<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 7, 1998
FELCOR SUITE HOTELS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 1-14236 72-2541756
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (972) 444-4900
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On May 7, 1998, the Company issued 5,750,000 Depositary Shares
(including 750,000 shares pursuant to the exercise of an over-allotment
option), each representing an 1/100 interest in a share of 9% Cumulative
Redeemable Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), of the Company. Each share of Series B Preferred Stock is entitled to
a liquidation preference of $2,500 per share (equivalent to $25 per Depositary
Share). The Depositary Shares and the Preferred Stock were issued pursuant to
an Underwriting Agreement dated April 30, 1998, among the Company, FelCor
Suites Limited Partnership (the "Partnership") and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Prudential
Securities Incorporated and Smith Barney Inc., as representatives of the
several underwriters named therein (the "Underwriters"). This report is being
filed for the purpose of setting forth certain exhibits in connection with the
issuance of the Depositary Shares and Series B Preferred Stock.
ITEM 7(C). EXHIBITS
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
<S> <C>
1 Underwriting Agreement dated April 30, 1998, among the Company,
the Partnership and the Underwriters.
3.3 Articles Supplementary of the Company designating the 9% Series B
Cumulative Redeemable Preferred Stock
4.5 Form of Share Certificate representing 9% Series B Cumulative
Redeemable Preferred Stock
4.6 Deposit Agreement dated April 30, 1998, between the Company and
SunTrust Bank, Atlanta, as preferred share depositary
4.7 Form of Depositary Receipt evidencing the Depositary Shares
8.1 Opinion of Hunton & Williams as to certain tax matters
10.1.9 Ninth Amendment to Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of May 1, 1998, between
the Company and all of the persons or entities who are or shall in
the future become limited partners of the Partnership, adopting
Addendum No. 3 to Amended and Restated Agreement of Limited
Partnership dated as of May 1, 1998
</TABLE>
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C>
FELCOR SUITE HOTELS INC.
Date: May 28, 1998 By: /s/ Lawrence D. Robinson
---------------------------------------------------------------------------
Lawrence D. Robinson
Senior Vice President, General Counsel
and Secretary
</TABLE>
3
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
No. Description of Exhibit Numbered Page
------------ ------------------------------------------------------- ---------------------
<S> <C>
1 Underwriting Agreement dated April 30, 1998, among the Company, the
Partnership and the Underwriters.
3.3 Articles Supplementary of the Company designating the 9% Series B
Cumulative Redeemable Preferred Stock
4.5 Form of Share Certificate representing 9% Series B Cumulative
Redeemable Preferred Stock
4.6 Deposit Agreement dated April 30, 1998, between the Company and
SunTrust Bank, Atlanta, as preferred share depositary
4.7 Form of Depositary Receipt evidencing the Depositary Shares
8.1 Opinion of Hunton & Williams as to certain tax matters
10.1.9 Ninth Amendment to Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of May 1, 1998, between the
Company and all of the persons or entities who are or shall in the
future become limited partners of the Partnership, adopting Addendum
No. 3 to Amended and Restated Agreement of Limited Partnership dated
as of May 1, 1998
</TABLE>
4
<PAGE> 1
EXHIBIT 1
5,000,000 Depositary Shares
FELCOR SUITE HOTELS, INC.
EACH REPRESENTING 1/100 OF A SHARE OF 9%
SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK
PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
April 30, 1998
<PAGE> 2
April 30, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
FelCor Suite Hotels, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), an aggregate of 5,000,000 depositary shares (the
"Depositary Shares"), each representing 1/100 of a share of 9% Series B
Cumulative Redeemable Preferred Stock, $.01 par value per share (the
"Preferred Stock") of the Company. Morgan Stanley & Co. Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Prudential Securities Incorporated
and Smith Barney Inc. shall act as representatives (the "Representatives") of
the several Underwriters.
The Depositary Shares will be issued by SunTrust Bank, Atlanta, as
Depositary (the "Depositary"), under a Deposit Agreement dated as of May 7,
1998 (the "Deposit Agreement"), among the Company, the Depositary and the
holders from time to time of the Depositary Receipts issued thereunder. The
Depositary Shares will be evidenced by Depositary Receipts issued pursuant to
the Deposit Agreement (the "Depositary Receipts").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 750,000 depositary shares (the
"Additional Depositary Shares"), each representing 1/100 of a share of
Preferred Stock (the "Additional Preferred Stock"), if and to the extent that
the Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares granted to the Underwriters in
Section 2 hereof. Such Additional Depositary Shares will be issued by the
Depositary under the Deposit Agreement and will be evidenced by additional
depositary receipts (the "Additional Depositary Receipts") issued pursuant to
the Deposit Agreement. The Preferred Stock, the Additional Preferred Stock,
the Depositary Shares, the Additional Depositary Shares, the Depositary
Receipts and the Additional Depositary Receipts are described in the Prospectus
Supplement, which is referred to below, and are collectively referred to herein
as the "Securities."
Upon consummation of the transactions contemplated hereby and upon the
Company's contribution of the net proceeds from the sale of the Depositary
Shares, in exchange for units of
<PAGE> 3
partnership interest (the "Units") in FelCor Suites Limited Partnership, (the
"Partnership"), a Delaware limited partnership, the Company will own an
approximate 92.4% general partnership interest in the Partnership. As of April
17, 1998, the Partnership, directly or indirectly, owned interests in 76
hotels as described in the Prospectus, as defined herein (collectively, the
"Current Hotels"). On March 23, 1998, the Company entered into a merger
agreement (the "Merger Agreement") with Bristol Hotel Company ("Bristol") under
which the owned and leased hotel assets of Bristol will be merged with and into
the Company (the "Merger"). In addition, the Company has entered into an
agreement (the "Acquisition Agreement") as described in the Prospectus to
acquire eight additional hotels from an unaffiliated seller (such additional
hotels, along with the hotels being acquired in connection with the Merger
being hereinafter referred to as the "Acquisition Hotels") (the Current Hotels
and the Acquisition Hotels are hereinafter referred to as the "Hotels").
The Partnership leases the Current Hotels, and upon the purchase
thereof will lease eight of the Acquisition Hotels, to DJONT Operations, L.L.C.
or a subsidiary thereof (collectively, the "Lessee"), pursuant to separate
leases providing for the payment of certain base amounts (the "Percentage
Leases"). The Current Hotels are managed pursuant to separate management
agreements (collectively, the "Management Agreements"). The Partnership will
lease the remaining Acquisition Hotels to an affiliate of Bristol (the "Bristol
Lessee") pursuant to leases similar to the Percentage Leases (the "Bristol
Leases"). The Current Hotels are operated, and the Acquisition Hotels will be
operated, by the Lessee and the Bristol Lessee pursuant to the terms of the
Percentage Leases and the Bristol Leases, respectively. Other capitalized
terms used herein and not otherwise defined herein shall have the meaning set
forth in the Registration Statement (as hereinafter defined).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to
debt securities, preferred stock, depositary shares, common stock and common
stock warrants and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "Prospectus Supplement") specifically relating to
the Depositary Shares pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"). The term "Registration Statement" means the
registration statement, including the exhibits thereto, as amended to the date
of this Agreement. The term "Basic Prospectus" means the prospectus included
in the Registration Statement. The term "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement. The term "Preliminary
Prospectus" means a preliminary prospectus supplement specifically relating to
the Depositary Shares, together with the Basic Prospectus. As used herein, the
terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall
include in each case the documents, if any, incorporated by reference therein.
The terms "supplement" and "amendment" or "amend" as used herein shall include
all documents deemed to be incorporated by reference in the Prospectus that are
filed subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto.
2
<PAGE> 4
1. REPRESENTATIONS AND WARRANTIES. The Company and the
Partnership, jointly and severally, represent and warrant to and agree with
each of the Underwriters that:
(a) The Registration Statement has become effective; no
order preventing or suspending the use of any Preliminary Prospectus has been
issued and no proceeding for that purpose has been instituted or threatened by
the Commission or the securities authority of any state or other jurisdiction.
No stop order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has been
instituted or threatened or, to the best knowledge of the Company, contemplated
by the Commission or the securities authority of any state or other
jurisdiction.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Securities Act, set forth in the General
Instructions to Form S-3. When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements
of, the Securities Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was
declared effective, and on the Closing Date (or the Option Closing Date, as the
case may be, both as defined below) 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 Securities
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) and at the Closing Date (or the Option
Closing Date, as the case may be, both as defined below), 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 Securities
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representation and warranty in this paragraph (b) does not apply to statements
in or omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use
therein.
(c) The Incorporated Documents heretofore filed, 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
3
<PAGE> 5
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
Maryland with all requisite corporate power and authority to own and lease its
properties and to conduct its business. 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 Partnership or the Hotels taken as a whole. 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 Partnership or any Hotels, taken as a whole.
Except for the entities listed on Schedule II hereto (the "Subsidiaries"), the
Company does not own or control, directly or indirectly, any corporation,
association or other entity. The Partnership owns the percentage equity
interests of each of the Subsidiaries as reflected on Schedule II. All of such
equity interests have been duly and validly authorized and issued and are fully
paid and are so owned free and clear of any pledge, lien, charge, encumbrance,
security interests, preemptive right or other claims.
(e) The Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware Revised
Uniform Limited Partnership Act (the "Delaware Act") with all requisite
partnership power and authority to own and lease its properties and to conduct
its business. Each subsidiary of the Partnership has been duly formed and is
validly existing as a corporation, limited partnership or limited liability
company in good standing under the laws of its respective jurisdiction of
formation, except where the failure to do so would not have a material adverse
effect on the Company, the Partnership or the Hotels, taken as a whole. The
Partnership and its subsidiaries have been duly qualified or registered to do
business and are in good standing as foreign partnerships, corporations or
limited liability companies in each other jurisdiction in which the ownership
or leasing of their properties or the nature or conduct of their 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 Partnership or the
Hotels taken as a whole. 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
Partnership or the Hotels, taken as a whole. The Company is the sole general
partner of the Partnership, and at the Closing Date, will be the sole general
partner of the Partnership and will own an approximate 92.4% interest in the
Partnership. The Company owns all of the
4
<PAGE> 6
outstanding Series A Preferred Units in the Partnership and, upon issuance of
such units on the Closing Date, will own all of the outstanding Series B
Preferred Units in the Partnership.
(f) DJONT Operations, L.L.C. has been duly formed and is
validly existing as a limited liability company in good standing under the
Delaware Limited Liability Company Act. FCOAM, Inc. has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Texas. The Lessee has all requisite limited liability company or
corporate power and authority to own, lease and operate its properties and
conduct its business. Each subsidiary of DJONT Operations, L.L.C. (other than
FCOAM, Inc.) has been duly formed, is validly existing and is in good standing
under the laws of the State of Delaware. The Lessee and its subsidiaries have
been duly qualified to do business and are in good standing as a foreign
limited liability company or corporation in each other jurisdiction in which
the ownership or leasing of their properties or the nature or conduct of their
business as now conducted requires such qualification, except where the failure
to do so would not have a material adverse effect on the Lessee. The Lessee
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 Lessee or the Hotels, taken as a whole.
(g) The Company has full legal right, power and authority
to enter into this Agreement, the Deposit Agreement and the amendment to the
articles of incorporation relating to the Preferred Stock (the "Articles
Supplementary"), to issue, sell and deliver the Securities as provided herein
and to consummate the transactions contemplated herein. This Agreement, the
Deposit Agreement and the Articles Supplementary have been duly authorized,
executed and delivered by the Company.
(h) The Partnership 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 Partnership.
(i) The Company, the Partnership, and to the knowledge of
the Company and the Partnership, each of the other parties to the Amended and
Restated Agreement of Limited Partnership of the Partnership, as amended (the
"Partnership Agreement"), the Percentage Leases and the Management Agreements
have full legal right, power and authority to enter into each such agreement
and to consummate the transactions contemplated therein. Each such agreement
has been duly authorized, executed and delivered by the Company, the
Partnership, and to the knowledge of the Company and the Partnership, each of
the other parties. (This Agreement, the Deposit Agreement, the Articles
Supplementary, the Partnership Agreements, the New Percentage Leases (as
defined herein) and the New Management Agreements (as defined herein) sometimes
are hereinafter referred to collectively as the "Operative Documents").
(j) The Partnership and, to the knowledge of the Company
and the Partnership, each of the other parties to the Acquisition Agreement and
the Merger Agreement have full legal
5
<PAGE> 7
right, power and authority to enter into such agreements and to consummate the
transactions contemplated thereby. The Acquisition Agreement and the Merger
Agreement have been duly authorized, executed and delivered by the Company and,
to the Company'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.
(k) 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 Securities, the execution, delivery and
performance of this Agreement, the Deposit Agreement and the Articles
Supplementary and the consummation by the Company and the Partnership of the
transactions contemplated hereby and thereby has been made or obtained and is
in full force and effect; provided, however, that the Articles Supplementary
have not been filed, but will be filed with the Maryland Department of
Assessments and Taxation on or before the Closing Date.
(l) Neither the issuance, sale and delivery by the
Company of the Securities, nor the execution, delivery and performance of this
Agreement, the Deposit Agreement or the Articles Supplementary nor the
consummation of the transactions contemplated hereby or thereby 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, any of the Operative Documents, the articles of
incorporation (as amended by the Articles Supplementary), bylaws, certificate
of limited partnership or partnership agreement, as the case may be, of the
Company or the Partnership; any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which the Company 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 the Acquisition
Hotels 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.
(m) The Depositary Shares to be issued and sold to the
Underwriters hereunder and the Preferred Stock have been validly authorized by
the Company. When the Preferred Stock and the Depositary Receipts evidencing
the Depositary Shares representing interests in such Preferred Stock are
issued and delivered against payment therefor as provided in this Agreement and
the Deposit Agreement, the Preferred Stock will be duly and validly issued,
fully paid and nonassessable. The deposit of the Preferred Stock by the
Company with the Depositary pursuant to the Deposit Agreement has been duly
authorized and, when the Depositary Shares are issued and delivered in
accordance with the terms of the Agreement, the Depositary Shares will
represent legal and valid interests in the Preferred Stock as provided in the
Deposit Agreement. Assuming due authorization, execution and delivery of any
Deposit Agreement by the Depositary, each Depositary Share, if any, will
represent the interest described in the Prospectus in a validly issued,
outstanding, fully paid and
6
<PAGE> 8
nonassessable share of Preferred Stock. Assuming due execution and delivery of
the Depositary Receipts, if any, by the Depositary pursuant to such Deposit
Agreement, the Depositary Receipts will entitle the holders thereof to the
benefits provided therein and in the Deposit Agreement. There are no statutory
or other preemptive rights of shareholders with respect to any of the
Securities. No person or entity holds a right to require or participate in the
registration under the Securities Act of the Securities pursuant to the
Registration Statement other than those persons who have expressly waived such
rights. No person or entity has a right of participation or first refusal with
respect to the sale of the Securities by the Company. The form of certificates
evidencing the Preferred Stock comply with all applicable requirements of
Maryland law. The Depositary Receipts are in due and proper form.
(n) 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 validly issued, are
fully paid and nonassessable and conform to the description of the Common Stock
and the Series A Preferred Stock contained in the Prospectus. The Securities
conform to their description contained in the Prospectus. None of the issued
and outstanding shares of capital stock of the Company has been issued or is
owned or held in violation of any preemptive rights of shareholders. The
Company has no other issued and outstanding capital stock. 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.
(o) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered under the
Securities Act or exempt from the registration requirements of the Securities
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.
(p) All of the issued Units have been duly and validly
authorized and issued and are fully paid. None of the issued Units has been
issued or is owned or held in violation of any preemptive right. The Units to
be issued to the Company at the Closing Date have been duly and validly
authorized by the Partnership. At the Closing Date, such Units will be validly
issued and fully paid. All of the outstanding Units have been issued, offered
and sold in compliance with all applicable laws (including, without limitation,
federal and state securities laws). The Units to be issued to the Company at
the Closing Date will be issued, offered and sold in compliance with all
applicable laws (including, without limitation, federal and state securities
laws).
(q) The financial statements of the Company, the Lessee
and Bristol incorporated by reference in the Registration Statement and
Prospectus, together with related schedules and notes (and any amendment or
supplement thereto), present fairly the financial position of each entity, as
of the dates indicated, and the results of operations and cash flows of such
entity for the periods specified, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified. No other financial statements or schedules are required by Form S-3
7
<PAGE> 9
or otherwise to be included or incorporated by reference in the Registration
Statement, the Prospectus, or any Preliminary Prospectus.
(r) Each of Coopers & Lybrand L.L.P., Arthur Andersen
LLP and Price Waterhouse LLP, who have examined and are reporting upon the
audited financial statements and schedules included or incorporated by
reference in the Registration Statement, are and were, during the periods
covered by their reports included in the Registration Statement and the
Prospectus, independent public accountants within the meaning of the Act.
(s) Since December 31, 1997, neither the Company, the
Partnership, nor the Lessee has sustained 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 or partnership interests, as applicable, long-term debt,
obligations under capital leases or short-term borrowings of the Company, the
Partnership, or the Lessee, (ii) any material adverse change, or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company, the Partnership or the Lessee and their respective subsidiaries, taken
as a whole, from that set forth in the Prospectus, exclusive of any amendments,
or supplements thereto subsequent to the date of this Agreement, (iii) any
liability or obligation, direct or contingent, incurred or undertaken by the
Company, the Partnership or the Lessee 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 or partnership interests, as applicable, of the Company or
the Partnership, or (v) any transaction that is material to the Company, the
Partnership or the Lessee, except transactions in the ordinary course of
business or as otherwise disclosed in the Registration Statement and the
Prospectus.
(t) The Partnership has good and indefeasible title in
fee simple to all real property and the improvements thereon owned by it free
and clear of all liens, encumbrances, claims, security interests, restrictions
and defects except (i) such as are described in the Prospectus, (ii) such
matters reflected in the owner's title insurance policies relating to such
properties and (iii) such as do not materially adversely affect the value of
the properties or the use proposed to be made of the property by the
Partnership. Upon consummation of the transactions contemplated by the
Acquisition Agreement and the Merger Agreement, the Partnership will have good
and indefeasible 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 which do not
materially adversely affect the value of the property or the use proposed to be
made of the property by the Partnership or, with respect to the Acquisition
Hotels to be acquired in the Merger, such as would not have a material adverse
effect on the Company, the Partnership or any Hotels, taken as a whole. Except
as disclosed in the Prospectus, neither the Company nor the Partnership owns or
leases any real property as lessee
8
<PAGE> 10
other than pursuant to leases which individually or in the aggregate are not
material to the business, financial condition or results of operations of the
Company and the Partnership. Except as disclosed in the Prospectus, no person
other than the Partnership has an option or right of first refusal to purchase
all or part of any Current Hotel or any interest therein other than certain
options and rights of first refusal contained in the ground lease relating to
the Embassy Suites in Kansas City, Missouri or partnership agreements to which
the Partnership or its subsidiaries are parties. Each of the 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 Hotels), except if and to the extent disclosed in the Prospectus and except
for such failures to comply that would not 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 Company
or the Hotels, taken as a whole. Neither the Company nor the Partnership has
knowledge of any pending or threatened condemnation proceedings, zoning change,
or other proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on or access to the 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 the Partnership, the Company or the
Hotels, taken as a whole.
(u) Neither the Company nor the Partnership is in
violation of its respective articles of incorporation, bylaws, 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; provided, however, that the Merger will
require consents from certain third parties which either will be obtained or
the failure to obtain would not have a material adverse effect on the Company,
the Partnership or the Hotels, taken as a whole. Neither the Company nor 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.
(v) Except as described in the Prospectus, there is not
pending or, to the knowledge of the Company or the Partnership, threatened, any
action, suit, proceeding, inquiry or investigation against the Company, the
Partnership, the Lessee 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 or the Deposit Agreement.
9
<PAGE> 11
(w) 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 which are not described or filed as required. To
the best knowledge of the Company and the Partnership, there are no statutes or
regulations applicable to the Company or the Partnership or certificates,
permits or other authorizations from governmental regulatory officials or
bodies required to be obtained or maintained by the Company 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 between the Company, the Partnership, the Lessee, respectively,
and third parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company, the Partnership and the Lessee,
respectively, enforceable against such parties 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.
(x) Except as described in the Prospectus, the Company,
the Partnership or the Lessee owns, possesses or has obtained or has taken all
necessary action to obtain (and will obtain) all material permits, licenses,
franchises (including, with respect to the Lessee, 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, and to operate its respective properties and
to carry on its business, and neither the Company, the Partnership nor the
Lessee has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, franchises, certificates, consents,
orders, approvals or authorizations.
