<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1996
REGISTRATION NO. 333-3307
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
AMENDMENT NO. 1
TO
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]
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 JULY 23, 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.
See "Risk Factors" commencing on page 4 for a discussion of certain
factors that should be considered by prospective purchasers of the Offered
Securities.
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.
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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, Commission File Number 34-0-22164 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 Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, (iii) 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, (iv) the Company's
Form 8-K filed with the Commission on March 14, 1996, (v) the proxy statement
filed with the Commission on March 18, 1996 for the Company's annual meeting of
shareholders for 1996, (vi) the proxy statement filed with the Commission on
May 17, 1996 for the Company's special meeting of shareholders held on June 21,
1996 and (vii) the Company's Form 8-K filed with the Commission on July 8,
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.
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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 June 30, 1996, the Partnership owned 49 hotel properties
with an aggregate of 6,905 rooms located in 22 states and had entered into
contracts to acquire or is developing eight additional hotel properties with an
aggregate of 790 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. or
another wholly-owned subsidiary of Doubletree Corporation (collectively
the "Lessees") 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 Lessees operate 45 of the 49 hotels leased from the Partnership at
June 30, 1996 and the remaining hotels are operated by third parties pursuant
to management agreements with RFS, Inc. Prior to February 27, 1996,
substantially all of the equity interests of RFS, Inc. 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 RFS, Inc., with RFS, Inc. 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 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>
Three Months
For the Period Year Ended December 31, Ended March 31,
August 13, 1993 ------------------------ ------------------
to December 31, 1993 1994 1995 1995 1996
-------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to 207:1 102:1 35:1 79:1 10:1
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
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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.
RISK FACTORS
Prospective investors should carefully consider the following
information in conjunction with the other information contained in this
Prospectus before purchasing the Offered Securities as they may be issued from
time to time in the future. Prospectus Supplements relating to the Offered
Securities may contain forward-looking statements. The Company wishes to
caution readers that the following important factors, among others, in some
cases have affected, and in the future could affect, the Company's results of
operations and could cause the Company's results of operations and could cause
the Company's results of operations to differ materially from those expressed
in any forward looking statements made in a Prospectus Supplement.
DEPENDENCE ON LESSEES AND PAYMENTS UNDER THE PARTICIPATING LEASES
The Company's ability to make distributions to its shareholders
depends solely upon the ability of the Lessees to make rent payments under the
Percentage Leases. Any failure or delay by the Lessees in making rent payments
would adversely affect the Company's ability to make anticipated distributions
to its shareholders. Such failure or delay by the Lessees may be caused by
reductions in revenue from the Hotels or in the net operating income of the
Lessees or otherwise. Although failure on the part of the Lessees to materially
comply with the terms of a Percentage Lease (including failure to pay rent when
due) would give the Company the right to terminate such lease, repossess the
applicable property and enforce the payment obligations under the lease, the
Company would then be required to find another lessee to lease such property.
There can be no assurance that the Company would be able to find another lessee
or that, if another lessee were found, the Company would be able to enter into
a new lease on favorable terms.
RIGHT OF FIRST REFUSAL
The Company has entered into an agreement with RFS, Inc. which gives
RFS, Inc. a right of first refusal, subject to certain exceptions, to lease
hotels acquired by the Company or the Partnership in the future, even though
RFS, Inc. may not be operating hotels leased from the Company in a manner
which is satisfactory to the Company.
HOTEL INDUSTRY RISKS
Operating Risks
The Hotels are subject to all operating risks common to the hotel
industry. These risks include, among other things, competition from other
hotels; over-building in the hotel industry which in the past has adversely
affected occupancy and
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room rates; increases in operating costs due to inflation and other factors
which may not be offset by increased room rates; significant dependence on
business and commercial travelers and tourism; increases in energy costs and
other expenses of travel; and adverse effects of general and local economic
conditions. These factors could adversely affect the Lessees' ability to make
lease payments and therefore the Company's ability to make distributions to
shareholders. Additionally, decreases in revenues of the Hotels will result in
decreased percentage rent to the Partnership under the Percentage Leases.
Competition
The Hotels compete with other hotel properties in their geographic
markets. As industry conditions improve, new competing hotels may be opened in
the Company's existing markets and in markets in which the Company may acquire
hotels in the future.
As a result of improving conditions in the hotel industry, management
believes hotel acquisition activity has increased. Therefore, the Company may
experience increased competition for investment opportunities, including
competition from other hotel REITS and other entities. Competition generally
may reduce the number of suitable investment opportunities offered to the
Company and increase the bargaining power of property owners seeking to sell.
