSHIP, L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
- -------------
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
- -------------------------------------------
2.01 Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------
2.02 Name, Office and Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------------------
2.03 Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------
2.04 Term and Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
2.05 Filing of Certificate and Perfection of Limited Partnership . . . . . . . . . . . . . . . . . . 10
-----------------------------------------------------------
ARTICLE III
BUSINESS OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
- ---------------------------
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
- ----------------------------------
4.01 Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------------
4.02 Additional Capital Contributions and Issuances of Additional Partnership Interests . . . . . . . 11
----------------------------------------------------------------------------------
4.03 General Partner Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------
4.04 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------
4.05 Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------
4.06 No Interest on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------------------------
4.07 Return of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------------------------
4.08 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------------
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- ---------------------------------
5.01 Allocation of Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-----------------------------
5.02 Distribution of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
5.03 REIT Distribution Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------------------------
5.04 No Right to Distributions in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------
5.05 Limitations on Return of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------------------------------------
5.06 Distributions Upon Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------------
5.07 Substantial Economic Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------------------------
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
- -----------------------------
6.01 Management of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------------
6.02 Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------------
6.03 Indemnification and Exculpation of Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------------------------------
6.04 Liability of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------------------------
6.05 Expenditures by the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------------------
6.06 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------
6.07 Optional Conversion of Series A Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . 28
------------------------------------------------
6.08 Redemption Right With Respect To Series A Preferred Shares . . . . . . . . . . . . . . . . . . 28
----------------------------------------------------------
6.09 Employment or Retention of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------------------------------
6.10 Loans to the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------------
6.11 Loans to the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------------------------
6.12 General Partner Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------------
ARTICLE VII
CHANGES IN GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
- --------------------------
7.01 Transfer of the General Partner's Partnership Interest . . . . . . . . . . . . . . . . . . . . . 31
------------------------------------------------------
7.02 Admission of a Substitute or Successor General . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------------------------------
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner . . . . . . . . . . 33
----------------------------------------------------------------------------
7.04 Removal of a General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------------------
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
- -----------------------
8.01 Management of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------------------
8.02 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------
8.03 Limitation on Liability of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-------------------------------------------
8.04 Ownership by Limited Partner of Corporate General Partner or Affiliate . . . . . . . . . . . . . 35
----------------------------------------------------------------------
8.05 Limited Partner Redemption Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
--------------------------------
8.06 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------
8.07 Outside Activities of Class A Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------------------------------------
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
- ------------------------------------------
9.01 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-----------------------
9.02 Restrictions on Transfer of Limited Partnership Interests . . . . . . . . . . . . . . . . . . . 42
---------------------------------------------------------
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
9.03 Admission of Substitute Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
---------------------------------------
9.04 Rights of Assignees of Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------------------------------------
9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner . . . . . . . . . 45
------------------------------------------------------------------------------
9.06 Joint Ownership of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------------
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
- ------------------------------------------
10.01 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-----------------
10.02 Custody of Partnership Funds; Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-------------------------------------------
10.03 Fiscal and Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------------------
10.04 Annual Tax Information and Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------------------------
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments . . . . . . . . . . . . . . . . . 46
-------------------------------------------------------------
10.06 Reports to Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
---------------------------
ARTICLE XI
AMENDMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
- ----------------------
ARTICLE XII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
- ------------------
12.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-------
12.02 Survival of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------------
12.03 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--------------------
12.04 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------
12.05 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
----------------
12.06 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------------------
12.07 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------
12.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
------------
12.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
-------------
</TABLE>
- iii -
<PAGE> 5
THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
RFS PARTNERSHIP, L.P.
RECITALS
RFS Partnership, L.P. (the "Partnership") was formed as a limited
partnership under the laws of the State of Tennessee by a Certificate of
Limited Partnership filed with the Secretary of State of the State of Tennessee
on August 3, 1993. The Partnership was governed originally by an agreement of
limited partnership maintained at the offices of the Partnership (the "Original
Agreement"). The parties to the Original Agreement were RFS Hotel Investors,
Inc., a Tennessee corporation (the "Company" and in its capacity as the General
Partner, the "General Partner"), and RFS, Inc. (in its capacity as the
Original Limited Partner, the "Original Limited Partner"). The Original
Agreement was amended and restated on August 13, 1993 (the "First Amended and
Restated Agreement") (i) to admit Limited Partners to the Partnership and (ii)
to provide for the withdrawal of the Original Limited Partner. The First
Amended and Restated Agreement was amended on November 19, 1993 (the "First
Amendment to the First Amended and Restated Agreement") to change the cash
distribution provisions. The First Amendment to the First Amended and Restated
Agreement was amended and restated on August 24, 1994 (the "Second Amended and
Restated Agreement") to admit additional Limited Partners (the "Class B Limited
Partners") to the Partnership.
The General Partner desires (i) to issue to itself a preferred general
partnership interest and (ii) to restate the Second Amended and Restated
Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Second Amended and Restated Agreement to read in its
entirety as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"ACT" means the Tennessee Revised Uniform Limited Partnership Act, as
it may be amended from time to time.
<PAGE> 6
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) all administrative costs
and expenses of the General Partner, including any salaries or other payments
to directors, officers and/or employees of the General Partner, and any
accounting and legal expenses of the General Partner, which expenses, the
Partners have agreed, are expenses of the Partnership and not the General
Partner, and (iii) to the extent not included in clause (ii) above, REIT
Expenses; provided, however, that Administrative Expenses shall not include any
administrative expenses incurred by the General Partner that are attributable
to Properties owned by the General Partner directly, or to activities of the
General Partner not related to the Partnership, the allocation of such
administrative expenses between the Partnership and the General Partner shall
be determined by the Partnership's independent accounting firm.
"AFFILIATE" means, (i) any Person that, directly or indirectly,
controls or is controlled by or is under common control with such Person, (ii)
any other Person that owns, beneficially, directly or indirectly, 5% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"AGREED VALUE" means the fair market value of a Partner's non-cash
Capital Contribution as of the date of its contribution to the Partnership as
agreed to by the contributing Partner and the General Partner. For purposes of
this Agreement, unless the General Partner in its sole discretion determines
otherwise, the Agreed Value of a Partner's non-cash Capital Contribution shall
be equal to the number of Partnership Units received by such Partner in
exchange for such contribution, multiplied by the "Market Price" on the date of
contribution calculated in accordance with the second and third sentences of
the definition of "Cash Amount." The names and addresses of the Partners, the
number of Partnership Units issued to each Partner, and the Agreed Value of
non-cash Capital Contributions is set forth on Exhibit A attached hereto
("Exhibit A").
"AGREEMENT" means this Third Amended and Restated Agreement of Limited
Partnership of the Partnership.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of capital initially
contributed or agreed to be contributed, as the context requires, to the
Partnership by each Partner pursuant to the terms of the Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of
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such Partner. The paid-in Capital Contribution shall mean the cash amount or
the Agreed Value of other assets actually contributed by each Partner to the
capital of the Partnership.
"CAPITAL TRANSACTION" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the repair
or reconstruction of Properties), or other disposition of any Property (or the
Partnership's interest therein).
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to
the value of the REIT Shares Amount on the date of receipt by the General
Partner of a Notice of Redemption. The value of the REIT Shares Amount shall
be based on the average of the daily market price of REIT Shares for the ten
consecutive trading days immediately preceding the date of such valuation. The
market price for each such trading day shall be: (i) if the REIT Shares are
listed or admitted to trading on any securities exchange or the Nasdaq-Stock
Market, the sale price, regular way, on such day, or if no sale takes place on
such day, the average of the closing bid and asked prices, regular way, on such
day, (ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the Nasdaq-National Market, the last reported sale price
on such day or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or (iii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the Nasdaq-National Market
and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by the General
Partner, or if there shall be no bid and asked prices on such day, the average
of the high bid and low asked prices, as so reported, on the most recent day
(not more than 10 days prior to the date in question) for which prices have
been so reported; provided that if there are no bid and asked prices reported
during the ten days prior to the date in question, the value of the REIT Shares
shall be determined by the General Partner acting in good faith on the basis of
such quotations and other information as it considers, in its reasonable
judgment, appropriate. In the event the REIT Shares Amount includes rights
that a holder of REIT Shares would be entitled to receive, then the value of
such rights shall be determined by the General Partner acting in good faith on
the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
"CERTIFICATE" means any instrument or document that is required under
the laws of the State of Tennessee, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Tennessee or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership,
to effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Tennessee or such other
jurisdiction.
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"CHARTER" means the Charter of the General Partner filed with the
Secretary of State of the State of Tennessee on August 3, 1993, as amended and
restated on August 3, 1993, January 31, 1995, and February 27, 1996, and as
further amended or restated from time to time.
"CLASS A LIMITED PARTNER" means any Person named as a Class A Limited
Partner on Exhibit A, and any Person who becomes a Substitute or additional
Class A Limited Partner, in such Person's capacity as a Class A Limited Partner
in the Partnership.
"CLASS B LIMITED PARTNER" means any Person named as a Class B Limited
Partner on Exhibit A, and any Person who becomes a Substitute or additional
Class B Limited Partner, in such Person's capacity as a Class B Limited Partner
in the Partnership.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code as of the date hereof and any
successor provision of the Code.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMPANY" means RFS Hotel Investors, Inc., a Tennessee corporation.
"CONVERSION FACTOR" means one (1), provided that in the event that the
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator
of which shall be the actual number of REIT Shares (determined without the
above assumption) issued and outstanding on such date. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition
is contested by such Person and has been dismissed within 90 days); insolvency
or bankruptcy of such Person as finally determined by a court proceeding;
filing by such Person of a petition or application to accomplish the same or
for the appointment of a receiver or a trustee for such Person or a substantial
part of his assets; commencement of any proceedings relating to such Person as
a debtor under any other reorganization, arrangement, insolvency, adjustment of
debt or liquidation law of any jurisdiction, whether now in existence or
hereinafter in effect, either by such Person or by another, provided that if
such proceeding is commenced by another, such Person indicates his
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approval of such proceeding, consents thereto or acquiesces therein, or such
proceeding is contested by such Person and has not been finally dismissed
within 90 days.
"GENERAL PARTNER" means RFS Hotel Investors, Inc. and any Person who
becomes a substitute or additional General Partner as provided herein, and any
of their successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means a Partnership Interest held by a
General Partner that is a general partnership interest.
"HOTELS" means hotel properties owned by the Partnership from time to
time.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of his status as the General Partner or a director or officer of the
Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner
may designate from time to time, in its sole and absolute discretion.
"INDEPENDENT DIRECTOR" means a Director of the Company who is not an
officer or employee of the Company or an Affiliate of (i) any advisor to the
Company under an advisory agreement, (ii) any lessee of any Property, (iii) any
subsidiary of the Company, or (iv) any partnership which is an Affiliate of the
Company.
"LIMITED PARTNER" means any Person named as a Class A Limited Partner
or a Class B Limited Partner on Exhibit A, and any Person who becomes a
Substitute or additional Class A Limited Partner or Class B Limited Partner, in
such Person's capacity as a Class A Limited Partner or a Class B Limited
Partner in the Partnership.
"LIMITED PARTNER REDEMPTION RIGHT" has the meaning provided in Section
8.05(a) hereof.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a
Limited Partner in the Partnership at any particular time, including the right
of such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"LOSS" has the meaning provided in Section 5.01(h) hereof.
"MINIMUM LIMITED PARTNERSHIP INTEREST" means the lesser of (i) 1% or
(ii) if the total Capital Contributions to the Partnership exceed $50 million,
1% divided by the ratio of the total Capital Contributions to the Partnership
to $50 million; provided, however, that the Minimum Limited Partnership
Interest shall not be less than 0.2% at any time.
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"NOTICE OF REDEMPTION" means the Notice of Exercise of Redemption
Right substantially in the form attached as Exhibit B hereto.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and
all benefits to which the holder of such a Partnership Interest may be entitled
as provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02 hereof,
which record date shall be the same as the record date established by the
General Partner for a distribution to its shareholders of some or all of its
portion of such distribution.
