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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report May 22, 1997
(Date of Earliest Event Reported) (May 22, 1997)
EQUITY INNS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 34-0-23290 62-1550848
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4735 SPOTTSWOOD,
SUITE 201,
MEMPHIS, TENNESSEE 38117
(Address and zip code of
principal executive offices)
Registrant's telephone number, including area code: (901) 761-9651
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ITEM 5. OTHER EVENTS
This report contains as exhibits (a) the form of Underwriting Agreement
among Equity Inns, Inc., Equity Inns Trust, Equity Inns Partnership, L.P.,
Smith Barney Inc., Morgan Keegan & Company, Inc., Prudential Securities
Incorporated and J.C. Bradford & Co. (collectively, the "Underwriters") in
connection with the sale of 8,000,000 shares of the Company's common stock (the
"Offering") pursuant to the Company's Prospectus Supplement dated as of May 22,
1997, to a Prospectus dated May 12, 1997, included as part of a Registration
Statement on Form S-3 (No. 333-26559) filed with the Commission on May 6, 1997
(the "Registration Statement") and (b) the form of tax opinion incorporated by
reference as Exhibit 8.1 to the Registration Statement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit Description
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1.1 Form of Underwriting Agreement between Equity Inns, Inc.,
Equity Inns Trust, Equity Inns Partnership, L.P., Smith
Barney Inc., Morgan Keegan & Company, Inc., Prudential
Securities Incorporated and J.C. Bradford & Co.
8.1 Form of Opinion of Hunton & Williams as to Tax Matters
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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 its behalf by the
undersigned thereunto duly authorized.
EQUITY INNS, INC.
(REGISTRANT)
Date: May 22, 1997 By: /s/ Howard A. Silver
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Howard A. Silver
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
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1.1 Form of Underwriting Agreement between Equity Inns, Inc.,
Equity Inns Trust, Equity Inns Partnership, L.P., Smith
Barney Inc., Morgan Keegan & Company, Inc., Prudential
Securities Incorporated and J.C. Bradford & Co.
8.1 Form of Opinion of Hunton & Williams as to Tax Matters
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8,000,000 Shares
EQUITY INNS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
May 22, 1997
SMITH BARNEY INC.
MORGAN KEEGAN & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
J. C. BRADFORD & CO.
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Equity Inns, Inc., a Tennessee corporation (the "Company"), proposes
to issue and sell an aggregate of 8,000,000 shares (the "Firm Shares") of its
common stock, $0.01 par value per share (the "Common Stock"), to the several
Underwriters named in Schedule I hereto (the "Underwriters"). The Company also
proposes to sell to the Underwriters, upon the terms and conditions set forth
in Section 2 hereof, up to an additional 1,200,000 shares (the "Additional
Shares") of Common Stock. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares."
Upon consummation of the transactions contemplated hereby and
application of the net proceeds from the sale of the Firm Shares, the Company,
through its wholly owned subsidiary, Equity Inns Trust, a Maryland real estate
investment trust (the "Trust"), will own an approximate 97.0% general
partnership interest in Equity Inns Partnership, L.P. (the "Partnership"), a
Tennessee limited partnership. The Partnership currently owns 56 hotels as
described in the Prospectus (the "Current Hotels"). The Partnership has entered
into agreements (the "Acquisition Agreements") as described in the Prospectus
to acquire 28 additional hotels (such additional hotels being hereinafter
referred to as the "Acquisition Hotels;" and, together with the Current Hotels,
the "Hotels"). Other capitalized terms used herein and not otherwise defined
herein shall have the meaning set forth in the Registration Statement.
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The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (Registration No. 333-26559) under
the Act, including a prospectus subject to completion relating to the Shares;
and such amendments to such registration statement as may have been required
prior to the date hereof have been filed with the Commission, and such
amendments have been similarly prepared. Such registration statement and any
post-effective amendments thereto have become effective under the Act. The
Company also has filed, or proposes to file, with the Commission pursuant to
Rule 424(b) under the Act, a prospectus supplement specifically relating to the
Shares.
The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it became effective, as supplemented or amended prior to
the execution of this Agreement, including all information (if any) deemed to
be a part of such registration at the time it became effective pursuant to Rule
430A under the Act. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to the registration statement will be
filed and must be declared effective before the offering of the Shares may
commence, the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post-effective amendment. The term
"Prospectus" as used in this Agreement means the base prospectus included in
the registration statement at the time it was declared effective (the "Base
Prospectus") together with the prospectus supplement relating to the Shares
dated the date hereof in the form first filed with the Commission on or after
May 22, 1997 pursuant to Rule 424(b) under the Act. The term "Prepricing
Prospectus Supplement" as used in this Agreement means the Base Prospectus
together with any prospectus supplement subject to completion included in the
Registration Statement as filed with the Commission pursuant to Rule 424(b)
under the Act, and as such Prepricing Prospectus Supplement shall have been
amended or supplemented from time to time prior to the date of the Prospectus.
Any reference in this Agreement to the registration statement, the Registration
Statement, the Base Prospectus, any Prepricing Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the
date of the Registration Statement, such Prepricing Prospectus Supplement or
the Prospectus, as the case may be, and any reference to any amendment or
supplement to the Registration Statement, any Prepricing Prospectus Supplement
of the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which are incorporated by
reference in the Registration Statement, any Prepricing Prospectus Supplement,
the Prospectus, or any amendment or supplement thereto.
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2. Agreements to Sell and Purchase. The Company hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company, the Trust and the Partnership contained in this
Agreement and subject to all the terms and conditions set forth in this
Agreement, each Underwriter agrees, severally and not jointly, to purchase from
the Company, at a purchase price of $12.675 per Share (the "Purchase Price Per
Share"), the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares increased as
set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company, the Trust and the
Partnership contained in this Agreement and subject to all the terms and
conditions set forth in this Agreement, the Underwriters shall have the right
to purchase from the Company, at the Purchase Price Per Share, pursuant to an
option (the "Over-allotment Option") which may be exercised at any time and
from time to time prior to 9:00 P.M., New York City time, on the 30th day after
the date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday
or a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading), up to an aggregate of 1,200,000 Additional
Shares. Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. Upon
any exercise of the Over-allotment Option, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments as you may determine in order to avoid fractional
shares) which bears the same proportion to the number of Additional Shares to
be purchased by the Underwriters as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number of
Firm Shares increased as set forth in Section 10 hereof) bears to the aggregate
number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after this Agreement has become effective as in your
judgment is advisable and initially to offer the Shares upon the terms set
forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on May 29, 1997 (the "Closing Date"). The place of closing for
the Firm Shares and the Closing Date may be varied by agreement between you and
the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the office of Smith Barney
Inc. mentioned above at such time and on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than two nor later than ten business days after
the giving of the notice hereinafter referred to, as shall be specified in a
written notice from you on
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behalf of the Underwriters to the Company of the Underwriters' determination to
purchase a number, specified in such notice, of Additional Shares. The place of
closing for any Additional Shares and the Option Closing Date for such Shares
may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by wire transfer of immediately available funds to the Company.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for a post-effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when such post-effective amendment
has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus Supplement or the Prospectus or for additional information; (ii) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (f) below, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event, which makes any statement of a material fact
made in the Registration Statement or the Prospectus (as then amended or
supplemented) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus (as then amended or
supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
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(c) The Company will furnish to you, without charge, (i) five
signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits thereto, (ii) such number of conformed copies of the
Registration Statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request, (iii) such number of copies of
the Incorporated Documents, without exhibits, as you may reasonably request,
and (iv) five copies of the exhibits to the Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which upon filing, becomes an
Incorporated Document, of which you shall not previously have been advised or
to which, after you shall have received a copy of the document proposed to be
filed, you shall reasonably object.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities as you
have requested, copies of the Prepricing Prospectus Supplement. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus Supplement so furnished by the
Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. Subject to the provisions of subsection
(g) below, the Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws or real estate syndication laws of the
jurisdictions in which the Shares are offered by the several Underwriters and
by all dealers to whom Shares may be sold, both in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus
is required by the Act to be delivered in connection with sales by any
Underwriter or dealer. If during such period of time any event shall occur that
in the judgment of the Company or in the opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus (or to
file under the Exchange Act any document which, upon filing, becomes an
Incorporated Document) in order to comply with the Act or any other law, the
Company will forthwith prepare and, subject to the provisions of paragraph (d)
above, file with the Commission an appropriate supplement or amendment thereto
(or to such document), and will expeditiously furnish to the Underwriters and
dealers a reasonable number of copies thereof. In the event that the Company
and you, as Representatives of the several
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Underwriters, agree that the Prospectus should be amended or supplemented, the
Company, if requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws or real estate syndication laws of such
jurisdictions as you may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(i) The Company will furnish to its shareholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and during the period of three years hereafter, the Company will
furnish to you (i) concurrently with mailing or filing, a copy of each report
of the Company mailed to shareholders or filed with the Commission, and (ii)
from time to time such other information concerning the Company as you may
reasonably request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any of
the conditions of this Agreement to be complied with or fulfilled by the
Company, the Company agrees to reimburse the Representatives for all reasonable
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection with this Agreement.