(y) Except as described in the Prospectus, the Company,
the Partnership, and the Lessee own or possess or have the right to acquire
(and will acquire) adequate license or other rights to use all patents,
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 Partnership, and the Lessee to conduct their respective businesses
as presently conducted, and neither the Company, the Partnership, nor the
Lessee 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 Partnership or the Lessee.
(z) The Company's, the Partnership's and to the best of
the Company's and the Partnership's knowledge, the Lessee'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 Partnership's, or the Lessee's
financial statements; and, to the best of the Company's and the Partnership's
knowledge, neither the Company, the Partnership, nor the
10
<PAGE> 12
Lessee, nor any employee or agent thereof, has made any payment of funds of the
Company, the Partnership, the Lessee, as the case may be, or received or
retained any funds, and no funds of the Company, the Partnership, the Lessee,
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.
(aa) Each of the Company, the Partnership (to the extent
not consolidated with the Company), and the Lessee 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 (except for certain tax returns, the failure of which to
file will not have a material adverse effect on the Company, the Partnership or
the Hotels, taken as a whole); 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 and which if determined adversely
to any such entity, could materially adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of any such entity, respectively. All tax liabilities are adequately provided
for on the respective books of such entities.
(bb) The Company, the Partnership, and the Lessee maintain
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate for their respective
businesses and, to the best of the Company's and the Partnership's knowledge,
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company, the Partnership and the Lessee against
theft, damage, destruction, acts of vandalism, and all other risks customarily
insured against, all of which insurance is in full force and effect.
(cc) To the best of the Company's knowledge, no general
labor problem exists or is imminent with the employees of the Company or
Lessee. The Partnership has no employees.
(dd) Each of the Company, 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 Depositary
Shares.
(ee) The Depositary Shares are registered, or will be
registered on or before the Closing Date, pursuant to Section 12(b) of the
Exchange Act, and the Depositary Shares will be, within 30 days of the date of
this Agreement, listed on the New York Stock Exchange.
(ff) 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.
(gg) Except as otherwise disclosed in the Prospectus,
neither the Company, the Partnership, FelCor/CSS Holdings, L.P. ("Holdings")
nor, to the best knowledge of the Company and
11
<PAGE> 13
the Partnership, any entity from whom the Partnership acquired or will acquire
the 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 or the Partnership, including the Hotels
(the "Real Property"), except as in material compliance with applicable laws;
to the knowledge of the Company and the Partnership, the Real Property and the
Company's and the Partnership's 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 and the Partnership have
complied with, 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, neither the Company nor the Partnership 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 alleges a violation of any Environmental Laws by the Company or
the Partnership; alleges that the Company or the Partnership is a liable party
or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section
9601, et seq., or any state superfund law; has resulted in or could result in
the attachment of an environmental lien on any of the Real Property; or alleges
that the Company or the Partnership 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; except
with respect to this representation (gg), such matters relating to certain of
the Acquisition Hotels that will not have a material adverse effect on the
Company, the Partnership or the Hotels, taken as a whole.
(hh) 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.
(ii) None of the Company, the Partnership, or the Lessee
is, will become as a result of the transactions contemplated hereby, or will
conduct its respective business 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.
12
<PAGE> 14
(jj) No real estate appraisal firm which prepared
appraisals of the Hotels, nor any environmental engineering firm which prepared
Phase I environmental assessment reports with respect to the Hotels, was
employed for such purpose on a contingent basis or has any substantial interest
in the Company, the Partnership, the Lessee, or any selling entity.
(kk) The Merger will not 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, any of the Operative Documents, the articles of incorporation, by-laws,
certificate of limited partnership or partnership agreement, as the case may
be, of the Company or the Partnership; any indenture, mortgagee, deed of trust,
loan agreement, note, lease or other agreement or instrument to which the
Company 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 the
Acquisition Hotels is subject (provided, however, that such Merger will require
consents from certain third parties which either will be obtained or the
failure to obtain will not have a material adverse effect on the Company, the
Partnership or the Hotels); 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.
(ll) Holdings is not currently prohibited, directly or
indirectly, from making distributions to the Company, from repaying to the
Company any loans or advances to Holdings, or from transferring any of
Holdings' property or assets to the Company, except as disclosed in the
Prospectus.
(mm) The Company has not, directly or indirectly (i) taken
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Depositary Shares or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Depositary Shares or (B) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company.
(nn) To the Company's knowledge, neither the Company nor
any of its subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule, or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
Any certificate signed by any officer of the Company on behalf of the
Company, or the Partnership and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by such entity to
each Underwriter as to the matters covered thereby.
13
<PAGE> 15
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company, the respective numbers of Depositary Shares set forth in Schedule I
hereto opposite its name at U.S. $24.2125 a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Depositary Shares, and the Underwriters
shall have a one-time right to purchase, severally and not jointly, up to
750,000 Additional Depositary Shares at the Purchase Price. If the
Representatives, on behalf of the Underwriters, elect to exercise such option,
the Representatives shall so notify the Company in writing not later than 30
days after the date of this Agreement, which notice shall specify the number of
Additional Depositary Shares to be purchased by the Underwriters and the date
on which such shares would be purchased. Such date may be the same as the
Closing Date (as defined herein) but not earlier than the Closing Date nor
later than 10 business days after the date of such notice. Additional
Depositary Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Depositary Shares. If any Additional Depositary Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Depositary Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears
the same proportion to the total number of Additional Depositary Shares to be
purchased as the number of Depositary Shares set forth in Schedule 1 hereto
opposite the name of such Underwriter bears to the total number of Depositary
Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 30 days after the date of the Prospectus, directly or
indirectly sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any Depositary Shares or any shares of Preferred Stock. The
foregoing sentence shall not apply to (A) the Depositary Shares to be sold
hereunder, or (B) transactions by any person other than the Company relating to
Depositary Shares and/or shares of Preferred Stock or other securities acquired
in open market transactions after the completion of the offering of the
Depositary Shares.
3. TERMS OF PUBLIC OFFERING. The Company is advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Depositary Shares as soon after this Agreement has become
effective as in your judgment is advisable. The Company is further advised by
you that the Depositary Shares are to be offered to the public initially at
U.S. $25.00 a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of U.S.
$.50 a share under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of U.S. $.40 a
share, to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Depositary
Shares to be sold by the Company shall be made in Federal or other funds
immediately available in New York City against
14
<PAGE> 16
delivery of such Depositary Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on May 7, 1998, or at such
other time on the same or such other date, not later than May 14, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Depositary Shares shall be made to the
Company in Federal or other funds immediately available in New York City
against delivery of such Additional Depositary Shares for the respective
accounts of the several Underwriters at 10:00 a.m., New York City time, on the
date specified in the notice described in Section 2 or at such other time on
the same or on such other date, in any event not later than June 12, 1998, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Option Closing Date."
Depositary Receipts and Additional Depositary Receipts for the
Depositary Shares and the Additional Depositary Shares, as applicable shall be
in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or Option Closing Date, as applicable. The Depositary Receipts
and Additional Depositary Receipts evidencing the Depositary Shares and the
Additional Depositary Shares, as applicable shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Depositary Shares and the Additional
Depositary Shares to the Underwriters duly paid, against payment of the
Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Company to sell the Depositary Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Depositary
Shares on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company, the Partnership and their respective subsidiaries, taken
as a whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Depositary
Shares on the terms and in the manner contemplated in the Prospectus.
15
<PAGE> 17
(b) The Underwriters shall have received on the Closing Date (i) a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in clause (a)(ii) above and (ii) a
certificate, dated the Closing Date and signed by an executive officer of the
Company and the general partner of the Partnership to the effect that the
representations and warranties of the Company and the Partnership contained in
this Agreement are true and correct as of the Closing Date and that the Company
and the Partnership have complied with all of the agreements and satisfied all
of the conditions on their part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date, an
opinion of Jenkens & Gilchrist, a Professional Corporation, counsel for the
Company and the Partnership, dated the Closing Date and addressed to the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under
Maryland law with all requisite corporate power and
authority to own, lease and operate its properties
and to conduct its business. The Company has been
duly qualified to do business and is in good standing
as a foreign corporation in the states of Arizona,
California, Colorado, Delaware, Florida, Georgia,
Illinois, Kentucky, Louisiana, Massachusetts,
Minnesota, Missouri, Nebraska, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, South
Carolina, Tennessee, and Texas. To such counsel's
knowledge, there are no other jurisdictions in which
the ownership or leasing the Company's 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
financial condition, business, prospects, net worth
or results of operations of the Company and the
Partnership, taken as a whole. To such counsel's
knowledge, except for the entities listed on Schedule
II to this Agreement, the Company does not own or
control, directly or indirectly, any corporation,
association or control, directly or indirectly, any
corporation, association or other entity. The
Partnership owns the percentage equity interests of
each of the Subsidiaries as reflected on Schedule II.
All of such equity interests have been duly and
validly authorized and issued and are fully paid and
are so owned free and clear of any pledge, lien,
charge, encumbrance, security interests, preemptive
right or other claims.
(ii) The Partnership has been duly formed and validly
existing under the Delaware Act with all requisite
partnership power and authority to own, lease and
operate its properties and to conduct its business.
The Partnership has been duly qualified or registered
to do business and is in good standing as a foreign
16
<PAGE> 18
partnership in the states of Arizona, California,
Colorado, Florida, Georgia, Illinois, Kentucky,
Louisiana, Massachusetts, Minnesota, Missouri,
Nebraska, New Jersey, New York, North Carolina, Ohio,
Oklahoma, Pennsylvania, South Carolina, Tennessee and
Texas. To such counsel's knowledge, there are no
other jurisdictions in which the ownership or leasing
of the Partnership's 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 financial condition,
business, prospects, net worth or results of
operations of the Company and the Partnership, taken
as a whole. The Company is the sole general partner
of the Partnership and upon its delivery to the
Partnership of the net proceeds from the sale of the
Depositary Shares pursuant hereto, will own an
approximate 92.4% general partnership interest in the
Partnership. The Company owns all of the outstanding
Series A Preferred Units in the Partnership and, upon
issuance of such units on the Closing Date, will own
all of the outstanding Series B Preferred Units in
the Partnership.
(iii) Holdings has been duly formed and is validly existing
as a limited partnership in good standing under the
Delaware Act. It has all requisite partnership power
and authority to own, lease and operate its
properties and conduct its business. It has been
duly qualified to do business and is in good standing
as a foreign partnership or corporation in the states
of Alabama, Arizona, California, Florida, Louisiana,
Minnesota, Ohio and Texas. To such counsel's
knowledge, there are no other jurisdictions 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
financial condition, business, prospects, net worth
or results of the Company and the Partnership taken
as a whole.
(iv) DJONT Operations, L.L.C. has been duly formed and is
validly existing as a limited liability company in
good standing under the Delaware Limited Liability
Company Act. DJONT Operations, L.L.C. has all
requisite limited liability company power and
authority to own, lease and operate its properties
and conduct its business. DJONT Operations, L.L.C.
has been duly qualified to do business and is in good
standing as a foreign limited liability company in
the states of Alabama, Arizona, California, Colorado,
Florida, Georgia, Illinois, Kentucky, Louisiana,
Minnesota, New Jersey, Ohio, Oklahoma, Tennessee and
Texas. To such counsel's knowledge, there are no
other jurisdictions 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 financial condition, business,
prospects, net worth or results of the Lessee. The
subsidiaries of DJONT Operations, L.L.C. consist of
DJONT Leasing, L.L.C., FCH/DT
17
<PAGE> 19
Leasing, L.L.C., FCH/DT Leasing II, L.L.C., FCH/SH
Leasing, L.L.C., FCH/SH Leasing II, L.L.C., and
DJONT/EPT Leasing, L.L.C., each of which is a
Delaware limited liability company (collectively, the
"LLC Subsidiaries"), and FCOAM, Inc., a Texas
corporation ("FCOAM"). Each of the LLC Subsidiaries
has been duly formed and is validly existing as a
limited liability company in good standing under the
Delaware Limited Liability Company Act. FCOAM has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
State of Texas. Each of the LLC Subsidiaries and
FCOAM has all requisite limited liability company or
corporate power and authority to own, lease and
operate its properties and conduct its business.
Each of the LLC Subsidiaries has been duly qualified
to do business and is in good standing as a foreign
limited liability company in the states indicated on
Schedule III hereto. FCOAM has been duly qualified
to do business and is in good standing as a foreign
corporation in the state of Massachusetts. To such
counsel's knowledge, there are no other jurisdictions
in which the ownership or leasing of the LLC
Subsidiaries, and FCOAM's respective properties or
the nature or conduct of their respective business
requires such qualification, except where the failure
to do so would not have a material adverse effect on
the financial condition, business, prospects, net
worth or results of the LLC Subsidiaries, FCOAM and
the Lessee taken as a whole.
(v) The Company has full corporate right, power and
authority to enter into, deliver and perform this
Agreement, the Deposit Agreement and the Articles
Supplementary, to issue, sell and deliver the
Depositary Shares and the Preferred Stock as provided
herein and therein and to consummate the transactions
contemplated herein. This Agreement, the Deposit
Agreement and the Articles Supplementary have been
duly authorized, executed and delivered by the
Company.
(vi) 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 by the Partnership.
(vii) The Partnership has full partnership right, power and
authority to enter into, either for itself or on
behalf of a subsidiary, each of the Percentage Leases
(the "New Percentage Leases") relating to the Current
Hotels acquired since October 1, 1997. Each New
Percentage Lease has been duly authorized, executed
and delivered by the Partnership. Each New
Percentage Lease should be construed to create a
valid leasehold interest in favor of the Lessee.
18
<PAGE> 20
(viii) The Lessee has full limited liability company right,
power and authority to enter into each of the New
Percentage Leases and the Management Agreements (the
"New Management Agreements") relating to the Current
Hotels acquired since October 1, 1997 and to
consummate the transactions contemplated therein.
Each such agreement relating to the Current Hotels
acquired since October 1, 1997 has been duly
authorized, executed and delivered by the Lessee.
(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 Depositary Shares,
the execution, delivery and performance of this
Agreement and the consummation by the Company and the
Partnership of the transactions contemplated hereby,
the execution, delivery and performance of the other
Operative Documents to which either the Company or
the Partnership is a party and the consummation by
the Company and/or the Partnership, as applicable, of
the transactions contemplated thereby, including
without limitation the issuance of Units, has been
made or obtained and is in full force and effect,
except such (i) as may be necessary under state
securities or real estate syndication laws or by the
NASD in connection with the purchase and distribution
of the Depositary Shares by the Underwriters, as to
which such counsel need express no opinion, or (ii)
solely as the same may relate to the Operative
Documents, the lack of which would not have a
material adverse effect on the financial condition,
business, prospects, net worth or results of
operations of the Company and the Partnership, taken
as a whole.
(x) Each consent, approval, authorization, order,
license, certificate, permit, registration,
designation or filing by or with any governmental
agency or body necessary for the execution, delivery
and performance of the Operative Documents by the
Lessee, and the consummation by the Lessee of the
transactions contemplated thereby, has been made or
obtained or filed and is in full force and effect,
except such (i) as may be necessary under state
securities or real estate syndication laws or by the
NASD in connection with the purchase and distribution
of the Depositary Shares by the Underwriters, as to
which such counsel need express no opinion, or (ii)
the lack of which would not have a material adverse
effect on the financial condition, business,
prospects, net worth or results of operations of the
Lessee.
(xi) Neither the issuance, sale and delivery by the
Company of the Preferred Stock or the Depositary
Shares, nor the execution, delivery and performance
of this Agreement, the Deposit Agreement nor the
Articles Supplementary by the Company and/or the
Partnership, nor the consummation of the transactions
contemplated hereby or thereby by the Company or the
Partnership, will
19
<PAGE> 21
violate any of the terms and provisions of, or
constitute a default under, any of the Operative
Documents, the articles of incorporation, bylaws,
certificate of limited partnership or partnership
agreement, as the case may be, of any such entity, as
applicable; or, to such counsel's knowledge, under
any material indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or
instrument to which the Company or the Partnership is
a party or to which they, either of them, any of
their respective properties or other assets or any
Current Hotel owned by the Partnership or Holdings as
of the date hereof is subject, except for violations
or defaults under agreements or instruments which
have since been terminated, cured or otherwise
satisfied or such violations or defaults as would not
have a material adverse effect on the financial
condition, business, prospects, net worth or results
of operations of the Company and the Partnership,
taken as a whole; or, to such counsel's knowledge,
violate any applicable statute, judgment, decree,
order, rule or regulation of any court or
governmental agency or body; or, 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 foregoing, except for
liens, charges, claims or encumbrances which are
created by the Operative Documents or which have
since been terminated, cured or otherwise would not
have a material adverse effect on the financial
condition, business, prospects, net worth or results
of operations of the Company and the Partnership,
taken as a whole.
(xii) The Depositary Shares to be issued and sold to the
Underwriters hereunder and the Preferred Stock have
been validly authorized by the Company. When the
Preferred Stock and the Depositary Receipts
evidencing the Depositary Shares representing
interests in such Preferred Stock are issued and
delivered against payment therefor as provided in
this Agreement and the Deposit Agreement, the
Preferred Stock will be duly and validly issued,
fully paid and nonassessable. The deposit of the
Preferred Stock by the Company with the Depositary
pursuant to the Deposit Agreement has been duly
authorized and, when the Depositary Shares are issued
and delivered in accordance with the terms of the
Agreement, the Depositary Shares will represent legal
and valid interests in the Preferred Stock as
provided in the Deposit Agreement. Assuming due
authorization, execution and delivery of the Deposit
Agreement by the Depositary, each Depositary Share,
if any, will represent the interest described in the
Prospectus in a validly issued, outstanding, fully
paid and nonassessable share of Preferred Stock.
Assuming due execution and delivery of the Depositary
Receipts, if any, by the Depositary pursuant to such
Deposit Agreement, the Depositary Receipts will
entitle the holders thereof to the benefits provided
therein and in the Deposit Agreement. To such
counsel's knowledge, no person or entity has a right
of participation or first refusal with respect to the
sale of the Depositary Shares by the Company. The
form of
20
<PAGE> 22
certificates evidencing the Preferred Stock comply in
all material respects with all applicable
requirements of Maryland law. The Depositary
Receipts are in due and proper form. All offers and
sales of the Company's capital stock prior to the
date hereof were at all relevant times duly
registered under the Securities Act or exempt from
the registration requirements of the Securities Act
by reason of Sections 3(b), 4(2) or 4(6) thereof, and
(with the exception of shares of Common Stock and
Series A Preferred Stock registered under the
Securities Act, as to which such counsel need not
opine) were duly registered or the subject of an
available exemption from the registration
requirements of the applicable state securities or
blue sky laws.
(xiii) 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 validly issued, fully
paid and nonassessable. 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.
(xiv) All of the issued Units have been duly and validly
authorized and issued and are fully paid. None of
the issued Units have been issued or is owned or held
in violation of any preemptive rights. The Units to
be issued to the Company at the Closing Date have
been duly and validly authorized by the Partnership.
When issued and delivered against payment thereof as
provided in the Partnership Agreement, such Units
will be duly and validly issued and fully paid. All
of the outstanding Units have been issued, offered
and sold in compliance with all applicable laws
(including, without limitation, federal and state
securities laws). The Units to be issued to the
Company at the Closing Time will be issued, offered
and sold in compliance with all applicable laws
(including, without limitation, federal and state
securities laws).
(xv) Neither the Company, the Partnership nor the Lessee
is in violation of its respective articles of
incorporation, bylaws, certificate of limited
partnership, partnership agreement, or limited
liability company agreement, as the case may be, and
to the knowledge of such counsel no material default
exists and no event has occurred which, with notice
or after the lapse of time to cure or both, would
constitute a material default in the due performance
and observance of any obligation, agreement, term,
covenant, or condition contained in any indenture,
mortgage, deed of trust, loan agreement, note, lease
or other agreement or instrument known to such
counsel to which any such entity is a party or by
which any such entity or any of its properties is
subject. To the knowledge of such counsel, neither
the Company, the
21
<PAGE> 23
Partnership nor the Lessee 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.
(xvi) 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 Partnership,
the Lessee or Holdings 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 individually or in the aggregate have a
material adverse effect on the financial position,
results of operations or business of the Company and
the Partnership, taken as a whole.