"PARTNERSHIP REDEMPTION RIGHT" has the meaning provided in Section
6.08(b) hereof.
"PARTNERSHIP UNIT" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as may
be amended from time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by such Partner by the total number of Partnership Units then
outstanding. The Percentage Interest of each Partner shall be as set forth on
Exhibit A, as may be amended from time to time.
"PERSON" means any individual, partnership, corporation, joint
venture, trust or other entity.
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<PAGE> 11
"PREFERENCE VALUE PER UNIT" means, with respect to the Preferred
Partnership Units held by the General Partner, the initial preference value of
$19 per Preferred Partnership Unit.
"PREFERRED PARTNERSHIP INTEREST" means an ownership interest in the
Partnership held by the General Partner and includes any and all benefits to
which the holder of such a Preferred Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"PREFERRED PARTNERSHIP UNIT" means a fractional, undivided share of
the Preferred Partnership Interests issued hereunder. The allocation of
Preferred Partnership Units among the Partners shall be as set forth on Exhibit
A, as may be amended from time to time.
"PREFERRED RETURN" means, on each Partnership Record Date, $0.3625
multiplied by the number of Preferred Partnership Units held by the General
Partner on the Partnership Record Date to which the Preferred Return relates.
The General Partner's Preferred Return (i) shall be cumulative, (ii) if unpaid,
shall accrue interest at an annual rate of 7.6%, and (iii) shall be prorated
for any partial calendar quarter.
"PREFERRED SHARE" means a share of preferred stock of the General
Partner.
"PROFIT" has the meaning provided in Section 5.01(h) hereof.
"PROPERTY" means any hotel property or other investment in which the
Partnership holds an ownership interest.
"REDEEMING LIMITED PARTNER" has the meaning provided in Section
8.05(a) hereof.
"REDEMPTION AMOUNT" means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner in its sole discretion pursuant to
Section 8.05(b) hereof.
"REGULATIONS" means the Federal Income Tax Regulations issued under
the Code, as amended and as hereafter amended from time to time. Reference to
any particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT EXPENSES" means (i) costs and expenses relating to the formation
and continuity of existence of the General Partner and any Subsidiaries thereof
(which Subsidiaries shall, for purposes of this definition, be included within
the definition of General Partner), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any
director, officer, or employee of the General Partner,
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<PAGE> 12
(ii) costs and expenses relating to the public offering and registration of
securities by the General Partner and all statements, reports, fees and
expenses incidental thereto, including underwriting discounts and selling
commissions applicable to any such offering of securities, (iii) costs and
expenses associated with the preparation and filing of any periodic reports by
the General Partner under federal, state or local laws or regulations,
including filings with the Commission, (iv) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations promulgated
by any regulatory body, including the Commission, and (v) all other operating
or administrative costs of the General Partner incurred in the ordinary course
of its business on behalf of the Partnership.
"REIT SHARE" means a share of the common stock of the General Partner,
par value $.01 per share.
"REIT SHARES AMOUNT" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a
Redeeming Limited Partner, multiplied by the Conversion Factor; provided that
in the event the General Partner issues to all holders of REIT Shares rights,
options, warrants or convertible or exchangeable securities entitling the
shareholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the "rights"), then the REIT Shares Amount shall
also include such rights that a holder of that number of REIT Shares would be
entitled to receive.
"SERIES A PREFERRED SHARE" means a share of convertible preferred
stock, Series A, of the General Partner.
"SERVICE" means the Internal Revenue Service.
"SPECIFIED REDEMPTION DATE" means the first business day of the month
that is at least 5 business days after the receipt by the General Partner of
the Notice of Redemption (or any other date agreed to by the General Partner
and the Redeeming Limited Partner).
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03 hereof.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 CONTINUATION. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
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<PAGE> 13
2.02 NAME, OFFICE AND REGISTERED AGENT. The name of the
Partnership shall be RFS Partnership, L.P. The specified office and place of
business of the Partnership shall be 889 Ridge Lake Blvd., Suite 100, Memphis,
Shelby County, Tennessee 38120. The General Partner may at any time change the
location of such office, provided the General Partner gives notice to the
Partners of any such change. The name and address of the Partnership's
registered agent is Robert M. Solmson, 889 Ridge Lake Blvd., Suite 100,
Memphis, Shelby County, Tennessee 38120. The sole duty of the registered agent
as such is to forward to the Partnership any notice that is served on him as
registered agent.
2.03 PARTNERS.
(a) The General Partner of the Partnership is RFS Hotel
Investors, Inc. Its principal place of business shall be the same as that of
the Partnership.
(b) The Limited Partners shall be those Persons identified as
Limited Partners on Exhibit A, as amended from time to time.
2.04 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full
force and effect until December 31, 2050, except that the Partnership shall be
dissolved upon the happening of any of the following events:
(i) The occurrence of an Event of Bankruptcy as
to a General Partner or the dissolution, death or withdrawal
of a General Partner unless the business of the Partnership is
continued pursuant to Section 7.03(b) hereof; provided that if
a General Partner is on the date of such occurrence a
partnership, the dissolution of such General Partner as a
result of the dissolution, death, withdrawal, removal or Event
of Bankruptcy of a partner in such partnership shall not be an
event of dissolution of the Partnership if the business of
such General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and such
General Partner and such partners comply with any other
applicable requirements of this Agreement;
(ii) The passage of 90 days after the sale or
other disposition of all or substantially all the assets of
the Partnership (provided that if the Partnership receives an
installment obligation as consideration for such sale or other
disposition, the Partnership shall continue, unless sooner
dissolved under the provisions of this Agreement, until such
time as such note or notes are paid in full);
(iii) The redemption of all Limited Partnership
Interests (other than any of such interests held by the
General Partner); or
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(iv) The election by the General Partner that the
Partnership should be dissolved.
(b) Upon dissolution of the Partnership (unless the business
of the Partnership is continued pursuant to Section 7.03(b) hereof), the
General Partner (or its trustee, receiver, successor or legal representative)
shall amend or cancel the Certificate and liquidate the Partnership's assets
and apply and distribute the proceeds thereof in accordance with Section 5.06
hereof. Notwithstanding the foregoing, the liquidating General Partner may
either (i) defer liquidation of, or withhold from distribution for a reasonable
time, any assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind according to the order of priority set forth in Section 5.06
hereof.
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP.
The General Partner shall execute, acknowledge, record and file at the expense
of the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner otherwise ceases to qualify as a REIT, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing.
The General Partner shall also be empowered to do any and all acts and things
necessary or prudent to ensure that the Partnership will not be classified as a
"publicly traded partnership" for purposes of Section 7704 of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The General Partner has contributed to
the capital of the Partnership cash in the amounts set forth on Exhibit A. The
Class A Limited Partners have contributed the Class A Limited Partners'
proportionate ownership interests in certain
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<PAGE> 15
Hotels to the capital of the Partnership. The Class B Limited Partners have
contributed the Class B Limited Partners' proportionate ownership interests in
certain Hotels to the capital of the Partnership. The Agreed Values of the
Partners' Capital Contributions are as set forth opposite their names on
Exhibit A.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.02 or in Section
4.03 hereof, the Partners shall have no right or obligation to make any
additional Capital Contributions or loans to the Partnership. The General
Partner may contribute additional capital to the Partnership, from time to
time, and receive additional Partnership Interests in respect thereof, in the
manner contemplated in this Section 4.02.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby
authorized to cause the Partnership to issue such additional
Partnership Interests in the form of Partnership Units for any
Partnership purpose at any time or from time to time, to the
Partners (including the General Partner) or to other Persons
for such consideration and on such terms and conditions as
shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited
Partners. Any additional Partnership Interests issued thereby
may be issued in one or more classes, or one or more series of
any of such classes, with such designations, preferences and
relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior
to Limited Partnership Interests, all as shall be determined
by the General Partner in its discretion based upon its good
faith determination that the Partnership will receive adequate
consideration therefor and without the approval of any Limited
Partner, subject to Tennessee law, including, without
limitation, (i) the allocation of items of Partnership income,
gain, loss, deduction and credit to each such class or series
of Partnership Interests; (ii) the right of each such class or
series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or
series of Partnership Interests upon dissolution and
liquidation of the Partnership; provided, however, that no
additional Partnership Interests shall be issued to the
General Partner unless either:
(1)(A) the additional Partnership Interests
are issued in connection with an issuance of shares
of or other interests in the General Partner, which
shares or interests have designations, preferences
and other rights, all such that the economic
interests are substantially similar to the
designations, preferences and other rights of the
additional Partnership Interests issued to the
General Partner by the Partnership in accordance with
this Section 4.02 and (B) except as provided in
Section 4.02(a)(ii)
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<PAGE> 16
hereof, the General Partner shall make a
Capital Contribution to the Partnership in an amount
equal to the proceeds raised in connection with the
issuance of such shares of or other interests in the
General Partner, or
(2) the additional Partnership Interests are
issued to all Partners in proportion to their
respective Percentage Interests.
Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue
Partnership Units for less than fair market value, so long as
the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the
Partnership.
(ii) Upon Issuance of New Securities. The General
Partner shall not issue any additional REIT Shares (other than
REIT Shares issued in connection with a redemption pursuant to
Section 8.05 hereof), Preferred Shares, or rights, options,
warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase REIT Shares
(collectively, "New Securities") other than to all holders of
REIT Shares or Preferred Shares, respectively, unless (A) the
General Partner shall cause the Partnership to issue to the
General Partner, Partnership Interests or rights, options,
warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights,
all such that the economic interests are substantially similar
to those of the New Securities, and (B) the General Partner
contributes the proceeds from the issuance of such New
Securities and from the exercise of rights contained in such
New Securities to the Partnership; provided, however, that the
General Partner is allowed to issue New Securities in
connection with an acquisition of a property to be held
directly by the General Partner, but if and only if, such
direct acquisition and issuance of New Securities have been
approved and determined to be in the best interests of the
General Partner and the Partnership by a majority of the
Independent Directors. Without limiting the foregoing, the
General Partner is expressly authorized to issue New
Securities for less than fair market value, and to cause the
Partnership to issue to the General Partner corresponding
Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the best
interests of each of the General Partner and the Partnership
(for example, and not by way of limitation, the issuance of
REIT Shares and corresponding Partnership Units pursuant to an
employee stock purchase plan providing for employee purchases
of REIT Shares at a discount from fair market value or
employee stock options that have an exercise price that is
less than the fair market value of the REIT Shares, either at
the time of issuance or at the time of exercise), and (y) the
General Partner contributes all proceeds from such issuance to
the Partnership. By way of example, in the event the General
Partner issues REIT Shares for a cash
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<PAGE> 17
purchase price and contributes all of the proceeds of such
issuance to the Partnership as required hereunder, the General
Partner shall be issued a number of additional Partnership
Units equal to the product of (A) the number of such REIT
Shares issued by the General Partner the proceeds of which were
so contributed, multiplied by (B) a fraction, the numerator of
which is one, and the denominator of which is the Conversion
Factor in effect on the date of such contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance
of Shares. In connection with any and all issuances of REIT Shares and
Preferred Shares, the General Partner shall make a Capital Contribution to the
Partnership of the proceeds raised in connection with such issuance as required
above, provided that if the proceeds actually received by the General Partner
are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the General Partner shall be deemed to have made a Capital
Contribution to the Partnership in the amount of the gross proceeds of such
issuance and the Partnership shall be deemed simultaneously to have paid such
underwriting discount and offering expenses in connection with the required
issuance of additional Partnership Units to General Partner for such Capital
Contribution pursuant to Section 4.02(a) hereof.
(c) Minimum Limited Partnership Interest. In the event
that either a redemption pursuant to Section 8.05 hereof or an additional
Capital Contribution by the General Partner would result in the Limited
Partners, in the aggregate, owning less than the Minimum Limited Partnership
Interest, the General Partner and the Limited Partners shall form another
partnership and contribute sufficient Limited Partnership Interests together
with such other Limited Partners so that such partnership owns at least the
Minimum Limited Partnership Interest.