(k) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth under the
caption "Use of Proceeds" in the Prospectus.
(l) The Company will timely file the Prospectus pursuant to
Rule 424(b) under the Act and will advise you of the time and manner of such
filing.
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(m) Except as provided in this Agreement, the Company will
not sell, offer to sell, solicit an offer to buy, contract to sell, grant any
option to purchase (other than options granted pursuant to the Company's 1994
Stock Incentive Plan or the Non-Employee Directors' Stock Incentive Plan), or
otherwise transfer or dispose of any shares of Common Stock or any other
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock for a period of 90 days after the date of the Prospectus, without
the prior written consent of Smith Barney Inc.; provided, however, that the
foregoing shall not prohibit the Company or the Partnership from issuing Common
Stock, Partnership Units or other securities convertible into Common Stock in
connection with the acquisition of one or more hotel properties.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current executive officers and directors named in the Prospectus.
(o) Except as stated in this Agreement and in any Prepricing
Prospectus Supplement and Prospectus, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to list the Shares
on The New York Stock Exchange.
6. Representations and Warranties of the Company, The Trust and the
Partnership. The Company, the Trust and the Partnership, jointly and severally,
represent and warrant to each Underwriter that:
(a) No order preventing or suspending the use of any
Prepricing Prospectus Supplement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission or the securities
authority of any state or other jurisdiction. No stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other jurisdiction.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Act, set forth in the General Instructions to
Form S-3. When any Prepricing Prospectus Supplement was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder and (ii)
did not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was declared effective, and on
the Closing Date (or the Option Closing Date, as the case may be) it (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment or
supplement thereto is filed with the Commission pursuant to Rule 424(b) and at
the Closing Date (or the Option Closing Date, as the case may be), the
Prospectus, as amended or supplemented at any such time, (i) contained or will
contain all statements required to be stated therein in
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accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representation and warranty in this paragraph (b)
does not apply to statements in or omissions from the Registration Statement or
the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any Underwriter through
you expressly for use therein.
(c) The Incorporated Documents when they were filed (or, if
any amendment with respect to any such document was filed, when such amendment
was filed), conformed in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, any further Incorporated
Documents so filed will, when they are filed, conform in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder; no such document when it was filed (or, if an amendment with
respect to any such document was filed, when such amendment was filed)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Tennessee with all requisite corporate power and authority to own and lease its
properties and to conduct its business as now conducted. The Company has been
duly qualified to do business and is in good standing as a foreign corporation
in each other jurisdiction in which the ownership or leasing of its properties
or the nature or conduct of its business as now conducted requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Company, the Trust, the Partnership or any Hotel. The
Company will be duly qualified (at the time of the closing of the acquisition
of the Acquisition Hotels) in each jurisdiction in which the ownership or
leasing of its properties or the nature or conduct of its business requires
such qualification, except where the failure to do so would not have a material
adverse effect on the Company, the Trust, the Partnership, any Hotel or the
Acquisition Hotels. Except for the Trust, the Partnership, Equity Inns
Services, Inc., a wholly-owned subsidiary of the Company ("EISI"), Equity
Inns/West Virginia Partnership, L.P. ("EIWV"), EQI Financing Corporation
("EQIFC") and EQI Financing Partnership I, L.P. ("EQIFP), the Company does not
own or control, directly or indirectly, any corporation, association or other
entity.
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(e) The Trust has been duly organized and is validly existing
as a real estate investment trust in good standing under the laws of the State
of Maryland with all requisite power and authority to own and lease its
properties and to conduct its business as now conducted. The Trust has been
duly qualified to do business and is in good standing in each other
jurisdiction in which the ownership or leasing of its properties or the nature
or conduct of its business as now conducted requires such qualification, except
where the failure to do so would not have a material adverse effect on the
Company, the Trust, the Partnership or any Hotel. The Trust will be duly
qualified (at the time of the closing of the acquisition of the Acquisition
Hotels) in each jurisdiction in which the ownership or leasing of its
properties or the nature or conduct of its business requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Company, the Trust, the Partnership, any Hotel or the
Acquisition Hotels. Except for the Partnership, the Trust does not own or
control, directly or indirectly, any corporation, association or other entity.
The Trust is wholly owned by the Company.
(f) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Tennessee Revised
Uniform Limited Partnership Act (the "Tennessee Act") with all requisite
partnership power and authority to own and lease its properties and to conduct
its business as now conducted. The Partnership has been duly qualified or
registered to do business and is in good standing as a foreign partnership in
each other jurisdiction in which the ownership or leasing of its properties or
the nature or conduct of its business as now conducted requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Company, the Trust, the Partnership or any Hotel. The
Partnership will be duly qualified (at the time of the closing of the
acquisition of the Acquisition Hotels) in each jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of its business
requires such qualification, except where the failure to do so would not have a
material adverse effect on the Company, the Trust, the Partnership, any Hotel
or the Acquisition Hotels. The Trust is the sole general partner of the
Partnership and holds approximately 96.1% of the outstanding Partnership Units.
At the Closing Date, following the contribution of the net proceeds of the
Offering to the Partnership, the Trust will be the sole general partner of the
Partnership and will be the holder of approximately 97.0% of the Units in the
Partnership (assuming no exercise of the option to purchase the Additional
Shares).
(g) The Partnership and, to the knowledge of the Company, the
Trust and the Partnership, each of the other parties to the Acquisition
Agreements has been duly formed and is validly existing as a corporation or
partnership, as applicable, under the laws of its state of formation. The
Partnership and, to the knowledge of the Company, the Trust and the
Partnership, each of the other parties to the Acquisition Agreements has all
requisite corporate or partnership power and authority to own, lease and
operate its properties and to conduct its business as now conducted.
(h) The Company has full corporate right, power and authority
to enter into this Agreement, to issue, sell and deliver the Shares as provided
herein and to consummate the transactions contemplated herein. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding agreement of the Company, enforceable in
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accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles and except to the extent the indemnification and contribution
provisions set forth in Section 7 of this Agreement may be limited by federal
or state securities laws or the public policy underlying such laws.
(i) The Trust has full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
herein. This Agreement has been duly authorized, executed and delivered by the
Trust and constitutes a valid and binding agreement of the Trust, enforceable
in accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles and except to the extent the indemnification and contribution
provisions set forth in Section 7 of this Agreement may be limited by federal
or state securities laws or the public policy underlying such laws.