(xvii) 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. To such counsel's knowledge, there
are no statutes or regulations applicable to the
Company, the Partnership or the Lessee 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. To such counsel's
knowledge, all material agreements between the
Company, the Partnership or the Lessee, respectively,
and third parties expressly referenced in the
Prospectus, assuming due authorization, execution and
delivery thereof by each other party thereto, are
legal, valid and binding obligations of each such
entity, respectively, enforceable against such entity
in accordance with their respective terms, except to
the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or
other laws of general applicability relating to or
affecting creditors' rights and to general equitable
principles.
(xviii) The Company has applied to list the Depositary Shares
on the New York Stock Exchange.
(xix) The Registration Statement has become effective under
the Securities 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 Securities Act.
Other than financial statements and other financial
and
22
<PAGE> 24
operating information data and schedules contained
therein, as to which counsel need express no opinion,
the Registration Statement, all Preliminary
Prospectuses, 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 Form S-3 under the Securities Act.
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.
(xx) Such counsel has no reason to believe that the
Registration Statement including the Incorporated
Documents, 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 a material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading (provided
that such counsel need express no belief regarding
the financial statements and related schedules and
other financial data contained in the Registration
Statement, any amendment thereto, or the Prospectus,
or any amendment or supplement thereto).
(xxi) 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 conform 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.
(xxii) None of the Company, the Partnership or the Lessee
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.
23
<PAGE> 25
(xxiii) The descriptions in or incorporated by reference in
the Prospectus or the Preliminary Prospectus of
statutes, regulations, legal or governmental
proceedings, the Percentage Leases, and the
Management Agreements therein described present
fairly a summary of the information required to be
shown under the Act. The descriptions in the
Registration Statement and the Prospectus or the
Preliminary Prospectus of the contracts, leases and
other legal documents therein described present
fairly the information required to be shown.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
and jurisdictions in which they are admitted, provided that (1) each such local
counsel is acceptable to the Underwriters, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Underwriters and is, in form and substance satisfactory to
them and their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon. In
addition, in rendering the foregoing opinion, such counsel may rely on, as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of the Company, the Partnership and the Lessee and certificates or
other written statements of officers or departments of various jurisdictions,
having custody of documents respecting the existence or good standing of the
Company, the Partnership and the Lessee provided that copies of all such
opinions, statements or certificates shall be delivered to Underwriters'
counsel. The opinion of counsel for the Company shall state that the opinion
of any other counsel, or certificate or written statement, on which such
counsel is relying is in form satisfactory to such counsel and that you and
they are justified in relying thereon.
(d) The Underwriters shall have received on the Closing
Date, an opinion of Hunton & Williams, tax counsel for the Company and the
Partnership, dated the Closing Date and addressed to the Underwriters, to the
effect that 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 Internal Revenue Code of 1986, as amended (the "Code"),
and that the Company's proposed method of operation enables it to meet the
requirements for qualification and taxation as a REIT under the Code. The
Company has taken all necessary action to be treated, effective beginning with
the year ended December 31, 1994, as a REIT under the Code. The Partnership
will be treated as a partnership for federal income purposes and not as a
corporation or an association taxable as a corporation. In rendering the
foregoing opinion, such counsel may rely on, as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company, the Partnership and the Lessee and certificates or other written
statements of officers or departments of various jurisdictions, having custody
of documents respecting the existence or good standing of the Company, the
Partnership and the Lessee provided that copies of all such opinions,
statements or certificates shall be delivered to Underwriters' counsel.
24
<PAGE> 26
(e) The Underwriters shall have received on the Closing
Date an opinion of King & Spalding, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (v), (xii) (but
only with respect to the due authorization, issuance and delivery of the
Depositary Shares), (xix) and (xx) of paragraph (c) above, and to the effect
that the statements in the Prospectus Supplement under the captions
"Description of Series B Preferred Stock and Depositary Shares," and
"Underwriting" fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein.
With respect to subparagraph (xx) of paragraph (c) above, Jenkens &
Gilchrist and King & Spalding may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified.
The opinions of Jenkens & Gilchrist and Hunton & Williams described in
paragraphs (c) and (d) above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from each of Coopers & Lybrand L.L.P., Arthur Andersen LLP and
Price Waterhouse LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
The several obligations of the Underwriters to purchase Additional
Depositary Shares hereunder are subject to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Depositary Shares and other matters related to the issuance of the
Additional Depositary Shares.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, seven conformed
copies of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 3:00 p.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
25
<PAGE> 27
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the
public offering of the Depositary Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in connection
with sales by an Underwriter or dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriters, it is necessary to amend
or supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish to
the Company) to which Depositary Shares may have been sold by you on behalf of
the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Depositary Shares and the
Preferred Stock for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering the
twelve-month period ending June 30, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all expenses incident to the performance of their obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Depositary Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, each Preliminary Prospectus
Supplement, the Prospectus Supplement and amendments and supplements to any of
the foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in
the quantities hereinabove specified, (ii) all costs and expenses related to
the transfer and delivery of the Depositary Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or Legal Investment memorandum in connection
with the offer and sale of the Depositary Shares under state securities laws
and all expenses in connection with the qualification of the Depositary Shares
and the Preferred Stock for offer and sale under state securities laws as
26
<PAGE> 28
provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of the
offering of the Depositary Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Depositary
Shares and all costs and expenses incident to listing the Depositary Shares on
the NYSE, (vi) the cost of printing the Depositary Receipts and the
certificates representing the Preferred Stock, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Depositary Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses incident
to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however,
that except as provided in this Section, Section 7 entitled "Indemnity and
Contribution", and the last paragraph of Section 9 below, the Underwriters will
pay all of their costs and expenses, including fees and disbursements of their
counsel, stock transfer taxes payable on resale of any of the Depositary Shares
by them and any advertising expenses connected with any offers they may make.
7. INDEMNITY AND CONTRIBUTION. (a) The Company and the
Partnership, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any Preliminary Prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Partnership, their respective
directors and officers who sign the Registration Statement and each person, if
any, who controls the Company or the Partnership within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused
27
<PAGE> 29
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
Preliminary Prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 7,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, the Partnership, their
respective directors and officers who sign the Registration Statement and each
person, if any, who controls the Company or the Partnership within the meaning
of either such Section. In the case of any such separate firm for the
Underwriters and such control persons of any Underwriters, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In the case of any
such separate firm for the Company and the Partnership, and such directors,
officers and control persons of the Company and the Partnership, such firm
shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have
28
<PAGE> 30
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened 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 proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Depositary Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Partnership on the one hand
and the Underwriters on the other hand in connection with the offering of the
Depositary Shares shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Depositary Shares (before deducting
expenses) received by the Company and the Partnership and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Depositary Shares. The relative fault
of the Company and the Partnership on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, the Partnership or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Depositary Shares they have purchased hereunder, and not
joint.
(e) The Company, the Partnership and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
of this Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph 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 or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any
29
<PAGE> 31
amount in excess of the amount by which the total price at which the Depositary
Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company and the Partnership contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, or the Company, the Partnership, their
respective officers or directors or any person controlling the Company or the
Partnership and (iii) acceptance of and payment for any of the Depositary
Shares.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of
any securities of the Company shall have been suspended on any exchange or in
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a) (i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable
to market the Depositary Shares on the terms and in the manner contemplated in
the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Depositary Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Depositary Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate number of the Depositary Shares to be
purchased on such date, the other Underwriters shall be obligated severally in
the proportions that the number of Depositary Shares set forth opposite their
respective names in Schedule I bears to the aggregate number of Depositary
Shares set forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as you may specify, to purchase the Depositary Shares
which such defaulting Underwriter
30
<PAGE> 32
or Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Depositary Shares that any Underwriter has
agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of Depositary
Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Depositary Shares and the aggregate number of Depositary Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Depositary Shares to be purchased and arrangements satisfactory to you and the
Company for the purchase of such Depositary Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional
Depositary Shares and their aggregate number of Additional Depositary Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Additional Depositary Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Depositary Shares or (ii) purchase not less
than the number of Additional Depositary Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
12. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
31
<PAGE> 33
Very truly yours,
FELCOR SUITE HOTELS, INC.
By:/s/ Randall L. Churchey
Randall L. Churchey,
Senior Vice President and
Chief Financial Officer
FELCOR SUITES LIMITED PARTNERSHIP
By: FELCOR SUITE HOTELS, INC., General
Partner
By:/s/ Randall L. Churchey
Randall L. Churchey,
Senior Vice President and
Chief Financial Officer
<PAGE> 34
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
Acting severally on behalf
of themselves and the several
Underwriters named in
Schedule I hereto.
By Morgan Stanley & Co.
Incorporated
By: /s/ Michael Fusco
--------------------------------
Name: Michael Fusco
Title: Vice President
<PAGE> 35
SCHEDULE I
Underwriters
<TABLE>
<CAPTION>
Number of
Depositary Shares
Underwriter To Be Purchased
----------- -----------------
<S> <C>
Morgan Stanley & Co. Incorporated 1,157,195
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 1,157,185
Prudential Securities Incorporated 1,157,185
Smith Barney Inc. 1,157,185
BT Alex Brown Incorporated 57,500
Bear, Stearns & Co. Inc. 57,500
CIBC Oppenheimer Corp. 57,500
Dain Rauscher Incorporated 57,500
A.G. Edwards & Sons, Inc. 57,500
Goldman, Sachs & Co. 57,500
Lehman Brothers Inc. 57,500
Morgan Keegan & Company, Inc. 57,500
Advest, Inc. 28,750
Robert W. Baird & Co. Incorporated 28,750
J.C. Bradford & Co. 28,750
Cowen & Company 28,750
Craigie Incorporated 28,750
Crowell, Weedon & Co. 28,750
Davenport & Company LLC 28,750
First Albany Corporation 28,750
First of Michigan Corporation 28,750
Gibraltar Securities Co. 28,750
Interstate/Johnson Lane Corporation 28,750
Janney Montgomery Scott Inc. 28,750
McDonald & Company Securities, Inc. 28,750
McGinn, Smith & Co., Inc. 28,750
H.J. Meyers & Co., Inc. 28,750
W.J. Nolan & Company Inc. 28,750
Piper Jaffray Inc. 28,750
The Robinson-Humphrey Company, LLC 28,750
Roney & Co., L.L.C. 28,750
</TABLE>
<PAGE> 36
<TABLE>
<S> <C>
Scott & Stringfellow, Inc. 28,750
Southwest Securities, Inc. 28,750
Stifel, Nicolaus & Company, Incorporated 28,750
Tucker Anthony Incorporated 28,750
---------
Total Depositary Shares 5,750,000
=========
</TABLE>
<PAGE> 37
SCHEDULE II
Subsidiaries of FelCor Suite Hotels, Inc.
THE FOLLOWING IS A TRUE AND CORRECT LIST OF THE SUBSIDIARIES
OF FELCOR SUITE HOTELS, INC. ("FELCOR") AS OF APRIL 20, 1998
<TABLE>
<CAPTION>
STATE AND FORM OF
NAME ORGANIZATION OWNERSHIP INTEREST(1)
---- ------------------------- ------------------
<S> <C> <C>
FelCor Suites Limited Partnership Delaware; Limited 92.4% GP interest owned by FelCor
("FelCor LP") Partnership
FelCor/CSS Hotels, L.L.C. ("FelCor/CSS Delaware; Limited 100% owned by FelCor LP
Hotels") Liability Company
FelCor/CSS Holdings, L.P. Delaware; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/St. Paul Holdings, L.P. Delaware; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
FelCor/LAX Hotels, L.L.C. ("FelCor/LAX Delaware; Limited 100% owned by FelCor LP
Hotels") Liability Company
FelCor/LAX Holdings, L.P. ("FelCor/LAX Delaware; 1% GP Interest owned by
Holdings") Limited Partnership FelCor/LAX Hotels; 99% LP
interest owned by FelCor LP
Los Angeles International Airport Hotel Texas; 50% GP interest owned by
Associates, L.P. Limited Partnership FelCor/LAX Holdings and
47.2% LP interest owned by
FelCor/LAX Hotels
FCH/DT Hotels, L.L.C. Delaware; Limited 90% owned by FelCor LP
Liability Company
FCH/DT Holdings, L.P. Delaware; 1% GP interest owned by FCH/DT
Limited Partnership Hotels, L.L.C.; 89.1% LP interest
owned by FelCor LP
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C>
FCH/DT BWI Holdings, L.P. Delaware; 1% GP interest owned by FCH/DT
Limited Partnership Hotels, L.L.C.; 99% LP interest
owned by FCH/DT Holdings, LP
FelCor/Charlotte Hotel, L.L.C. Delaware; Limited 50% owned by FelCor/CSS Hotels
("FelCor/Charlotte") Liability Company
E. S. Charlotte Limited Partnership Minnesota; 2% GP interest owned by
Limited Partnership FelCor/Charlotte; 49% LP interest
owned by FelCor LP
FelCor/Indianapolis Hotel, L.L.C. Delaware; Limited 50% owned by FelCor/CSS Hotels
("Felcor/Indianapolis") Liability Company
E.S. North, an Indiana Limited Indiana; 2% GP interest owned by
Partnership Limited Partnership FelCor/Indianapolis; 49% LP
interest owned by FelCor LP
FelCor Eight Hotels, L.L.C. Delaware; 100% owned by FelCor LP
("FelCor Eight Hotels") Limited Liability
Company
EPT Atlanta - Perimeter Center Limited Delaware; 1% GP interest owned by FelCor
Partnership Limited Partnership Eight Hotels; 49% LP interest
("EPT Atlanta") owned by FelCor LP
EPT - Austin Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Austin") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Covina Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Covina") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Kansas City Limited Partnership Delaware; 1% GP interest owned by FelCor
Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Meadowlands Limited Partnership Delaware; 1% GP interest owned by FelCor
Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - Overland Park Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Overland Park") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
</TABLE>
<PAGE> 39
<TABLE>
<S> <C> <C>
EPT - Raleigh Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT Raleigh") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
EPT - San Antonio Limited Partnership Delaware; 1% GP interest owned by FelCor
("EPT San Antonio") Limited Partnership Eight Hotels; 49% LP interest
owned by FelCor LP
Promus/FelCor Lombard Venture Illinois; 50% GP interest owned by FelCor
("Lombard JV") General Partnership LP
MHV Joint Venture Texas; 50% GP interest owned by FelCor
("MHV JV") General Partnership LP
Promus/FelCor Parsippany Venture New Jersey; 50% GP interest owned by FelCor
("Parsippany JV") General Partnership LP
Promus/FelCor San Antonio Venture Texas; 50% GP interest owned by FelCor
General Partnership LP
Kingston Plantation Development Delaware; 97% non-voting Class B
Corporation ("KPDC") Corporation interest owned by FelCor LP
Promus/FelCor Manager, Inc. Delaware; 50% owned by KPDC
Corporation
Promus/FelCor Hotels, L.L.C. Delaware; Limited 1% owned by Promus/FelCor
Liability Company Manager, Inc.; 99% owned by EPT
Atlanta, EPT Austin, EPT Covina,
EPT Overland Park, EPT Raleigh,
EPT San Antonio, Lombard JV, MHV
JV and Parsippany JV
Promus/FCH Development Company, L.L.C. Delaware; 50% owned by FelCor LP
Limited Liability
Company
Promus/FCH Condominium Company, L.L.C. Delaware; 50% owned by FelCor LP
Limited Liability
Company
FCH/PSH, L.P. Pennsylvania; 1% GP interest owned by
Limited Partnership FelCor/CSS Hotels; 99% LP
interest owned by FelCor LP
</TABLE>
<PAGE> 40
# # # #
(1) THE PERCENTAGE INTERESTS REFLECTED ABOVE REPRESENT THE PERCENTAGES OF
AGGREGATE EQUITY INTEREST IN THE RESPECTIVE ENTITIES. EACH OF THE GP INTERESTS
REFLECTED ABOVE REPRESENTS EITHER THE ENTIRE GENERAL PARTNER INTEREST IN SUCH
ENTITY OR AN INTEREST AS THE SOLE ADMINISTRATIVE GENERAL PARTNER OF SUCH ENTITY
WITH POWER TO CONTROL THE DAY-TO-DAY OPERATIONS THEREOF.
<PAGE> 41
LESSEE QUALIFICATION STATUS
<TABLE>
<CAPTION>
NAME OF ENTITY STATE
- -------------- -----
<S> <C>
DJONT Operations, L.L.C. Delaware*
Alabama
Arizona
California
Colorado
Florida
Georgia
Illinois
Kentucky
Louisiana
Minnesota
New Jersey
Ohio
Oklahoma
Tennessee
Texas
DJONT Leasing, L.L.C. Delaware*
Arizona
California
Georgia
Illinois
Indiana
Kansas
Minnesota
Missouri
Nebraska
New Jersey
New York
North Carolina
South Carolina
Texas
FCH/DT Leasing, L.L.C. Delaware*
Colorado
Maryland
Michigan
New Jersey
Ohio
Pennsylvania
Texas
</TABLE>
<PAGE> 42
<TABLE>
<S> <C>
FCH/DT Leasing II, L.L.C. Delaware*
Florida
North Carolina
Ohio
Tennessee
Texas
FCH/SH Leasing, L.L.C. Delaware*
Arizona
Florida
Georgia
Illinois
Kentucky (pending)
Pennsylvania
Texas
FCH/SH Leasing II, L.L.C. Delaware*
Vermont
DJONT/EPT Leasing, L.L.C. Delaware*
California
Georgia
Illinois
Kansas
New Jersey
North Carolina
Texas
DJONT/EPT Manager, Inc. Delaware*
California
Georgia
Illinois
Kansas
New Jersey
North Carolina
Texas
FCOAM, Inc. Texas*
Massachusetts
- -----------------------
</TABLE>
* Domicile state
<PAGE> 1
EXHIBIT 3.3
ARTICLES SUPPLEMENTARY
OF
FELCOR SUITE HOTELS, INC.
FELCOR SUITE HOTELS, INC., a Maryland corporation (hereinafter
referred to as the "Company"), hereby certifies as follows:
FIRST: Under the authority set forth in Article V of the Charter of
the Company, the Board of Directors of the Company on April 20, 1998, and April
30, 1998, classified 57,500 unissued shares of the Preferred Stock as "9%
Series B Cumulative Redeemable Preferred Stock."
SECOND: A description of the 9% Series B Cumulative Redeemable
Preferred Stock, including the preferences and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as set or changed by the Board of Directors of the
Company is as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This series of
preferred stock shall be designated as 9% Series B Cumulative Redeemable
Preferred Stock (the "Series B Preferred Stock"), and 57,500 shall be the
number of shares of Preferred Stock constituting such series.
Section 2. DEFINITIONS. For purposes of the Series B Preferred
Stock, the following terms shall have the meanings indicated:
"Board of Directors" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series B Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in Texas or New York
are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (c) of Section 5
hereof.
"Common Stock" shall mean the common stock of the Company, par value $0.01 per
share.
"Dividend Payment Date" shall mean the last calendar day of January, April,
July and October in each year, commencing on July 31, 1998; PROVIDED, HOWEVER,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing February 1,
May 1, August 1, and November 1 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period (other than
the initial Dividend Period, which shall commence on May 7, 1998 and end on and
include July 31, 1998).
"Issue Date" shall mean the date on which the Company first issues a share of
Series B Preferred Stock.
<PAGE> 2
"Junior Stock" shall mean the Common Stock and any other class or series of
shares of the Company over which the Series B Preferred Stock has preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Company.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8
hereof.
"Series A Preferred Stock" shall mean the Company's $1.95 Series A Cumulative
Convertible Preferred Stock.
"Series B Preferred Stock" shall have the meaning set forth in Section 1
hereof.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Company in its accounting ledgers of
any accounting or bookkeeping entry which indicates, pursuant to a declaration
of dividends or other distribution by the Board of Directors, the allocation of
funds to be so paid on any series or class of capital stock of the Company;
PROVIDED, HOWEVER, that if any funds for a class or series of Junior Stock or
any class or series of stock ranking on a parity with the Series B Preferred
Stock as to the payment of dividends are placed in a separate account of the
Company or delivered to a disbursing, paying or other similar agent, then "set
apart for payment" with respect to the Series B Preferred Stock shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
"Transfer Agent" means SunTrust Bank, Atlanta, Georgia, or such other agent or
agents of the Company as may be designated by the Board of Directors or their
designee as the transfer agent for the Series B Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9(a)
hereof.
Section 3. DIVIDENDS.