Investment in Single Industry
The Company's current strategy is to acquire interests in hotel
properties. The Company does not seek to invest in assets selected to reduce
the risks associated with an investment in real estate in the hotel industry,
and is subject to risks inherent in investments in a single industry.
Seasonality
The hotel industry is seasonal in nature. Generally, hotel revenues
are greater in the second and third quarters than in the first and fourth
quarters. This seasonality can be expected to cause quarterly fluctuations in
the Company's lease revenues.
REAL ESTATE INVESTMENT RISKS
General Risks
The Company's investments are subject to varying degrees of risk
generally incident to the ownership of real property. The underlying value of
the Company's real estate investments and the Company's income and ability to
make distributions to its shareholders is dependent upon the ability of the
Lessees to operate the Hotels in a manner sufficient to maintain or increase
revenues and to generate sufficient income in excess of operating
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expenses to make rent payments under the Percentage Leases. Income from the
Hotels may be adversely affected by adverse changes in national economic
conditions, adverse changes in local market conditions due to changes in
general or local economic conditions and neighborhood characteristics,
competition from other hotel properties, changes in interest rates and in the
availability, cost and terms of mortgage funds, the impact of present or future
environmental legislation and compliance with environmental laws, the ongoing
need for capital improvements, particularly in older structures, changes in
real estate tax rates and other operating expenses, adverse changes in
governmental rules and fiscal policies, civil unrest, acts of God, including
earthquakes and other natural disasters (which may result in uninsured losses),
acts of war, adverse changes in zoning laws, and other factors which are beyond
the control of the Company.
Value and Liquidity of Real Estate
Real estate investments are relatively illiquid. The ability of the
Company to vary its portfolio in response to changes in economic and other
conditions is limited. There can be no assurance that the Company will be able
to dispose of an investment when it finds disposition advantageous or necessary
or that the sale price of any disposition will recoup or exceed the amount of
the Company's investment.
Uninsured and Underinsured Losses
Each Percentage Lease specifies comprehensive insurance to be
maintained on each of the Company's hotels, including liability, fire and
extended coverage of the type and amount which management believes is
customarily obtained for or by an owner on real property assets. However,
there are certain types of losses, generally of a catastrophic nature, such as
earthquakes and floods that may be uninsurable or not economically insurable.
The Company's Board of Directors will use its discretion in determining
amounts, coverage limits and deductibility provisions of insurance, with a view
to requiring appropriate insurance on the Company's investments at a reasonable
cost and on suitable terms. This may result in insurance coverage that in the
event of a substantial loss would not be sufficient to pay the full current
market value or current replacement cost of the Company's lost investment.
Inflation, changes in building codes and ordinances, environmental
considerations, and other factors also might make it infeasible to use
insurance proceeds to replace the property after such property has been damaged
or destroyed. Under such circumstances, the insurance proceeds received by the
Company might not be adequate to restore its economic position with respect to
such property.
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Environmental Matters
Under various federal, state, and local environmental laws,
ordinances and regulations, a current or previous owner or operator of real
property may be liable for the costs of removal or remediation of hazardous or
toxic substances on, under or in such property. Such laws often impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. In addition, the presence
of hazardous or toxic substances, or the failure to remediate such property
properly, may adversely affect the owner's ability to borrow using such real
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, whether
or not such facility is or ever was owned or operated by such person. Certain
environmental laws and common law principles could be used to impose liability
for release of asbestos-containing materials ("ACMs") into the air and third
parties may seek recovery from owners or operators of real properties for
personal injury associated with exposure to released ACMs. Thus, if such
liability were to arise in connection with the ownership of its hotels, the
Company or the Partnership may be potentially liable for any such costs.
Phase I environmental site assessments ("ESAs") have been obtained on
all of the Hotels from a qualified independent environmental engineering firm.
The purpose of Phase I ESAs audits is to identify potential sources of
contamination for which the Hotels may be responsible and to assess the status
of environmental regulatory compliance. The Phase I ESAs have not revealed any
environmental liability or compliance concerns that the Company believes would
have a material adverse effect on the Company's business, assets or results of
operations, nor is the Company aware of any such liability or concerns. The
Phase I ESAs, however, did not include invasive procedures, such as soil
sampling or groundwater analysis.