(j) The Partnership has full partnership right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered on behalf of the Partnership by the Trust, as the sole general
partner of the Partnership, and constitutes a valid and binding agreement of
the Partnership enforceable in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, reorganization or
other laws of general applicability relating to or affecting creditors' rights,
or by general equity principles and except to the extent the indemnification
and contribution provisions set forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
(k) Each of the Second Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), the
Consolidated Lease Amendment and each of the Percentage Leases executed since
the date of the Consolidated Lease Agreement have been duly authorized,
executed and delivered by the parties thereto and constitute valid and binding
agreements, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or affecting
creditors' rights or by general equity principles. The leases with respect to
the Acquisition Hotels (the "Proposed Leases"), when duly authorized, executed
and delivered by the parties thereto, will constitute valid and binding
agreements, enforceable in accordance with their terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization or
other laws of general applicability relating to or affecting creditors' rights
or by general equity principles. (This Agreement, the Partnership Agreement,
the Consolidated Lease Amendment, the Percentage Leases, and the Proposed
Leases sometimes are hereinafter referred to as the "Operative Documents.")
(l) The Partnership and, to the knowledge of the Company, the
Trust and the Partnership, each of the other parties to the Acquisition
Agreements has full legal right, power and authority to enter into such
agreements and to consummate the transactions contemplated thereby
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<PAGE> 11
subject to the terms thereof. The Acquisition Agreements have been duly
authorized, executed and delivered on behalf of the Partnership by the Trust,
as general partner of the Partnership and, to the Company's, the Trust's and
the Partnership's knowledge, the other parties thereto and constitute valid and
binding agreements, enforceable in accordance with their terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization
or other laws of general applicability relating to or affecting creditors'
rights or by general equity principles.
(m) Each material consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by or with
any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement, the other Operative Documents and the
Acquisition Agreements and the consummation by the Company, the Trust and the
Partnership and the other parties to the Acquisition Agreements of the
transactions contemplated hereby and thereby has been made or obtained and is
in full force and effect.
(n) Neither the issuance, sale and delivery by the Company of
the Shares, nor the execution, delivery and performance of this Agreement, the
other Operative Documents or the Acquisition Agreements nor the consummation of
the transactions contemplated hereby and thereby by the Company, the Trust or
the Partnership as applicable, will conflict with or result in a breach or
violation of any of the terms and provisions of, or (with or without the giving
of notice or the passage of time or both) constitute a default under the
charter, by-laws, Declaration of Trust, certificate of limited partnership or
partnership agreement, as the case may be, of the Company, the Trust or the
Partnership; any indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Company, the Trust, the
Partnership is a party or to which they, any of them, any of their respective
properties or other assets or any Current Hotel or Acquisition Hotel is
subject; or any applicable statute, judgment, decree, order, rule or regulation
of any court or governmental agency or body applicable to any of the foregoing
or any of their respective properties; or result in the creation or imposition
of any lien, charge, claim or encumbrance upon any property or asset of any of
the foregoing.
(o) The issuance of the Shares to be issued and sold to the
Underwriters hereunder has been validly authorized by the Company. When issued
and delivered against payment therefor as provided in this Agreement, the
Shares will be duly and validly issued, fully paid and nonassessable. No
statutory or other preemptive rights of shareholders exist with respect to any
of the Shares. No person or entity holds a right to require or participate in
the registration under the Act of the Shares pursuant to the Registration
Statement; and, except as set forth in the Prospectus, no person holds a right
to require registration under the Act of any shares of Common Stock of the
Company at any other time. No person or entity has a right of participation or
first refusal with respect to the sale of the Shares by the Company. The form
of certificates evidencing the Shares complies with all applicable requirements
of Tennessee law.
(p) The Company's authorized, issued and outstanding capital
stock is as disclosed in the Prospectus. All of the issued shares of capital
stock of the Company have been duly
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<PAGE> 12
authorized and are validly issued, fully paid and nonassessable. None of the
issued shares of capital stock of the Company has been issued or is owned or
held in violation of any statutory or other preemptive rights of shareholders.
Except as disclosed in the Prospectus, there is no outstanding option, warrant
or other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company.
(q) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under the Act or
exempt from the registration requirements of the Act by reason of Sections
3(b), 4(2) or 4(6) thereof and were duly registered or were issued pursuant to
an available exemption from the registration requirements under the applicable
state securities or Blue Sky laws.
(r) All of the issued shares of beneficial interest of the
Trust have been duly authorized and validly issued, are fully paid and
nonassessable. None of the issued shares of beneficial interest of the Trust
has been issued or is owned or held in violation of any preemptive right. There
is no outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any shares of beneficial
interest of the Trust or any security convertible into or exchangeable for
shares of beneficial interest of the Trust. All of the outstanding shares of
beneficial interest of the Trust have been issued, offered and sold in
compliance with all applicable laws (including, without limitation, federal and
state securities laws).
(s) All of the issued Partnership Units of the Partnership
have been duly and validly authorized and issued and are fully paid and
nonassessable. None of the issued Partnership Units has been issued or is owned
or held in violation of any preemptive right. At the Closing Date, such
Partnership Units will be validly issued, fully paid and nonassessable. All of
the outstanding Partnership Units have been issued, offered and sold in
compliance with all applicable laws (including, without limitation, federal and
state securities laws).
(t) The financial statements of the Company incorporated by
reference in the Registration Statement and Prospectus present fairly the
financial position of the Company as of the dates indicated and the results of
operations and cash flows for the Company for the periods specified, all in
conformity with generally accepted accounting principles applied on a
consistent basis. To the knowledge of the Company, the Partnership and the
Trust, the various financial statements of Growth Hotel Investors ("GHI") and
Growth Hotel Investors II ("GHI II") included in the Registration Statement and
the Prospectus present fairly the financial position for such hotels as of the
dates indicated and the results of operations and cash flows for such hotels
for the periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statement schedules
included in the Registration Statement and the amounts in the Prospectus under
the captions "Prospectus Supplement Summary -- Summary Financial Data" and
"Selected Financial Information" fairly present the information shown therein
and have been compiled on a basis consistent with the financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus. No other financial statements or schedules are
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<PAGE> 13
required by Form S-3 or otherwise to be included in the Registration Statement,
the Prospectus, or any Prepricing Prospectus Supplement. The unaudited pro
forma financial information (including the related notes) included in the
Prospectus or any Prepricing Prospectus Supplement complies as to form in all
material respects to the applicable accounting requirements of the Act and the
Act Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable. Such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Company,
the financial position, results of operations and other information purported
to be shown therein at the respective dates and for the respective periods
specified.
(u) (i) Coopers & Lybrand L.L.P., who have examined and are
reporting upon the audited financial statements and schedules of the Company
incorporated by reference in the Registration Statement, are, and were during
the periods covered by their reports incorporated by reference in the
Registration Statement and the Prospectus, independent public accountants
within the meaning of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder. (ii) Imowitz Koenig & Co., LLP, who
have examined and are reporting upon the audited financial statements and
schedules of GHI and GHI II included in the Prospectus Supplement, are, and
were during the periods covered by their reports included in the Prospectus
Supplement, independent public accountants within the meaning of the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder.
(v) None of the Company, the Trust or the Partnership has
sustained, since December 31, 1996, any material loss or interference with its
business from fire, explosion, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or arbitrators'
or court or governmental action, order or decree; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement and
Prospectus, there has not been (i) any material change in the capital stock,
shares of beneficial interests or partnership interests, as applicable,
long-term debt, obligations under capital leases or short-term borrowings of
the Company, the Trust or the Partnership, (ii) any material adverse change, or
any development which could reasonably be seen as involving a prospective
material adverse change, in or affecting the business, prospects, properties,
assets, results of operations or condition (financial or other) of the Company,
the Trust or the Partnership, (iii) any liability or obligation, direct or
contingent, incurred or undertaken by the Company, the Trust or the Partnership
which is material to the business or condition (financial or other) of such
entity, except for liabilities or obligations incurred in the ordinary course
of business, (iv) any declaration or payment of any dividend or distribution of
any kind on or with respect to the capital stock, shares of beneficial interest
or partnership interests, as applicable, of the Company, the Trust, or the
Partnership, or (v) any transaction that is material to the Company, the Trust
or the Partnership except transactions in the ordinary course of business or as
otherwise disclosed in the Registration Statement and the Prospectus.