(d) 1993 Plan. The General Partner has established the
Amended and Restated 1993 Restricted Stock and Stock Option Plan and may from
time to time establish other compensation or other incentive plans to provide
incentives to directors, executive officers and certain key employees of the
General Partner or its subsidiaries. The following examples are illustrative
of the operation of the provisions of Section 4.02(a)(ii) with respect to
issuances of New Securities to such directors, officers and employees:
(i) If the General Partner awards REIT Shares to any
such director, officer or other employee (A) the General
Partner shall, as soon as practicable, contribute to the
Partnership (to be thereafter taken into account for the
purposes of calculating any cash distributable to the
Partners) an amount equal to the price, if any, paid to the
General Partner by such party for such REIT Shares, and (B)
the General Partner shall be issued by the Partnership a
number of additional Partnership Units equal to the product of
(1) the number of such REIT Shares issued by the General
Partner, multiplied by (2) a fraction, the numerator of which
is one hundred percent (100%), and the
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denominator of which is the Conversion Factor in effect on the
date of such contribution.
(ii) If the General Partner awards an option or
warrant relating to REIT shares, whether or not qualifying as
an incentive stock option under the Code, to any director,
officer or other employee, then the Partnership shall grant to
the General Partner a corresponding option or warrant to
acquire Partnership Units. Upon the exercise of such option
or warrant, (A) the General Partner shall, as soon as
practicable after such exercise, contribute to the capital of
the Partnership (to be thereafter taken into account for the
purposes of calculating distributable cash) an amount equal to
the exercise price, if any, paid to the General Partner by
such exercising party in connection with the exercise of the
option or warrant, and (B) the General Partner shall be issued
by the Partnership a number of additional Partnership Units
equal to the product of (1) the number of REIT Shares issued
by the General Partner in satisfaction of such exercised
option or warrant, multiplied by (2) a fraction, the numerator
of which is one hundred percent (100%), and the denominator of
which is the Conversion Factor in effect on the date of such
contribution.
(iii) If the General Partner grants any director,
officer or employee share appreciation rights, performance
share awards or other similar rights ("Incentive Rights"),
then simultaneously, the Partnership shall grant to the
General Partner corresponding and economically equivalent
rights. Consequently, upon the cash payment by General
Partner to its directors, officers or employees pursuant to
such Incentive Rights, the Partnership shall make an equal
cash payment to the General Partner.
4.03 GENERAL PARTNER LOANS. The General Partner may from time to
time advance funds to the Partnership for any proper Partnership purpose as a
loan ("Funding Loan"), provided that any such funds must first be obtained by
the General Partner from a third party lender, and then all of such funds must
be loaned by the General Partner to the Partnership on the same terms and
conditions, including principal amount, interest rate, repayment schedule and
costs and expenses, as shall be applicable with respect to or incurred in
connection with such loan from such third party lender. Except for Funding
Loans, the General Partner shall not incur any indebtedness for borrowed funds;
provided, however, that upon a majority vote of the Independent Directors, any
loan proceeds received by the General Partner may be distributed to its
shareholders or other equity holders if such loan and distribution have been
determined by a majority of the Independent Directors to be necessary to enable
the General Partner to maintain its status as a REIT under Sections 856-860 of
the Code.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner in accordance
with Regulations Section 1.704-
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1(b)(2)(iv). If (i) a new or existing Partner acquires additional Partnership
Units in exchange for more than a de minimis Capital Contribution, (ii) the
Partnership distributes to a Partner more than a de minimis amount of
Partnership property in redemption or liquidation of Partnership Units, or
(iii) the Partnership is liquidated within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g), the General Partner shall revalue the property of the
Partnership to its fair market value (as determined by the General Partner and
taking into account Section 7701(g) of the Code) in accordance with Regulations
Section 1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by
the General Partner, the Capital Accounts of the Partners shall be adjusted in
accordance with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which
generally require such Capital Accounts to be adjusted to reflect the manner in
which the unrealized gain or loss inherent in such property (that has not been
reflected in the Capital Accounts previously) would be allocated among the
Partners pursuant to Section 5.01 hereof if there were a taxable disposition of
such property for its fair market value (as determined by the General Partner
and taking into account Section 7701(g) of the Code) on the date of the
revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding
Partnership Units increases or decreases during a taxable year, each Partner's
Percentage Interest shall be adjusted to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
outstanding Partnership Units. If the Partners' Percentage Interests are
adjusted pursuant to this Section 4.05, the Profits and Losses for the taxable
year in which the adjustment occurs shall be allocated between the part of the
year ending on the day when the Partnership's property is revalued by the
General Partner and the part of the year beginning on the following day either
(i) as if the taxable year had ended on the date of the adjustment or (ii)
based on the number of days in each part. The General Partner, in its sole
discretion, shall determine which method shall be used to allocate Profits and
Losses for the taxable year in which the adjustment occurs. The allocation of
Profits and Losses for the earlier part of the year shall be based on the
Percentage Interests before adjustment, and the allocation of Profits and
Losses for the later part shall be based on the adjusted Percentage Interests.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled
to withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08 NO THIRD PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to
pursue any other right or remedy hereunder or at
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law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by,
the parties hereto and their respective successors and assigns. None of the
rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners. In addition, it is the intent of
the parties hereto that no distribution to any Limited Partner shall be deemed
a return of money or other property in violation of the Act. However, if any
court of competent jurisdiction holds that, notwithstanding the provisions of
this Agreement, any Limited Partner is obligated to return such money or
property, such obligation shall be the obligation of such Limited Partner and
not of the General Partner. Without limiting the generality of the foregoing,
a deficit Capital Account of a Partner shall not be deemed to be a liability of
such Partner nor an asset or property of the Partnership.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) Profit. Profit of the Partnership for each fiscal year
of the Partnership shall be allocated as follows:
(i) First, if the Partners previously have been
allocated Loss under Section 5.01(b)(v), to the Partners in
accordance with their respective Percentage Interests until
the aggregate amount of Profit allocated under this Section
5.01(a)(i) equals the aggregate amount of Loss allocated under
Section 5.01(b)(v);
(ii) Second, if the General Partner previously has
been allocated Loss under Section 5.01(b)(iv), to the General
Partner until the aggregate amount of Profit allocated under
this Section 5.01(a)(ii) equals the aggregate amount of Loss
allocated under Section 5.01(b)(iv);
(iii) Third, if the General Partner and the Class B
Limited Partners previously have been allocated Loss under
Section 5.01(b)(iii), to the General Partner and the Class B
Limited Partners in proportion to their Percentage Interests
until the aggregate amount of Profit allocated under this
Section 5.01(a)(iii) equals the aggregate amount of Loss
allocated under Section 5.01(b)(iii);
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(iv) Fourth, if the Class A Limited Partners
previously have been allocated Loss under Section 5.01(b)(ii),
to the Class A Limited Partners in proportion to their
Percentage Interests until the aggregate amount of Profit
allocated under this Section 5.01(a)(iv) equals the aggregate
amount of Loss allocated under Section 5.01(b)(ii);
(v) Fifth, to the General Partner until the
aggregate amount of Profit allocated to the General Partner
under this Section 5.01(a)(v) for the current and all prior
years equals the aggregate amount of cash distributed to the
General Partner under Sections 5.02(a)(i) and 5.06(a)(i) for
the current and all prior years;
(vi) Sixth, to the General Partner and the Class B
Limited Partners in proportion to their Percentage Interests
until the aggregate amount of Profit allocated to the General
Partner and the Class B Limited Partners under this Section
5.01(a)(vi) for the current and all prior years equals the
aggregate amount of cash distributed to the General Partner
and the Class B Limited Partners under Section 5.02(a)(ii) for
the current and all prior years;
(vii) Seventh, to the Class A Limited Partners in
proportion to their Percentage Interests until the aggregate
amount of Profit allocated to the Class A Limited Partners
under this Section 5.01(a)(vii) for the current and all prior
years equals the aggregate amount of cash distributed to the
Class A Limited Partners under Section 5.02(a)(iii) for the
current and all prior years; and
(viii) Thereafter, any remaining Profit shall be
allocated among the Partners in accordance with their
respective Percentage Interests.
(b) Loss. Loss of the Partnership for each fiscal year of
the Partnership shall be allocated as follows:
(i) First, if the Partners previously have been
allocated Profit under Section 5.01(a)(viii), Loss shall be
allocated among the Partners in accordance with their
respective Percentage Interests until the aggregate amount of
Loss allocated under this Section 5.01(b)(i) equals the
aggregate amount of Profit allocated under Section
5.01(a)(viii);
(ii) Second, if the Class A Limited Partners
previously have been allocated Profit under Section
5.01(a)(vii), Loss shall be allocated to the Class A Limited
Partners in proportion to their Percentage Interests until the
aggregate amount of Loss allocated under this Section
5.01(b)(ii) equals the aggregate amount of Profit allocated
under Section 5.01(a)(vii);
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<PAGE> 22
(iii) Third, if the General Partner and the Class B
Limited Partners previously have been allocated Profit under
Section 5.01(a)(vi), Loss shall be allocated to the General
Partner and the Class B Limited Partners in proportion to
their Percentage Interests until the aggregate amount of Loss
allocated under this Section 5.01(b)(iii) equals the aggregate
amount of Profit allocated under Section 5.01(a)(vi);
(iv) Fourth, if the General Partner previously has
been allocated Profit under Section 5.01(a)(v), Loss shall be
allocated to the General Partner until the aggregate amount of
Loss allocated under this Section 5.01(b)(iv) equals the
aggregate amount of Profit allocated under Section 5.01(a)(v);
and
(v) Thereafter, any remaining Loss shall be
allocated among the Partners in accordance with their
respective Percentage Interests.
(c) Depreciation and Amortization Deductions. Depreciation
and amortization deductions for each fiscal year of the Partnership shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
(d) Minimum Gain Chargeback. Notwithstanding any provision
to the contrary, (i) any expense of the Partnership that is a "nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated among the Partners in accordance with their respective Percentage
Interests, (ii) any expense of the Partnership that is a "partner nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(i)(2) shall be
allocated in accordance with Regulations Section 1.704-2(i)(1), (iii) if there
is a net decrease in Partnership Minimum Gain within the meaning of Regulations
Section 1.704-2(f)(1) for any Partnership taxable year, items of gain and
income shall be allocated among the Partners in accordance with Regulations
Section 1.704-2(f) and the ordering rules contained in Regulations Section
1.704-2(j), and (iv) if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for any
Partnership taxable year, items of gain and income shall be allocated among the
Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering
rules contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(e) Qualified Income Offset. If a Limited Partner receives
in any taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and
Partner Nonrecourse Debt Minimum Gain, as determined in accordance with
Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated
specially for such taxable year (and, if necessary, later taxable years) items
of income and gain in an amount and manner sufficient to eliminate such
negative Capital Account balance as quickly
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as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Limited Partner in
accordance with this Section 5.01(e), to the extent permitted by Regulations
Section 1.704-1(b) and Section 5.01(f), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(e).
(f) Capital Account Deficits. Loss shall not be allocated to
a Limited Partner to the extent that such allocation would cause a deficit in
such Partner's Capital Account (after reduction to reflect the items described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum
of such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse
Debt Minimum Gain. Any Loss in excess of that limitation shall be allocated to
the General Partner. After the occurrence of an allocation of Loss to the
General Partner in accordance with this Section 5.01(f), to the extent
permitted by Regulations Section 1.704-1(b), Profit shall be allocated to such
Partner in an amount necessary to offset the Loss previously allocated to such
Partner under this Section 5.01(f).
