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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 FEBRUARY 12, 1998
EQUITY INNS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TENNESSEE 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
between Equity Inns, Inc., Equity Inns Trust and Equity Inns Partnership, L.P.
and Prudential Securities Incorporated in connection with the sale of 641,556
shares of the Company's common stock, $.01 par value per share, pursuant to the
Company's Prospectus Supplement dated as of February 12, 1998, to a base
Prospectus dated December 11, 1995, included as part of a Registration Statement
on Form S-3 (No. 33-99480) filed with the Securities and Exchange Commission on
November 15, 1995 (the "Registration Statement") and (b) the 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:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.1 Underwriting Agreement between Equity Inns, Inc., Equity
Inns Trust and Equity Inns Partnership, L.P. and Prudential
Securities Incorporated
8.1 Opinion of Hunton & Williams as to Tax Matters
</TABLE>
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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: February 12, 1998 By: /s/ Howard A. Silver
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Howard A. Silver
Executive Vice President, Secretary, Treasurer
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
1.1 Underwriting Agreement between Equity Inns, Inc., Equity Inns Trust and
Equity Inns Partnership, L.P. and Prudential Securities Incorporated
8.1 Opinion of Hunton & Williams as to Tax Matters
</TABLE>
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Exhibit 1.1
641,556 SHARES
EQUITY INNS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
February 12, 1998
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
Dear Ladies and Gentlemen:
Equity Inns, Inc., a Tennessee corporation (the "Company"), proposes to
issue and sell an aggregate of 641,556 shares (the "Shares") of its common
stock, $0.01 par value per share (the "Common Stock"), to Prudential Securities
Incorporated (the "Underwriter"). The Underwriter intends to deposit the Shares
with the trustee of the National Equity Trust Equity Portfolio Series 2 (REIT
Portfolio) (the "UIT Trust"), a registered unit investment trust under the
Investment Company Act of 1940, as amended, to which Prudential Securities
Incorporated acts as sponsor and depositor, in exchange for units in the UIT
Trust.
Upon consummation of the transactions contemplated hereby and
application of the net proceeds from the sale of the Shares, the Company,
through its wholly-owned subsidiary, Equity Inns Trust, a Maryland real estate
investment trust (the "Trust"), will own an approximate 95.1% general
partnership interest in Equity Inns Partnership, L.P. (the "Partnership"), a
Tennessee limited partnership. The Partnership currently owns 89 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 two 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 respective meanings set forth in the Registration Statement.
The Company wishes to confirm as follows its agreement with the
Underwriter in connection with the purchase of the Shares by the Underwriter.
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
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(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 33-99480) under the Act, including a prospectus relating to the Company's
Common Stock 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 in the form included in the
Registration Statement at the time it was declared effective (the "Base
Prospectus") together with the prospectus supplement relating to the offering of
the Shares dated the date hereof in the form first filed with the Commission on
or after February 12, 1998 pursuant to Rule 424(b) under the Act. Any
reference in this Agreement to the registration statement, the Registration
Statement, the Base Prospectus 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 or the
Prospectus, as the case may be, and any reference to any amendment or supplement
to the Registration Statement or 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, the Prospectus, or any
amendment or supplement thereto.
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 the
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, the Underwriter agrees to purchase from the Company, at a purchase
price of $15.02 per Share (the "Purchase Price Per Share"), the Shares.
3. Terms of Public Offering. The Company has been advised by you that
you propose to deposit the Shares with the trustee of the UIT Trust in exchange
for units in the UIT Trust as soon after the execution and delivery hereof (and,
if necessary, the filing of any post-effective amendment to the Registration
Statement) as in your judgment is advisable.
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4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriter of and payment for the Shares shall be made at the office of
Prudential Securities Incorporated in New York, New York, at 10:00 A.M., New
York City time, on February 18, 1998 (the "Closing Date"). The place of closing
for the Shares and the Closing Date may be varied by agreement between you and
the Company.