(a) The Holders of shares of the Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, dividends payable in cash in an
amount per share of Series B Preferred Stock equal to $225.00 per annum. Such
dividends shall be cumulative from May 7, 1998, whether or not in any Dividend
Period or Periods there shall be funds of the Company legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates,
commencing on the first Dividend Payment Date after the Issue Date. Each such
dividend shall be payable in arrears to the holders of record of shares of the
Series B Preferred Stock, as they appear on the stock records of the Company at
the close of business on such record dates, not more than 60 days preceding
such Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable for each full Dividend Period
for the Series B Preferred Stock shall be computed by dividing the annual
dividend rate by four. The amount of
- 2 -
<PAGE> 3
dividends payable for any period shorter or longer than a full Dividend Period,
on the Series B Preferred Stock shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. Holders of the Series B Preferred
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein provided, on the Series
B Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series B
Preferred Stock that may be in arrears.
(c) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Stock for any period unless full cumulative dividends have
been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series B
Preferred Stock for all Dividend Periods terminating on or prior to the
Dividend Payment Date on such class or series of Parity Stock. When dividends
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Series B Preferred Stock
and all dividends declared upon any other class or series of Parity Stock shall
be declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series B Preferred Stock and accumulated and
unpaid on such Parity Stock.
(d) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock), shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Stock, nor shall Junior Stock be
redeemed, purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an employee
incentive or benefit plan of the Company or any subsidiary) for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Company, directly or
indirectly, unless in each case (i) the full cumulative dividends on all
outstanding shares of the Series B Preferred Stock and any other Parity Stock
of the Company shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Series B Preferred Stock and all past
dividend periods with respect to such Parity Stock and (ii) sufficient funds
shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the Series B Preferred Stock and the
current dividend period with respect to such Parity Stock. Notwithstanding the
foregoing limitations, the Company may at any time acquire shares of its
capital stock, without regard to rank, for the purpose of preserving its status
as a real estate investment trust ("REIT").
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, before any payment or
distribution of the assets of the Company (whether capital or surplus) shall be
made to or set apart for the holders of Junior Stock, the holders of the shares
of Series B Preferred Stock shall be entitled to receive two thousand five
hundred dollars ($2,500.00) per share of Series B Preferred Stock plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holders, but such
holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among
- 3 -
<PAGE> 4
the holders of the shares of Series B Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid and liquidating payments on any
other shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of shares of Series B
Preferred Stock and any such other Parity Stock ratably in accordance with the
respective amounts that would be payable on such shares of Series B Preferred
Stock and any such other Parity Stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, (i) a consolidation or merger of
the Company with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Company's assets, or (iii) a statutory share exchange
shall not be deemed to be a liquidation, dissolution or winding up, voluntary
or involuntary, of the Company.
(b) Subject to the rights of the holders of shares of any series
or class or classes of stock ranking on a parity with or prior to the Series B
Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Company, after payment shall have
been made in full to the holders of the Series B Preferred Stock, as provided
in this Section 4, any other series or class or classes of Junior Stock shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series B Preferred Stock shall not be entitled to share
therein.
Section 5. REDEMPTION AT THE OPTION OF THE COMPANY
(a) The Series B Preferred Stock shall not be redeemable by the
Company prior to May 7, 2003. On and after May 7, 2003, the Company, at its
option, may redeem the shares of Series B Preferred Stock in whole or in part,
as set forth herein, subject to the provisions described below.
(b) The Series B Preferred Stock may be redeemed, in whole or in
part, at the option of the Company, at any time or from time to time, upon not
less than 30 nor more than 60 days' prior written notice. In order to exercise
its redemption option, the Company must issue a press release announcing the
redemption (the "Press Release"). The Company may not issue a Press Release
prior to May 7, 2003. The Press Release shall announce the redemption and set
forth the number of shares of Series B Preferred Stock which the Company
intends to redeem. The Call Date shall be selected by the Company, shall be
specified in the notice of redemption and, subject to the provisions of Section
5(e) below, shall be not less than 30 days or more than 60 days after the date
on which the Company issues the Press Release.
(c) Upon redemption of Series B Preferred Stock by the Company on
the date specified in the notice to holders required under subparagraph (e) of
this Section 5 (the "Call Date"), each share of Series B Preferred Stock to be
redeemed shall be redeemed in cash at a price per share equal to $2,500.00 per
share, plus all accrued and unpaid distributions thereon to the Call Date,
without interest, to the extent that the Company has funds legally available
therefor. The redemption price of the Series B Preferred Stock (other than any
portion thereof consisting of accrued and unpaid distributions) must be paid
solely from the sale proceeds of other capital stock of the Company and not
from any other source. For purposes of the foregoing sentence, "capital stock"
means any common stock, preferred stock, depositary shares, interests,
participations, or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing. Dividends payable
- 4 -
<PAGE> 5
on the shares of Series B Preferred Stock for any period greater or less than a
full dividend period will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Except as provided above, the Company shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on shares
of Series B Preferred Stock called for redemption or on the shares of capital
stock issued upon such redemption.
(d) If full cumulative dividends on the Series B Preferred Stock
and any other class or series of Parity Stock of the Company have not been paid
or declared and set apart for payment, the Series B Preferred Stock may not be
redeemed in part and the Company may not purchase or acquire shares of Series B
Preferred Stock, otherwise than pursuant to a purchase or exchange offer made
on the same terms to all holders of shares of Series B Preferred Stock.
(e) If the Company shall redeem shares of Series B Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to the beneficial holders of the Series B Preferred Stock by the Company
not less than thirty Business Days before the Call Date. Such notice shall be
provided by first class mail, postage prepaid, at such holder's address as the
same appears on the stock records of the Company, or by publication in THE WALL
STREET JOURNAL or THE NEW YORK TIMES, or if neither such newspaper is then
being published, any other daily newspaper of national circulation. If the
Company elects to provide such notice by publication, it shall also promptly
mail notice of such redemption to the holders of the Series B Preferred Stock
to be redeemed. Neither the failure to mail any notice required by this
paragraph (e), nor any defect therein or in the mailing thereof, to any
particular holder, shall affect the sufficiency of the notice or the validity
of the proceedings for redemption with respect to the other holders. Any notice
which was mailed in the manner herein provided shall be conclusively presumed
to have been duly given on the date mailed whether or not the holder receives
the notice. Each such mailed or published notice shall state, as appropriate:
(1) the Call Date: (2) the number of shares of Series B Preferred Stock to be
redeemed from such holder; (3) the redemption price; (4) the place or places
where the Series B Preferred Stock is to be surrendered for payment of the
redemption price; and (5) that dividends on the shares to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been published or mailed as aforesaid, from and after the Call Date
(unless the Company shall fail to make available the amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the shares of the Series B Preferred Stock so called for redemption shall
cease to accrue, (ii) said shares shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Series B Preferred
Stock of the Company shall cease (except the rights to receive the cash payable
upon such redemption, without interest thereon, upon surrender and endorsement
of their certificates). The Company's obligation to provide cash in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the Company shall deposit with a bank or trust company (which may be an
affiliate of the Company) that has an office in the Borough of Manhattan, City
of New York and that has, or is an affiliate of a bank or trust company that
has, a capital and surplus of at least $50,000,000, any cash necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied
to the redemption of the shares of Series B Preferred Stock so called for
redemption. At the close of business on the Call Date, each share Series B
Preferred Stock to be redeemed pursuant to Section 5(c)(i) (unless the Company
defaults in the delivery of the cash payable on such Call Date) shall be deemed
to be no longer outstanding regardless of whether such holder has surrendered
the certificates representing the Series B Preferred Stock. No interest shall
- 5 -
<PAGE> 6
accrue for the benefit of the holders of Series B Preferred Stock to be
redeemed on any cash so set aside by the Company. Subject to applicable escheat
laws, any such cash unclaimed at the end of two years from the Call Date
(together with any interest or other earnings accrued thereon) shall revert to
the general funds of the Company, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Company for the payment of such cash, and shall have no right to interest from
and after the Call Date.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Company shall so require and if the notice
shall so state), such shares shall be exchanged for cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding shares of Series B Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Company from outstanding shares of Series B
Preferred Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the Company in its sole
discretion to be equitable. If fewer than all the shares of Series B Preferred
Stock represented by any certificate are redeemed, then new certificates
representing the unredeemed shares shall be issued without cost to the holder
thereof.
(f) Notwithstanding the foregoing, the Company may at any time
acquire shares of its capital stock, without regard to rank, for the purpose of
preserving its status as a REIT, for purposes of an employee benefit plan of
the Company, or in accordance with the conversion or redemption provisions of
any class of Preferred Stock ranking on parity with or senior to the Series B
Preferred Stock.
(g) The procedures for redeeming any depositary receipts
evidencing fractional interests in the Series B Preferred Stock shall be the
same as the procedures for redeeming the Series B Preferred Stock contained in
this Section 5 except that the depositary agent that issued the depositary
receipts being redeemed may act on behalf of the Company.
Section 6. SHARES TO BE RETIRED.
All shares of Series B Preferred Stock which shall have been issued
and reacquired in any manner by the Company shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series. The Company may also retire any unissued shares of Series B Preferred
Stock, and such shares shall then be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series.
Section 7. CONVERSION.
Holders of shares of Series B Preferred Stock shall have no conversion
rights.
Section 8. RANKING. Any class or series of stock of the Company
shall be deemed to rank:
(a) prior to the Series B Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
- 6 -
<PAGE> 7
dissolution or winding up, as the case may be, in preference or priority to the
holders of Series B Preferred Stock;
(b) on a parity with the Series B Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series B Preferred Stock, if the holders of such class of stock or
series and the Series B Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority one over
the other ("Parity Stock"); the Series A Preferred Stock shall be Parity Stock
with respect to the Series B Preferred Stock; and
(c) junior to the Series B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Series B Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such stock or
series.
Section 9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series B Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of a similar arrearage with respect to any Parity Stock) and the holders
of shares of Series B Preferred Stock, together with the holders of shares of
every other series of Parity Stock (any such other series, the "Voting
Preferred Stock"), voting as a single class regardless of series, shall be
entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series B Preferred
Stock and the Voting Preferred Stock called as hereinafter provided. Whenever
all arrearages dividends on the Series B Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series B Preferred
Stock and the Voting Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearages in six quarterly
dividends), and the terms of office of all persons elected as directors by the
holders of the Series B Preferred Stock and the Voting Preferred Stock shall
forthwith terminate and the number of the Board of Directors shall be
automatically reduced accordingly. At any time after such voting power shall
have been so vested in the holders of shares of Series B Preferred Stock and
the Voting Preferred Stock, the secretary of the Company may, and upon the
written request of any holder of Series B Preferred Stock or any holder of
depositary receipts evidencing a fractional interest in the Series B Preferred
Stock (addressed to the secretary at the principal office of the Company)
shall, call a special meeting of the holders of the Series B Preferred Stock
and the Voting Preferred Stock for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar to
that
- 7 -
<PAGE> 8
provided in the Bylaws of the Company for a special meeting of the stockholders
or as required by law. If any such special meeting required to be called as
above provided shall not be called by the secretary within 20 days after
receipt of any such request, then any holder of shares of Series B Preferred
Stock (or depositary receipts representing shares of Series B Preferred Stock)
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Company. The directors elected at
any such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Series B Preferred Stock and the
Voting Preferred Stock, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders of
the Series B Preferred Stock and the Voting Preferred Stock or the successor of
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall not
have previously terminated as provided above.
(b) So long as any shares of Series B Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, as amended, the affirmative vote of at least 66 2/3%
of the votes entitled to be cast by the holders of the shares of Series B
Preferred Stock and the Voting Preferred Stock, at the time outstanding, acting
as a single class regardless of series, at any meeting called for the purpose,
shall be necessary for effecting or validating the following:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary that materially adversely affects
the voting powers, rights or preferences of the holders of the Series B
Preferred Stock or the Voting Preferred Stock; PROVIDED, HOWEVER, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount, of any Junior Stock or any shares of any class
ranking on a parity with the Series B Preferred Stock or the Voting Preferred
Stock shall not be deemed to materially adversely affect the voting powers,
rights or preferences of the holders of Series B Preferred Stock, and PROVIDED,
FURTHER, that if any such amendment, alteration or repeal would materially
adversely affect any voting powers, rights of preferences of the Series B
Preferred Stock or another series of Voting Preferred Stock that are not
enjoyed by some or all of the other series which otherwise would be entitled to
vote in accordance herewith, the affirmative vote of least 66 2/3% of the votes
entitled to be cast by holders of all series similarly affected, similarly
given, shall be required in lieu of the affirmative vote of at least 66 2/3% of
the votes entitled to be cast by the holders of the shares of Series B
Preferred Stock and the Voting Preferred Stock which otherwise would be
entitled to vote in accordance herewith;
(ii) Enter into a share exchange that affects the Series B
Preferred Stock, consolidate with or merge into another entity, or permit
another entity to consolidate with or merge into the Company, unless in each
such case, each share of Series B Preferred Stock remains outstanding without a
material and adverse change to its terms and rights or is converted into or
exchanged for a share of preferred stock of the surviving entity having
preferences, rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption identical
to those of a share of Series B Preferred Stock (except for changes that do not
materially and adversely affect the holders of the Series B Preferred Stock);
or
- 8 -
<PAGE> 9
(iii) The authorization, reclassification, or creation of,
or the increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior to the Series B
Preferred Stock in the distribution of assets on any liquidation, dissolution
or winding up of the Company or in the payment of dividends.
For purposes of the foregoing provisions of this Section 9, each share
of Series B Preferred Stock shall have one hundred (100) votes per share, each
of which 100 votes may be directed separately by the holder thereof (or by any
proxy or proxies of such holder). With respect to each share of the Series B
Preferred Stock, the holder thereof may designate up to 100 proxies, with each
proxy having the right to vote a whole number of votes (totaling 100 votes per
share of Series B Preferred Stock). Except as otherwise required by applicable
law or as set forth herein, the shares of Series B Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section 10. RECORD HOLDERS. The Company and the Transfer Agent may
deem and treat the record holder of any shares of Series B Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Company nor
the Transfer Agent shall be affected by any notice to the contrary.
[Signatures On Following Page.]
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be signed in its name and on its behalf on this 1st day of
May, 1998, by its Senior Vice President who acknowledges that these Articles
Supplementary are the act of the Company and that to the best of his knowledge,
information and belief and under penalties for perjury all matters and facts
contained in these Articles Supplementary are true in all material respects.
FELCOR SUITE HOTELS, INC.
By: /s/ Randall L. Churchey
------------------------------------------
Randall L. Churchey, Senior Vice President
Attest:
/s/ Lawrence D. Robinson
-----------------------------------------------
Lawrence D. Robinson, Secretary
(Corporate Seal)
- 10 -
<PAGE> 1
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF MARYLAND
PB
[FELCOR LOGO]
FELCOR SUITE HOTELS, INC.
THIS CERTIFICATE IS TRANSFERABLE 9% SERIES B CUMULATIVE
IN ATLANTA, GEORGIA and NEW YORK, REDEEMABLE PREFERRED STOCK
NEW YORK
CUSIP 31 5 40 0
SEE REVERSE FOR CERTAIN
DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF 9% SERIES B CUMULATIVE
REDEEMABLE PREFERRED STOCK, $.01 PAR VALUE AND $2,500.00
LIQUIDATION PREFERENCE PER SHARE, OF
FELCOR SUITE HOTELS, INC.
(the "Corporation"), a Maryland corporation. The shares represented by this
Certificate are transferable only on the stock transfer books of the
Corporation by the holder of record hereof in person or any duly authorized
attorney or legal representative upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Corporation's transfer agent and registrar.
In Witness Whereof, the Corporation has caused this Certificate to be
executed by the facsimile seal and signature of its duly authorized officers.
Dated:
/s/ LAWRENCE D. ROBINSON
SECRETARY
[SEAL]
Countersigned and Registered at:
SUNTRUST BANK, ATLANTA
(Atlanta, Georgia)
Transfer Agent
and Registrar /s/ THOMAS J. CORCORAN, JR.
By
Authorized Signature PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE> 2
FELCOR SUITE HOTELS, INC.
The shares of Equity Stock represented by this certificate are subject
to restrictions on transfer for the purpose of maintaining the Corporation's
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may at any time (1) Beneficially Own
or Constructively Own shares of any class of Equity Stock in excess of 9.9% (or
such other percentage as may be determined by the Board of Directors of the
Corporation) of the total number of shares of such class of Equity Stock
outstanding as of such time; (2) Beneficially Own Equity Stock which would
result in the Corporation being "closely held" under Section 856(h) of the
Code; (3) Constructively Own Equity Stock which would result in the
Corporation Constructively Owning 10% or more of the ownership interest in any
tenant or subtenant of the Corporation's real property (including the real
property held by FelCor Suites Limited Partnership and any other partnership in
which the Corporation owns an interest), within the meaning of Section
856(d)(2)(B) of the Code. Any Person who attempts to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the above limitations
must immediately notify the Corporation in writing. If the restrictions above
are violated, the shares of Equity Stock represented hereby will be transferred
automatically and by operation of law to a Trust and shall be designated
Shares-in-Trust. All capitalized terms in this legend have the meanings
assigned to them in the Corporation's Charter, as the same may be further
amended from time to time. The shares of Equity Stock represented by this
certificate are subject to all of the provisions of the Charter and Bylaws of
the Corporation, each as amended or supplemented from time to time, to all of
which the holder, by acceptance hereof, assents. The Corporation will furnish
to any stockholder, upon request and without charge, a copy of its Charter and
Bylaws, and all amendments or supplements thereto, setting forth the
restrictions on transfer and a statement of (i) the designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each class which the Corporation is authorized to
issue, (ii) the differences in the relative rights and preferences between the
shares of each series of each class of the stock which the Corporation is
authorized to issue to the extent they have been set by the Board of Directors
and (iii) the authority of the Board of Directors to set the relative rights
and preferences of subsequent series of stock of the Corporation.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
as tenants in common UNIF TRANSFER MIN ACT -- Custodian
as tenants by the entireties ------- -------
as joint tenants with right (Cust) (Minor)
of survivorship and not as tenants under Uniform Transfers to Minors
in common Act
----------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE
OF ASSIGNEE
_______________________________________________________________________________
________________________________________________________________________ shares
represented by this Certificate, and do hereby irrevocably constitute and
appoint
______________________________________________________________________ Attorney
to transfer the said shares on the books of the Corporation with full power of
substitution in the premises.
Date:_____________________
________________________________________
SIGNATURE(S) GUARANTEED:________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ac-15.
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 4.6
================================================================================
DEPOSIT AGREEMENT
AMONG
FELCOR SUITE HOTELS, INC.
SUNTRUST BANK
AND
THE HOLDERS OF THE DEPOSITARY
RECEIPTS TO BE ISSUED HEREUNDER
DATED AS OF APRIL 30, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Articles Supplementary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Corporate Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Deposit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Depositary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Depositary's Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Record holder or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II FORM OF RECEIPTS, DEPOSIT OF PREFERRED SHARES, EXECUTION
AND DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF
RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Form and Transferability of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Deposit of Preferred Shares; Execution and Delivery of Receipts
in Respect Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Optional Redemption of Preferred Shares for Cash . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Registration of Transfers of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Combinations and Split-ups of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Surrender of Receipts and Withdrawal of Preferred Shares . . . . . . . . . . . . . . . . . . . . . 7
2.7 Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 Lost Receipts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.9 Cancellation and Destruction of Surrendered Receipts . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS
AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Filing Proofs, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Representations and Warranties as to Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Representation and Warranty as to Receipts and Depositary Shares . . . . . . . . . . . . . . . . . 9
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV THE PREFERRED SHARES; NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Cash Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Distributions Other Than Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Subscription Rights, Preferences or Privileges . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Notice of Dividends; Fixing of Record Date for Holders of Receipts . . . . . . . . . . . . . . . 12
4.5 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Changes Affecting Preferred Shares and Reclassifications,
Recapitalization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Inspection of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Lists of Receipt Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.9 Tax and Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V THE DEPOSITARY AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Maintenance of Offices, Agencies and Transfer Books
by the Depositary and the Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Prevention or Delay in Performance by the Depositary,
the Depositary's Agents, the Registrar or the Company . . . . . . . . . . . . . . . . . . . . 15
5.3 Obligations of the Depositary, the Depositary's Agents,
the Registrar and the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Resignation and Removal of the Depositary;
Appointment of Successor Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Notices, Reports and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Exclusive Benefit of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Depositary's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.6 Holders of Receipts Are Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.8 Inspection of Deposit Agreement and Articles Supplementary . . . . . . . . . . . . . . . . . . . 21
7.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-ii-
<PAGE> 4
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of April 30, 1998, among FelCor Suite Hotels,
Inc., a Maryland corporation (the "Company") and SunTrust Bank, Atlanta,
Georgia, a Georgia banking corporation, as Depositary, and all holders from
time to time of Receipts (as hereinafter defined) issued hereunder.