(w) The Partnership has good and marketable title in fee
simple to all real property and the improvements located thereon owned by it,
including the Hotels, free and clear of all liens,
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<PAGE> 14
encumbrances, claims, security interests, restrictions and defects except such
as are described in the Prospectus or in connection with the Company's $130
million line of credit (the "Line of Credit"), the collateralized mortgage
bonds issued by EQI Financing Partnership I, L.P. or the title insurance
policies relating to such properties. Upon consummation of the transactions
contemplated by the Acquisition Agreements, the Partnership will have good and
marketable title in fee simple to the Acquisition Hotels and all related real
property, free and clear of all liens, encumbrances, claims, security
interests, restrictions and defects except such as are described in the
proposed title commitments for the Acquisition Hotels or in connection with the
financing of a portion of the purchase price for the Acquisition Hotels or
which do not materially adversely affect the value of the property or the use
proposed to be made of the property by the Partnership. Neither the Company nor
the Trust owns or leases any real property as lessee. Except for the ground
leases relating to the Traverse City, Michigan Hotel, the Tinton Falls, New
Jersey Hotel, the Glen Burnie (Baltimore), Maryland Hotel, the Mountain Brook
(Birmingham), Alabama Hotel, the Atlanta (Northlake), Georgia Hotel, the
Memphis (Sycamore), Tennessee Hotel and the Nashville, Tennessee Hotel, the
Partnership does or will not lease any real property as lessee. The ground
leases are valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made, and proposed to be made,
of such property, by the Partnership. The Leases conform in all material
respects to the description thereof, if any, set forth in the Registration
Statement; and no notice has been given or material claim asserted by anyone
adverse to the rights of the Partnership under any of the Leases or affecting
the right to the continued possession of the leased property. The Company, the
Trust and the Partnership have good title to all personal property owned by
them, free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed in the
Prospectus or do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company, the Trust or the Partnership. Except as set forth in the Leases
or in the Prospectus, no person has an option or right of first refusal to
purchase all or part of any Current Hotel, any Acquisition Hotel or any
interest therein. Each of the Current Hotels complies with all applicable
codes, laws and regulations (including, without limitation, building and zoning
codes, laws and regulations and laws relating to access to the Current Hotels),
and except for such failures to comply that would not individually or in the
aggregate have a material adverse impact on the condition, financial or
otherwise, or on the earnings, assets, business affairs or business prospects
of the Partnership, the Trust or the Company. Neither the Company, the Trust
nor the Partnership has knowledge of any pending or threatened condemnation
proceedings, zoning change, or other proceeding or action that will in any
manner affect the size of, use of, improvements on, construction on or access
to the Current Hotels, except such proceedings or actions that would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of or with respect to
any Current Hotel, any Acquisition Hotel, the Partnership, the Trust or the
Company.
(x) Neither the Company, the Trust or the Partnership is in
violation of its respective charter, bylaws, declaration of trust, certificate
of limited partnership or partnership agreement, as the case may be, and no
default exists, and no event has occurred, nor state of facts exists, which,
with notice or after the lapse of time to cure or both, would constitute a
default in the due
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<PAGE> 15
performance and observance of any obligation, agreement, term, covenant,
consideration or condition contained in any indenture, mortgage, deed of trust,
loan agreement, note, lease or other agreement or instrument to which any such
entity is a party or to which any such entity or any of its properties is
subject, except as may be properly described in the Prospectus or such as in
the aggregate do not now have or will not in the future have a material adverse
effect on the financial position, results of operations or business of each
such entity, respectively. None of the Company, the Trust or the Partnership is
in violation of, or in default with respect to, any statute, rule, regulation,
order, judgment or decree, except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in the
future have a material adverse effect on the financial position, results of
operations or business of each such entity, respectively.
(y) There is not pending or, to the knowledge of the Company,
the Trust, or the Partnership, threatened, any action, suit, proceeding,
inquiry or investigation against the Company, the Trust or the Partnership or
any of their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, before or brought by any court
or governmental agency or body or board of arbitrators, which could result in
any material adverse change in the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of any such entity
or which could adversely affect the consummation of the transactions
contemplated by this Agreement and the Acquisition Agreements.
(z) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no
contracts, leases, or other documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as required. To the
best knowledge of the Company, the Trust and the Partnership, there are no
statutes or regulations applicable to the Company, the Trust or the Partnership
or certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company, the
Trust or the Partnership of a character required to be disclosed in the
Registration Statement or the Prospectus which have not been so disclosed and
properly described therein. All agreements, if any, between the Company, the
Trust and the Partnership, respectively, and third parties expressly referenced
in the Prospectus are legal, valid and binding obligations of the Company, the
Trust and the Partnership, respectively, enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights and by general equitable principles.
(aa) The Company, the Trust or the Partnership owns,
possesses or has obtained all material permits, licenses, franchises
(including, with respect to the Partnership, the franchises relating to the
Hotels), certificates, consents, orders, approvals and other authorizations of
governmental or regulatory authorities or other entities as are necessary to
own or lease, as the case may be, its respective properties and to carry on its
business as presently conducted, or as contemplated in the Prospectus to be
conducted, and none of the Company, the Trust or the
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<PAGE> 16
Partnership has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, franchises, certificates, consents,
orders, approvals or authorizations.
(bb) Each of the Company, the Trust and the Partnership owns
or possesses adequate license or other rights to use all trademarks, service
marks, trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company, the Trust and
the Partnership to conduct its respective business now, and as proposed to be
conducted or operated as described in the Prospectus, and neither the Company,
the Trust or the Partnership has received notice of infringement or of conflict
with (and knows of no such infringement of or conflict with) asserted rights of
others with respect to any Intangibles which could materially and adversely
affect the business, prospects, properties, assets, results of operation or
condition (financial or otherwise) of the Company, the Trust or the
Partnership.
(cc) To the best of the Company's, the Trust's, and the
Partnership's knowledge, the Company's, the Trust's and the Partnership's
system of internal accounting controls taken as a whole is sufficient to meet
the broad objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in amounts
that would be material in relation to the Company's, the Trust's or the
Partnership's financial statements; and, to the best of the Company's, the
Trust's, and the Partnership's knowledge, none of the Company, the Trust, the
Partnership or any employee or agent thereof, has made any payment of funds of
the Company, the Trust or the Partnership, as the case may be, or received or
retained any funds and no funds of the Company, the Trust or the Partnership,
as the case may be, have been set aside to be used for any payment, in each
case in violation of any law, rule or regulation.
(dd) Each of the Company, the Trust (to the extent not
consolidated with the Company) and the Partnership (to the extent not
consolidated with the Company) has filed on a timely basis all necessary
federal, state, local and foreign income and franchise tax returns required to
be filed through the date hereof and has paid all taxes shown as due thereon;
and no tax deficiency has been asserted against any such entity, nor does any
such entity know of any tax deficiency which is likely to be asserted against
any such entity which if determined adversely to any such entity, could
materially adversely affect the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of any such entity.
All tax liabilities are adequately provided for on the respective books of such
entities.
(ee) Each of the Company, the Trust, the Partnership, and
their officers, directors or affiliates has not taken and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in or constitute the stabilization or manipulation
of any security of the Company or to facilitate the sale or resale of the
Shares.
(ff) The Common Stock is registered pursuant to Section 12(b)
of the Exchange Act and is listed on The New York Stock Exchange.
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<PAGE> 17
(gg) The Company has not incurred any liability for a fee,
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby or as described in the Registration Statement.