Certificates for the 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. 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. The certificates evidencing the
Shares to be purchased hereunder shall be delivered to you on the Closing Date,
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 Underwriter
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: of any request by the Commission for
amendment of or a supplement to the Registration Statement or the Prospectus or
for additional information; 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 within the period of time
referred to in paragraph (e) 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.
(c) The Company will furnish to you, without charge, (i) as many
signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto as you may reasonably request, (ii) such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto,
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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 (e)
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) 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 Underwriter a prospectus is required by the Act to be
delivered in connection with sales by the Underwriter or any dealer, the Company
will expeditiously deliver to the 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 the United States in which the Shares are offered by the Underwriter 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 the Underwriter
or any 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 Underwriter 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 Underwriter and any dealers a reasonable
number of copies thereof. In the event that the Company and you 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.
(f) The Company will cooperate with you and with counsel for the
Underwriter in connection with the registration or qualification of the
Shares for offering and sale by the Underwriter and by any 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.
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(g) 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.
(h) 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 concurrently with mailing or filing, a copy of each report of the
Company mailed to shareholders or filed with the Commission, and from time to
time such other information concerning the Company as you may reasonably
request.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than 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 Underwriter 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 you for all reasonable out-of-pocket
expenses (including fees and expenses of your counsel) incurred by you in
connection with this Agreement.
(j) 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.
(k) 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.
(l) Except as stated in this Agreement and in the 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.
(m) The Company will use its best efforts to list the Shares on
the NYSE.
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 the Underwriter that:
(a) 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.
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(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 the
Registration Statement or any amendment thereto was declared effective, and on
the Closing Date 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, the Prospectus, as amended or supplemented at any such time,
(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 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 the Underwriter 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
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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.
(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
95.0% 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 95.1% of the Partnership Units.
(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.
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(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 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 Third Amended and Restated Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement"), the Consolidated
Lease Amendment dated as of November 15, 1996 by and between the Partnership and
Crossroads/Memphis Partnership, L.P., as amended by First Amendment to
Consolidated Lease Amendment dated as of February 6, 1997 (together, the
"Consolidated Lease Amendment") and the Second Consolidated Lease Amendment
dated as of February 6, 1997 (the "Second Consolidated Lease Amendment") between
EQI Financing Partnership I, L.P., and Crossroads/Memphis Financing Company,
L.L.C. and each of the operating leases between the Lessee and the Partnership
pursuant to which the Lessee leases the Current Hotels from the Partnership (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
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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 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 or 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, to the Company's knowledge,
any 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
Underwriter 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.
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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. Except as set forth in the Prospectus and certain agreements with
limited partners of the Partnership with respect to shares of Common Stock
issuable upon redemption of Units (copies of which have previously been provided
to you), 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 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
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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") incorporated by
reference 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
fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements incorporated by reference in the
Registration Statement and the Prospectus. No other financial statements or
schedules are required by Form S-3 or otherwise to be included in the
Registration Statement or the Prospectus. The unaudited pro forma financial
information (including the related notes) incorporated by reference in the
Prospectus 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 incorporated by reference in the Prospectus, are,
and were during the periods covered by their reports incorporated by reference
in the Prospectus, 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
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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, encumbrances, claims, security
interests, restrictions and defects except such as are described in the
Prospectus or in connection with the Company's $250 million unsecured line of
credit (the "Line of Credit"), the Company's $5 million unsecured revolving line
of credit with the National Bank of Commerce (the "NBC Credit Line"), 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 (collectively,
the "Leases"), the Partnership does or will not lease any real property as
lessee. The 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 disclosed to
you in writing, 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
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<PAGE> 13
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 Current
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 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,
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<PAGE> 14
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, the Partnership or the Lessee 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 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
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<PAGE> 15
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 NYSE.
(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
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<PAGE> 16
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.
(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, the NBC 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, the NBC 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.