W I T N E S S E T H:
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of the Company's Preferred Shares (as
hereinafter defined) with the Depositary for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of the Receipts evidencing
Depositary Shares representing a fractional interest in the Preferred Shares
deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed to this Deposit Agreement, with appropriate insertions, modifications
and omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, it is
agreed by and among the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and the
Receipts:
SECTION 1.1 "ARTICLES SUPPLEMENTARY" shall mean the articles
supplementary to the Charter filed with the Department of Assessments and
Taxation of the State of Maryland establishing the Preferred Shares as a series
of preferred shares of the Company.
SECTION 1.2 "CHARTER" shall mean the Articles of Amendment and
Restatement, as supplemented and amended from time to time, of the Company.
SECTION 1.3 "COMPANY" shall mean FelCor Suite Hotels, Inc., a
Maryland corporation, and its successors.
SECTION 1.4 "CORPORATE OFFICE" shall mean the corporate office
of the Depositary at which at any particular time its business in respect of
matters governed by this Deposit Agreement shall be administered, which at the
date of this Deposit Agreement is located at 58 Edgewood Avenue, N.E., Atlanta,
Georgia 30303.
-1-
<PAGE> 5
SECTION 1.5 "DEPOSIT AGREEMENT" shall mean this agreement, as
the same may be amended, modified or supplemented from time to time.
SECTION 1.6 "DEPOSITARY" shall mean SunTrust Bank, Atlanta,
Georgia, a bank having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000, and any successor as
depositary hereunder.
SECTION 1.7 "DEPOSITARY SHARE" shall mean a fractional interest
of 1/100 of a Preferred Share deposited with the Depositary hereunder and the
same proportionate interest in any and all other property received by the
Depositary in respect of such Preferred Share and held under this Deposit
Agreement, all as evidenced by the Receipts issued hereunder. Subject to the
terms of this Deposit Agreement, each owner of a Depositary Share is entitled,
proportionately, to all the rights, preferences and privileges of the Preferred
Share represented by such Depositary Share, including the dividend, voting,
redemption, conversion and liquidation rights contained in the Articles
Supplementary.
SECTION 1.8 "DEPOSITARY'S AGENT" shall mean an agent appointed
by the Depositary as provided, and for the purposes specified, in Section 7.5.
SECTION 1.9 "PREFERRED SHARES" shall mean the Company's 9%
Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share,
heretofore validly issued, fully paid and nonassessable.
SECTION 1.10 "RECEIPT" shall mean a Depositary Receipt issued
hereunder to evidence one or more Depositary Shares, whether in definitive or
temporary form, substantially in the form set forth as Exhibit A hereto.
SECTION 1.11 "RECORD DATE" shall mean the date fixed pursuant to
Section 4.4.
SECTION 1.12 "RECORD HOLDER" OR "HOLDER" as applied to a Receipt
shall mean the person in whose name a Receipt is registered on the books
maintained by the Depositary for such purpose.
SECTION 1.13 "REGISTRAR" shall mean SunTrust Bank, Atlanta,
Georgia or any bank or trust company appointed to register ownership and
transfers of Receipts or the deposited Preferred Shares, as the case may be, as
herein provided.
SECTION 1.14 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended.
SECTION 1.15 "TRANSFER AGENT" shall mean SunTrust Bank, Atlanta,
Georgia or any bank or trust company appointed to transfer the Receipts or the
deposited Preferred Shares, as the case may be, as herein provided.
-2-
<PAGE> 6
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF PREFERRED SHARES,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1 FORM AND TRANSFERABILITY OF RECEIPTS. Definitive
Receipts shall be engraved or printed or lithographed with steel-engraved
borders and underlying tint and shall be substantially in the form set forth in
Exhibit A annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided. Pending the preparation
of definitive Receipts, the Depositary, upon the written order of the Company,
delivered in compliance with Section 2.2, shall execute and deliver temporary
Receipts which may be printed, lithographed, typewritten, mimeographed or
otherwise substantially of the tenor of the definitive Receipts in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the persons executing such Receipts may
determine, as evidenced by their execution of such Receipts. If temporary
Receipts are issued, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for
definitive Receipts upon surrender of the temporary Receipts at the Corporate
Office or such other offices, if any, as the Depositary may designate, without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Receipts, the Depositary shall execute and deliver in exchange
therefor definitive Receipts representing the same number of Depositary Shares
as represented by the surrendered temporary Receipt or Receipts. Such exchange
shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Deposit Agreement, and with respect to the Preferred
Shares deposited, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual or
facsimile signature of a duly authorized signatory of the Depositary, PROVIDED
that if a Registrar (other than the Depositary) shall have been appointed then
such Receipts shall also be countersigned by manual signature of a duly
authorized signatory of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for any purpose
unless it shall have been executed as provided in the preceding sentence. The
Depositary shall record on its books each Receipt executed as provided above
and delivered as hereinafter provided.
Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their issuance.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of
this Deposit Agreement as may be required by the Depositary or required to
comply with any applicable law or regulation or with
-3-
<PAGE> 7
the rules and regulations of any securities exchange upon which the Preferred
Shares, the Depositary Shares or the Receipts may be listed or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Receipts are subject.
Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt), that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with
the same effect as in the case of a negotiable instrument; PROVIDED, HOWEVER,
that until a Receipt shall be transferred on the books of the Depositary as
provided in Section 2.4, the Depositary may, notwithstanding any notice to the
contrary, treat the record holder thereof at such time as the absolute owner
thereof for the purpose of determining the person entitled to distribution of
dividends or other distributions, the exercise of any conversion rights or to
any notice provided for in this Deposit Agreement and for all other purposes.
SECTION 2.2 DEPOSIT OF PREFERRED SHARES; EXECUTION AND DELIVERY
OF RECEIPTS IN RESPECT THEREOF. Concurrently with the execution of this
Deposit Agreement, the Company is delivering to the Depositary a certificate or
certificates, registered in the name of the Depositary and evidencing 57,500
Preferred Shares, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with (i) all such certifications as
may be required by the Depositary in accordance with the provisions of this
Deposit Agreement and (ii) a written order of the Company directing the
Depositary to execute and deliver to, or upon the written order of, the person
or persons stated in such order a Receipt or Receipts for the Depositary Shares
representing such deposited Preferred Shares. The Depositary acknowledges
receipt of the deposited Preferred Shares and related documentation and agrees
to hold such deposited Preferred Shares in an account to be established by the
Depositary at the Corporate Office or at such other office as the Depositary
shall determine. The Company hereby appoints the Depositary as the Registrar
and Transfer Agent for Preferred Shares deposited hereunder and the Depositary
hereby accepts such appointment and, as such, will reflect changes in the
number of shares (including any fractional shares) of deposited Preferred
Shares held by it by notation, book-entry or other appropriate method.
If required by the Depositary, Preferred Shares presented for deposit
by the Company at any time, whether or not the register of shareholders of the
Company is closed, shall also be accompanied by an agreement or assignment, or
other instrument satisfactory to the Depositary, that will provide for the
prompt transfer to the Depositary or its nominee of any dividend or right to
subscribe for additional Preferred Shares or to receive other property that any
person in whose name the Preferred Shares is or has been registered may
thereafter receive upon or in respect of such deposited Preferred Shares, or in
lieu thereof such agreement of indemnity or other agreement as shall be
satisfactory to the Depositary.
-4-
<PAGE> 8
Upon receipt by the Depositary of a certificate or certificates for
Preferred Shares deposited hereunder, together with the other documents
specified above, and upon registering such Preferred Shares in the name of the
Depositary, the Depositary, subject to the terms and conditions of this Deposit
Agreement, shall execute and deliver to, or upon the order of, the person or
persons named in the written order delivered to the Depositary referred to in
the first paragraph of this Section 2.2, a Receipt or Receipts for the number
of whole Depositary Shares representing the Preferred Shares so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Corporate Office, except that, at the request, risk and expense of any person
requesting such delivery, such delivery may be made at such other place as may
be designated by such person.
Other than in the case of splits, combinations or other
reclassifications affecting the Preferred Shares, or in the case of dividends
or other distributions of Preferred Shares, if any, there shall be deposited
hereunder not more than the number of shares constituting the Preferred Shares
as set forth in the Articles Supplementary, as such may be amended.
The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary
to perform its obligations under this Deposit Agreement.
SECTION 2.3 OPTIONAL REDEMPTION OF PREFERRED SHARES FOR CASH.
Whenever the Company shall elect to redeem deposited Preferred Shares for cash
in accordance with the provisions of the Articles Supplementary, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary
not less than 30 nor more than 60 days prior written notice of the date of such
proposed redemption and of the number of such Preferred Shares held by the
Depositary to be redeemed and the applicable redemption price, as set forth in
the Articles Supplementary, including the amount, if any, of accrued and unpaid
dividends to the date of such redemption. The Depositary shall mail,
first-class postage prepaid, notice of the redemption of Preferred Shares and
the proposed simultaneous redemption of the Depositary Shares representing the
Preferred Shares to be redeemed, not less than 30 nor more than 60 days prior
to the date fixed for redemption of such Preferred Shares and Depositary Shares
(the "cash redemption date"), to the holders of record on the record date fixed
for such redemption pursuant to Section 4.4 hereof of the Receipts evidencing
the Depositary Shares to be so redeemed, at the addresses of such holders as
the same appear on the records of the Depositary; but neither failure to mail
any such notice to one or more such holders nor any defect in any such notice
shall affect the sufficiency of the proceedings for redemption as to other
holders. The Company shall provide the Depositary with such notice, and each
such notice shall state: the cash redemption date; the cash redemption price;
the number of deposited Preferred Shares and Depositary Shares to be redeemed;
if fewer than all the Depositary Shares held by any holder are to be redeemed,
the number of such Depositary Shares held by such holder to be so redeemed; the
place or places where Receipts evidencing Depositary Shares to be redeemed are
to be surrendered for payment of the cash redemption price; and that from and
after the cash redemption date dividends in
-5-
<PAGE> 9
respect of the Preferred Shares represented by the Depositary Shares to be
redeemed will cease to accrue. If fewer than all the outstanding Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed shall be
selected pro rata (as nearly as may be practicable without creating fractional
Depositary Shares) or by any other equitable method determined by the Company.
The Company may also cause notice of redemption to be published in the Wall
Street Journal or New York Times or, if neither is being published, in any
other newspaper of national circulation, prior to the cash redemption date.
In the event that notice of redemption has been made as described in
the immediately preceding paragraph and the Company shall then have paid in
full to the Depositary the cash redemption price (determined pursuant to the
Articles Supplementary) of the Preferred Shares deposited with the Depositary
to be redeemed (including any accrued and unpaid dividends to the date of
redemption), the Depositary shall redeem the number of Depositary Shares
representing such Preferred Shares so called for redemption by the Company and
from and after the cash redemption date (unless the Company shall have failed
to redeem the Preferred Shares to be redeemed by it as set forth in the
Company's notice provided for in the preceding paragraph), all dividends in
respect of the Preferred Shares called for redemption shall cease to accrue,
the Depositary Shares called for redemption shall be deemed no longer to be
outstanding and all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the cash redemption price and
any money or other property to which holders of such Receipts were entitled
upon such redemption) shall, to the extent of such Depositary Shares, cease and
terminate. Upon surrender in accordance with said notice of the Receipts
evidencing such Depositary Shares (properly endorsed or assigned for transfer,
if the Depositary shall so require), such Depositary Shares shall be redeemed
at a cash redemption price of $25.00 per Depositary Share plus any other money
and other property payable in respect of such Preferred Shares. The foregoing
shall be further subject to the terms and conditions of the Articles
Supplementary.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such
Receipt upon its surrender to the Depositary, together with payment of the cash
redemption price for and all other amounts payable in respect of the Depositary
Shares called for redemption, a new Receipt evidencing the Depositary Shares
evidenced by such prior Receipt and not called for redemption.
SECTION 2.4 REGISTRATION OF TRANSFERS OF RECEIPTS. The Company
hereby appoints the Depositary as the Registrar and Transfer Agent for the
Receipts and the Depositary hereby accepts such appointment and, as such, shall
register on its books from time to time transfers of Receipts upon any
surrender thereof by the holder in person or by a duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, together with evidence of the payment of any transfer taxes as
may be required by law. Upon such surrender, the Depositary shall execute a
new Receipt or Receipts and deliver the same to or upon the order of the person
entitled thereto evidencing the same aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.
-6-
<PAGE> 10
SECTION 2.5 COMBINATIONS AND SPLIT-UPS OF RECEIPTS. Upon
surrender of a Receipt or Receipts at the Corporate Office or such other office
as the Depositary may designate for the purpose of effecting a split-up or
combination of Receipts, subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denominations requested evidencing the same aggregate number
of Depositary Shares evidenced by the Receipt or Receipts surrendered.
SECTION 2.6 SURRENDER OF RECEIPTS AND WITHDRAWAL OF PREFERRED
SHARES. Any holder of a Receipt or Receipts may withdraw any or all of the
deposited Preferred Shares represented by the Depositary Shares evidenced by
such Receipt or Receipts and all money and other property, if any, represented
by such Depositary Shares by surrendering such Receipt or Receipts at the
Corporate Office or at such office as the Depositary may designate for such
withdrawals, PROVIDED that a holder of a Receipt or Receipts may not withdraw
such Preferred Shares (or money and other property, if any, represented
thereby) which has previously been called for redemption. After such
surrender, without unreasonable delay, the Depositary shall deliver to such
holder, or to the person or persons designated by such holder as hereinafter
provided, the number of whole or fractional shares of such Preferred Shares and
all such money and other property, if any, represented by the Depositary Shares
evidenced by the Receipt or Receipts so surrendered for withdrawal, but holders
of such whole or fractional Preferred Shares will not thereafter be entitled to
deposit such Preferred Shares hereunder or to receive Depositary Shares
therefor. If the Receipt or Receipts delivered by the holder to the Depositary
in connection with such withdrawal shall evidence a number of Depositary Shares
in excess of the number of Depositary Shares representing the number of whole
or fractional shares of deposited Preferred Shares to be withdrawn, the
Depositary shall at the same time, in addition to such number of whole or
fractional Preferred Shares and such money and other property, if any, to be
withdrawn, deliver to such holder, or (subject to Section 2.4) upon his order,
a new Receipt or Receipts evidencing such excess number of Depositary Shares.
Delivery of such Preferred Shares and such money and other property being
withdrawn may be made by the delivery of such certificates, documents of title
and other instruments as the Depositary may deem appropriate, which, if
required by the Depositary, shall be properly endorsed or accompanied by proper
instruments of transfer.
If the deposited Preferred Shares and the money and other property
being withdrawn are to be delivered to a person or persons other than the
record holder of the Receipt or Receipts being surrendered for withdrawal of
Preferred Shares, such holder shall execute and deliver to the Depositary a
written order so directing the Depositary and the Depositary may require that
the Receipt or Receipts surrendered by such holder for withdrawal of such
Preferred Shares be properly endorsed in blank or accompanied by a properly
executed instrument of transfer or endorsement in blank.
The Depositary shall deliver the deposited Preferred Shares and the
money and other property, if any, represented by the Depositary Shares
evidenced by Receipts surrendered for withdrawal at the Corporate Office,
except that, at the request, risk and expense of the holder
-7-
<PAGE> 11
surrendering such Receipt or Receipts and for the account of the holder
thereof, such delivery may be made at such other place as may be designated by
such holder.
SECTION 2.7 LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER,
SPLIT-UP, COMBINATION, SURRENDER AND EXCHANGE OF RECEIPTS. As a condition
precedent to the execution and delivery, transfer, split-up, combination,
surrender or exchange of any Receipt, the Depositary, any of the Depositary's
Agents or the Company may require any or all of the following: (i) payment to
it of a sum sufficient for the payment (or, in the event that the Depositary or
the Company shall have made such payment, the reimbursement to it) of any tax
or other governmental charge with respect thereto (including any such tax or
charge with respect to the Preferred Shares being deposited or withdrawn); (ii)
the production of proof satisfactory to it as to the identity and genuineness
of any signature (or the authority of any signature); and (iii) compliance with
such regulations, if any, as the Depositary or the Company may establish
consistent with the provisions of this Deposit Agreement as may be required by
any securities exchange upon which the deposited Preferred Shares, the
Depositary Shares or the Receipts may be included for quotation or listed.
The deposit of Preferred Shares may be refused, the delivery of
Receipts against Preferred Shares may be suspended, the transfer of Receipts
may be refused, and the transfer, split-up, combination, surrender, exchange or
redemption of outstanding Receipts may be suspended (i) during any period when
the register of shareholders of the Company is closed or (ii) if any such
action is deemed reasonably necessary or advisable by the Depositary, any of
the Depositary's Agents or the Company at any time or from time to time because
of any requirement of law or of any government or governmental body or
commission, or under the Charter or under any provision of this Deposit
Agreement.
SECTION 2.8 LOST RECEIPTS, ETC. In case any Receipt shall be
mutilated or destroyed or lost or stolen, the Depositary, in its discretion,
may execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, PROVIDED that the holder thereof
provides the Depositary with (i) evidence reasonably satisfactory to the
Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof and (ii) reasonable
indemnification satisfactory to the Depositary and the Company.
SECTION 2.9 CANCELLATION AND DESTRUCTION OF SURRENDERED
RECEIPTS. All Receipts surrendered to the Depositary or any Depositary's Agent
shall be canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so cancelled.
-8-
<PAGE> 12
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1 FILING PROOFS, CERTIFICATES AND OTHER INFORMATION.
Any person presenting Preferred Shares for deposit or any holder of a Receipt
may be required from time to time to file such proof of residence or other
information, to execute such certificates and to make such representations and
warranties as the Depositary or the Company may reasonably deem necessary or
proper. The Depositary or the Company may withhold or delay the delivery of
any Receipt, the transfer, redemption or exchange of any Receipt, the
withdrawal of the deposited Preferred Shares represented by the Depositary
Shares evidenced by any Receipt, the distribution of any dividend or other
distribution or the sale of any rights or of the proceeds thereof, until such
proof or other information is filed, such certificates are executed or such
representations and warranties are made.
SECTION 3.2 PAYMENT OF FEES AND EXPENSES. Holders of Receipts
shall be obligated to make payments to the Depositary of certain fees and
expenses, as provided in Section 5.7, or provide evidence reasonably
satisfactory to the Depositary that such fees and expenses have been paid.
Until such payment is made, transfer of any Receipt or any withdrawal of the
Preferred Shares or money or other property, if any, represented by the
Depositary Shares evidenced by such Receipt may be refused, any dividend or
other distribution may be withheld, and any part or all of the Preferred Shares
or other property represented by the Depositary Shares evidenced by such
Receipt may be sold for the account of the holder thereof (after attempting by
reasonable means to notify such holder a reasonable number of days prior to
such sale). Any dividend or other distribution so withheld and the proceeds of
any such sale may be applied to any payment of such fees or expenses, the
holder of such Receipt remaining liable for any deficiency.
SECTION 3.3 REPRESENTATIONS AND WARRANTIES AS TO PREFERRED
SHARES. In the case of the initial deposit of the Preferred Shares hereunder,
the Company and, in the case of subsequent deposits thereof, each person so
depositing Preferred Shares under this Deposit Agreement shall be deemed
thereby to represent and warrant that such Preferred Shares and each
certificate therefor are valid and that the person making such deposit is duly
authorized to do so. The Company hereby further represents and warrants that
such Preferred Shares, when issued, will be validly issued, fully paid and
nonassessable. Such representations and warranties shall survive the deposit
of the Preferred Shares and the issuance of Receipts.
SECTION 3.4 REPRESENTATION AND WARRANTY AS TO RECEIPTS AND
DEPOSITARY SHARES. The Company hereby represents and warrants that the
Receipts, when issued, will evidence legal and valid interests in the
Depositary Shares and each Depositary Share will represent a legal and valid
1/100 fractional interest in a deposited Preferred Share. Such
-9-
<PAGE> 13
representation and warranty shall survive the deposit of the Preferred Shares
and the issuance of Receipts evidencing the Depositary Shares.