(g) Allocations Between Transferor and Transferee. If a
Partner transfers any part or all of its Partnership Interest, and the
transferee is admitted as a substitute Partner as provided herein, the
distributive shares of the various items of Profit and Loss allocable among the
Partners during such fiscal year of the Partnership shall be allocated between
the transferor and the substitute Partner either (i) as if the Partnership's
fiscal year had ended on the date of the transfer, or (ii) based on the number
of days of such fiscal year that each was a Partner without regard to the
results of Partnership activities in the respective portions of such fiscal
year in which the transferor and the transferee were Partners. The General
Partner, in its sole discretion, shall determine which method shall be used to
allocate the distributive shares of the various items of Profit and Loss
between the transferor and the substitute Partner.
(h) Definition of Profit and Loss. "Profit" and "Loss" and
any items of income, gain, expense, or loss referred to in this Agreement shall
be determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially
allocated pursuant to Section 5.01(c), 5.01(d), 5.01(e), or 5.01(f). All
allocations of income, Profit, gain, Loss, and expense (and all items contained
therein) for federal income tax purposes shall be identical to all allocations
of such items set forth in this Section 5.01, except as otherwise required by
Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The General
Partner shall have the authority to elect the method to be used by the
Partnership for allocating items of income, gain, and expense as required by
Section 704(c) of the Code and such election shall be binding on all Partners.
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5.02 DISTRIBUTION OF CASH.
(a) The General Partner shall distribute cash on a quarterly
(or, at the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period), as follows:
(i) First, to the General Partner until the General
Partner has received an amount equal to the excess, if any, of
(A) its cumulative Preferred Return for the current and all
prior years over (B) the sum of all prior distributions to the
General Partner pursuant to this Section 5.02(a)(i);
(ii) Second, to the General Partner and the Class B
Limited Partners in proportion to their Percentage Interests
until the General Partner has received, on a cumulative basis,
an amount sufficient to provide the General Partner with Funds
From Operations (net income (computed in accordance with
generally accepted accounting principles) excluding gains (or
losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures) equal to $1.00
per share of common stock of the General Partner, based on the
weighted average number of such shares outstanding;
(iii) Third, to the Class A Limited Partners in
proportion to their Percentage Interests until the Class A
Limited Partners have received, on a cumulative basis, an
amount per Partnership Unit equal to the amount per
Partnership Unit received by the General Partner and Class B
Limited Partners under Section 5.02(a)(ii) hereof; and
(iv) Thereafter, to the Partners in accordance
with their respective Percentage Interests.
(b) In no event may a Partner receive a distribution of cash
with respect to a Partnership Unit if such Partner is entitled to receive a
dividend with respect to a REIT Share for which all or part of such Partnership
Unit has been or will be exchanged.
5.03 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use
its reasonable efforts to cause the Partnership to distribute amounts
sufficient to enable the General Partner (i) to meet its distribution
requirement for qualification as a REIT as set forth in Section 857(a)(1) of
the Code and (ii) to avoid any federal income or excise tax liability imposed
by the Code.
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be
entitled to demand property other than cash in connection with any
distributions by the Partnership.
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5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS.
Notwithstanding any of the provisions of this Article V, no Partner shall have
the right to receive and the General Partner shall not have the right to make,
a distribution which includes a return of all or part of a Partner's Capital
Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the
liabilities to a Partner for the return of his Capital Contribution, does not
exceed the fair market value of the Partnership's assets.
5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed in
the following order of priority:
(i) First, to the General Partner, an amount equal
to the excess, if any, of (A) the General Partner's cumulative
Preferred Return for the current and all prior years over (B)
the sum of all prior distributions to the General Partner
pursuant to Section 5.02(a)(i) hereof;
(ii) Second, to the General Partner, an amount equal
to the Preference Value per Unit multiplied by the number of
Preferred Partnership Units held by the General Partner
immediately preceding the liquidation; and
(iii) Third, to all Partners with positive Capital
Accounts in accordance with their respective positive Capital
Account balances.
For purposes of Section 5.06(a)(iii) hereof, the Capital Account of each
Partner shall be determined after all adjustments made in accordance with
Sections 5.01, 5.02, and 5.06(a)(i) and (ii) hereof resulting from Partnership
operations and from all sales and dispositions of all or any part of the
Partnership's assets. Any distributions pursuant to this Section 5.06 shall be
made by the end of the Partnership's taxable year in which the liquidation
occurs (or, if later, within 90 days after the date of the liquidation). To
the extent deemed advisable by the General Partner, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that adequate
funds are available to pay any contingent debts or obligations of the
Partnership.
(b) If the General Partner has a negative balance in its
Capital Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance with Sections
5.01 and 5.02 hereof resulting from Partnership operations and from all sales
and dispositions of all or any part of the Partnership's assets, the General
Partner shall contribute to the Partnership an amount of cash equal to the
negative balance in its Capital Account and such cash shall be paid or
distributed by the Partnership to creditors, if any, and then to the Limited
Partners in accordance with Section 5.06(a). Such contribution by the General
Partner shall be made by
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the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners
that the allocations of Profit and Loss under the Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to nonrecourse
debt) within the meaning of Section 704(b) of the Code as interpreted by the
Regulations promulgated pursuant thereto. Article V and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement,
the General Partner shall have full, complete and exclusive discretion to
manage and control the business of the Partnership for the purposes herein
stated, and shall make all decisions affecting the business and assets of the
Partnership. Subject to the restrictions specifically contained in this
Agreement, the powers of the General Partner shall include, without limitation,
the authority to take the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, lease and dispose
of any real property and any other property or assets that the
General Partner determines are necessary or appropriate or in
the best interests of the business of the Partnership;
(ii) to construct buildings and make other
improvements on the properties owned or leased by the
Partnership;
(iii) to borrow money for the Partnership, issue
evidences of indebtedness in connection therewith, refinance,
guarantee, increase the amount of, modify, amend or change the
terms of, or extend the time for the payment of, any
indebtedness or obligation to the Partnership, and secure such
indebtedness by mortgage, deed of trust, pledge or other lien
on the Partnership's assets;
(iv) to pay, either directly or by reimbursement,
for all operating costs and general administrative expenses of
the General Partner or the Partnership, to third parties or to
the General Partner as set forth in this Agreement;
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(v) to lease all or any portion of any of the
Partnership's assets, whether or not the terms of such leases
extend beyond the termination date of the Partnership and
whether or not any portion of the Partnership's assets so
leased are to be occupied by the lessee, or, in turn,
subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may
determine;
(vi) to prosecute, defend, arbitrate, or
compromise any and all claims or liabilities in favor of or
against the Partnership, on such terms and in such manner as
the General Partner may reasonably determine, and similarly to
prosecute, settle or defend litigation with respect to the
Partners, the Partnership, or the Partnership's assets;
provided, however, that the General Partner may not, without
the consent of all of the Partners, confess a judgment against
the Partnership;
(vii) to file applications, communicate, and
otherwise deal with any and all governmental agencies having
jurisdiction over, or in any way affecting, the Partnership's
assets or any other aspect of the Partnership business;
(viii) to make or revoke any election permitted or
required of the Partnership by any taxing authority;
(ix) to maintain such insurance coverage for
public liability, fire and casualty, and any and all other
insurance for the protection of the Partnership, for the
conservation of Partnership assets, or for any other purpose
convenient or beneficial to the Partnership, in such amounts
and such types, as it shall determine from time to time;
(x) to determine whether or not to apply any
insurance proceeds for any property to the restoration of such
property or to distribute the same;
(xi) to retain legal counsel, accountants,
consultants, real estate brokers, and such other persons, as
the General Partner may deem necessary or appropriate in
connection with the Partnership business and to pay therefor
such reasonable remuneration as the General Partner may deem
reasonable and proper;
(xii) to retain other services of any kind or
nature in connection with the Partnership business, and to pay
therefor such remuneration as the General Partner may deem
reasonable and proper;
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(xiii) to negotiate and conclude agreements on
behalf of the Partnership with respect to any of the rights,
powers and authority conferred upon the General Partner;
(xiv) to maintain accurate accounting records and
to file promptly all federal, state and local income tax
returns on behalf of the Partnership;
(xv) to distribute Partnership cash or other
Partnership assets in accordance with this Agreement;
(xvi) to form or acquire an interest in, and
contribute property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);
(xvii) to establish Partnership reserves for working
capital, capital expenditures, contingent liabilities, or any
other valid Partnership purpose; and
(xviii) to take such other action, execute,
acknowledge, swear to or deliver such other documents and
instruments, and perform any and all other acts the General
Partner deems necessary or appropriate for the formation,
continuation and conduct of the business and affairs of the
Partnership and to possess and enjoy all of the rights and
powers of a general partner as provided by the Act.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require
the General Partner, in its capacity as such, to expend its individual funds
for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.
(b) In no event shall the General Partner incur or allow to
exist as of the end of any month Indebtedness (as defined below) in an amount
in excess of thirty percent (30%) of the General Partner's investment in hotel
properties, at cost, after giving effect to the General Partner's use of
proceeds from any Indebtedness. For purposes of the foregoing restrictions,
"Indebtedness" of the General Partner shall mean all obligations of the General
Partner, the Partnership or any other subsidiaries or partnerships in which the
General Partner serves as general partner, for borrowed money (including all
notes payable and drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other similar instruments
on which interest charges are customarily paid, including obligations under
capital leases.
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6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any
or all of its powers, rights and obligations hereunder, and may appoint,
employ, contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General
Partner may approve.
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities (joint or several),
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Partnership as set forth in
this Agreement in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that: (i) the act
or omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active
and deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the
act or omission was unlawful. The termination of any proceeding by judgment,
order or settlement does not create a presumption that the Indemnitee did not
meet the requisite standard of conduct set forth in this Section 6.03(a). The
termination of any proceeding by conviction or upon a plea of nolo contendere
or its equivalent, or an entry of an order of probation prior to judgment,
creates a rebuttable presumption that the Indemnitee acted in a manner contrary
to that specified in this Section 6.03(a). Any indemnification pursuant to
this Section 6.03 shall be made only out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for
reasonable expenses incurred by an Indemnitee who is a party to a proceeding in
advance of the final disposition of the proceeding upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification by
the Partnership as authorized in this Section 6.03 has been met, and (ii) a
written undertaking by or on behalf of the Indemnitee to repay the amount if it
shall ultimately be determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 6.03 shall
be in addition to any other rights to which an Indemnitee or any other Person
may be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have
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the power to indemnify such Person against such liability under the provisions
of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by the Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 6.03 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit
of the Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other Persons.
6.04 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, the General Partner shall not be liable for monetary damages to
the Partnership or any Partners for losses sustained or liabilities incurred as
a result of errors in judgment or of any act or omission if the General Partner
acted in good faith.
(b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General
Partner's shareholders collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners) in
deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith.
(c) Subject to its obligations and duties as General Partner
set forth in Section 6.01 hereof, the General Partner may exercise any of the
powers granted to it under this
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Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to prevent the General Partner
from incurring any taxes under Section 857, Section 4981, or any other
provision of the Code, is expressly authorized under this Agreement and is
deemed approved by all of the Limited Partners.
(e) Any amendment, modification or repeal of this Section
6.04 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership
and the Limited Partners under this Section 6.04 as in effect immediately prior
to such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless
of when claims relating to such matters may arise or be asserted.
6.05 EXPENDITURES BY THE PARTNERSHIP. The General Partner is
hereby authorized to pay compensation for accounting, administrative, legal,
technical, management and other services rendered to the Partnership. All of
the aforesaid expenditures (including Administrative Expenses) shall be made on
behalf of the Partnership, and the General Partner shall be entitled to
reimbursement by the Partnership for any expenditure (including Administrative
Expenses) incurred by it on behalf of the Partnership which shall be made other
than out of the funds of the Partnership. The Partnership shall also assume,
and pay when due, all Administrative Expenses.
6.06 OUTSIDE ACTIVITIES; REDEMPTION/TENDER OFFER OF REIT SHARES.
(a) Subject to Section 6.12 hereof, the Charter and any
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities
substantially similar or identical to those of the Partnership. Neither the
Partnership nor any of the Limited Partners shall have any rights by virtue of
this Agreement in any such business ventures, interests or activities. None of
the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any such
business ventures, interests or activities, and the General Partner shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures, interests and activities to the Partnership or any Limited
Partner, even if such opportunity is
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of a character which, if presented to the Partnership or any Limited Partner,
could be taken by such Person.