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<PAGE> 17
(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 Trust or the
Partnership and delivered to you or to counsel for the Underwriter shall be
deemed a representation and warranty by such entity to the 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 you and
each person, if any, who controls the 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, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment
thereto, the Base Prospectus or the Prospectus or any amendment or
supplement thereto, or
(ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, the Base Prospectus
or the Prospectus or any amendment or supplement thereto 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 the Underwriter
furnished in writing to the Company by or on behalf of the Underwriter through
you expressly for use in connection therewith. 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 the
Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Company, the Trust or the Partnership, the
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. The 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 the Underwriter or such controlling
person unless the Company, the Trust or the Partnership have agreed in writing
to pay such fees and expenses, the Company, the Trust or the Partnership, have
failed to assume the defense and employ counsel, or the named parties to any
such action, suit or proceeding (including any impleaded parties) include both
the Underwriter or such controlling person and the Company, the Trust or the
Partnership and the Underwriter or such controlling person shall have been
advised by its counsel that
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<PAGE> 18
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 the 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 only one separate firm of attorneys (in addition
to any local counsel), at any time for the Underwriter and any controlling
persons not having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Prudential Securities
Incorporated, 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 the
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) The Underwriter agrees 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 the Underwriter, but only with respect
to information furnished in writing by or on behalf of the Underwriter through
you expressly for use in the Registration Statement or the Prospectus, 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 or the Prospectus, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against the Underwriter
pursuant to this paragraph (c), the 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 the 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 the 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 Underwriter by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriter 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
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<PAGE> 19
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 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
Underwriter on the other hand from the offering of the Shares, or 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 Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities 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 Underwriter 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 Underwriter
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 Underwriter 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 Underwriter 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 Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by a pro rata allocation 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, the
Underwriter shall not 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 the 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.
(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.
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<PAGE> 20
(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
representations and warranties of the Company, the Trust, the Partnership and
the Underwriter set forth in this Agreement shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriter or any person controlling the Underwriter, the Company, the Trust,
the Partnership, their respective directors or officers, or any person
controlling the Company or the Trust or the Partnership, acceptance of any
Shares and payment therefor hereunder, and any termination of this Agreement. A
successor to the Underwriter or any person controlling the 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 the Underwriter's Obligations. The obligation of the
Underwriter to purchase the 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 the 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 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 would materially, adversely affect the market for the Shares, or 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 Underwriter 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 materially adversely affect the market for the Shares.
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<PAGE> 21
(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 to the effect that:
(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 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 Underwriter, 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 Underwriter, 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.
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<PAGE> 22
(vi) The Partnership has the partnership power and authority to
enter into this Agreement and to consummate the transactions contemplated
herein. This Agreement has 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 Underwriter,
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) The Partnership Agreement 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. (the "NASD") in connection with the purchase and distribution of
the Shares by the Underwriter, 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> 23
(xi) The issuance of the Shares to the Underwriter 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. 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 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
Partnership Units will be duly and validly
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<PAGE> 24
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 REIT 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, 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.
(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
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<PAGE> 25
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
"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 NYSE, subject to official notice of issuance.
(d) You shall have received on the Closing Date an opinion of
King & Spalding, counsel for the Underwriter, dated the Closing Date and
addressed to you, 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 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.
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<PAGE> 26
(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 NYSE.
(i) The NASD shall not have objected to such offering, such terms or
the Underwriter's participation in the same.
(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 or to
counsel for the Underwriter, shall be
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<PAGE> 27
deemed a representation and warranty by the Company, the Trust or the
Partnership, as applicable, to the Underwriter as to the statements made
therein.
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: the preparation, printing or reproduction, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Prospectus, and each amendment or
supplement to any of them; the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, 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; 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;
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; the listing of the
Shares on the NYSE; 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 Underwriter
relating to the preparation, reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); the
filing fees and the fees and expenses of counsel for the Underwriter in
connection with any filings required to be made with the NASD; the
transportation and other expenses incurred by or on behalf of the Company's
representatives in connection with presentations to prospective purchasers of
the Shares; the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become effective:
upon the execution and delivery hereof by the parties hereto; or 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 by notifying the Company.