ARTICLE IV
THE PREFERRED SHARES; NOTICES
SECTION 4.1 CASH DISTRIBUTIONS. Whenever the Depositary shall
receive any cash dividend or other cash distribution on the deposited Preferred
Shares, including any cash received upon redemption of any Preferred Shares
pursuant to Section 2.3, the Depositary shall, subject to Section 3.2,
distribute to record holders of Receipts on the record date fixed pursuant to
Section 4.4 such amounts of such sum as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders; PROVIDED, HOWEVER, that in case the Company or
the Depositary shall be required to and shall withhold from any cash dividend
or other cash distribution in respect of the Preferred Shares represented by
the Receipts held by any holder an amount on account of taxes, the amount made
available for distribution or distributed in respect of Depositary Shares
represented by such Receipts subject to such withholding shall be reduced
accordingly. The Depositary shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any holder of Receipts a fraction of one
cent, and any balance not so distributable shall be held by the Depositary
(without liability for interest thereon) and shall be added to and be treated
as part of the next sum received by the Depositary for distribution to record
holders of Receipts then outstanding.
SECTION 4.2 DISTRIBUTIONS OTHER THAN CASH. Whenever the
Depositary shall receive any distribution other than cash on the deposited
Preferred Shares, the Depositary shall, subject to Section 3.2, distribute to
record holders of Receipts on the record date fixed pursuant to Section 4.4
such amounts of the securities or property received by it as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders, in any manner that the
Depositary and the Company may deem equitable and practicable for accomplishing
such distribution. If, in the opinion of the Depositary after consultation
with the Company, such distribution cannot be made proportionately among such
record holders, or if for any other reason (including any requirement that the
Company or the Depositary withhold an amount on account of taxes), the
Depositary deems, after consultation with the Company, such distribution not to
be feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received or any part thereof, at such place or places and upon
such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Section 3.2, be distributed or made available for distribution, as
the case may be, by the Depositary to record holders of Receipts as provided by
Section 4.1 in the case of a distribution received in cash. The Company shall
not make any distribution of such securities or property to the holders of
Receipts unless the
-10-
<PAGE> 14
Company shall have provided to the Depositary an opinion of counsel stating
that such securities or property have been registered under the Securities Act
or do not need to be registered.
SECTION 4.3 SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If
the Company shall at any time offer or cause to be offered to the persons in
whose names deposited Preferred Shares are registered on the books of the
Company any rights, preferences or privileges to subscribe for or to purchase
any securities or any rights, preferences or privileges of any other nature,
such rights, preferences or privileges shall in each such instance be made
available by the Depositary to the record holders of Receipts in such manner as
the Company shall instruct (including by the issue to such record holders of
warrants representing such rights, preferences or privileges); PROVIDED,
HOWEVER, that (a) if at the time of issue or offer of any such rights,
preferences or privileges the Company determines upon advice of its legal
counsel that it is not lawful or feasible to make such rights, preferences or
privileges available to the holders of Receipts (by the issue of warrants or
otherwise) or (b) if and to the extent instructed by holders of Receipts who do
not desire to exercise such rights, preferences or privileges, the Depositary
shall then, if so instructed by the Company, and if applicable laws or the
terms of such rights, preferences or privileges so permit, sell such rights,
preferences or privileges of such holders at public or private sale, at such
place or places and upon such terms as it may deem proper. The net proceeds of
any such sale shall, subject to Section 3.1 and Section 3.2, be distributed by
the Depositary to the record holders of Receipts entitled thereto as provided
by Section 4.1 in the case of a distribution received in cash. The Company
shall not make any distribution of such rights, preferences or privileges,
unless the Company shall have provided to the Depositary an opinion of counsel
stating that such rights, preferences or privileges have been registered under
the Securities Act or applicable state securities laws or do not need to be
registered.
If registration under the Securities Act or applicable state
securities laws of the securities to which any rights, preferences or
privileges relate is required in order for holders of Receipts to be offered or
sold the securities to which such rights, preferences or privileges relate, the
Company agrees that it will promptly file a registration statement pursuant to
the Securities Act or applicable state securities laws with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such a registration statement shall have become
effective or unless the offering and sale of such securities to such holders
are exempt from registration under the provisions of the Securities Act or
applicable state securities laws and the Company shall have provided to the
Depositary an opinion of counsel to such effect.
If any other action under the law of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to
holders of Receipts, the Company agrees to use its best efforts
-11-
<PAGE> 15
to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.4 NOTICE OF DIVIDENDS; FIXING OF RECORD DATE FOR
HOLDERS OF RECEIPTS. Whenever any cash dividend or other cash distribution
shall become payable, any distribution other than cash shall be made, or any
rights, preferences or privileges shall at any time be offered, with respect to
the deposited Preferred Shares, or whenever the Depositary shall receive notice
of (i) any meeting at which holders of such Preferred Shares are entitled to
vote or of which holders of such Preferred Shares are entitled to notice or
(ii) any election on the part of the Company to redeem any such Preferred
Shares, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date fixed by the Company with respect to
the Preferred Shares) for the determination of the holders of Receipts who
shall be entitled to receive such dividend, distribution, rights, preferences
or privileges or the net proceeds of the sale thereof, to give instructions for
the exercise of voting rights at any such meeting or to receive notice of such
meeting or whose Depositary Shares are to be so redeemed.
SECTION 4.5 VOTING RIGHTS. Upon receipt of notice of any
meeting at which the holders of deposited Preferred Shares are entitled to
vote, the Depositary shall, as soon as practicable thereafter, mail to the
record holders of Receipts a notice, which shall be provided by the Company and
which shall contain (i) such information as is contained in such notice of
meeting, (ii) a statement that the holders of Receipts at the close of business
on a specified record date fixed pursuant to Section 4.4 will be entitled,
subject to any applicable provision of law, to instruct the Depositary as to
the exercise of the voting rights pertaining to the amount of Preferred Shares
represented by their respective Depositary Shares and (iii) a brief statement
as to the manner in which such instructions may be given. Upon the written
request of a holder of a Receipt on such record date, the Depositary shall vote
or cause to be voted the amount of Preferred Shares represented by the
Depositary Shares evidenced by such Receipt in accordance with the instructions
set forth in such request. To the extent such instructions request the voting
of a fractional interest of a share of deposited Preferred Shares, the
Depositary shall aggregate such interest with all other fractional interests
resulting from requests with the same voting instructions and shall vote the
number of whole votes resulting from such aggregation in accordance with the
instructions received in such requests. Each Preferred Share is entitled to
100 votes and, accordingly, each Depositary Share is entitled to one vote. The
Company hereby agrees to take all reasonable action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such
Preferred Shares or cause such Preferred Shares to be voted. In the absence of
specific instructions from the holder of a Receipt, the Depositary will abstain
from voting to the extent of the Preferred Shares represented by the Depositary
Shares evidenced by such Receipt. The Depositary shall not be required to
exercise discretion in voting any Preferred Shares represented by the
Depositary Shares evidenced by such Receipt.
-12-
<PAGE> 16
SECTION 4.6 CHANGES AFFECTING PREFERRED SHARES AND
RECLASSIFICATIONS, RECAPITALIZATION, ETC. Upon any change in par or stated
value, split-up, combination or any other reclassification of Preferred Shares,
or upon any recapitalization, reorganization, merger, amalgamation or
consolidation affecting the Company or to which it is a party or sale of all or
substantially all of the Company's assets, the Depositary shall, upon the
instructions of the Company: (i) make such adjustments in (a) the fraction of
an interest represented by one Depositary Share in one Preferred Share and (b)
the ratio of the redemption price per Depositary Share to the redemption price
of a Preferred Share, in each case as may be required by or as is consistent
with the provisions of the Articles Supplementary to fully reflect the effects
of such change in liquidation value, split-up, combination or other
reclassification of Shares, or of such recapitalization, reorganization,
merger, consolidation or sale and (ii) treat any shares or other securities or
property (including cash) that shall be received by the Depositary in exchange
for or upon conversion of or in respect of the Preferred Shares as new
deposited property under this Deposit Agreement, and Receipts then outstanding
shall thenceforth represent the proportionate interests of holders thereof or
the new deposited property so received in exchange for or upon conversion or in
respect of such Preferred Shares. In any such case the Depositary may, in its
discretion, with approval of the Company, execute and deliver additional
Receipts, or may call for the surrender of all outstanding Receipts to be
exchanged for new Receipts specifically describing such new deposited property.
Anything to the contrary herein notwithstanding, holders of Receipts shall have
the right from and after the effective date of any such change in par or stated
value, split-up, combination or other reclassification of the Preferred Shares
or any such recapitalization, reorganization, merger, amalgamation or
consolidation or sale of substantially all the assets of the Company to
surrender such Receipts to the Depositary with instructions to convert,
exchange or surrender the Preferred Shares represented thereby only into or
for, as the case may be, the kind and amount of shares and other securities and
property and cash into which the deposited Preferred Shares evidenced by such
Receipts might have been converted or for which such Preferred Shares might
have been exchanged or surrendered immediately prior to the effective date of
such transaction. The Company shall cause effective provision to be made in
the charter of the resulting or surviving corporation (if other than the
Company) for protection of such rights as may be applicable upon exchange of
the deposited Preferred Shares for securities or property or cash of the
surviving corporation in connection with the transactions set forth above. The
Company shall cause any such surviving corporation (if other than the Company)
expressly to assume the obligations of the Company hereunder.
SECTION 4.7 INSPECTION OF REPORTS. The Depositary shall make
available for inspection by holders of Receipts at the Corporate Office and at
such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of deposited Preferred Shares
and made generally available to the holders of the Preferred Shares. In
addition, the Depositary shall transmit certain notices and reports to the
holders of Receipts as provided in Section 5.5.
-13-
<PAGE> 17
SECTION 4.8 LISTS OF RECEIPT HOLDERS. Promptly upon request
from time to time by the Company, the Depositary shall furnish to the Company a
list, as of a recent date specified by the Company, of the names, addresses and
holdings of Depositary Shares of all persons in whose names Receipts are
registered on the books of the Depositary.
SECTION 4.9 TAX AND REGULATORY COMPLIANCE. The Depositary
shall be responsible for (i) preparation and mailing of form 1099's for all
open and closed accounts, (ii) foreign tax withholding, (iii) withholding 31%
(or any withholding as may be required at the then applicable rate) of
dividends from eligible holders of Receipts if directed to do so by the Company
or required to do so by applicable law, (iv) mailing W-9 forms to new holders
of Receipts without a certified taxpayer identification number, (v) processing
certified W-9 forms, (vi) preparation and filing of state information returns
and (vii) escheatment services.
SECTION 4.10 WITHHOLDING. Notwithstanding any other provision
of this Deposit Agreement, in the event that the Depositary determines that any
distribution in property is subject to any tax which the Depositary is
obligated by law to withhold, the Depositary may dispose of all or a portion of
such property in such amounts and in such manner as the Depositary deems
necessary and practicable to pay such taxes, by public or private sale, and the
Depositary shall distribute the net proceeds of any such sale or the balance of
any such property after deduction of such taxes to the holders of Receipts
entitled thereto in proportion to the number of Depositary Shares held by them
respectively.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.1 MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS
BY THE DEPOSITARY AND THE REGISTRAR. The Depositary shall maintain at the
Corporate Office facilities for the execution and delivery, transfer, surrender
and exchange, split-up, combination and redemption of Receipts and deposit and
withdrawal of Preferred Shares and at the offices of the Depositary's Agents,
if any, facilities for the delivery, transfer, surrender and exchange,
split-up, combination and redemption of Receipts and deposit and withdrawal of
Preferred Shares, all in accordance with the provisions of this Deposit
Agreement.
The Depositary shall keep books at the Corporate Office for the
registration and transfer of Receipts, which books at all reasonable times
shall be open for inspection by the record holders of Receipts as provided by
applicable law. The Depositary may close such books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or the
Preferred Shares represented by such Depositary Shares shall be listed on the
New York Stock Exchange, Inc. or
-14-
<PAGE> 18
any other stock exchange, the Depositary may, with the approval of the Company,
appoint a Registrar (acceptable to the Company) for registration of such
Receipts or Depositary Shares in accordance with the requirements of such
Exchange. Such Registrar (which may be the Depositary if so permitted by the
requirements of such Exchange) may be removed and a substitute registrar
appointed by the Depositary upon the request or with the approval of the
Company. If the Receipts, such Depositary Shares or such Preferred Shares are
listed on one or more other stock exchanges, the Depositary will, at the
request and expense of the Company, arrange such facilities for the delivery,
transfer, surrender, redemption and exchange of such Receipts, such Depositary
Shares or such Preferred Shares as may be required by law or applicable stock
exchange regulations.
SECTION 5.2 PREVENTION OR DELAY IN PERFORMANCE BY THE
DEPOSITARY, THE DEPOSITARY'S AGENTS, THE REGISTRAR OR THE COMPANY. Neither the
Depositary, any Depositary's Agent, any Registrar nor the Company shall incur
any liability to any holder of any Receipt, if by reason of any provision of
any present or future law or regulation thereunder of the United States of
America or of any other governmental authority or, in the case of the
Depositary, the Depositary's Agent or the Registrar, by reason of any
provision, present or future, of the Charter or the Articles Supplementary or,
in the case of the Company, the Depositary, the Depositary's Agent or the
Registrar, by reason of any act of God or war or other circumstance beyond the
control of the relevant party, the Depositary, the Depositary's Agent, the
Registrar or the Company shall be prevented or forbidden from doing or
performing any act or thing that the terms of this Deposit Agreement provide
shall be done or performed; nor shall the Depositary, any Depositary's Agent,
any Registrar or the Company incur any liability to any holder of a Receipt by
reason of any nonperformance or delay, caused as aforesaid, in the performance
of any act or thing that the terms of this Deposit Agreement provide shall or
may be done or performed, or by reason of any exercise of, or failure to
exercise, any discretion provided for in this Deposit Agreement.
SECTION 5.3 OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY. Neither the Depositary, any
Depositary's Agent, any Registrar nor the Company assumes any obligation or
shall be subject to any liability under this Deposit Agreement or any Receipt
to holders of Receipts other than from acts or omissions arising out of conduct
constituting bad faith, negligence (in the case of any action or inaction with
respect to the voting of the deposited Preferred Shares), gross negligence or
willful misconduct in the performance of such duties as are specifically set
forth in this Deposit Agreement.
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the deposited Preferred
Shares, Depositary Shares or Receipts that in its reasonable opinion may
involve it in expense or liability unless indemnity reasonably satisfactory to
it against all expense and liability be furnished as often as may be required.
-15-
<PAGE> 19
Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information
provided by any person presenting Preferred Shares for deposit, any holder of a
Receipt or any other person believed by it in good faith to be competent to
give such information. The Depositary, any Depositary's Agent, any Registrar
and the Company may each rely and shall each be protected in acting upon any
written notice, request, direction or other document believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties.
In the event the Depositary shall receive conflicting claims, requests
or instructions from any holders of Receipts, on the one hand, and the Company,
on the other hand, the Depositary shall be entitled to act on such claims,
requests or instructions received from the Company, and shall be entitled to
the full indemnification set forth in Section 5.6 hereof in connection with any
action so taken.
The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the deposited Preferred Shares or for the manner
or effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
Depositary. The Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are specifically set
forth in this Deposit Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Depositary or any Registrar.
The Depositary, its parent, affiliate, or subsidiaries, any
Depositary's Agent, and any Registrar may own, buy, sell or deal in any class
of securities of the Company and its affiliates and in Receipts or Depositary
Shares or become pecuniarily interested in any transaction in which the Company
or its affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Depositary or the
Depositary's Agent hereunder. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates or act in
any other capacity for the Company or its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
shall be deemed to be an "issuer" of the securities under the federal
securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary and any Depositary's Agent are acting
only in a ministerial capacity as Depositary for the deposited Preferred
Shares; PROVIDED, HOWEVER, that the Depositary agrees to comply with all
information reporting and withholding requirements applicable to it under law
or this Deposit Agreement in its capacity as Depositary.
The Company agrees that it will register the deposited Preferred
Shares and the Depositary Shares if required by the applicable securities laws.
-16-
<PAGE> 20
SECTION 5.4 RESIGNATION AND REMOVAL OF THE DEPOSITARY;
APPOINTMENT OF SUCCESSOR DEPOSITARY. The Depositary may at any time resign as
Depositary hereunder by notice of its election to do so delivered to the
Company, such resignation to take effect upon the appointment of a successor
depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$50,000,000. If a successor depositary shall not have been appointed in 60
days, the resigning Depositary may petition a court of competent jurisdiction
to appoint a successor depositary. Every successor depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the deposited Preferred Shares and any moneys
or property held hereunder to such successor and shall deliver to such
successor a list of the record holders of all outstanding Receipts. Any
successor depositary shall promptly mail notice of its appointment to the
record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.
SECTION 5.5 NOTICES, REPORTS AND DOCUMENTS. The Company agrees
that it will deliver to the Depositary, and the Depositary will, promptly after
receipt thereof, transmit to the record holders of Receipts, in each case at
the address recorded in the Depositary's books, copies of all notices and
reports (including financial statements) required by law, by the rules of any
national securities exchange upon which the Preferred Shares, the Depositary
Shares or the Receipts are included for quotation or listed or by the Charter
and the Articles Supplementary to be furnished by the Company to holders of the
deposited Preferred Shares and, if requested by the holder of any Receipt, a
copy of this Deposit Agreement, the form of Receipt, the Articles Supplementary
and the form of Preferred Shares. Such transmission will be at the Company's
expense and the Company will provide the Depositary with such number of copies
of such
-17-
<PAGE> 21
documents as the Depositary may reasonably request. In addition, the
Depositary will transmit to the record holders of Receipts at the Company's
expense such other documents as may be requested by the Company.
SECTION 5.6 INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify the Depositary, any Depositary's Agent and any Registrar against,
and hold each of them harmless from, any liability, costs and expenses
(including reasonable attorneys' fees) that may arise out of, or in connection
with, its acting as Depositary, Depositary's Agent or Registrar, respectively,
under this Deposit Agreement and the Receipts, except for any liability arising
out of the willful misconduct, gross negligence, negligence (in the case of any
action or inaction with respect to the voting of the deposited Preferred
Shares) or bad faith on the part of any such person or persons. The
obligations of the Company set forth in this Section 5.6 shall survive any
succession of any Depositary, Registrar or Depositary's Agent or termination of
this Deposit Agreement.
SECTION 5.7 FEES, CHARGES AND EXPENSES. No charges and
expenses of the Depositary or any Depositary's Agent hereunder shall be payable
by any person, except as provided in this Section 5.7. The Company shall pay
all transfer and other taxes and governmental charges arising solely from the
existence of this Deposit Agreement. The Company shall also pay all fees and
expenses of the Depositary in connection with the initial deposit of the
Preferred Shares and the initial issuance of the Depositary Shares evidenced by
the Receipts, any redemption of the Preferred Shares at the option of the
Company and all withdrawals of the Preferred Shares by holders of Depositary
Shares. If a holder of Receipts requests the Depositary to perform duties not
required under this Deposit Agreement, the Depositary shall notify the holder
of the cost of the performance of such duties prior to the performance thereof.
Such holder will be liable for the charges and expenses related to such
performance. All other fees and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
fees and expenses of counsel) incident to the performance of their respective
obligations hereunder will be promptly paid as previously agreed between the
Depositary and the Company. The Depositary shall present its statement for
fees and expenses to the Company every month or at such other intervals as the
Company and the Depositary may agree.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 AMENDMENT. The form of the Receipts and any
provision of this Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary in any respect that
they may deem necessary or desirable; PROVIDED, HOWEVER, that no such amendment
(other than any change in the fees of any Depositary, Registrar or Transfer
Agent) which (i) shall materially and adversely alter the rights
-18-
<PAGE> 22
of the holders of Receipts or (ii) would be materially and adversely
inconsistent with the rights granted to the holders of the Preferred Shares
pursuant to the Articles Supplementary shall be effective unless such amendment
shall have been approved by the holders of at least a majority of the
Depositary Shares then outstanding. In no event shall any amendment impair the
right, subject to the provisions of Section 2.6 and Section 2.7 and Article
III, of any holder of any Depositary Shares to surrender the Receipt evidencing
such Depositary Shares with instructions to the Depositary to deliver to the
holder the deposited Preferred Shares and all money and other property, if any,
represented thereby, except in order to comply with mandatory provisions of
applicable law. Every holder of an outstanding Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such
Receipt, to consent and agree to such amendment and to be bound by this Deposit
Agreement as amended thereby.
