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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 8, 1998
Date of report (Date of Earliest Event Reported)
RFS HOTEL INVESTORS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Tennessee O-22164 62-1534743
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
850 Ridge Lake Boulevard
Suite 220
Memphis, Tennessee 38120
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(Address of Principal Executive Offices) (Zip Code)
(901) 767-7005
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On September 8, 1998, RFS Hotel Investors, Inc. (the "Company") and
Equity Inns, Inc. ("Equity Inns") announced the termination of the Asset Sale
Agreement and Plans of Mergers dated as of April 21, 1998 (the "Merger
Agreement") by and among the Company, Equity Inns, RHI Acquisition, Inc., RFS
Partnership, L.P. and Equity Inns Partnership, L.P.
ITEM 7. EXHIBITS.
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99.1 Press Release, dated September 8, 1998, of RFS Hotel Investors, Inc.
99.2 Termination Agreement, dated as of September 8, 1998, by and among RFS
Hotel Investors, Inc., Equity Inns, Inc., RHI Acquisition, Inc., Equity
Inns Partnership, L.P. and RFS Partnership, L.P.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on behalf by the
undersigned thereunto duly authorized.
RFS HOTEL INVESTORS, INC.
(REGISTRANT)
BY: /s/ Michael J. Pascal
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MICHAEL J. PASCAL
SECRETARY, TREASURER AND
CHIEF FINANCIAL OFFICER
Date: September 11, 1998
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EXHIBIT INDEX
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Exhibit Description
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9.1 Press Release, dated September 8, 1998, of RFS Hotel Investors, Inc.
99.2 Termination Agreement, dated as of September 8, 1998, by and among RFS
Hotel Investors, Inc., Equity Inns, Inc., RHI Acquisition, Inc., Equity
Inns Partnership, L.P. and RFS Partnership, L.P.
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EXHIBIT 99.1
PRESS RELEASE
RFS HOTEL INVESTORS AND EQUITY INNS CANCEL MERGER PLANS
Memphis, TN, September 8, 1998 - RFS Hotel Investors, Inc. (NYSE:RFS) and Equity
Inns, Inc. (NYSE:ENN) today announced that their respective Boards of Directors
have terminated the Merger Agreement between the two companies. The companies
announced in April an agreement, subject to the approval of shareholders, under
which RFS would merge into Equity Inns in the exchange of 1.5 shares of ENN
common stock for each share of RFS common stock, plus assumption of all RFS
liabilities. The Agreement was predicated on ENN stock maintaining a price not
below $14 per share during a "measurement period." The most recent closing price
of ENN stock was approximately $10.50 per share.
RFS chairman, Robert M. Solmson, said, "At the time the merger was announced, we
felt this transaction added significantly to the value of our shareholders'
investment. However, market conditions have changed substantially since then,
and we believe that, in light of those changes, the transaction is no longer in
the best interest of our shareholders. We continue to have the highest regard
for Phil McNeill and the management team at Equity Inns, and we wish them
continued success," Solmson said.
William Lovelace, RFS Executive Vice President, said that the Company would
continue to be more conservative toward acquisitions than many other REITs, an
approach it adopted in the past year. "Our emphasis has been, and continues to
be, to maintain modest leverage, acquire hotels only where we reasonably expect
to receive a cash return greater than our cost of capital, and focus on markets,
like California, that have significant barriers to entry," said Lovelace. "We
are in the fortunate position of having a portfolio that is yielding a very high
current return. Additionally, our portfolio is diversified geographically, by
market segment, and by brand, which will, long-term, serve to minimize
volatility and risk."
Solmson stated, "REITs have, in recent months, lost a substantial portion of
their market value. In part, this is a result of investors' previous
misconception that REIT growth would continue unabated by having continuous
access to the capital markets. However, as REIT stock prices have declined, it
may be increasingly difficult for many REITs to attain their earnings estimates
because of an inability to make accretive acquisitions. We see this environment
as very favorable for a conservative company like our own. We have been
especially cautious in our use of debt, and we plan to re-emphasize our mission
of providing an attractive opportunity for investors who want to own real
estate, maintain liquidity and benefit from a high dividend yield."
RFS Hotel Investors, Inc. is a Memphis-based real estate trust (REIT) that owns
a diversified portfolio of 65 full-service, extended stay and premium
limited-service hotels comprising approximately 9,400 rooms in 24 states.