Americans with Disabilities Act
Under the Americans with Disabilities Act of 1990 (the "ADA"), all
public accommodations are required to meet certain federal requirements related
to access and use by disabled persons. While the Company believes that its
hotels are substantially in compliance with these requirements, a determination
that the Company is not in compliance with the ADA could result in imposition
of fines or an award of damages to private litigants. If the Company were
required to make modifications to comply with the ADA, the Company's ability to
make expected distributions to its shareholders could be adversely affected.
Property Taxes
Each Hotel and real estate generally is subject to real property
taxes. The real property taxes on hotel properties in
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which the Company invests may increase or decrease as property tax rates change
and as the properties are assessed or reassessed by taxing authorities.
RELIANCE ON BOARD OF DIRECTORS; NO CONTROL OVER OPERATIONS OF THE HOTELS
Shareholders have no right or power to take part in the management of
the Company except through the exercise of voting rights on certain specified
matters. The Board of Directors is responsible for managing the Company. In
addition, the Company has no control over the Lessees' day-to-day management of
the operation of the Hotels.
RISKS OF LEVERAGE; NO LIMITS ON INDEBTEDNESS
At a special meeting of shareholders on June 21, 1996, the Company's
shareholders approved an amendment to eliminate the Company's charter debt
limitation. The Company has a $75 million Credit Line to provide, as
necessary, working capital, funds for investments in additional hotel
properties and cash to make distributions. The interest rate on the Credit
Line is the 90-day LIBOR rate plus 1.75%. The Company may borrow additional
amounts from the same or other lenders in the future, or may issue corporate
debt securities in public or private offerings. Certain of such additional
borrowings may be secured by properties owned by the Company or the
Partnership.
There can be no assurances that the Company, upon the incurrence of
debt, will be able to meet its debt service obligations and, to the extent that
it cannot, the Company risks the loss of some or all of its assets, including
one or more of the Hotels, to foreclosure. Adverse economic conditions could
result in higher interest rates which could increase debt service requirements
on floating rate debt and could reduce the amounts available for distribution
to shareholders. The Company may obtain one or more forms of interest rate
protection (swap agreements, interest rate cap contracts, etc.) to hedge
against the possible adverse effects of interest rate fluctuations. Adverse
economic conditions could cause the terms on which borrowings become available
to be unfavorable. In such circumstances, if the Company is in need of
capital to repay indebtedness in accordance with its terms or otherwise, it
could be required to liquidate one or more investments in hotel properties at
times which may not permit realization of the maximum return on such
investments.
FRANCHISE RISKS
All but one of the Hotels, the Executive Inn in Tupelo, Mississippi,
is subject to franchise agreements with national franchisors. The franchisors
have required the Partnership to undertake and complete certain capital
improvements as a condition to the extension of the franchise agreements.
Prior to
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completion of the improvements, the franchisors will permit the operation of
the Hotels under conditional licenses. Failure to complete the improvements in
a manner satisfactory to the franchisors could result in the cancellation of
the franchise agreements. In addition, hotels in which the Company invests
subsequently may be operated pursuant to franchise agreements. The
continuation of the franchises is subject to specified operating standards and
other terms and conditions. The failure of a Hotel, the Partnership or the
Lessees to maintain such standards or adhere to such other terms and conditions
could result in the loss or cancellation of the franchise license. It is
possible that a franchisor could condition the continuation of a franchise
license on the completion of capital improvements which the Board of Directors
determines are too expensive or otherwise unwarranted in light of general
economic conditions or the operating results or prospects of the affected
hotel. In that event, the Board of Directors may elect to allow the franchise
license to lapse. In any case, if a franchise is terminated, the Company and
the Lessees may seek to obtain a suitable replacement franchise, or to operate
the Hotel independent of a franchise license. The loss of a franchise license
could have a material adverse effect upon the operations or the underlying
value of the hotel covered by the franchise because of the loss of associated
name recognition, marketing support and centralized reservation systems
provided by the franchisor.
EFFECT OF MARKET INTEREST RATES ON PRICE OF OFFERED SECURITIES
One of the factors that may influence the price of the Offered
Securities in public trading markets is the annual yield from distributions by
the Company on the price paid for the Offered Securities as compared to yields
on other financial instruments. Thus, an increase in market interest rates
will result in higher yields on other financial instruments, which could
adversely affect the market price of the Offered Securities.