(b) In the event the General Partner redeems any REIT Shares,
then the General Partner shall cause the Partnership to purchase from it a
number of Partnership Units as determined based on the application of the
Conversion Factor on the same terms that the General Partner redeemed such REIT
Shares. Moreover, if the General Partner makes a cash tender offer or other
offer to acquire REIT Shares, then the General Partner shall cause the
Partnership to make a corresponding offer to the General Partner to acquire an
equal number of Partnership Units held by the General Partner. In the event
any REIT Shares are redeemed by the General Partner pursuant to such offer, the
Partnership shall redeem an equivalent number of the General Partner's
Partnership Units for an equivalent purchase price based on the application of
the Conversion Factor.
6.07 OPTIONAL CONVERSION OF SERIES A PREFERRED SHARES. In the
event any holder of the Series A Preferred Shares exercises its option to
convert its Series A Preferred Shares into REIT Shares on or after February 27,
2003, then the General Partner shall cause the Partnership to convert an
equivalent number of the Preferred Partnership Units held by the General
Partner into Partnership Units held by such Partner. The portion of Preferred
Partnership Units to be converted shall be determined based on the same ratio
pursuant to which the Series A Preferred Shares were converted into REIT
Shares. Upon the conversion of all of the Series A Preferred Shares into REIT
Shares, the General Partner shall no longer hold Preferred Partnership Units
and, thus, shall no longer be entitled to distribution under Sections
5.02(a)(i), 5.06(a)(i), and 5.06(a)(ii) hereof.
6.08 REDEMPTION RIGHT WITH RESPECT TO PREFERRED PARTNERSHIP UNITS.
(a) Mandatory Redemption. In the event the General Partner
redeems all of the Series A Preferred Shares as a result of the termination of
the General Partner's status as a REIT, the Partnership shall redeem all of the
Series A Preferred Partnership Units held by the General Partner at a
redemption price per Series A Preferred Partnership Unit equal to the greater
of (i) the Series A Preference Value per Unit plus the excess, if any, of (A)
the General Partner's cumulative Preferred Return for the current and all prior
years (up to and including the date of redemption) with respect to the
Preferred Partnership Unit over (B) the sum of all prior distributions to with
respect to such Unit pursuant to Section 5.02(a)(i) hereof, or (ii) the product
of (A) the weighted average of the sales prices for a REIT Share as reported on
the NASDAQ-National Market System, or the principal exchange on which REIT
Shares are then traded, for the ten (10) business days prior to the second
business day preceding the date of repurchase, or if the REIT Shares no longer
traded on the Nasdaq-Stock Market or a recognized exchange, the fair market
value thereof as determined by the General Partner and the holders of the
Series A Preferred Shares for purposes of the redemption of the Series A
Preferred Shares, multiplied by (B) the number of REIT Shares into which a
Series A Preferred Share would be convertible, if converted on the business day
preceding the date of redemption.
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(b) Optional Redemption. On and after February 27, 2003, the
Partnership may, at its option following notice as described below, redeem at
any time all or a portion of the Preferred Partnership Units held by the
General Partner (the "Partnership Redemption Right") at a redemption price per
Preferred Partnership Unit, payable in cash, equal to the sum of (i) the
Preference Value per Preferred Partnership Unit and (ii) the excess, if any, of
(A) the General Partner's cumulative Preferred Return for the current and all
prior years (up to and including the date of redemption) with respect to the
Preferred Partnership Unit over (B) the sum of all prior distributions to the
General Partner with respect to such Unit pursuant to Section 5.02(a)(i)
hereof. The Partnership shall exercise the Partnership Redemption Right by
notifying the General Partner of the redemption not less than 30 nor more than
60 days prior to the redemption date and by specifying in such notice the
redemption date, the redemption price, and the number of Preferred Partnership
Units to be redeemed. The Partnership Redemption Right may be exercised with
respect to any number of Preferred Partnership Units held by the General
Partner. If the General Partner exercises its optional redemption right with
respect to the Series A Preferred Shares, then the exercise of the Partnership
Redemption Right will become mandatory. Similarly, if the Partnership
exercises the Partnership Redemption Right, the General Partner agrees to
redeem a corresponding portion of the Series A Preferred Shares.
(c) On and after the redemption date, the Preferred
Return will no longer accrue or accumulate with respect to the Preferred
Partnership Units redeemed by the Partnership. In addition, the General
Partner shall have no right, with respect to the Preferred Partnership Units so
redeemed, to receive any distribution payable after the redemption date unless
the General Partner was the holder of record of such Units on the record date
of the distribution.
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6.09 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership
(whether as a buyer, lessor, lessee, manager, furnisher of goods or services,
broker, agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor which the General Partner
determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its
Subsidiaries or other Persons in which it has an equity investment, and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable
law.
(d) Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates shall sell, transfer or convey
any property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
6.10 LOANS TO THE PARTNERSHIP. If additional funds are required by
the Partnership for any purpose relating to the business of the Partnership or
for any of its obligations, expenses, costs, or expenditures, including
operating deficits, the Partnership may borrow such funds as are needed from
the General Partner or any Affiliate of the General Partner for such period of
time and on such terms as the General Partner or its Affiliate may agree,
provided that the terms shall be substantially equivalent to the terms that
could be obtained from a third party on an arm's-length basis.
6.11 LOANS TO THE GENERAL PARTNER. If additional funds are
required by the General Partner for any purpose relating to the business of the
General Partner or for any of its obligations, expenses, costs, or
expenditures, including operating deficits, the General Partner may borrow such
funds as are needed from the Partnership or any Affiliate of the Partnership
for such period of time and on such terms as the Partnership or its Affiliate
may agree, provided that the terms shall be substantially equivalent to the
terms that could be obtained from a third party on an arm's-length basis.
6.12 GENERAL PARTNER PARTICIPATION. The General Partner agrees
that all business activities of the General Partner, including activities
pertaining to the acquisition, development and/or ownership of hotels or other
property, shall be conducted through the Partnership; provided, however, that
the General Partner is allowed to make a direct
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acquisition, but if and only if, such acquisition is made in connection with
the issuance of New Securities, which direct acquisition and issuance have been
approved and determined to be in the best interests of the General Partner and
the Partnership by a majority of the Independent Directors. The General
Partner also agrees that all borrowings shall constitute Funding Loans, subject
to the exception set forth in Section 4.03 hereof.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner may not transfer any of its General
Partnership Interest or Limited Partnership Interest or withdraw as General
Partner except as provided in Section 7.01(c) or in connection with a
transaction described in Section 7.01(d).
(b) The General Partner agrees that it will at all times own
at least a 20% Partnership Interest.
(c) Except as otherwise provided in Section 6.06(b) or
Section 7.01(d) hereof, the General Partner shall not engage in any merger,
consolidation or other combination with or into another Person or sale of all
or substantially all of its assets, or any reclassification, or any
recapitalization or change of outstanding REIT Shares (other than a change in
par value, or from par value to no par value, or as a result of a subdivision
or combination of REIT Shares (a "Transaction"), unless (i) the Transaction
also includes a merger of the Partnership or sale of substantially all of the
assets of the Partnership as a result of which all Limited Partners will
receive for each Partnership Unit an amount of cash, securities, or other
property equal to the product of the Conversion Factor and the greatest amount
of cash, securities or other property paid in the Transaction to a holder of
one REIT Share in consideration of one REIT Share, provided that if, in
connection with the Transaction, a purchase, tender or exchange offer ("Offer")
shall have been made to and accepted by the holders of more than 50 percent of
the outstanding REIT Shares, each holder of Partnership Units shall be given
the option to exchange its Partnership Units for the greatest amount of cash,
securities, or other property which a Limited Partner would have received had
it (A) exercised its Limited Partner Redemption Right and received REIT shares
and (B) sold, tendered or exchanged such REIT shares pursuant to the Offer the
REIT Shares received upon exercise of the Limited Partner Redemption Right
immediately prior to the expiration of the Offer; and (ii) no more than 75
percent of the equity securities of the acquiring Person in such Transaction
shall be owned, after consummation of such Transaction, by the General Partner
or Persons who were Affiliates of the Partnership or the General Partner
immediately prior to the date on which the Transaction is consummated.
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(d) Notwithstanding Section 7.01(c), the General Partner may
merge into or consolidate with another entity if immediately after such merger
or consolidation (i) substantially all of the assets of the successor or
surviving entity (the "Surviving General Partner"), other than Partnership
Units held by the General Partner, are contributed to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed by the Surviving General
Partner in good faith and (ii) the Surviving General Partner expressly agrees
to assume all obligations of the General Partner hereunder. Upon such
contribution and assumption, the Surviving General Partner shall have the right
and duty to amend this Agreement as set forth in this Section 7.01(d). The
Surviving General Partner shall in good faith arrive at a new method for the
calculation of the Cash Amount and Conversion Factor for a Partnership Unit
after any such merger or consolidation so as to approximate the existing method
for such calculation as closely as reasonably possible. Such calculation shall
take into account, among other things, the kind and amount of securities, cash
and other property that was receivable upon such merger or consolidation by a
holder of REIT Shares and/or options, warrants or other rights relating
thereto, and to which a holder of Partnership Units could have acquired had
such Partnership Units been redeemed immediately prior to such merger or
consolidation. Such amendment to this Agreement shall provide for adjustment
to such method of calculation which shall be as nearly equivalent as may be
practicable to the adjustments provided for with respect to the Conversion
Factor. The above provisions of this Section 7.01(d) shall similarly apply to
successive mergers or consolidations permitted hereunder.
7.02 ADMISSION OF A SUBSTITUTE OR SUCCESSOR GENERAL PARTNER. A
Person shall be admitted as a substitute or successor General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional
General Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
(b) if the Person to be admitted as a substitute or
additional General Partner is a corporation or a partnership it shall have
provided the Partnership with evidence satisfactory to counsel for the
Partnership of such Person's authority to become a General Partner and to be
bound by the terms and provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an
opinion (relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with
the Act, that none of the actions taken in connection with the admission of
such Person as a substitute or additional General Partner will cause (i) the
Partnership to
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be classified other than as a partnership for federal income tax purposes or
(ii) the loss of any Limited Partner's limited liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Partnership shall be dissolved and
terminated unless the Partnership is continued pursuant to Section 7.03(b)
hereof.
(b) Following the occurrence of an Event of Bankruptcy as to
a General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the
withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a
partner in, such partnership shall be deemed not to be a dissolution of such
General Partner if the business of such General Partner is continued by the
remaining partner or partners), the Limited Partners, within 90 days after such
occurrence, may elect to reconstitute the Partnership and continue the business
of the Partnership for the balance of the term specified in Section 2.04 hereof
by selecting, subject to Section 7.02 hereof and any other provisions of this
Agreement, a substitute General Partner by unanimous consent of the Limited
Partners. If the Limited Partners elect to reconstitute the Partnership and
admit a substitute General Partner, the relationship with the Partners and of
any Person who has acquired an interest of a Partner in the Partnership shall
be governed by this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or
the dissolution of, a General Partner, such General Partner shall be deemed to
be removed automatically; provided, however, that if a General Partner is on
the date of such occurrence a partnership, the withdrawal, death, dissolution,
Event of Bankruptcy as to or removal of a partner in such partnership shall be
deemed not to be a dissolution of the General Partner if the business of such
General Partner is continued by the remaining partner or partners.