(hh) Except as otherwise disclosed in the Prospectus, neither
the Company, the Trust, the Partnership nor, to the knowledge of the Company,
the Trust, or the Partnership, any entity ("Selling Entity") from which the
Partnership acquired a Current Hotel or from which the Partnership proposes to
acquire the Acquisition Hotels has authorized or conducted or has knowledge of
the generation, transportation, storage, presence, use, treatment, disposal,
release, or other handling of any hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled
or potentially subject to any remediation requirement under any environmental
law (collectively, "Hazardous Materials"), on, in, under or affecting any real
property currently leased or owned (or proposed to be leased or owned) or by
any means controlled by the Company, the Trust, and the Partnership, including
the Current Hotels and the Acquisition Hotels (the "Real Property") except as
in material compliance with applicable laws; except as otherwise disclosed in
the Prospectus, to the knowledge of the Company, the Trust and the Partnership,
the Real Property and the Company's, the Trust's and the Partnership's and the
Selling Entities' operations with respect to the Real Property are in
compliance with all federal, state and local laws, ordinances, rules,
regulations and other governmental requirements relating to pollution, control
of chemicals, management of waste, discharges of materials into the
environment, health, safety, natural resources, and the environment
(collectively, "Environmental Laws"), and the Company, the Trust, the
Partnership and the Selling Entities have, and are in compliance with, all
licenses, permits, registrations and government authorizations necessary to
operate under all applicable Environmental Laws. Except as otherwise disclosed
in the Prospectus, none of the Company, the Trust, the Partnership, or, to the
knowledge of the Company, the Trust and the Partnership, any Selling Entity has
received any written or oral notice from any governmental entity or any other
person and there is no pending or threatened claim, litigation or any
administrative agency proceeding that: (i) alleges a violation of any
Environmental Laws by the Company, the Trust, the Partnership or any Selling
Entity; (ii) alleges that the Company, the Trust, the Partnership or any
Selling Entity is a liable party or a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601, et seq., or any state superfund law; (iii) has resulted in or could
result in the attachment of an environmental lien on any of the Real Property;
or (iv) alleges that the Company, the Trust, the Partnership or any Selling
Entity is liable for any contamination of the environment, contamination of the
Real Property, damage to natural resources, property damage, or personal injury
based on their activities or the activities of their predecessors or third
parties (whether at the Real Property or elsewhere) involving Hazardous
Materials, whether arising under the Environmental Laws, common law principles,
or other legal standards.
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<PAGE> 18
(ii) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and the Company's
method of operation enables it to meet the requirements for taxation as a real
estate investment trust under the Code. The Partnership is treated as a
partnership for federal income purposes and not as a corporation or an
association taxable as a corporation.
(jj) None of the Company, the Trust or the Partnership is,
will become as a result of the transactions contemplated hereby, or will
conduct their respective businesses in a manner in which any such entity would
become, "an investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(kk) None of the appraisers which prepared appraisals of any
of the Current Hotels or the Acquisition Hotels, nor any environmental
engineering firm which prepared Phase I environmental assessment reports with
respect to the Current Hotels or the Acquisition Hotels, was employed for such
purpose on a contingent basis or has any substantial interest in the Company,
the Trust or the Partnership.
(ll) The Partnership is not currently prohibited, directly or
indirectly, from making distributions to the Trust, from repaying to the Trust
any loans or advances to the Partnership or from transferring any of the
Partnership's property or assets to the Trust, except as disclosed in the
Prospectus and under the Line of Credit and the EQI Financing Partnership I,
L.P. agreements.
(mm) The Trust is not currently prohibited, directly or
indirectly, from making distributions to the Company, from repaying to the
Company any loans or advances to the Trust or from transferring any of the
Trust's property or assets to the Company, except as disclosed in the
Prospectus and under the Line of Credit and the EQI Financing Partnership I,
L.P. agreements.
(nn) The statements set forth in the Prospectus under the
caption "Federal Income Tax Considerations," insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate and complete.
(oo) The Company has complied with all provisions of Florida
Statutes ss. 517.075 relating to issuers doing business with Cuba.
Any certificate signed by any officer of the Company on
behalf of the Company, or by an officer of the Trust on behalf of the the Trust
or the Partnership and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by such entity to each
Underwriter as to the matters covered thereby.
7. Indemnification and Contribution. (a) The Company, the
Trust and the Partnership, jointly and severally, agree to indemnify and hold
harmless each of you and each other Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims,
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<PAGE> 19
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prepricing Prospectus Supplement or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to such Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus Supplement shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by such Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person within the time required by the Act and the regulations thereunder,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus Supplement
was corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Company, the Trust or the Partnership
may otherwise have.
(b) If any action, suit or proceeding shall be brought
against any Underwriter or any person controlling any Underwriter in respect of
which indemnity may be sought against the Company, the Trust or the
Partnership, such Underwriter or such controlling person shall promptly notify
the Company, the Trust or the Partnership, and the Company, the Trust or the
Partnership shall assume the defense thereof, including the employment of
counsel and payment of all reasonable fees and expenses. Such Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action, suit or proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the Company, the Trust or the
Partnership have agreed in writing to pay such fees and expenses, (ii) the
Company, the Trust or the Partnership, have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Company, the Trust or the Partnership and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and the Company, the Trust or the
Partnership by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the Company, the Trust or the Partnership shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Company, the Trust or the Partnership shall, in connection
with any one such action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of
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<PAGE> 20
only one separate firm of attorneys (in addition to any local counsel), at any
time for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The Company, the Trust or the
Partnership shall not be liable for any settlement of any such action, suit or
proceeding effected without its written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Company, the Trust or the Partnership agree to
indemnify and hold harmless any Underwriter, to the extent provided in the
preceding paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Trust, the Partnership, their
respective directors and officers who sign the Registration Statement, and any
person who controls the Company, the Trust or the Partnership within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company, the Trust and the
Partnership to each Underwriter, but only with respect to information furnished
in writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus
Supplement, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, the Trust, the Partnership or
any of their respective directors, any such officer, or any such controlling
person based on the Registration Statement, the Prospectus or any Prepricing
Prospectus Supplement, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company, the Trust and the Partnership by paragraph (b) above (except that if
the Company, the Trust and the Partnership shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Underwriter's expense), and the
Company, the Trust, the Partnership or their respective directors, any such
officer, and any such controlling person shall have the rights and duties given
to the Underwriters by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriters may otherwise
have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, the Trust and the Partnership on the one hand and the Underwriters
on the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the Trust
and the Partnership on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities
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or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Trust and the Partnership on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters bear to the price to
public of the Shares, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company, the Trust and the
Partnership on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, the Trust
or the Partnership on the one hand or by the Underwriters on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Company, the Trust, the Partnership and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by a pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in paragraph (d) above shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any claim
or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
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representations and warranties of the Company, the Trust, the Partnership and
the Underwriters set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, the
Trust, the Partnership, their respective directors or officers, or any person
controlling the Company or the Trust or the Partnership, (ii) acceptance of any
Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Company, the Trust or the Partnership, their respective
directors or officers, or any person controlling the Company or the Trust or
the Partnership, shall be entitled to the benefits of the indemnity,
contribution, and reimbursement agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for a post-effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 P.M.,
New York City time, on the date hereof, or at such later date and time as shall
be consented to in writing by you, and all filings, if any, required by Rule
424 under the Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company, the
Trust and the Partnership taken as a whole not contemplated by the Prospectus,
which in your reasonable opinion, as Representatives of the several
Underwriters, would materially, adversely affect the market for the Shares, or
(ii) any event or development relating to or involving the Company, the Trust
or the Partnership or any officer or director of the Company which makes any
statement made in the Prospectus untrue or which, in the reasonable opinion of
the Company and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending
or supplementing the Prospectus to reflect such event or development would, in
your reasonable opinion, as Representatives of the several Underwriters,
materially adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion
of Hunton & Williams, counsel for the Company, the Trust and the Partnership,
dated the Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:
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(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Tennessee with the corporate power and authority to own
and lease its properties and to conduct its business as described in
the Prospectus. To such counsel's knowledge, except for the Trust,
EISI, EIWV, EQIFC, EQIFP and the Partnership, the Company does not
own or control, directly or indirectly, any corporation, association
or other entity.