SECTION 6.2 TERMINATION. This Deposit Agreement may be
terminated by the Company upon not less than 30 days' prior written notice to
the Depositary if (i) such termination is necessary to preserve the Company's
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (or any successor provisions) or (ii) the holders of a
majority of the Preferred Shares consent to such termination, whereupon the
Depositary shall deliver or make available to each holder of a Receipt, upon
surrender of the Receipt held by such holder, such number of whole or
fractional shares of deposited Preferred Shares that are represented by the
Depositary Shares evidenced by such Receipt, together with any other property
held by the Depositary in respect of such Receipt. In the event that this
Deposit Agreement is terminated pursuant to clause (i) of the immediately
preceding sentence, the Company hereby agrees to use its best efforts to list
the Preferred Shares issued upon surrender of the Receipt evidencing the
Depositary Shares represented thereby on a national securities exchange. This
Deposit Agreement will automatically terminate if (i) all outstanding
Depositary Shares shall have been redeemed pursuant to Section 2.3 or (ii)
there shall have been made a final distribution in respect of the deposited
Preferred Shares in connection with any liquidation, dissolution or winding up
of the Company and such distribution shall have been distributed to the holders
of Receipts entitled thereto.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Section 5.6 and Section 5.7.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 COUNTERPARTS. This Deposit Agreement may be
executed in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument. Delivery of an
-19-
<PAGE> 23
executed counterpart of a signature page to this Deposit Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Deposit Agreement. Copies of this Deposit Agreement shall be filed with
the Depositary and the Depositary's Agents and shall be open to inspection
during business hours at the Corporate Office and the respective offices of the
Depositary's Agents, if any, by any holder of a Receipt.
SECTION 7.2 EXCLUSIVE BENEFIT OF PARTIES. This Deposit
Agreement is for the exclusive benefit of the parties hereto, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.
SECTION 7.3 INVALIDITY OF PROVISIONS. In case any one or more
of the provisions contained in this Deposit Agreement or in the Receipts should
be or become invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 NOTICES. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in writing and shall be deemed
to have been duly given if personally delivered or sent by mail, or by telegram
or facsimile transmission confirmed by letter, addressed to the Company at:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: Lawrence D. Robinson
Telephone No.: (972) 444-4900
or at any other address of which the Company shall have notified the Depositary
in writing.
Any notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to the Depositary at the Corporate Office.
Any notices given to any record holder of a Receipt hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have filed with the Depositary in a timely manner a written request that
notices intended for such holder be mailed to some other address, at the
address designated in such request.
-20-
<PAGE> 24
Delivery of a notice sent by mail, or by telegram or telex or
telecopier shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or telex or telecopier message) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act upon any telegram
or telex or telecopier message received by it from the other or from any holder
of a Receipt, notwithstanding that such telegram or telex or telecopier message
shall not subsequently be confirmed by letter as aforesaid.
SECTION 7.5 DEPOSITARY'S AGENTS. The Depositary may from time
to time appoint Depositary's Agents to act in any respect for the Depositary
for the purposes of this Deposit Agreement and may at any time appoint
additional Depositary's Agents and vary or terminate the appointment of such
Depositary's Agents. The Depositary will notify the Company of any such
action.
SECTION 7.6 HOLDERS OF RECEIPTS ARE PARTIES. The holders of
Receipts from time to time shall be deemed to be parties to this Deposit
Agreement and shall be bound by all of the terms and conditions hereof and of
the Receipts by acceptance of delivery thereof.
SECTION 7.7 GOVERNING LAW. This Deposit Agreement and the
Receipts and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by, and construed in accordance with, the law of the
State of Georgia applicable to agreements made and to be performed in said
State.
SECTION 7.8 INSPECTION OF DEPOSIT AGREEMENT AND ARTICLES
SUPPLEMENTARY. Copies of this Deposit Agreement and the Articles Supplementary
shall be filed with the Depositary and the Depositary's Agents and shall be
open to inspection during business hours at the Corporate Office and the
respective offices of the Depositary's Agents, if any, by any holder of any
Receipt.
SECTION 7.9 HEADINGS. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as
part of this Deposit Agreement or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.
-21-
<PAGE> 25
IN WITNESS WHEREOF, FelCor Suite Hotels, Inc. and SunTrust Bank,
Atlanta, Georgia have duly executed this Deposit Agreement as of the day and
year first above set forth and all holders of Receipts shall become parties
hereto by and upon acceptance by them of delivery of Receipts issued in
accordance with the terms hereof.
FELCOR SUITE HOTELS, INC.
By: /s/ Lawrence D. Robinson
--------------------------------------
Name: Lawrence D. Robinson
Title: General Counsel
Attest: /s/ Susan E. Mitchell
----------------------------------
Witness
SUNTRUST BANK, ATLANTA, GEORGIA
By: /s/ Sue Hampton
-------------------------------------
Name: Sue Hampton
Title: Assistant Vice President
Attest: /s/ Sandra Benefield
---------------------------------
Authorized Signatory
-22-
<PAGE> 26
EXHIBIT A
The Depositary Shares evidenced by this Depositary Receipt are subject
to restrictions on ownership and transfer for the purpose of the Company's
maintenance of its status as a Real Estate Investment Trust under the Internal
Revenue Code of 1986, as amended. In order to maintain such status, the
Company's Articles Supplementary imposes limitations on the number of shares of
Series B Cumulative Redeemable Preferred Stock that may be owned by any single
person or affiliated group. All capitalized terms in this legend have the
meanings defined in the Company's Articles Supplementary for the Series B
Cumulative Redeemable Preferred Stock. Transfers in violation of the
restrictions described above shall be void AB INITIO.
The Company will furnish to the holder hereof upon request and without
charge a complete written statement of the terms and conditions of the Series B
Cumulative Redeemable Preferred Shares. Requests for such statement may be
directed to the Secretary of the Company.
[FORM OF FACE OF RECEIPT]
DR-
CERTIFICATE FOR NOT MORE THAN [5,750,000] DEPOSITARY SHARES CUSIP 314305 30 1
RECEIPT FOR DEPOSITARY SHARES,
EACH REPRESENTING 1/100 OF A 9% SERIES B CUMULATIVE
REDEEMABLE PREFERRED SHARE
FELCOR SUITE HOTELS, INC.
(a Maryland corporation)
SunTrust Bank, Atlanta, Georgia, as Depositary (the "Depositary"),
hereby certifies that ____________________ is the registered owner of
____________ DEPOSITARY SHARES ("Depositary Shares"), each Depositary Share
representing 1/100 of one share of 9% Series B Cumulative Redeemable Preferred
Stock, $0.01 par value per share (the "Shares"), of FelCor Suite Hotels, Inc.,
a Maryland corporation (the "Company"), on deposit with the Depositary, subject
to the terms and entitled to the benefits of the Deposit Agreement dated as of
April 30, 1998 (the "Deposit Agreement"), among the Company, the Depositary and
the holders from time to time of Receipts for Depositary Shares. By accepting
this Receipt, the holder hereof becomes a party to and agrees to be bound by
all the terms and conditions of the Deposit Agreement. This Receipt shall not
be valid or obligatory for any purpose or entitled to any benefits under the
Deposit Agreement unless it shall have been executed by the Depositary by the
manual or facsimile signature of a duly authorized officer or, if a Registrar
in respect of the Receipts (other than the Depositary) shall have been
appointed, by the manual signature of a duly authorized officer of such
Registrar.
-A1-
<PAGE> 27
Dated:
Countersigned:
By:
Authorized Signatory
-A2-
<PAGE> 28
[FORM OF REVERSE RECEIPT]
FELCOR SUITE HOTELS, INC. WILL FURNISH WITHOUT CHARGE TO EACH
REGISTERED HOLDER OF RECEIPTS WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT
AND A COPY OF THE ARTICLES SUPPLEMENTARY WITH RESPECT TO THE 9% SERIES B
CUMULATIVE REDEEMABLE PREFERRED STOCK OF FELCOR SUITE HOTELS, INC. ANY SUCH
REQUEST SHALL BE ADDRESSED TO THE DEPOSITARY NAMED ON THE FACE OF THIS RECEIPT.
------------------------------------
The following abbreviations when used in the instructions on the face
of this receipt shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - ________ Custodian ________
(Cust) (Minor)
Under Uniform Gifts to Minors Act __________________ (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
For value received, ____________ hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
------------------------------------
------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
------------------------------------
____________ Depositary Shares represented by the within Receipt, and do hereby
irrevocably constitute and appoint ____________ Attorney to transfer the said
Depositary Shares on the books of the within named Depositary with full power
of substitution in the premises.
-A3-
<PAGE> 29
Dated:_________
NOTICE: The signature to the assignment
must correspond with the name as written
upon the face of this Receipt in every
particular, without alteration or
enlargement or any change whatever.
-A4-
<PAGE> 1
TEMPORARY CERTIFICATE - EXCHANGEABLE FOR DEFINITIVE ENGRAVED
CERTIFICATE WHEN READY FOR DELIVERY
DEPOSITARY RECEIPT FOR
DEPOSITARY SHARES OF
NUMBER DEPOSITARY SHARES
DR-
FELCOR SUITE HOTELS, INC.
(a Maryland corporation)
[LOGO]
EACH REPRESENTING 1/100 OF A
9% SERIES B CUMULATIVE
REDEEMABLE PREFERRED SHARE
CUSIP 314305 30 1
THE UNDERSIGNED DEPOSITARY (THE "DEPOSITARY"), HEREBY CERTIFIES THAT:
IS THE REGISTERED OWNER OF
DEPOSITARY SHARES ("Depositary Shares"), each Depositary Share representing
1/100 of one share of 9% Series B Cumulative Redeemable Preferred Stock, $0.01
par value per share (the "Shares"), of FelCor Suites Hotels, Inc., a Maryland
corporation (the "Company"), on deposit with the Depositary, subject to the
terms and entitled to the benefits of the Deposit Agreement dated as of April
30, 1998 (the "Deposit Agreement"), among the Company, the Depositary and the
holders from time to time of Receipts for Depositary Shares. By accepting this
Receipt, the holder hereof becomes a party to and agrees to be bound by all the
terms and conditions of the Deposit Agreement. This Receipt shall not be valid
or obligatory for any purpose or entitled to any benefits under the Deposit
Agreement unless it shall have been executed by the Depositary by the manual or
facsimile signature of a duly authorized officer or, if a Registrar in respect
of the Receipts (other than the Depositary) shall have been appointed, by the
manual signature of a duly authorized officer of such Registrar.
Dated:
SUNTRUST BANK, ATLANTA /s/ LAWRENCE D. ROBINSON
(Atlanta, Georgia) as Depositary SECRETARY
[SEAL]
By /s/ THOMAS J. CORCORAN, JR.
Authorized Signatory PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE> 2
FELCOR SUITE HOTELS, INC.
The Depositary Shares evidenced by this Depositary Receipt are subject to
restrictions on ownership and transfer for the purpose of the Company's
maintenance of its status as a Real Estate Investment Trust under the Internal
Revenue Code of 1986, as amended. In order to maintain such status, the
Company's Articles Supplementary imposes limitations on the number of shares of
9% Series B Cumulative Redeemable Preferred Stock that may be owned by any
single person or affiliated group. All capitalized terms in this legend have
the meanings defined in the Company's Articles Supplementary for the 9% Series
B Cumulative Redeemable Preferred Stock. Transfers in violation of the
restrictions described above shall be void AB INTIO.
The Company will furnish to the holder hereof upon request and without
charge a complete written statement of the terms and conditions of the 9%
Series B Cumulative Redeemable Preferred Shares, as well as any other class or
series of class of stock the Company has authority to issue. Requests for such
statement maybe directed to the Secretary of the Company.
FELCOR SUITE HOTELS, INC. WILL FURNISH WITHOUT CHARGE TO EACH REGISTERED
HOLDER OF RECEIPTS WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A COPY
OF THE ARTICLES SUPPLEMENTARY WITH RESPECT TO THE 9% SERIES B CUMULATIVE
REDEEMABLE PREFERRED STOCK OF FELCOR SUITE HOTELS, INC. ANY SUCH REQUEST SHALL
BE ADDRESSED TO THE DEPOSITARY NAMED OF THE FACE OF THIS RECEIPT.
The following abbreviations, when used in the instructions on the face of
this receipt shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____________ Custodian ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of survivorship under Uniform Gifts to Minors
and not as tenants in common Act _______________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ____________ hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[____________________________________]__________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
______________________________________________________________ Depositary Shares
represented by the within Receipt, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Depositary Shares on the within named Depositary with full
power of substitution in the premises.
Dated: ______________________
Notice: The signature to this assignment must correspond with the name as
written upon the face of this Receipt in every particular, without alteration or
enlargement or any change whatever.
<PAGE> 1
EXHIBIT 8.1
May 7, 1998
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway, Suite 1300
Irving, Texas 75062
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
As representatives of the Underwriters
named in Schedule A of the Underwriting Agreement
c/o Morgan Stanley Dean Witter
1585 Broadway
New York, New York 10036
FelCor Suite Hotels, Inc.
Qualification as
Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as tax counsel to FelCor Suite Hotels, Inc., a Maryland
corporation (the "Company"), in connection with (i) the preparation of a Form
S-3 registration statement (No. 333-46357) filed with the Securities and
Exchange Commission ("SEC") on February 13, 1998, as amended through the date
hereof (the "Registration Statement"), (ii) the offering and sale (the
"Offering") of 5,750,000 depositary shares (the "Depositary Shares") each
representing 1/100 of one share of the 9% Series B Cumulative Redeemable
Preferred Stock, par value $.01 per share, of the Company (the "Series B
Preferred Stock") pursuant to a prospectus dated March 3, 1998 (the
"Prospectus") and a prospectus supplement dated April 30, 1998 contained as part
of the Registration Statement (the "Prospectus Supplement"), and (iii) the
Company's contribution of the net proceeds of the Offering to FelCor Suites
Limited Partnership, a
<PAGE> 2
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 2
Delaware limited partnership (the "Operating Partnership"), in exchange for
preferred units of 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 Operating Partnership currently owns, directly or indirectly,
equity interests in 76 hotels and associated personal property (the "Current
Hotels") through the following entities: (i) FelCor/CSS Holdings, L.P., a
Delaware limited partnership, (ii) FelCor/St. Paul Holdings, L.P., a Delaware
limited partnership, (iii) Los Angeles International Airport Associates, L.P., a
Texas limited partnership, (iv) Promus/FelCor Lombard Joint Venture, an Illinois
general partnership, (v) MHV Joint Venture, a Texas general partnership, (vi)
Promus/FelCor Parsippany Joint Venture, a New Jersey general partnership, (vii)
E.S. Charlotte Limited Partnership, a Minnesota limited partnership, (viii) E.S.
North, an Indiana Limited Partnership, an Indiana limited partnership, (ix)
FCH/DT Holdings, L.P., a Delaware limited partnership, (x) FCH/DT BWI Holdings,
L.P., a Delaware limited partnership, and (xi) certain joint ventures with
Promus Hotels, Inc. ("Promus") each of which holds a Current Hotel (the "Promus
Joint Ventures"). The Company and/or the Operating Partnership also owns equity
interests in (a) FelCor/CSS Hotels, L.L.C., a Delaware limited liability
company, (b) FelCor/LAX Hotels, L.L.C., a Delaware limited liability company,
(c) FelCor/LAX Holdings, L.P., a Delaware limited partnership, (d) Promus/FCH
Development Company, L.L.C., a Delaware limited liability company, and (e)
FCH/DT Hotels, L.L.C., a Delaware limited liability company. The entities
referred to in this paragraph will be referred to collectively herein as the
"Subsidiary Partnerships."
The Operating Partnership or a Subsidiary Partnership, as applicable,
leases each Current Hotel to DJONT Operations, L.L.C., a Delaware limited
liability company, or an affiliate thereof (the "Lessee") pursuant to
substantially similar operating leases (collectively, the "Leases"). Each of
Promus, Coastal Hotel Group, Inc., American General Hospitality, Inc., and ITT
Sheraton Corporation operates and manages certain of the Current Hotels on
behalf of the Lessee pursuant to substantially similar management agreements
(the "Management Agreements") with the Lessee.
The Company has contracted to acquire equity interests in eight
additional hotels and associated personal property (the "Starwood Hotels") from
Starwood Hotels &
<PAGE> 3
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 3
Resorts. Upon the acquisition of the Starwood Hotels, the Operating Partnership
or the applicable Subsidiary Partnership plans to enter into lease agreements
with the Lessee with respect to the Starwood Hotels that are substantially
similar to the Leases. Six of the Starwood Hotels are expected to be operated
and managed on behalf of the Lessee by Promus pursuant to management agreements
that are substantially similar to the Lessee's existing Management Agreements
with Promus. The remaining two Starwood Hotels are expected to be operated and
managed on behalf of the Lessee by Starwood Hotels & Resorts Worldwide, Inc.
pursuant to management agreements that are substantially similar to the
Management Agreements.
On March 23, 1998, the Company entered into an agreement (the "Merger
Agreement") with Bristol Hotel Company ("Bristol") whereby Bristol will merge
into the Company. As a result of the Merger, the Company will acquire 109 hotels
and associated personal property (the "Bristol Hotels") currently owned by
Bristol. The Company will lease the Bristol Hotels to Bristol Hotels & Resorts
("BHR") pursuant to substantially similar operating leases (the "BHR Leases").
In connection with the opinions rendered below, we have examined the
following:
1. the Company's Articles of Amendment and Restatement, as duly filed with
the Department of Assessments and Taxation of the State of Maryland on June 22,
1995, as amended on May 2, 1996, August 9, 1996, June 24, 1997, and November 13,
1997;
2. the Company's Bylaws;
3. the minutes of meetings of the Company's board of directors held from
May 22, 1997 through May 4, 1998;
4. the Prospectus and the Prospectus Supplement;
5. the Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated June 28, 1994 (the "Operating Partnership
Agreement"), among the
<PAGE> 4
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 4
Company, as general partner, and several limited partners, as amended on
November 17, 1995, January 9, 1996, and January 10, 1996;
6. Addendums Number 1 (and Annexes Number 1 and 2 thereto), dated
January 9, 1996, and Number 2, dated May 2, 1996, to the Operating Partnership
Agreement;
7. the Amended and Restated Agreement of Limited Partnership of
FelCor/CSS Holdings, L.P., dated as of September 18, 1995, between FelCor/CSS
Hotels, L.L.C., as general partner, and the Operating Partnership, as limited
partner, as amended on March 31, 1996;
8. the Agreement of Limited Partnership of FelCor/St. Paul Holdings, L.P.,
dated as of November 8, 1995, between FelCor/CSS Hotels, L.L.C., as general
partner, and the Operating Partnership, as limited partner, as amended on
December 29, 1995;
9. the Amended and Restated Agreement of Limited Partnership of Los
Angeles International Airport Associates, L.P., dated as of January 22, 1996,
between FelCor/LAX Holdings, L.P., as general partner, and several limited
partners, as amended on January 22, 1996;
10. the Amended and Restated Joint Venture Agreement of Promus/FelCor
Lombard Venture, f.k.a. Embassy/Shaw Lombard Venture, dated August 1, 1995,
between the Operating Partnership, Promus, and Embassy Development Corporation;
11. the Amended and Restated Joint Venture Agreement of MHV Joint Venture,
dated as of July 18, 1996, between the Operating Partnership and Promus;
12. the Amended and Restated Joint Venture Agreement of Promus/FelCor
Parsippany Venture, dated as of July 31, 1996, between the Operating Partnership
and Promus;
13. the Amended and Restated Limited Partnership Agreement of E.S.