(b) If a General Partner has been removed pursuant to this
Section 7.04 and the Partnership is continued pursuant to Section 7.03 hereof,
such General Partner shall promptly transfer and assign its General Partnership
Interest in the Partnership (i) to the substitute General Partner approved by a
majority-in-interest of the Limited Partners in accordance with Section 7.03(b)
hereof and otherwise admitted to the Partnership in accordance with Section
7.02 hereof. At the time of assignment, the removed General
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Partner shall be entitled to receive from the substitute General Partner the
fair market value of the General Partnership Interest of such removed General
Partner as reduced by any damages caused to the Partnership by such General
Partner. Such fair market value shall be determined by an appraiser mutually
agreed upon by the General Partner and a majority-in-interest of the Limited
Partners within 10 days following the removal of the General Partner. In the
event that the parties are unable to agree upon an appraiser, the General
Partner and a majority-in-interest of the Limited Partners each shall select an
appraiser. Each such appraiser shall complete an appraisal of the fair market
value of the General Partner's General Partnership Interest within 30 days of
the General Partner's removal, and the fair market value of the General
Partner's General Partnership Interest shall be the average of the two
appraisals; provided, however, that if the higher appraisal exceeds the lower
appraisal by more than 20% of the amount of the lower appraisal, the two
appraisers, no later than 40 days after the removal of the General Partner,
shall select a third appraiser who shall complete an appraisal of the fair
market value of the General Partner's General Partnership Interest no later
than 60 days after the removal of the General Partner. In such case, the fair
market value of the General Partner's General Partnership Interest shall be the
average of the two appraisals closest in value.
(c) The General Partnership Interest of a removed General
Partner, during the time after default until transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided, however,
such removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expense, profit, gain or loss allocations or cash
distributions allocable or payable, as the case may be, to the Limited
Partners. Instead, such removed General Partner shall receive and be entitled
to retain only distributions or allocations of such items which it would have
been entitled to receive in its capacity as General Partner, until the transfer
is effective pursuant to Section 7.04(b) hereof.
(d) All Partners shall have given and hereby do give such
consents, shall take such actions and shall execute such documents as shall be
legally necessary and sufficient to effect all the foregoing provisions of this
Section.
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to
sign for or bind the Partnership, such powers being vested solely and
exclusively in the General Partner.
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8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably
appoints the General Partner his true and lawful attorney-in-fact, who may act
for each Limited Partner and in his name, place and stead, and for his use and
benefit, to sign, acknowledge, swear to, deliver, file and record, at the
appropriate public offices, any and all documents, certificates, and
instruments as may be deemed necessary or desirable by the General Partner to
carry out fully the provisions of this Agreement and the Act in accordance with
their terms, which power of attorney is coupled with an interest and shall
survive the death, dissolution or legal incapacity of the Limited Partner, or
the transfer by the Limited Partner of any part or all of his Interest in the
Partnership.
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited
Partner shall be liable for any debts, liabilities, contracts or obligations of
the Partnership. A Limited Partner shall be liable to the Partnership only to
make payments of his Capital Contribution, if any, as and when due hereunder.
After his Capital Contribution is fully paid, no Limited Partner shall, except
as otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or
indirectly, own any stock or other interest in the General Partner or in any
Affiliate thereof, if such ownership by itself or in conjunction with other
stock or other interests owned by other Limited Partners would, in the opinion
of counsel for the Partnership, jeopardize the classification of the
Partnership as a partnership for federal income tax purposes. The General
Partner shall be entitled to make such reasonable inquiry of the Limited
Partners as is required to establish compliance by the Limited Partners with
the provisions of this Section.
8.05 LIMITED PARTNER REDEMPTION RIGHT.
(a) Subject to Section 8.05(c), on or after January 1, 1995,
each Class A Limited Partner shall have the right to require the Partnership to
redeem on a Specified Redemption Date all or a portion of the Partnership Units
held by such Class A Limited Partner at a redemption price equal to and in the
form of the Redemption Amount. Subject to Section 8.05(c), the Class B Limited
Partners shall have the right to require the Partnership to redeem on a
Specified Redemption Date the Partnership Units held by such Class B Limited
Partners, at a redemption price equal to and in the form of the Redemption
Amount subject to any restriction agreed to in writing between the Redeeming
Limited Partner and the General Partner. The redemption right described in
this Section 8.05 shall be referred to as the "Limited Partner Redemption
Right." The Limited Partner Redemption Right shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner by the Limited Partner
who is exercising the Limited Partner Redemption Right (the "Redeeming Limited
Partner"). A Limited Partner may not exercise the Limited Partner Redemption
Right for less than three hundred (300) Partnership Units or, if such Limited
Partner holds less than three hundred (300) Partnership Units, all of the
Partnership Units held by such Partner. The Redeeming Limited Partner shall
have no right, with respect to
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any Partnership Units so redeemed, to receive any distribution paid with
respect to Partnership Units if the record date for such distribution is on or
after the Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), the
General Partner may, in its sole and absolute discretion, assume directly and
satisfy a Limited Partner Redemption Right by paying to the Redeeming Limited
Partner the Redemption Amount on the Specified Redemption Date, whereupon the
General Partner shall acquire the Partnership Units offered for redemption by
the Redeeming Limited Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. In the event the General
Partner shall exercise its right to satisfy the Limited Partner Redemption
Right in the manner described in the preceding sentence, the Partnership shall
have no obligation to pay any amount to the Redeeming Limited Partner with
respect to such Redeeming Limited Partner's exercise of the Limited Partner
Redemption Right, and each of the Redeeming Limited Partner, the Partnership,
and the General Partner shall treat the transaction between the General Partner
and the Redeeming Limited Partner as a sale of the Redeeming Limited Partner's
Partnership Units to the General Partner for federal income tax purposes. Each
Redeeming Limited Partner agrees to execute such documents as the General
Partner may reasonably require in connection with the issuance of REIT Shares
upon exercise of the Limited Partner Redemption Right.
(c) The Partnership or the General Partner, as the case may
be, shall pay the Cash Amount to a Redeeming Limited Partner as the Redemption
Amount for such Partner if (i) the acquisition of REIT Shares by such Partner
on the Specified Redemption Date would (A) result in such Partner or any other
person owning, directly or indirectly, REIT Shares in excess of the "Ownership
Limit," as defined in the Charter and calculated in accordance therewith,
except as provided in the Charter, (B) result in REIT Shares being owned by
fewer than 100 persons (determined without reference to any rules of
attribution), except as provided in the Charter, (C) result in the General
Partner being "closely held" within the meaning of Section 856(h) of the Code,
(D) cause the General Partner to own, directly or constructively, 10% or more
of the ownership interests in a tenant of the General Partner's or the
Partnership's real property, within the meaning of Section 856(d)(2)(B) of the
Code, or (E) cause the acquisition of REIT Shares by such Partner to be
"integrated" with any other distribution of REIT Shares for purposes of
complying with the registration provisions of the Securities Act of 1933, as
amended, or (ii) the Partnership or the General Partner, as the case may be, so
elects in its sole discretion. Any Cash Amount or REIT shares to be paid to a
redeeming Limited Partner pursuant to this Section 8.05 shall be paid within
five (5) business days after the initial date of receipt by the General Partner
of the Notice of Redemption relating to the Partnership Units to be redeemed;
provided, however, that such five (5) day period may be extended for up to an
additional one hundred eighty (180) day period to the extent required for the
General Partner to cause additional REIT Shares to be issued to provide
financing to be used to make such payment of the Cash Amount and provided
further, that the Partnership shall pay interest at the Prime Rate as published
in The Wall Street Journal, Eastern Edition, from time to time on the Cash
Amount from the
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expiration of the five day period to the date of payment. Notwithstanding the
foregoing, the General Partner and the Partnership agree to use their best
efforts to cause the closing of the acquisition of redeemed Partnership Units
hereunder to occur as quickly as reasonably possible. If a Class B Limited
Partner exercises its Limited Partner Redemption Right and the Partnership or
the General Partner, as the case may be, elects to pay the REIT Shares Amount
rather than the Cash Amount, the REIT Shares received by such Class B Limited
Partner shall be properly registered under the Securities Act of 1933, as
amended.
(d) Each certificate, if any, evidencing REIT Shares that may
be issued in redemption of Partnership Units under this Section 8.05 (the
"Redemption Shares") shall bear a restrictive legend in substantially the
following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
law. No transfer of the Shares represented by this certificate shall
be valid or effective unless (A) such transfer is made pursuant to an
effective registration statement under the Securities Act of 1933, as
amended (the "Act"), or (B) the holder of the securities proposed to
be transferred shall have delivered to the company either a no-action
letter from the Securities and Exchange Commission or an opinion of
counsel (who may be an employee of such holder) experienced in
securities matters to the effect that such proposed transfer is exempt
from the registration requirements of the act which opinion shall be
reasonably satisfactory to the company."
8.06 REGISTRATION.
(a) Shelf Registration. At the request of a Class B Limited
Partner, the General Partner agrees to file with the Commission, no later than
November 1, 1995, a shelf registration statement under Rule 415 of the
Securities Act, or any similar rule that may be adopted by the Commission (the
"Shelf Registration"), with respect to all of the REIT Shares that may be
issued in redemption of Partnership Units under Section 8.05 above (the
"Redemption Shares"). The General Partner will use its best efforts to have
the Shelf Registration declared effective under the Securities Act no later
than January 1, 1996 (the "Target Effective Date") to permit the disposition of
the Redemption Shares by the holders thereof in accordance with the method or
methods of disposition specified by the holders, and to keep the Shelf
Registration continuously effective until the earlier of (i) January 1, 1998
(the "Shelf Registration Period"), (ii) the date when all of the Redemption
Shares are sold thereunder, or (iii) the date on which all of the holders of
Redemption Shares, pursuant to Rule 144(k) under the Securities Act, may sell
the Redemption Shares without registration under the Securities Act of 1933, as
amended (the "Securities Act"). The General Partner further agrees to
supplement or make amendments to the Shelf Registration, if required by the
rules, regulations or instructions applicable to the registration form utilized
by the Company or by the Securities Act or rules and regulations thereunder for
the Shelf Registration. Notwithstanding the foregoing, if for any reason the
effectiveness of the Shelf
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Registration is delayed or suspended or it ceases to be available for sales of
Redemption Shares thereunder, the Shelf Registration Period shall be extended
by the aggregate number of days of such delay, suspension or unavailability.
(b) Registration and Qualification Procedures. The General
Partner is required by the provisions of Section 8.06(a) hereof to use its best
efforts to have the Shelf Registration declared effective under the Securities
Act by January 1, 1996. Accordingly, the General Partner will:
(i) prepare and file with the Commission a
registration statement, including amendments thereof and supplements relating
thereto, with respect to the Redemption Shares, in connection with which the
General Partner will give each holder of Redemption Shares, their underwriters,
if any, and their counsel and accountants a reasonable opportunity to
participate in the preparation thereof and will give such persons reasonable
access to its books, records, officers and independent public accountants;
(ii) use its best efforts to cause the
registration statement to be declared effective by the Commission;
(iii) keep the registration statement effective and
the related prospectus current throughout the Shelf Registration Period;
provided, however, that the General Partner shall have no obligation to file
any amendment or supplement at its own expense more than ninety (90) days after
the effective date of the registration statement;
(iv) furnish to each holder of Redemption Shares
such numbers of copies of prospectuses, and supplements or amendments thereto,
and such other documents as such holder reasonably requests;
(v) register or qualify the securities covered by
the registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of Redemption Shares shall
reasonably request, and do such other reasonable acts and things as may be
required of it to enable such holders to consummate the sale or other
disposition in such jurisdictions of the Redemption Shares; provided, however,
that the General Partner shall not be required to (i) qualify as a foreign
corporation or consent to a general and unlimited service or process in any
jurisdictions in which it would not otherwise be required to be qualified or so
consent or (ii) qualify as a dealer in securities;
(vi) furnish, at the request of the holders of
Redemption Shares, on the date Redemption Shares are delivered to the
underwriters for sale pursuant to such registration, or, if such Shares are not
being sold through underwriters, on the date the Shelf Registration with
respect to such Redemption Shares becomes effective, (A) a securities opinion
of counsel representing the General Partner for the purposes of such
registration covering such legal matters as are customarily included in such
opinions and (B) letters of the firm of independent public accountants that
certified the financial statements included in
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the registration statement, addressed to the underwriters, covering
substantially the same matters as are customarily covered in accountant's
letters delivered to underwriters in underwritten public offerings of
securities and such other financial matters as such holders (or the
underwriters, if any) may reasonably request;
(vii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its shareholders as soon as reasonably practicable, but not later than sixteen
(16) months after the effective date of the Shelf Registration, an earnings
statement covering a period of at least twelve (12) months beginning after the
effective date of the Shelf Registration, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(viii) enter into and perform an underwriting
agreement with the managing underwriter, if any, selected as provided herein,
containing customary (A) terms of offer and sale of the securities, payment
provisions, underwriting discounts and commissions and (B) representations,
warranties, covenants, indemnities, terms and conditions; and
(ix) keep the holders of Redemption Shares advised
as to the initiation and progress of the registration.