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 the
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date, (i) trading in securities generally on the NYSE, the American Stock
Exchange or The Nasdaq Stock Market shall 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
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<PAGE> 28
escalation of hostilities or other national or international calamity, crisis or
change in economic conditions or the financial markets of the United States or
elsewhere that, in your judgment, is material and adverse and would, in your
judgment, make it impracticable or inadvisable to (x) commence or continue the
offering of the units of the UIT Trust to the public, or (y) enforce contracts
for the sale of the units of the UIT Trust. 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 Underwriter. The statements set forth
in the second sentence of the penultimate paragraph on the cover page and the
statement in second paragraph under the caption "Underwriting" in the
Prospectus, constitute the only information furnished by or on behalf of the
Underwriter 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 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 if to you,
Prudential Securities Incorporated, One New York Plaza, New York, New York
10292, Attention: Equity Transactions Group.
This Agreement has been and is made solely for the benefit of
the Underwriter, 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 the
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.
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<PAGE> 29
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Partnership, the Trust and the Underwriter.
Very truly yours,
EQUITY INNS, INC.
By: /s/ Howard A. Silver
-------------------------------------
Howard A. Silver
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
EQUITY INNS TRUST
By: /s/ Howard A. Silver
-------------------------------------
Howard A. Silver
Secretary and Treasurer
EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST
General Partner
By: /s/ Howard A. Silver
--------------------------------
Howard A. Silver
Secretary and Treasurer
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<PAGE> 30
Confirmed as of the date first above mentioned.
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Jean-Claude Canfin
------------------------------
Jean-Claude Canfin
Managing Director
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<PAGE> 1
Exhibit 8.1
February 12, 1998
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 (i) the preparation of a Form S-3 Registration
Statement filed with the Securities and Exchange Commission ("SEC") on December
11, 1995 (the "Registration Statement"), (ii) the offering and sale (the
"Offering") of 641,556 shares of common stock, par value $0.01 per share, of
the Company (the "Common Stock") pursuant to a prospectus dated December 11,
1995 (the "Prospectus") and a prospectus supplement dated February 12, 1998 (the
"Prospectus Supplement") related to the Registration Statement, and (iii) 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.
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
<PAGE> 2
Equity Inns, Inc.
February 12, 1998
Page 2
the Operating Partnership and the First Subsidiary Partnership, the
"Partnerships"), currently owns 89 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 79 of the Current Hotels to subsidiaries of Interstate Hotels Company
("Interstate") pursuant to substantially similar operating leases (the
"Interstate Leases"), and lease ten of the Current Hotels to a subsidiary of
Prime Hospitality Corporation ("Prime" and, together with Interstate, the
"Lessee") pursuant to substantially similar operating leases (together with the
Interstate Leases, the "Leases"). Interstate operates certain of the 79 Current
Hotels that it leases from the Partnerships, and Promus Hotels, Inc. operates
the remainder of the Current Hotels leased by Interstate pursuant to
substantially similar management agreements with Interstate (the "Management
Agreements"). Prime operates the ten Current Hotels that it leases from the
Partnerships.
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
November 6, 1997 through December 10, 1997;
4. the Prospectus and the Prospectus Supplement;
<PAGE> 3
Equity Inns, Inc.
February 12, 1998
Page 3
5. the Third Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated June 25, 1997, among the Trust, as general partner,
and several limited partners (the "Operating Partnership Agreement");
6. the Limited Partnership Agreement of the First Subsidiary Partnership,
dated December 24, 1996, between Financing and the Operating Partnership;
7. 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;
8. the Leases;
9. the Management Agreements; and
10. 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, 1998 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
<PAGE> 4
Equity Inns, Inc.
February 12, 1998
Page 4
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
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
"Regulations"), 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
<PAGE> 5
Equity Inns, Inc.
February 12, 1998
Page 5
December 31, 1997, 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, 1998, and in the future; and
(b) the descriptions of the law and the legal conclusions contained in
the Prospectus and the Prospectus Supplement under the captions "Federal
Income 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.
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 1998 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 filing of this opinion as an exhibit to Company's
8-K of even date herewith. We also 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 SEC.
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
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Equity Inns, Inc.
February 12, 1998
Page 6
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,
/s/ Hunton & Williams