(ii) The Trust has been duly organized and is
validly existing as a real estate investment trust in good standing
under the laws of the State of Maryland with all requisite power and
authority to own and lease its properties and to conduct its business
as described in the Prospectus. The Trust is wholly owned by the
Company.
(iii) The Partnership is a limited partnership duly
formed and validly existing under the Tennessee Revised Uniform
Limited Partnership Act (the "Tennessee Act") with the partnership
power and authority to own and lease its properties and to conduct its
business as described in the Prospectus.
(iv) The Company has the corporate power and
authority to enter into this Agreement, to issue, sell and deliver the
Shares as provided herein and to consummate the transactions
contemplated herein. This Agreement has been duly authorized by all
necessary corporate action and has been executed and delivered by the
Company and, assuming due authorization, execution and delivery by the
Underwriters, constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting the rights of
creditors generally and by principles of equity, whether considered at
law or in equity, and except to the extent that enforcement of the
indemnification and contribution provisions set forth in Section 7 of
this Agreement may be limited by federal or state securities laws or
the public policy underlying such laws.
(v) The Trust has the legal power and authority to
enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement has been duly authorized by all
necessary trust action and has been executed and delivered by the
Trust and, assuming due authorization, execution and delivery by the
Underwriters, constitutes a valid and binding agreement of the Trust,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors
generally and by principles of equity, whether considered at law or in
equity, and except to the extent that enforcement of the
indemnification and contribution provisions set forth in Section 7 of
this Agreement may be limited by federal or state securities laws or
the public policy underlying such laws.
(vi) The Partnership has the partnership power and
authority to enter into this Agreement and to consummate the
transactions contemplated herein. This Agreement has
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<PAGE> 24
been duly authorized by all necessary partnership action and has been
executed and delivered on behalf of the Partnership and, assuming due
authorization, execution and delivery by the Underwriters, constitutes
a valid and binding agreement of the Partnership enforceable in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
laws affecting the rights of creditors generally and by principles of
equity, whether considered at law or in equity, and except to the
extent that enforcement of the indemnification and contribution
provisions set forth in Section 7 of this Agreement may be limited by
federal or state securities laws or the public policy underlying such
laws.
(vii) Each of the Operative Documents has been duly
authorized by all necessary corporate, trust or partnership action on
behalf of the Company, the Trust and the Partnership, respectively,
and has been executed and delivered by the parties thereto and
constitutes a valid and binding agreement, enforceable in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws
affecting the rights of creditors generally and by principles of
equity, whether considered at law or in equity.
(viii) The Partnership has the partnership power and
authority to enter into the Acquisition Agreements and to consummate
the transactions contemplated therein. The Acquisition Agreements have
been duly authorized, executed and delivered on behalf of the
Partnership.
(ix) Each consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by
or with any governmental agency or body necessary for the valid
authorization, issuance, sale and delivery of the Shares, the
execution, delivery and performance of this Agreement and the
consummation by the Company, the Trust and the Partnership of the
transactions contemplated hereby, has been made or obtained and is in
full force and effect, except such as may be necessary under state
securities or real estate syndication laws or required by the National
Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Shares by the Underwriters, as to
which such counsel need express no opinion.
(x) Neither the issuance, sale and delivery by the
Company of the Shares, nor the execution, delivery and performance of
this Agreement will (a) violate the charter, bylaws, declaration of
trust, certificate of limited partnership or partnership agreement, as
the case may be, of any such entity, as applicable; (b) constitute a
default under any of the Operative Documents or any contract or
agreement filed or incorporated by reference as an exhibit to the
Registration Statement; (c) to such counsel's knowledge, violate any
applicable statute, judgment, decree, order, rule or regulation of any
court or governmental agency or body; or (d) to such counsel's
knowledge, result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or asset of any of the Company,
the Trust or the Partnership.
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<PAGE> 25
(xi) The issuance of the Shares to the Underwriters
hereunder has been validly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, the
Shares will be validly issued, fully paid and nonassessable. No
statutory or, to such counsel's knowledge, other preemptive rights of
shareholders exist with respect to any of the Shares. To such
counsel's knowledge, no person or entity holds a right to require or
participate in the registration under the Act of the Shares pursuant
to the Registration Statement, and, to such counsel's knowledge,
except as set forth in the Prospectus, no person holds a right to
require registration under the Act of any Common Stock of the Company
at any other time. To such counsel's knowledge, no person or entity
has a right of participation or first refusal with respect to the sale
of the Shares by the Company. The form of certificates evidencing the
Shares complies with all applicable requirements of Tennessee law.
(xii) The Company has authorized capital stock as
set forth in the Prospectus under the caption "Capitalization." All of
the issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable. None
of the issued shares of capital stock of the Company has been issued
in violation of any preemptive rights of shareholders. All sales of
the Company's capital stock prior to the date hereof were at all
relevant times duly registered under the Act or were exempt from the
registration requirements of the Act by reason of Sections 3(b), 4(2)
or 4(6) thereof and were duly registered or were issued pursuant to an
available exemption from the registration requirements of the
applicable state securities or blue sky laws, provided, however, that
such counsel need not express any opinion with respect to the
registration or availability of an exemption under applicable state
securities or blue sky laws for shares of Common Stock issued pursuant
to an underwritten public offering. To the knowledge of such counsel,
except as disclosed in the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and no commitment,
plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital
stock of the Company.
(xiii) All of the issued shares of beneficial
interest of the Trust have been duly authorized and validly issued and
are fully paid and nonassessable. None of the issued shares of
beneficial interest of the Trust has been issued or is owned or held
in violation of any statutory or, to such counsel's knowledge, other
preemptive right. The issuance of all of the outstanding shares of
beneficial interest of the Trust was exempt from the registration
requirements of the Act and any applicable state securities laws. To
such counsel's knowledge, there is no outstanding option, warrant or
other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of beneficial interest of the Trust
or any security convertible into or exchangeable for shares of
beneficial interest of the Trust.
(xiv) All of the issued Partnership Units of the
Partnership have been duly authorized and validly issued and are fully
paid and nonassessable. To such counsel's
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<PAGE> 26
knowledge, none of the issued Partnership Units has been issued or is
owned or held in violation of any preemptive rights. The issuance of
Partnership Units to be issued to the Trust at the Closing Date has
been duly and validly authorized by the Partnership. When issued and
delivered against payment therefor as provided in the Partnership
Agreement, such Units will be duly and validly issued and fully paid.
The issuances of the outstanding Partnership Units were exempt from
the registration requirements of the Act and any applicable state
securities laws.
(xv) To such counsel's knowledge and except as
described in the Prospectus, there is not pending or threatened, any
action, suit, proceeding, inquiry or investigation against the
Company, the Trust or the Partnership or any of their respective
officers and directors or to which the properties, assets or rights of
any such entity are subject, which, if determined adversely to any
such entity, would in the aggregate have a material adverse effect on
the financial position, results of operations or business of the
Company.
(xvi) The descriptions in the Registration Statement
and the Prospectus of the contracts, leases and other legal documents
therein described present fairly the information required to be shown
and there are no contracts, leases or other documents known to such
counsel of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
There are no statutes or regulations applicable to the Company, the
Trust or the Partnership or certificates, permits or other
authorizations from governmental regulatory officials or bodies
required to be obtained or maintained by any such entity, known to
such counsel, of a character required to be disclosed in the
Registration Statement or the Prospectus which have not been so
disclosed and properly described therein.
(xvii) The Company is organized in conformity with
the requirements for qualification as a real estate investment trust
("REIT") pursuant to Sections 856 through 860 of the Code, and the
Company's method of operation enables it to meet the requirements for
qualification and taxation as a real estate investment trust under the
Code. The Partnership is treated as a partnership for federal income
purposes and not as a corporation or an association taxable as a
corporation.