(c) Allocation of Expenses. The Partnership shall pay all
expenses in connection with the Shelf Registration, including without
limitation (i) all expenses incident to filing with the National Association of
Securities Dealers, Inc., (ii) registration fees, (iii) printing expenses, (iv)
accounting and legal fees and expenses, except to the extent holders of
Redemption Shares elect to engage accountants or attorneys in addition to the
accountants and attorneys engaged by the General Partner, (v) accounting
expenses incident to or required by any such registration or qualification and
(vi) expenses of complying with the securities or blue sky laws of any
jurisdictions in connection with such registration or qualification; provided,
however, the Partnership shall not be liable for (A) any discounts or
commissions to any underwriter or broker attributable to the sale of Redemption
Shares, or (B) any fees or expenses incurred by holders of Redemption Shares in
connection with such registration which, according to the written instructions
of any regulatory authority, the Partnership is not permitted to pay.
(d) Indemnification.
(i) In connection with the Shelf Registration,
the General Partner and the Partnership agree to indemnify holders of
Redemption Shares within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) caused by any untrue, or alleged untrue,
statement of a material fact contained in the Shelf Registration, preliminary
prospectus or prospectus (as amended or supplemented if the General Partner
shall have furnished any amendments or supplements thereto) or caused by any
omission, or alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statements
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therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement, alleged untrue
statement, omission, or alleged omission based upon information furnished to
the General Partner expressly for use therein. The General Partner and each
officer, director and controlling person of the General Partner shall be
indemnified by each holder of Redemption Shares covered by the Shelf
Registration for all such losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any such untrue, or
alleged untrue, statement or any such omission, or alleged omission, based upon
information furnished to the General Partner expressly for use therein in a
writing signed by the holder.
(ii) Promptly upon receipt by a party indemnified
under this Section 8.06(d) of notice of the commencement of any action against
such indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this Section 8.06(d), such
indemnified party shall notify the General Partner in writing of the
commencement of such action, but the failure to so notify the General Partner
shall not relieve it of any liability which it may have to any indemnified
party otherwise than under this Section 8.06(d) unless such failure shall
materially adversely affect the defense of such action. In case notice of
commencement of any such action shall be given to the General Partner as above
provided, the General Partner shall be entitled to participate in and, to the
extent it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be paid by
the indemnified party unless (i) the General Partner or the Partnership agrees
to pay the same, (ii) the General Partner fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party or (iii)
the named parties to any such action (including any impleaded parties) have
been advised by such counsel that representation of such indemnified party and
the General Partner by the same counsel would be inappropriate under applicable
standards of professional conduct (in which case the General Partner shall not
have the right to assume the defense of such action on behalf of such
indemnified party). No indemnifying party shall be liable for any settlement
entered into without its consent.
(e) Contribution.
(i) If for any reason the indemnification
provisions contemplated by Section 8.06(d) are either unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities referred to therein, then the party that would
otherwise be required to provide indemnification or the indemnifying party (in
either case, for purposes of this Section 8.06(e), the "Indemnifying Party") in
respect of such losses, claims, damages or liabilities, shall contribute to the
amount paid or payable by the party that would otherwise be entitled to
indemnification or the indemnified party (in either case, for purposes of this
Section 8.06(e), the "Indemnified Party") as a result of such losses, claims,
damages, liabilities or expense, in such proportion as is appropriate to
reflect the
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<PAGE> 45
relative fault of the Indemnifying Party and the Indemnified Party, as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact related
to information supplied by the Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party. In no event shall any holder of
Redemption Shares covered by the Shelf Registration be required to contribute
an amount greater than the dollar amount of the proceeds received by such
holder from the sale of Redemption Shares pursuant to the registration giving
rise to the liability.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8.06(e) were
determined by pro rata allocation (even if the holders or any underwriters or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No person or entity
determined to have committed a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
(iii) The contribution provided for in this Section
8.06(e) shall survive the termination of this Agreement and shall remain in
full force and effect regardless of any investigation mae by or on behalf of
any Indemnified Party.
(f) Listing on Securities Exchange. If the General Partner
shall list or maintain the listing of any shares of Common Stock on any
securities exchange or national market system, it will at its expense and as
necessary to permit the registration and sale of the Redemption Shares
hereunder, list thereon, maintain and, when necessary, increase such listing to
include such Redemption Shares.
8.07 OUTSIDE ACTIVITIES OF CLASS A LIMITED PARTNERS.
(a) No Class A Limited Partner or director, shareholder or
Affiliate of a Class A Limited Partner may (i) invest in any motel or hotel
property or (ii) manage or agree to manage a motel or hotel property, except
for a Property or any other hotel or motel property in which the General
Partner or the Partnership has an ownership interest, that, at the time such
management is undertaken or agreement to manage is entered into, is located
within a 20-mile radius of a Property or any other motel or hotel property in
which the General Partner has an ownership interest.
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(b) The General Partner, in its sole discretion, may waive
the restrictions on Class A Limited Partners set forth in Section 8.07(a) above
as to (i) any particular business venture in which a Limited Partner proposes
to engage or (ii) any particular Class A Limited Partner.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to
the General Partner and to the Partnership that the acquisition of his
Partnership Interest is made as a principal for his account for investment
purposes only and not with a view to the resale or distribution of such
Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign
or otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in Section 9.02(d) hereof,
no Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer his Limited Partnership Interest, in whole or in part, whether
voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General
Partner, which consent may be withheld in the sole discretion of the General
Partner. The General Partner may require, as a condition of any Transfer, that
the transferor assume all costs incurred by the Partnership in connection
therewith.
(b) No Limited Partner may effect a Transfer of his Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act of 1933, as amended,
or would otherwise violate any applicable federal or state securities or "Blue
Sky" law (including investment suitability standards).
(c) No transfer by a Limited Partner of his Partnership
Units, in whole or in part, may be made to any Person if (i) in the opinion of
legal counsel for the Partnership, the transfer would result in the
Partnership's being treated as an association taxable as a corporation (other
than a qualified REIT subsidiary within the meaning of Section 856(i) of
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the Code), or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
(d) Section 9.02(a) shall not apply to the following
transactions, except that the General Partner may require that the transferor
assume all costs incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner pursuant to
the exercise of its Limited Partner Redemption Right under
Section 8.05 hereof;
(ii) any Transfer by a Limited Partner that is a
corporation or other business entity to any of its Affiliates
or subsidiaries or to any successor in interest of such
Limited Partner; or
(iii) any donative Transfer by an individual
Limited Partner to his immediate family members or any trust
in which the individual or his immediate family members own,
collectively, 100% of the beneficial interests. For purposes
of this Section 9.02(c)(iii), the term "immediate family
member" shall be deemed to include only an individual Limited
Partner's spouse, children (including step- children and
adopted children) and grandchildren.
(e) Any Transfer in contravention of any of the provisions of
this Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an
assignee of the Limited Partnership Interest of a Limited Partner (which shall
be understood to include any purchaser, transferee, donee, or other recipient
of any disposition of such Limited Partnership Interest) shall be deemed
admitted as a Limited Partner of the Partnership only upon the satisfactory
completion of the following:
(i) The assignee shall have accepted and agreed
to be bound by the terms and provisions of this Agreement by
executing a counterpart or an amendment thereof, including a
revised Exhibit A, and such other documents or instruments as
the General Partner may require in order to effect the
admission of such Person as a Limited Partner.
(ii) To the extent required, an amended
Certificate evidencing the admission of such Person as a
Limited Partner shall have been signed, acknowledged and filed
for record in accordance with the Act.
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(iii) The assignee shall have delivered a letter
containing the representation set forth in Section 9.01(a)
hereof and the agreement set forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership
or trust, the assignee shall have provided the General Partner
with evidence satisfactory to counsel for the Partnership of
the assignee's authority to become a Limited Partner under the
terms and provisions of this Agreement.
(v) The assignee shall have executed a power of
attorney containing the terms and provisions set forth in
Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable
legal fees of the Partnership and the General Partner and
filing and publication costs in connection with his
substitution as a Limited Partner.
(vii) The assignee has obtained the prior written
consent of General Partner to its admission as a Substitute
Limited Partner, which consent may be given or denied in the
exercise of General Partner's sole and absolute discretion.
(viii) The assignee shall surrender to the General
Partner any certificate evidencing the Limited Partnership
Interest properly endorsed for transfer.
(b) For the purpose of allocating profits and losses and
distributing cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records of the
Partnership as, a Partner upon the filing of the Certificate described in
Section 9.03(a)(ii) hereof or, if no such filing is required, the later of the
date specified in the transfer documents, or the date on which the General
Partner has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02
hereof, except as required by operation of law, the Partnership shall not be
obligated for any purposes whatsoever to recognize the assignment by any
Limited Partner of his Partnership Interest until the Partnership has received
notice thereof.
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(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Limited Partnership Interest, but does not become a
Substitute Limited Partner and desires to make a further assignment of such
Limited Partnership Interest, shall be subject to all the provisions of this
Article IX to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of his Limited Partnership Interest.
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A
LIMITED PARTNER. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership,
and the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership
that the actions of a single joint owner can bind both owners under the
applicable laws of the state of residence of such joint owners. Upon the death
of one owner of a Partnership Interest held in a joint tenancy with a right of
survivorship, the Partnership Interest shall become owned solely by the
survivor as a Limited Partner and not as an assignee. The Partnership need not
recognize the death of one of the owners of a jointly-held Partnership
Interest until it shall have received notice of such death. Upon notice to the
General Partner from either owner, the General Partner shall cause the
Partnership Interest to be divided into two equal Partnership Interests, which
shall thereafter be owned separately by each of the former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with
generally accepted accounting principles,
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including: (a) a current list of the full name and last known business address
of each Partner, (b) a copy of the Certificate of Limited Partnership and all
certificates of amendment thereto, (c) copies of the Partnership's federal,
state and local income tax returns and reports, (d) copies of the Agreement and
any financial statements of the Partnership for the three most recent years and
(e) all documents and information required under the Act. Any Partner or his
duly authorized representative, upon paying the costs of collection,
duplication and mailing, shall be entitled to inspect or copy such records
during ordinary business hours. The corporate Secretary of the General Partner
shall serve as the transfer agent for the certificates representing the
Partnership Units.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall
be deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation
of the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such
commingling as may necessarily result from an investment in those investment
companies permitted by this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 75 days after the
end of each fiscal year of the Partnership, the General Partner shall furnish to
each person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of
the Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax
Matters Partner, the General Partner shall have the right and obligation to
take all actions authorized and required, respectively, by the Code for the Tax
Matters Partner. The General Partner shall have the right to retain
professional assistance in respect of any audit of the Partnership by the
Service and all out-of-pocket expenses and fees incurred by the General
Partner on behalf of the Partnership as Tax Matters Partner shall constitute
Partnership expenses. In the event the General Partner receives notice of a
final Partnership adjustment under Section 6223(a)(2) of the Code, the General
Partner shall either (i) file a court petition for judicial review of such
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final adjustment within the period provided under Section 6226(a) of the Code,
a copy of which petition shall be mailed to all Limited Partners on the date
such petition is filed, or (ii) mail a written notice to all Limited Partners,
within such period, that describes the General Partner's reasons for
determining not to file such a petition.