Charlotte Limited Partnership, dated as of September 16, 1996, between the
Operating Partnership and other venturers;
<PAGE> 5
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 5
14. the Amended and Restated Limited Partnership Agreement of E.S. North,
an Indiana Limited Partnership, dated as of September 16, 1996, between the
Operating Partnership and other venturers;
15. the Agreement of Limited Partnership of FCH/DT Holdings, L.P., dated as
of February 27, 1997, among FCH/DT Hotels, L.L.C., as general partner, and the
Operating Partnership and DTR Santa Clara, Inc., an Arizona corporation ("DTR
Santa Clara"), as limited partners;
16. the Amended and Restated Agreement of Limited Partnership of FCH/DT BWI
Holdings, L.P., dated as of March 20, 1997, between FCH/DT Hotels, L.L.C., as
general partner, and FCH/DT Holdings, L.P., as limited partner;
17. the Limited Liability Company Agreement of FelCor/CSS Hotels, L.L.C.,
dated as of October 18, 1995, between the Company and the Operating Partnership;
18. the Limited Liability Company Agreement of FelCor/LAX Hotels, L.L.C.,
dated as of October 18, 1995, between the Company and the Operating Partnership;
19. the Agreement of Limited Partnership of FelCor/LAX Holdings, L.P.,
dated as of December 14, 1995, between FelCor/LAX Hotels, L.L.C., as general
partner, and the Operating Partnership, as limited partner, as amended on April
1, 1996;
20. the Limited Liability Company Agreement of Promus/FCH Development
Company, L.L.C., dated November 1996, between the Company and Promus;
21. the Limited Liability Company Agreement of FCH/DT Hotels, L.L.C., dated
as of February 18, 1997, between the Company and DTR Santa Clara;
22. the Certificate of Incorporation of Kingston Plantation Development
Corp. ("Kingston"), a corporation in which the Operating Partnership owns 100%
of the nonvoting stock, representing 97% of the value of Kingston's outstanding
stock;
23. the Leases;
<PAGE> 6
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 6
24. the Management Agreements;
25. the tax opinions given by Bracewell & Patterson, L.L.P., dated June
26, 1996, April 30, 1996, December 20, 1995, May 18, 1995, and July 13, 1994,
regarding the Company's qualification as a REIT for its taxable years ended
December 31, 1994 and December 31, 1995, and the tax opinion given by Bracewell
& Patterson. L.L.P., dated April 26, 1995, regarding the tax-free reorganization
of the Company (the "Bracewell & Patterson Opinions");
26. the Merger Agreement;
27. the Form of Master Hotel Agreement dated March 23, 1998 among Bristol,
BHR, the Company, and the Operating Partnership;
28. the Form of BHR Lease dated as of March 23, 1998 between the Operating
Partnership and BHR; and
29. 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 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 Operating Partnership Agreement, or the organizational documents
of the Subsidiary
<PAGE> 7
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 7
Partnerships (the "Subsidiary Partnership Agreements") after the date of this
opinion that would affect its qualification as a real estate investment trust (a
"REIT") for any taxable year;
4. each partner or member of the Operating Partnership and the Subsidiary
Partnerships (each, 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 Operating Partnership Agreement and the
Subsidiary Partnership Agreements and the transactions contemplated thereby; and
6. no action will be taken by the Company, the Operating Partnership, the
Subsidiary Partnerships, the Partners, or Kingston 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 have relied upon the
Bracewell & Patterson Opinions and 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 in the Prospectus Supplement under the caption "Federal
Income Tax Considerations" (which are incorporated herein by reference), we are
of the opinion that:
<PAGE> 8
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 8
(a) the Company qualified to be taxed as a REIT pursuant to
sections 856 through 860 of the Code for its taxable years ended
December 31, 1994 through December 31, 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;
(b) the descriptions of the law and the legal conclusions
contained in the Prospectus and the Prospectus Supplement under the
caption "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 Depositary Shares or the Series B Preferred Stock;
(c) the Leases will be treated as true leases for federal
income tax purposes; and
(d) the Operating Partnership and the Subsidiary Partnerships
will be treated for federal income tax purposes as partnerships and not
as corporations or associations taxable as corporations or as publicly
traded partnerships.
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.
<PAGE> 9
FelCor Suite Hotels, Inc.
Morgan Stanley Dean Witter
Merrill Lynch & Co.
Prudential Securities Incorporated
Salomon Smith Barney
May 7, 1998
Page 9
We hereby consent to the references to Hunton & Williams under the
captions "Federal Income Tax Considerations" and "Legal Matters" 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 or other matters or to any issues arising under the tax laws
of any other country, or any state or locality. We undertake no 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 addressees, 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
<PAGE> 1
EXHIBIT 10.1.9
NINTH AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF FELCOR SUITES LIMITED PARTNERSHIP
This Ninth Amendment to Amended and Restated Agreement of Limited
Partnership of FelCor Suites Limited Partnership (the "Amendment"), is entered
into as of May 6, 1998, by and between FelCor Suite Hotels, Inc., a Maryland
corporation, as General Partner, and all other persons and entities who are or
shall in the future become limited partners of this limited partnership in
accordance with the provisions of the Partnership Agreement (as hereinafter
defined).
R E C I T A L S:
A. The parties have previously executed and delivered that
certain Amended and Restated Agreement of Limited Partnership of FelCor Suites
Limited Partnership dated as of July 25, 1994, as previously amended (the
"Partnership Agreement"), pursuant to which they formed a Delaware limited
partnership under the name "FelCor Suites Limited Partnership" (the
"Partnership").
B. Pursuant to Sections 4.6 and 1.4 of the Partnership Agreement,
the General Partner is authorized to cause the Partnership to issue from time
to time Partnership Securities in one or more classes, and in one or more
series of any such classes, and to establish the designations, preferences,
rights, powers and duties of such classes and series.
C. The General Partner desires to exercise such authority by
amending the Partnership Agreement as provided herein to establish a new class
and series of Partnership Securities.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used without definition
herein shall have the meanings set forth therefor in the Partnership Agreement.
2. Amendment of Partnership Agreement. The Partnership Agreement
is hereby amended to add an Addendum No. 3 to the Partnership Agreement to
create and provide for the authorization for issuance of a class of the
Partnership Securities designated as the "Series B Cumulative Redeemable
Preferred Units," having the preferences and relative, participating, optional
or other special rights, powers and duties set forth in such Addendum No. 3.
Such Addendum No. 3 shall be in the form of Addendum No. 3 attached to this
Amendment. The Addendum No. 3 is hereby incorporated into and made a part of
the Partnership Agreement for all purposes.
- 1 -
<PAGE> 2
IN WITNESS WHEREOF, the General Partner has caused this Amendment to
be duly executed in its respective capacities set forth below as of the date
first set forth above.
GENERAL PARTNER:
FELCOR SUITE HOTELS, INC.,
a Maryland corporation
By: /s/ Lawrence D. Robinson
--------------------------------------------
Name: Lawrence D. Robinson
--------------------------------------------
Title: Senior Vice President & General Counsel
--------------------------------------------
LIMITED PARTNERS (for all the Limited Partners now
and hereafter admitted as limited partners of the
Partnership, pursuant to the powers of attorney in
favor of the General Partner contained in Section
1.4 of the Agreement):
By: FELCOR SUITE HOTELS, INC., acting as
General Partner and as duly authorized
attorney-in-fact
By: /s/ Lawrence D. Robinson
------------------------------------
Name: Lawrence D. Robinson
------------------------------------
Title: Sr. Vice President & General Counsel
------------------------------------
- 2 -
<PAGE> 3
FELCOR SUITES LIMITED PARTNERSHIP
_____________________
ADDENDUM NO. 3 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
_____________________
DESIGNATION OF
SERIES B CUMULATIVE REDEEMABLE PREFERRED UNITS
The undersigned General Partner of FelCor Suites Limited Partnership,
a Delaware limited partnership (the "PARTNERSHIP"), pursuant to the authority
expressly granted to the General Partner by the Amended and Restated Agreement
of Limited Partnership of FelCor Suites Limited Partnership dated as of July
25, 1994, as amended, pursuant to which the Partnership is formed (the
"PARTNERSHIP AGREEMENT"), and in particular Sections 1.4 and 4.6 thereof,
hereby executes and delivers this Addendum No. 3 to the Partnership Agreement
(the "ADDENDUM"), which Addendum is hereby made a part of the Partnership
Agreement for all purposes, to create and provide for the issue of a class of
Partnership Units and to fix the designations, preferences and relative,
participating, optional or other special rights, powers and duties thereof as
follows:
1. DESIGNATION OF CLASS. A class of units of the Partnership is
hereby authorized and designated as the "Series B Cumulative Redeemable
Preferred Units" (the "SERIES B PREFERRED UNITS"). The Series B Preferred
Units shall have the preferences and relative, participating, optional or other
special rights, powers and duties that are set forth in this Addendum and to
the extent permitted by this Addendum, established by the General Partner and
set forth in any amendments to the Partnership Agreement or any amendments or
annexes to this Addendum.
2. AUTHORIZED NUMBER OF SERIES B PREFERRED UNITS. The authorized
number of Series B Preferred Units shall be 57,500.
3. PREFERENCES, RIGHTS, POWERS AND DUTIES.
3.1 DEFINITIONS. For purposes of the Series B Preferred
Units, the following terms shall have the meanings indicated:
"Addendum" shall have the meaning set forth in the preamble hereof.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally- chartered banking
institutions in Texas or New York are not required to be open.
"Call Date" shall have the meaning set forth in Section
3.4(b).
- 1 -
<PAGE> 4
"Common Unit" shall mean the units of partnership interest of
the Partnership not designated as Preferred Units.
"Common Stock" shall mean the common stock, $0.01 par value
per share, of the General Partner.
"Distribution Payment Date" shall mean the last calendar day
of January, April, July and October in each year, commencing on July
31, 1998; PROVIDED, HOWEVER, that if any Distribution Payment Date
falls on any day other than a Business Day, the distribution payment
due on such Distribution Payment Date shall be paid on the Business
Day immediately following such Distribution Payment Date.
"Distribution Period" shall mean quarterly distribution
periods commencing February 1, May 1, August 1 and November 1 of each
year and ending on and including the day preceding the first day of
the next succeeding Distribution Period (other than the initial
Distribution Period, which shall commence on May 7, 1998 and end on
and include July 31, 1998).
"General Partner" shall mean FelCor Suite Hotels, Inc., a
Maryland corporation, which is the sole general partner of the
Partnership.
"Issue Date" shall mean the date on which the Partnership
first issues a Series B Preferred Unit.
"Junior Units" shall have the meaning set forth in Section
3.6(c).
"Parity Units" shall have the meaning set forth in Section
3.6(b).
"Partnership" shall have the meaning set forth in the preamble
hereof.
"Partnership Agreement" shall have the meaning set forth in
the preamble hereof.
"Preferred Units" shall mean units of partnership interest of
the Partnership designated as having certain preferences to the Common
Units with respect to distributions or upon liquidation of the
Partnership.
"Series B Preferred Stock" shall mean the 9% Series B
Cumulative Redeemable Preferred Stock, $0.01 par value and $2,500.00
liquidation preference per share, of the General Partner.
"Series B Preferred Units" shall have the meaning set forth in
Section 1.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Partnership
in its accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Partnership, the allocation of funds to be so
paid on any series or class
- 2 -
<PAGE> 5
of capital units of the Partnership; PROVIDED, HOWEVER, that if any
funds for a class or series of Junior Units or any class or series of
Parity Units are placed in a separate account of the Partnership or
delivered to a disbursing, paying or other similar agent, then "set
apart for payment" with respect to the Series B Preferred Units shall
mean placing such funds in a separate account or delivering such funds
to a disbursing, paying or other similar agent.
Initially capitalized terms used without definition herein
shall have the meanings set forth therefor in the Partnership
Agreement. Other terms defined herein have the meanings so given
them. Whenever the context requires, the gender of all words used in
this Addendum shall include the masculine, feminine and neuter form of
such words, and the singular form shall include the plural and vice
versa.
3.2 DISTRIBUTIONS.
(a) The holders of the Series B Preferred Units shall be
entitled to receive, when, as and if declared by the General Partner
out of funds legally available for that purpose, distributions payable
in cash in an amount per Series B Preferred Unit equal to $225.00 per
annum. Such distributions shall be cumulative from May 7, 1998,
whether or not in any Distribution Period or Periods there shall be
funds of the Partnership legally available for the payment of such
distributions, and shall be payable quarterly, when, as and if
declared by the General Partner, in arrears on Distribution Payment
Dates, commencing on the first Distribution Payment Date after the
Issue Date. Each such distribution shall be payable in arrears to the
holders of record of the Series B Preferred Units, as they appear on
the records of the Partnership at the close of business on such record
dates, not more than sixty (60) days preceding such Distribution
Payment Dates thereof, as shall be fixed by the General Partner.
Accrued and unpaid distributions for any past Distribution Periods may
be declared and paid at any time, without reference to any regular
Distribution Payment Date, to holders of record on such date, not
exceeding forty-five (45) days preceding the payment date thereof, as
may be fixed by the General Partner.
(b) The amount of distributions payable for each full
Distribution Period for the Series B Preferred Units shall be computed
by dividing the annual distribution rate by four. The amount of
distributions payable for any period shorter or longer than a full
Distribution Period, on the Series B Preferred Units shall be computed
on the basis of a 360-day year. consisting of twelve 30-day months.
Holders of the Series B Preferred Units shall not be entitled to any
distributions, whether payable in cash, property or units, in excess
of cumulative distributions, as herein provided, on the Series B
Preferred Units. No interest, or sum of money in lieu of interest,
shall be payable in respect of any distribution payment or payments on
the Series B Preferred Units that may be in arrears.
(c) So long as any of the Series B Preferred Units are
outstanding, no distributions, except as described in the immediately
following sentence, shall be declared or paid or set apart for payment
on any class or series of Parity Units for any period unless full
cumulative distributions have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the
- 3 -
<PAGE> 6
Series B Preferred Units for all Distribution Periods terminating on or prior
to the Distribution Payment Date on such class or series of Parity Units. When
distributions are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, all distributions declared upon the Series B Preferred
Units and all distributions declared upon any other class or series of Parity
Units shall be declared ratably in proportion to the respective amounts of
distributions accumulated and unpaid on the Series B Preferred Units and
accumulated and unpaid on such Parity Units.
(d) So long as any of the Series B Preferred Units are
outstanding, no distributions (other than dividends or distributions
paid in units of, or options, warrants or rights to subscribe for or
purchase units of, Junior Units), shall be declared or paid or set
apart for payment or other distribution declared or made upon Junior
Units, nor shall Junior Units be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of
Common Units made for purposes of an employee incentive or benefit
plan of the Partnership for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any such
units) by the Partnership, directly or indirectly), unless in each
case (i) the full cumulative distributions on all outstanding Series B
Preferred Units and any other Parity Units shall have been paid or set
apart for payment for all past Distribution Periods with respect to
the Series B Preferred Units and all past distribution periods with
respect to such Parity Units and (ii) sufficient funds shall have been
paid or set apart for the payment of the distribution for the current
Distribution Period with respect to the Series B Preferred Units and
the current Distribution Period with respect to such Parity Units.
3.3 LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Partnership, whether voluntary or involuntary,
before any payment or distribution of the assets of the Partnership
(whether capital or surplus) shall be made to or set apart for the
holders of Junior Units, the holders of the Series B Preferred Units
shall be entitled to receive two thousand five hundred dollars
($2,500.00) per Series B Preferred Unit plus an amount equal to all
distributions (whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders, but such
holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Partnership, the assets
of the Partnership, or proceeds thereof, distributable among the
holders of the Series B Preferred Units shall be insufficient to pay
in full the preferential amount aforesaid and liquidating payments on
any other class or series of Parity Units, then such assets, or the
proceeds thereof, shall be distributed among the holders of the Series
B Preferred Units and any such other Parity Units ratably in
accordance with the respective amounts that would be payable on such
Series B Preferred Units and any such other Parity Units if all
amounts payable thereon were paid in full. For the purposes of this
Section 3.3, (i) a consolidation or merger of the Partnership with one
or more Persons, (ii) a sale or transfer of all or substantially all
of the assets of the Partnership, or (iii) a statutory exchange of
units shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Partnership.
- 4 -
<PAGE> 7
(b) Subject to the rights of the holders of any series or
class or classes of Parity Units, after payment shall have been made
in full to the holders of the Series B Preferred Units, as provided in
this Section 3.3, any other series or class or classes of Junior Units
shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining
to be paid or distributed, and the holders of the Series B Preferred
Units shall not be entitled to share therein.
3.4 REDEMPTION.
(a) The Series B Preferred Units shall be redeemable by
the Partnership solely when, as, and if any share of the Series B
Preferred Stock is redeemed by the General Partner and in the same
proportion as shares of the Series B Preferred Stock are redeemed by
the General Partner so that the number of Series B Preferred Units
remaining unredeemed shall be the same as, and at all times equal to,
the number of shares of Series B Preferred Stock remaining unredeemed.
The Series B Preferred Stock is not redeemable by the General Partner
prior to May 7, 2003, and, therefore, the Series B Preferred Units
shall not be redeemable by the Partnership prior to such date.
(b) Upon redemption of the Series B Preferred Units by
the Partnership on the date specified in the notice to holders
required under subparagraph (d) of this Section 3.4 (the "CALL DATE"),
each Series B Preferred Unit called for redemption shall be redeemed
in cash at a price per unit equal to $2,500.00 per unit, plus all
accrued and unpaid distributions thereon to the Call Date, without
interest, to the extent that the Partnership has funds legally
available therefor. The redemption price of the Series B Preferred
Units (other than any portion thereof consisting of accrued and unpaid
distributions) must be paid solely from the sale proceeds of other
equity interests of the Partnership and not from any other source.
For purposes of the foregoing sentence, "equity interests" means any
general partner interests, limited partner interests, preferred units,
depositary shares, interests, participations, or other ownership
interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for partnership units) or
options to purchase any of the foregoing. Distributions payable on
the Series B Preferred Units for any period greater or less than a
full dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Except as provided above, the
Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series B Preferred Units
called for redemption or on the equity interests issued upon such
redemption.
(c) If full cumulative distributions on the Series B
Preferred Units and any other class or series of Parity Units have not
been paid or declared and set apart for payment, the Series B
Preferred Units may not be redeemed in part and the Partnership may
not purchase or acquire Series B Preferred Units, otherwise than
pursuant to a purchase or exchange offer made on the same terms to all
holders of Series B Preferred Units.
(d) If the Partnership shall redeem Series B Preferred
Units pursuant to this Section 3.4, notice of such redemption shall be
given to the holders of the Series B
- 5 -
<PAGE> 8
<Page 8>
Preferred Units called for redemption as soon as practicable after
notice of redemption of the Series B Preferred Stock is given by the
General Partner.
From and after the Call Date (unless the Partnership shall
fail to make available the amount of cash necessary to effect such
redemption), (i) except as otherwise provided herein, distributions on
the Series B Preferred Units so called for redemption shall cease to
accrue, (ii) such units shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Series B
Preferred Units shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender
and endorsement of their certificates).
As promptly as practicable after the surrender in accordance
with such notice of the certificates for any such units so redeemed
(properly endorsed or assigned for transfer, if the Partnership shall
so require and if the notice shall so state), such units shall be
exchanged for cash (without interest thereon) for which such units
have been redeemed. If fewer than all the outstanding Series B
Preferred Units are to be redeemed, units to be redeemed shall be
selected by the Partnership from outstanding Series B Preferred Units
not previously called for redemption by lot or pro rata (as nearly as
may be) or by any other method determined by the Partnership in its
sole discretion to be equitable. If fewer than all the Series B
Preferred Units represented by any certificate are redeemed, then new
certificates representing the unredeemed units shall be issued without
cost to the holder thereof.
3.5 CONVERSION. Holders of Series B Preferred Units
shall have no conversion rights.
3.6 RANKING. Any class or series of units of the
Partnership shall be deemed to rank:
(a) prior to the Series B Preferred Units, as to the
payment of distributions and as to distribution of assets upon
liquidation, dissolution or winding up, if the holders of such class
or series shall be entitled to the receipt of distributions or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of Series B
Preferred Units;
(b) on a parity with the Series B Preferred Units, as to
the payment of distributions and as to distribution of assets upon
liquidation, dissolution or winding up, whether or not the
distribution rates, distribution payment dates or redemption or
liquidation prices per unit thereof be different from those of the
Series B Preferred Units, if the holders of such class of units or
series and the Series B Preferred Units shall be entitled to the
receipt of distributions and of amounts distributable upon
liquidation, dissolution or winding up in proportion to their
respective amounts of accrued and unpaid distributions per unit or
liquidation preferences, without preference or priority one over the
other ("PARITY UNITS"); the Series A Cumulative Convertible Preferred
Units shall be Parity Units with respect to the Series B Preferred
Units; and
- 6 -
<PAGE> 9
(c) junior to the Series B Preferred Units, as to the
payment of distributions or as to the distribution of assets upon
liquidation, dissolution or winding up, if such units or series shall
be Common Units or if the holders of the Series B Preferred Units
shall be entitled to receipt of distributions or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of such units or
series ("JUNIOR UNITS").
3.7 RECORD HOLDERS. The Partnership may deem and treat
the record holder of any Series B Preferred Units as the true and
lawful owner thereof for all purposes, and the Partnership shall not
be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Partnership has caused this Addendum to be
executed by its General Partner, acting through its duly authorized officer, as
of this 6th day of May, 1998.
<TABLE>
<S> <C>
FELCOR SUITES LIMITED PARTNERSHIP
By: FELCOR SUITE HOTELS, INC., a
Maryland corporation, as its General Partner
By: /s/ Lawrence D. Robinson
-----------------------------------------------------
Name: Lawrence D. Robinson
-------------------------------------------------------
Title: Sr.Vice President & General Counsel
-----------------------------------------------------
</TABLE>
- 7 -