(xviii) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or
is pending or contemplated under the Act. Other than financial
statements and other financial and operating data and schedules
contained therein, as to which counsel need express no opinion, the
Registration Statement, all Prepricing Prospectus Supplements, the
Prospectus and any amendment or supplement thereto, appear on their
face to conform as to form in all material respects with the
requirements of the Act and the Act Regulations.
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<PAGE> 27
(xix) Such counsel has no reason to believe that the
Registration Statement, or any further amendment thereto made prior to
the Closing Date, on its effective date and as of the Closing Date,
contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that the Prospectus, or any amendment or supplement thereto made prior
to the Closing Date, as of its issue date and as of the Closing Date,
contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided
that such counsel need express no belief regarding the financial
statements and related schedules and other financial data contained in
the Registration Statement, any amendment thereto, or the Prospectus,
or any amendment or supplement thereto).
(xx) The Incorporated Documents (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) when they were filed with the
Commission complied on their face as to form in all material respects
with the requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder; and nothing has come to such
counsel's attention which causes them to believe that any of such
Incorporated Documents (other than the financial statements and
related schedules therein, as to which such counsel need express no
belief), when such Incorporated Documents were so filed, contained an
untrue statement of material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made when such documents were so
filed, not misleading.
(xxi) Neither the Company, the Trust nor the
Partnership is, or solely as a result of the consummation of the
transactions contemplated hereby will become, an "investment company,"
or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(xxii) The information in the Prospectus under the
caption "Shares Available for Future Sale" and "Federal Income Tax
Considerations," to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel, is correct and
presents fairly the information required to be disclosed therein under
the Act and the Act Regulations.
(xxiii) To such counsel's knowledge, the conditions
for use of a Registration Statement on Form S-3 set forth in the
General Instructions to Form S-3 have been satisfied with respect to
the Company and the transactions contemplated by this Agreement and
the Registration Statement.
(xxiv) Such counsel has been advised that the Shares
have been approved for listing on The New York Stock Exchange, subject
to official notice of issuance.
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(d) You shall have received on the Closing Date an opinion of
King & Spalding, counsel for the Underwriters, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, with respect
to the matters referred to in clauses (iv), (xi) and (xix) of the foregoing
paragraph (c) and such other related matters as you may request.
(e) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from Coopers & Lybrand L.L.P. and Imowitz Koenig & Co., LLP
independent certified public accountants, substantially in the forms heretofore
approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the consolidated short-term or long-term debt of the
Company (other than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any amendment
or Supplement thereto); (iii) there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of operations of
the Company, the Trust or the Partnership taken as a whole; (iv) the Company,
the Trust, and the Partnership, shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company, the Trust, and the Partnership, taken as a whole,
other than those reflected in the Registration Statement or the Prospectus (or
any amendment or supplement thereto); and (v) all the representations and
warranties of the Company, the Trust, and the Partnership contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company and similar
officers of the Trust as general partner of the Partnership (or such other
officers as are acceptable to you), to the effect set forth in this Section
8(f) and in Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(h) The Shares shall have been listed or approved for listing
upon notice of issuance on The New York Stock Exchange.
(i) The NASD shall not have objected to such offering, such
terms or the Underwriters' participation in the same.
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(j) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel in your reasonable discretion.
Any certificate or document signed by any officer of the Company, the
Trust or the general partner of the Partnership and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company, the Trust or the
Partnership, as applicable, to each Underwriter as to the statements made
therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 8, except that, if any
Option Closing Date is other than the Closing Date, the certificates, opinions
and letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Prepricing Prospectus Supplement, the
Prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Prepricing Prospectus Supplement, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the reproduction and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents reproduced and delivered in connection with the offering of the
Shares; (v) the listing of the Shares on The New York Stock Exchange; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws or real estate syndication laws of the several
states as provided in Section 5(g) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Underwriters relating to the
preparation, reproduction, and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the filing
fees and the fees and expenses of counsel for the Underwriters in connection
with any filings required to be made with the National Association of
Securities Dealers, Inc.; (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company.
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10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for a post-effective amendment to the Registration Statement to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of or such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective, it
may be terminated by the Company, by notifying you, or by you, as
Representatives of the several Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters
are obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters in Schedule I or in such other proportion as you may specify in
accordance with Section 20 of the Master Agreement Among Underwriters of Smith
Barney Inc., to purchase the shares which such defaulting Underwriter or
Underwriters are obligated, but fail or refuse, to purchase. If any one or more
of the Underwriters shall fail or refuse to purchase Shares which it or they
are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any
such Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Company,
purchases shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed within 24 hours by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or The Nasdaq Stock Market shall
-30-
<PAGE> 31
have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York or Tennessee shall have been declared
by either federal or state authorities, or (iii) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to
make it, in your reasonable judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the
resale of the Shares by the Underwriters. Notice of such termination may be
given to the Company by telegram, telecopy or telephone and shall be
subsequently confirmed within 24 hours by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside cover page, the list of Underwriters and their respective allotments
appearing under the caption "Underwriting" in the Prospectus and the statements
in the first and third paragraphs under the caption "Underwriting" in any
Prepricing Prospectus Supplement and in the Prospectus, constitute the only
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, the Trust or the
Partnership, at the office of the Company at Equity Inns, Inc., 4735
Spottswood, Suite 102, Memphis, Tennessee, 38117, Attention: Mr. Phillip H.
McNeill, Sr. or (ii) if to you, as Representatives of the several Underwriters,
care of Smith Barney Inc., 388 Greenwich Street, New York, New York 10013,
Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, the Trust and the Partnership, their
respective directors and officers, and the other controlling persons referred
to in Section 7 hereof and their respective successors and assigns, to the
extent provided herein, and no other person shall acquire or have any right
under or by virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from any Underwriter of any of the Shares in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-31-
<PAGE> 32
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Partnership, the Trust and the several Underwriters.
Very truly yours,
EQUITY INNS, INC.
By:
-------------------------------------------
Howard A. Silver
Vice President of Finance, Secretary,
Treasurer and Chief Financial Officer
EQUITY INNS TRUST
By:
-------------------------------------------
Howard A. Silver
Secretary and Treasurer
EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST
General Partner
By:
-----------------------------------
Howard A. Silver
Secretary and Treasurer
-32-
<PAGE> 33
Confirmed as of the date first above mentioned
on behalf of themselves and the
other several Underwriters named
in Schedule I hereto.
SMITH BARNEY INC.
MORGAN KEEGAN & COMPANY, INC.
PRUDENTIAL SECURITIES INCORPORATED
J. C. BRADFORD & CO.
As Representatives of the Several Underwriters
By: SMITH BARNEY INC.
By: /s/
-------------------------------
Name:
Managing Director
-33-
<PAGE> 34
SCHEDULE I
EQUITY INNS, INC.
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
- ----------- -----------
<S> <C>
Smith Barney Inc................................................................ 2,000,000
Morgan Keegan & Company, Inc.................................................... 2,000,000
Prudential Securities Incorporated.............................................. 2,000,000
J.C. Bradford & Co.............................................................. 2,000,000
---------
Total......... 8,000,000
</TABLE>
<PAGE> 1
May 22, 1997
Equity Inns, Inc.
4735 Spottswood, Suite 102
Memphis, Tennessee 38117
Equity Inns, Inc.
Qualification as
Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as counsel to Equity Inns, Inc., a Tennessee corporation
(the "Company"), in connection with the preparation of a Form S-3 Registration
Statement and filed with the Securities and Exchange Commission on May 12, 1997
(the "Registration Statement") and the offering and sale (the "Offering") of
8,000,000 shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") pursuant to a prospectus dated May 6, 1997 contained as part of
the Registration Statement ("Prospectus") and a prospectus supplement dated May
22, 1997 (the "Prospectus Supplement"), the Company's contribution of the net
proceeds of the Offering to its wholly-owned subsidiary, Equity Inns Trust, a
Maryland real estate investment trust (the "Trust"), and the Trust's
contribution of such net proceeds to Equity Inns Partnership, L.P., a Tennessee
limited partnership (the "Operating Partnership"), in exchange for an
additional general partnership interest in the Operating Partnership. You have
requested our opinion regarding certain U.S. federal income tax matters in
connection with the Offering.