CHANGES IN POLICIES
The major policies of the Company, including its policies with
respect to acquisitions, financing, growth, operations, debt capitalization and
distributions, have been determined by its Board of Directors. The Board of
Directors may amend or revise these and other policies from time to time
without a vote of the shareholders of the Company. The Company cannot change
its policy of seeking to maintain its qualification as a REIT without the
approval of its shareholders.
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LIMITATION ON ACQUISITION AND CHANGE IN CONTROL
Ownership Limitation
The Ownership Limitation, which provides that no shareholder may own,
directly or indirectly, more than 9.9% of any class of the outstanding stock of
the Company, may have the effect of precluding acquisition of control of the
Company by a third party without the approval of the Board of Directors.
Staggered Board
The Board of Directors of the Company has three classes of directors
with terms of the classes expiring in 1997, 1998 and 1999. Directors for each
class will be elected for a three-year term upon the expiration of that class'
term. The staggered terms of directors may affect the shareholders' ability to
change control of the Company even if a change in control were in the
shareholders' interest.
Tennessee Anti-Takeover Statues
As a Tennessee corporation, the Company is subject to various
legislative acts set forth in Chapter 35 of Title 48 of the Tennessee Code,
which impose certain restrictions and require certain procedures with respect
to certain takeover offers and business combinations, including, but not
limited to, combinations with interested shareholders and share repurchases
from certain shareholders.
TAX RISKS
Failure to Qualify as a REIT
The Company operates and intends to continue to operate so as to
qualify as a REIT for federal income tax purposes. Although the Company has
not requested, and does not expect to request, a ruling from the Service that
it qualifies as a REIT, it previously has received an opinion of its counsel
that, based on certain assumptions and representations, it so qualifies.
Investors should be aware, however, that opinions of counsel are not binding on
the Service or any court. The REIT qualification opinion only represents the
view of counsel to the Company based on counsel's review and analysis of
existing law, which includes no controlling precedent. Furthermore, both the
validity of the opinion and the continued qualification of the Company as a
REIT will depend on the Company's continuing ability to meet various
requirements concerning, among other things, the ownership of its outstanding
stock, the nature of its assets, the sources of its income, and the amount of
its distributions to the shareholders of the Company.
If the Company were to fail to qualify as a REIT in any taxable year,
the Company would not be allowed a deduction for distributions to its
shareholders in computing its taxable income and would be subject to federal
income tax (including any applicable minimum tax) on its taxable income at
regular corporate rates. Unless entitled to relief under certain Code
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provisions, the Company also would be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification was lost.
As a result, Cash Available for Distribution to the shareholders would be
reduced for each of the years involved. Although the Company currently
operates and intends to continue to operate in a manner intended to qualify as
a REIT, it is possible that future economic, market, legal, tax or other
considerations may cause the Board of Directors, with the consent of two-thirds
of the shareholders, to revoke the REIT election.
REIT Minimum Distribution Requirements
In order to qualify as a REIT, the Company generally is required each
year to distribute to its shareholders at least 95% of its net taxable income
(excluding any net capital gain). In addition, the Company is subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of (i) 85%
of its ordinary income, (ii) 95% of its capital gain net income for that year
and (iii) 100% of its undistributed taxable income from prior years.
The Company intends to make distributions to its shareholders to
comply with the 95% distribution requirement and to avoid the nondeductible
excise tax. The Company's income will consist primarily of its share of the
income of the Partnership, and the Company's Cash Available for Distribution
will consist primarily of its share of cash distributions from the Partnership.
Differences in timing between the recognition of taxable income and the receipt
of Cash Available for Distribution due to the seasonality of the hospitality
industry could require the Company to borrow funds on a short-term basis to
meet the 95% distribution requirement and to avoid the nondeductible excise
tax. For federal income tax purposes, distributions paid to shareholders may
consist of ordinary income, capital gains, nontaxable return of capital, or a
combination thereof. The Company will provide its shareholders with an annual
statement as to its designation of the tax characterization of distributions.
The requirement to distribute a substantial portion of the Company's net
taxable income could cause the Company to distribute amounts that otherwise
would be spent on future acquisitions, unanticipated capital expenditures or
repayment of debt, which would require the Company to borrow funds or to sell
assets to fund the cost of such items.
Distributions by the Partnership are determined by the Company's
Board of Directors and are dependent on a number of factors, including the
amount of the Partnership's Cash Available for Distribution, the Partnership's
financial condition, any decision by the Board of Directors to reinvest funds
rather than to distribute such funds, the Partnership's capital expenditures,
the annual distribution requirements under the REIT provisions of
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the Code and such other factors as the Board of Directors deems relevant.