(b) All elections required or permitted to be made by the
Partnership under the Code shall be made by the General Partner in its sole
discretion.
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article V of
this Agreement, any adjustments made pursuant to Section 754 shall affect only
the successor in interest to the transferring Partner and in no event shall be
taken into account in establishing, maintaining or computing Capital Accounts
for the other Partners for any purpose under this Agreement. Each Partner will
furnish the Partnership with all information necessary to give effect to such
election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) The books of the Partnership shall be audited annually as
of the end of each fiscal year of the Partnership by accountants selected by
the General Partner, who shall be the same accountants responsible for the
examination of the General Partner's books. The General Partner shall
determine and prepare an annual balance sheet, a statement of partners' capital
as of the end of such year, as well as statements of cash flow and income, all
in accordance with generally accepted accounting principles and accompanied by
an independent auditor's report (collectively, the "Financial Statements"),
together with all supplementary schedules and information prepared by the
accountants related thereto. As a note to such Financial Statements, the
General Partner shall prepare a schedule of all loans to the Partnership. Such
schedule shall demonstrate that loans have been made, used, carried on the
books of the Partnership (and repaid, if applicable) in accordance with the
provisions of this Agreement. Within 90 days after the end of each fiscal
year, the General Partner shall transmit the Financial Statements to the
Limited Partners. The General Partner also shall prepare quarterly unreviewed
Financial Statements and shall transmit such statements to the Limited Partners
within 45 days of the end of each fiscal quarter of the Partnership.
(b) Any Partner shall further have the right to a private
audit of the books and records of the Partnership, provided such audit is made
for Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
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ARTICLE XI
AMENDMENT OF AGREEMENT
The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect; provided, however, that the following
amendments shall require the consent of each Limited Partner adversely affected
thereby:
(a) any amendment affecting the operation of the Conversion
Factor or the Limited Partner Redemption Right;
(b) any amendment that would adversely affect the rights of
the Limited Partners to receive the distributions payable to them hereunder;
(c) any amendment that would adversely affect the rights of
the Limited Partners to receive allocations of Profit and Loss; or
(d) any amendment that would impose on the Limited Partners
any obligation to make additional Capital Contributions to the Partnership.
The foregoing shall not limit the Partnership's or the General
Partner's rights to issue Additional Partnership Interests and New Securities
pursuant to Section 4.02.
ARTICLE XII
GENERAL PROVISIONS
12.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A; provided, however, that any Partner may specify a different
address by notifying the General Partner in writing of such different address.
Notices to the Partnership shall be delivered at or mailed to its specified
office.
12.02 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all
further acts and execute, swear to, acknowledge and deliver all further
documents which may be reasonable, necessary, appropriate or desirable to carry
out the provisions of this Agreement or the Act.
12.04 SEVERABILITY. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be
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severable from this Agreement (to the extent permitted by law) and in any event
such illegality, invalidity or unenforceability shall not affect the remainder
hereof.
12.05 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 PRONOUNS AND PLURALS. When the context in which words are used
in the Agreement indicates that such is the intent, words in the singular
number shall include the plural and the masculine gender shall include the
neuter or female gender as the context may require.
12.07 HEADINGS. The Article headings or sections in this Agreement
are for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
12.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
- 49 -
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Third Amended and Restated Agreement of Limited Partnership,
all as of the 27th day of February, 1996.
GENERAL PARTNER:
---------------
RFS HOTEL INVESTORS, INC., a
Tennessee corporation
By: /s/ Minor W. Perkins
-------------------------
Minor W. Perkins, President
CLASS A LIMITED PARTNERS:
------------------------
*
------------------------------------
ROBERT M. SOLMSON
*
------------------------------------
H. LANCE FORSDICK
*
------------------------------------
RFS, INC., a
Tennessee corporation
*
------------------------------------
- 50 -
<PAGE> 55
THE ROBERT M. SOLMSON TRUST
(*)
By:
---------------------------------
CLASS B LIMITED PARTNERS:
------------------------
(*)
------------------------------------
Michael H. Dubroff
(*)
------------------------------------
Charles Dubroff
Michel Family Partnership
(*)
By:
--------------------------------
DubFam, Inc.
(*)
By:
--------------------------------
Dubroff Family Partnership
(*)
By:
--------------------------------
(*)By: RSF Hotel Investors, Inc., an
attorney-in-fact for the named
Parties
- 51 -
<PAGE> 56
By: /s/ Minor W. Perkins
---------------------------
Minor W. Perkins, President
- 52 -
<PAGE> 57
<TABLE>
<CAPTION>
EXHIBIT A, dated as of February 27, 1996
Amount or
Agreed Value of Preferred
Partner Capital Partnership Partnership Percentage
and Address Contributions Units Units Interest
----------- ------------- ----- ----- --------
<S> <C> <C> <C> <C>
General Partner:
RFS Hotel Investors, Inc.
c/o 889 Ridge Lake Blvd.
Suite 100
Memphis, TN 38120 $ 414,496,246 973,684 24,369,000 98.68518%
Class A Limited Partners:
H. Lance Fordsick, Sr.
c/o 889 Ridge Lake Blvd.
Suite 100
Memphis, TN 38120 $ 334,311.25 20,573 .08331%
Robert M. Solmson
c/o 889 Ridge Lake Blvd.
Suite 100
Memphis, TN 38120 $ 91,146.25 5,609 .02271%
The Robert M. Solmson
Trust
c/o 889 Ridge Lake Blvd.
Suite 100
Memphis, TN 38120 $ 115,147.50 7,086 .02870%
RFS, Inc.
c/o 889 Ridge Lake Blvd.
Suite 100
Memphis, TN 38120 $ 1,265,923.75 77,903 .31547%
Class B Limited Partners:
Dubfam Inc.
c/o Residence Inn
Route 9, Interstate 84
Fishkill, NY 12524 $ 23351.25 1,437 .00582%
Michael H. Dubroff
c/o Residence Inn
Route 9, Interstate 84
Fishkill, NY 12524 $ 609,423.75 37,503 .15187%
The Dubroff Family
Partnership
c/o Residence Inn
Route 9, Interstate 84
Fishkill, NY 12524 $ 770,526.25 47,417 .19202%
</TABLE>
- 53 -
<PAGE> 58
<TABLE>
<S> <C> <C> <C>
The Michel Family
Partnership
c/o Residence Inn
Route 9, Interstate 84
Fishkill, NY 12524 $1,467,277.50 90,294 .36565%
Charles M. Dubroff
c/o Residence Inn
Route 9, Interstate 84
Fishkill, NY 12524 $ 36,869.25 36,853 .14924%
</TABLE>
- 54 -
<PAGE> 59
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
The undersigned hereby irrevocably (i) presents for redemption
______ units of limited partnership interest ("Units") in RFS Partnership, L.P.
(the "Partnership") in accordance with the terms of the Agreement of Limited
Partnership ("Agreement") of the Partnership and the "Limited Partner
Redemption Right" defined therein, (ii) surrenders such Units and all right,
title and interest therein, (iii) surrenders herewith any certificate or other
writing evidencing the Units (and requests that any Units so evidenced that are
not redeemed be evidenced by the issuance of a new certificate or writing) and
(iv) directs that the "Cash Amount" or "REIT Shares Amount" (as determined by
the General Partner), as defined in the Agreement, deliverable upon exercise of
the Limited Partner Redemption Rights be delivered to the address specified
below, and if REIT Shares are to be delivered, such REIT Shares be registered
or placed in the name(s) and at the address(es) specified below.
Dated:___________________
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Street Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If REIT Shares are to be issued, issue to:
- ----------------------------
- ----------------------------
- ----------------------------
Please provide social security or identifying number:
- ----------------------------
- 55 -
<PAGE> 60
ACCEPTANCE OF GENERAL PARTNER:
RFS Hotel Investors, Inc., as General Partner of the Partnership,
hereby accepts the Units described above for redemption in accordance with the
Agreement, and by its execution hereof evidences conclusively that the Limited
Partner has satisfied all of the requirements under the Agreement for exercise
of the Limited Partner Redemption Right, or that some or all of such
requirements have been waived, such waiver being in the sole discretion of the
General Partner
RFS Hotel Investors, Inc.
By:
---------------------------
Robert M. Solmson
Its: President
Dated:
-------------------------
- 56 -
<PAGE> 1
EXHIBIT 5.1
May 8, 1996
Board of Directors
RFS Hotel Investors, Inc.
889 Ridge Lake Boulevard, Suite 100
Memphis, Tennessee 38120
Registration Statement on Form S-3
$250,000,000 of Offered Securities
----------------------------------
Gentlemen:
We are acting as counsel for RFS Hotel Investors, Inc. (the "Company")
in connection with the registration under the Securities Act of 1933, as
amended, of (i) Preferred Stock, $.01 par value ("Preferred Stock"), (ii)
depositary shares representing entitlement to all rights and preferences of a
fraction of a share of Preferred Stock of a specified series, (iii) Common
Stock, $.01 par value ("Common Stock"), and (iv) delayed delivery contracts to
purchase Preferred Stock, depositary shares or Common Stock of the Company
having an aggregate maximum public offering price of $250,000,000
(collectively, the "Offered Securities"). The Offered Securities are described
in the Registration Statement on Form S-3 of the Company (the "Registration
Statement"), and the Prospectus included therein (the "Prospectus"), to be
filed with the Securities and Exchange Commission (the "Commission") on May 8,
1996. In connection with the filing of the Registration Statement you have
requested our opinion concerning certain corporate matters.
We are of the opinion that:
1. The Company is a corporation duly incorporated and validly
existing under the laws of the State of Tennessee.
2. When the terms of any class or series of the Offered
Securities have been authorized by appropriate corporate action of the Company
and have been issued and sold as described in the Registration Statement, the
Prospectus and the applicable Prospectus Supplement, the Offered Securities (to
the extent consisting of Preferred Stock and/or Common Stock) will be legally
issued, fully paid and nonassessable.
<PAGE> 2
Board of Directors
RFS Hotel Investors, Inc.
May 3, 1996
Page 2
We consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the reference to us in the
Prospectus included therein.
Very truly yours,
/s/ Hunton & Williams
<PAGE> 1
EXHIBIT 12.1
STATEMENT OF COMPUTATION OF RATIOS
(in thousands)
<TABLE>
<CAPTION>
Historical
------------------------------------------------------------------------
Period from August 13, 1993
(inception of operations) Year Ended Year Ended
through December 31, 1993 December 31, 1994 December 31, 1995
--------------------------- ----------------- -----------------
<S> <C> <C> <C>
Earnings:
Net income $1,208 $14,156 $30,646
Minority Interest 28 195 439
Fixed Charges 6 142 902
------ ------- -------
Earnings $1,242 $14,493 $31,987
====== ======= =======
Fixed Charges:
Interest expense $ 0 $ 25 $ 592
Amortization of loan costs 6 117 310
------ ------- -------
Fixed Charges $ 6 $ 142 $ 902
====== ======= =======
Fixed Charge Coverage Ratio(1) 207x 102x 35x
====== ======= =======
</TABLE>
- ------------
(1) Computed as Earnings divided by Fixed Charges.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated January 19, 1996, except as to Note 11, for which
the date is February 27, 1996, on our audits of the consolidated financial
statements of RFS Hotel Investors, Inc. as of December 31, 1995 and 1994 and
for the years ended December 31, 1995 and 1994 and for the period August 13,
1993 (inception of operations) through December 31, 1993 and the related
financial statement schedules as of December 31, 1995; and our report dated
February 2, 1996, except as to Note 13, for which the date is February 27,
1996, on our audits of the financial statements of RFS, Inc. as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995. We also consent to the reference to our firm under the caption
"Experts."
/s/ Coopers & Lybrand L.L.P.
Memphis, Tennessee
May 8, 1996