<PAGE> 2
Equity Inns, Inc.
May 22, 1996
Page 2
The Company, through the Operating Partnership, EQI Financing
Partnership I, L.P. (the "First Subsidiary Partnership"), and Equity
Inns/West Virginia Partnership, L.P. (the "Second Subsidiary
Partnership and, together with the Operating Partnership and the First
Subsidiary Partnership, the "Partnerships"), currently owns 56 hotels
and associated personal property (the "Current Hotels"). EQI Financing
Corporation, a wholly-owned subsidiary of the Company ("Financing"),
owns a 1% general partnership interest, and the Operating Partnership
owns a 99% limited partnership interest, in the First Subsidiary
Partnership. Equity Inns Services, Inc., a wholly-owned subsidiary of
the Company ("Services"), owns a 1% general partnership interest, and
the Operating Partnership owns a 99% limited partnership interest, in
the Second Subsidiary Partnership.
Prior to November 15, 1996, the Partnerships leased the
Current Hotels to Trust Leasing, Inc. (formerly named McNeill Hotel
Co., Inc.) pursuant to substantially similar operating leases. As of
the date hereof, the Partnerships lease 48 of the Current Hotels to
Crossroads/Memphis Partnership, L.P. (the "First Lessee") and eight
of the Current Hotels to Crossroads/Future Company, L.L.C. (the "Second
Lessee") pursuant to substantially similar operating leases (the
"Leases"). The Lessees operate 52 of the Current Hotels and Promus
Hotels, Inc. operates four of the Current Hotels pursuant to
substantially similar management agreements with the Lessees (the
"Management Agreements").
The Operating Partnership has contracted to acquire 28
additional hotels and associated personal property (the "Acquisition
Hotels"). Upon the Operating Partnership's acquisition of the
Acquisition Hotels, the Operating Partnership plans to enter into lease
agreements with the Second Lessee that are substantially similar to the
Leases. The Second Lessee plans to operate the Acquisition Hotels.
<PAGE> 3
Equity Inns, Inc.
May 22, 1996
Page 3
In connection with the opinions rendered below, we have
examined the following:
1. the Company's Charter, as amended;
2. the Company's Bylaws;
3. the minutes of meetings of the Company's board of
directors held from April 16, 1996 through May 21, 1997;
4. the 1996 federal income tax return of the Company;
5. the Prospectus Statement;
6. the Prospectus Supplement;
7. the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated December 31, 1994,
among the Trust, as general partner, and several limited partners (the
"Operating Partnership Agreement");
8. the Limited Partnership Agreement of the First
Subsidiary Partnership, dated December 24, 1996, between Financing and
the Operating Partnership;
9. the Limited Partnership Agreement of the Second
Subsidiary Partnership, dated November 25, 1996, between Services and
the Operating Partnership, as amended on December 31, 1996;
10. the Leases;
11. the Management Agreements; and
<PAGE> 4
Equity Inns, Inc.
May 22, 1996
Page 4
12. such other documents as we have deemed necessary or
appropriate for purposes of this opinion.
In connection with the opinions rendered below, we have
assumed generally that:
1. each of the documents referred to above has been duly
authorized, executed, and delivered; is authentic, if an original, or
is accurate, if a copy; and has not been amended;
2. during its taxable year ending December 31, 1997 and
subsequent taxable years, the Company has operated and will continue to
operate in such a manner that makes and will continue to make the
representations contained in a certificate, dated as of the date hereof
and executed by a duly appointed officer of the Company (the "Officer's
Certificate"), true for such years;
3. the Company will not make any amendments to its
organizational documents, the Trust's organizational documents,
Financing's organizational documents, Services' organizational
documents, the Operating Partnership Agreement, or the partnership
agreements of the First or Second Subsidiary Partnership (together with
the Operating Partnership Agreement, the "Partnership Agreements")
after the date of this opinion that would affect its qualification as a
real estate investment trust (a "REIT") for any taxable year;
4. each partner of the Partnerships (a "Partner") that is
a corporation or other entity has a valid legal existence;
5. each Partner has full power, authority, and legal right
to enter into and to perform the terms of the applicable Partnership
Agreement and the transactions contemplated thereby; and
<PAGE> 5
Equity Inns, Inc.
May 22, 1996
Page 5
6. no action will be taken by the Company, the Trust,
Financing, Services, the Partnerships, or the Partners after the date
hereof that would have the effect of altering the facts upon which the
opinions set forth below are based.
In connection with the opinions rendered below, we also have
relied upon the correctness of the representations contained in the
Officer's Certificate.
After reasonable inquiry, we are not aware of any facts
inconsistent with the representations set forth in the Officer's
Certificate. Furthermore, where such representations involve matters
of law, we have explained to the Company's representatives the relevant
and material sections of the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury regulations thereunder (the "Regula-
tions"), published rulings of the Internal Revenue Service (the
"Service"), and other relevant authority to which such representations
relate and are satisfied that the Company's representatives understand
such provisions and are capable of making such representations.
Based on the documents and assumptions set forth above, the
representations set forth in the Officer's Certificate, and the
discussions in the Prospectus and the Prospectus Supplement under the
captions "Federal Income Tax Considerations" (which are incorporated
herein by reference), we are of the opinion that:
(a) the Company qualified to be taxed as a REIT pursuant to
sections 856 through 860 of the Code for its taxable years ended
December 31, 1994 through December 31, 1996, and the Company's
organization and current and proposed method of operation will
enable it to continue to qualify as a REIT for its taxable year
ending December 31, 1997, and in the future;
(b) the descriptions of the law and the legal conclusions
contained in the Prospectus and the Prospectus Supplement under
the captions "Federal Income
<PAGE> 6
Equity Inns, Inc.
May 22, 1996
Page 6
Tax Considerations" are correct in all material respects, and
the discussions thereunder fairly summarize the federal income tax
considerations that are likely to be material to a holder of the
Common Stock;
(c) the Leases will be treated as true Leases for federal income tax
purposes; and
(d) each Partnership will be treated for federal income tax
purposes as a partnership and not as a corporation or an association
taxable as a corporation or as a publicly traded partnership.
We will not review on a continuing basis the Company's compliance with
the documents or assumptions set forth above, or the representations
set forth in the Officer's Certificate. Accordingly, no assurance can
be given that the actual results of the Company's operations for its
1997 and subsequent taxable years will satisfy the requirements for
qualification and taxation as a REIT.
The foregoing opinions are based on current provisions of
the Code and the Regulations, published administrative
interpretations thereof, and published court decisions. The Service
has not issued Regulations or administrative interpretations with
respect to various provisions of the Code relating to REIT
qualification. No assurance can be given that the law will not change
in a way that will prevent the Company from qualifying as a REIT.
We hereby consent to the references to Hunton & Williams
under the captions "Federal Income Tax Considerations" in the
Prospectus and the Prospectus Supplement. In giving this consent, we
do not admit that we are in the category of persons whose consent is
required by Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder by the Securities and
Exchange Commission.
The foregoing opinions are limited to the U.S. federal
income tax matters addressed herein, and no other opinions are rendered
with respect to other federal tax matters or to any issues arising
under the tax laws of any other country or any state or locality. We
undertake no
<PAGE> 7
Equity Inns, Inc.
May 22, 1996
Page 7
obligation to update the opinions expressed herein after the date of
this letter. This opinion letter is solely for the information and use
of the addressee, and it may not be distributed, relied upon for any
purpose by any other person, quoted in whole or in part or otherwise
reproduced in any document, or filed with any governmental agency
without our express written consent.
Very truly yours,