Certain matters discussed in this press release may constitute forward-looking
statements within the meaning of the federal securities laws. Actual results and
the timing of certain events could differ materially from those projected in or
contemplated by the forward-looking statements due to a number of factors
including general economic conditions, competitive factors, interest rates and
the other risks inherent in the real estate business. For further information on
factors which could impact the Company and the statements contained herein,
reference is made to the filings of Equity Inns, Inc. and RFS Hotel Investors,
Inc. with the Securities and Exchange Commission, including quarterly reports on
Form 10Q, reports on Form 8-K and annual reports on Form 10-K, including factors
described in the Form 10-K for the fiscal year ended December 31, 1997 filed by
Equity Inns, Inc. and RFS Hotel Investors, Inc.
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EXHIBIT 99.2
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT is made as of this 8th day of September,
1998 (this "Termination Agreement") by and among RFS HOTEL INVESTORS, INC., a
Tennessee corporation ("Target REIT"), EQUITY INNS, INC., a Tennessee
corporation ("Acquiror REIT"), RHI ACQUISITION, INC., a Tennessee corporation
and wholly-owned subsidiary of Acquiror REIT ("Merger Sub"), EQUITY INNS
PARTNERSHIP, L.P., a Tennessee limited partnership ("Acquiror OP"), and RFS
PARTNERSHIP, L.P., a Tennessee limited partnership ("Contributor OP").
RECITALS
I. The parties have entered into the Asset Sale Agreement and Plans of
Mergers dated as of the 21st day of April, 1998 (the "Agreement").
II. Pursuant to Section 11.1 of the Agreement, the Agreement may be
terminated by the mutual written consent of Acquiror REIT and Target
REIT.
III. Acquiror REIT and Target REIT mutually desire to terminate the
Agreement as set forth herein and the other parties to the Agreement
desire to join in such termination and in the agreements set forth
herein.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed that:
A. The Agreement is hereby terminated effective as of the date
hereof.
B. Notwithstanding any provision of Article XI or any other
provision of the Agreement, the parties hereby agree that:
1. Target REIT and Contributor OP shall have no
liability or obligation to pay or make any
reimbursement to Acquiror REIT, Acquiror OP or Merger
Sub or any of their respective affiliates,
shareholders, officers, directors, employees or
agents with respect to any liabilities, claims, costs
or expenses incurred by Target REIT or Contributor OP
in connection with the transactions contemplated by
the Agreement or as a result of this Termination
Agreement.
2. Acquiror REIT, Acquiror OP and Merger Sub shall have
no liability or obligation to pay or make any
reimbursement to Target REIT or Contributor OP or any
of their respective affiliates, shareholders,
officers, directors, employees or agents with respect
to any liabilities, claims, costs
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or expenses incurred by them in connection with the
transactions contemplated by the Agreement or as a
result of this Termination Agreement.
C. Notwithstanding any provision of Article XI or any other
provision of the Agreement, no party shall be liable to any
other party for any Termination Fee (as defined in the
Agreement) or any similar fee, payment or reimbursement as a
result of the termination of the Agreement.
D. Target REIT and Acquiror REIT agree not to make any public
announcement or press release with respect to the termination
of the Agreement and this Termination Agreement without first
offering the other the opportunity to review and comment on
any such announcement or release.
E. The confidentiality provisions of Section 12.5 of the
Agreement shall survive the termination of the Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
TARGET REIT:
RFS HOTEL INVESTORS, INC.
By: /s/ Robert M. Solmson
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Name: Robert M. Solmson
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Title: Chairman
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CONTRIBUTOR OP:
RFS PARTNERSHIP, L.P.
By: RFS Hotel Investors, Inc., General Partner
By: /s/ Robert M. Solmson
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Name: Robert M. Solmson
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Title: Chairman
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ACQUIROR REIT:
EQUITY INNS, INC.
By: /s/ Howard A. Silver
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Name: Howard A. Silver
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Title: President
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MERGER SUB, INC.:
RHI ACQUISITION, INC.
By: /s/ Phillip H. McNeill, Sr.
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Name: Phillip H. McNeill, Sr.
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Title: Chairman of the Board
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ACQUIROR OP:
EQUITY INNS PARTNERSHIP, L.P.
By: Equity Inns Trust, General Partner
By: /s/ Howard A. Silver
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Name: Howard A. Silver
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Title: President
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