Failure of the Partnership to be Classified as a Partnership for
Federal Income Tax Purposes; Impact on Real Estate Investment Trust
Status
The Company has not requested and does not expect to request, a ruling from the
Internal Revenue Service that the Partnership will be classified as a
partnership for federal income tax purposes. If the Service were to challenge
successfully the tax status of the Partnership as a partnership for federal
income tax purposes, the Partnership would be taxable as a corporation. In
such event, since the value of the Company's ownership interest in the
Partnership constitutes more than 10% of the Partnership's voting securities
and exceeds 5% of the value of the Company's assets, the Company would cease to
qualify as a REIT. Furthermore, the imposition of a corporate tax on the
Partnership would substantially reduce the amount of cash available for
distribution to the Company and its shareholders.
OWNERSHIP LIMITATION
In order for the Company to maintain its qualification as a REIT, not
more than 50% in value of outstanding stock may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities). For the purpose of preserving the Company's REIT
qualification, the Company's Charter prohibits direct or indirect ownership of
more than 9.9% of the outstanding shares of any class of the Company's stock by
any person (the "Ownership Limitation"). Generally, the capital stock owned by
affiliated owners is aggregated for purposes of the Ownership Limitation. The
Ownership Limitation could have the effect of delaying, deferring or preventing
a takeover or other transaction in which holders of some, or a majority, of the
Common Stock might receive a premium for their shares of Common Stock over the
then prevailing market price or which such holders might believe to be
otherwise in their best interests.
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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 June 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 or any
exchange on which the Common Stock may be listed 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.
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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
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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
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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
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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.
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WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called
for redemption), and subject to the terms of the Deposit Agreement, the owner
of the Depositary Shares evidenced thereby will be entitled to delivery of whole
shares of Preferred Stock and all money and other property, if any, represented
by such Depositary Shares. Partial shares of Preferred Stock will not be
issued. If the Depositary Receipts delivered by the holder evidence a number
of Depositary Shares in excess of the number of Depositary Shares representing
the number of whole shares of Preferred Stock to be withdrawn, the relevant
Depositary will deliver to such holder at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares. Holders of shares
of Preferred Stock thus withdrawn will not thereafter be entitled to deposit
such shares under the Deposit Agreement or to receive Depositary Shares
therefor. The Company does not expect that there will be any public trading
market for the Preferred Stock, except as represented by the Depositary Shares.
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").
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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
19
<PAGE> 21
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.
20
<PAGE> 22
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
21
<PAGE> 23
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)
- -------------
* Previously filed
** Filed herewith
22
<PAGE> 24
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.
23
<PAGE> 25
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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis, State of
Tennessee on the 23rd day of July, 1996.
RFS HOTEL INVESTORS, INC.,
a Tennessee corporation
By: /s/ Robert M. Solmson
--------------------------------
Robert M. Solmson
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed on the 23rd day
of July, 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.
*By: /s/ Michael J. Pascal
-----------------------------
Michael J. Pascal
attorney-in-fact
</TABLE>
24
<PAGE> 26
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>
- ----------------
* Previously filed
** Filed herewith
25
<PAGE> 1
EXHIBIT 12.1
STATEMENT OF COMPUTATION OF RATIOS
(in thousands)
<TABLE>
<CAPTION>
Historical
------------------------------------------------------------------------ Three Months Ended
Period from August 13, 1993 March 31,
(inception of operations) Year Ended Year Ended ------------------
through December 31, 1993 December 31, 1994 December 31, 1995 1995 1996
--------------------------- ----------------- ----------------- ------ ------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $1,208 $14,156 $30,646 $5,989 $7,236
Minority Interest 28 195 439 92 108
Fixed Charges 6 142 902 78 796
------ ------- ------- ------ ------
Earnings $1,242 $14,493 $31,987 $6,159 $8,140
====== ======= ======= ====== ======
Fixed Charges:
Interest expense $ 0 $ 25 $ 592 $ 15 $ 708
Amortization of loan costs 6 117 310 63 88
------ ------- ------- ------ ------
Fixed Charges $ 6 $ 142 $ 902 $ 78 $ 796
====== ======= ======= ====== ======
Fixed Charge Coverage Ratio(1) 207x 102x 35x 79x 10x
====== ======= ======= ====== ======
</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
(Commission File No. 333-3307) 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
July 22, 1996
