EXHIBIT 1.2
EQUITY INNS, INC.
8% Series C Cumulative Preferred Stock
($25.00 Liquidation Preference)
PLACEMENT AGENT AGREEMENT
February 8, 2006
X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Equity Inns, Inc., a Tennessee corporation (the "Company"), proposes to
issue and sell up to 2,400,000 shares (the "Shares") of its 8.0% Series C
Cumulative Preferred Stock, liquidation preference of $25.00 per share (the
"Preferred Shares") to certain institutional investors (collectively, the
"Investors"). The Company desires to engage the Placement Agent as its placement
agent in connection with such issuance and sale.
Upon consummation of the transactions contemplated hereby and application
of the net proceeds from the sale of the Shares, the Company, through its
wholly-owned subsidiary, Equity Inns Trust, a Maryland real estate investment
trust (the "Trust"), will own an approximate 97.87% partnership interest in
Equity Inns Partnership, L.P., a Tennessee limited partnership (the
"Partnership"), and will own 100% of the Series C Preferred Units (as defined
herein) of the Partnership. The Company, through the Partnership and its other
subsidiaries, currently owns 125 hotels (the "Hotels"). Other capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
set forth in the Registration Statement (as defined herein).
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement (Registration No. 333-117421) on
Form S-3 with respect to the Shares, including a base prospectus (the "Base
Prospectus"), and such amendments to such registration statement as may have
been required to the date of this Agreement, has been prepared by the Company
pursuant to and in conformity with the requirements of the Act and has been
filed with the Commission under the Act. Such registration statement has been
declared effective by the Commission. Copies of such registration statement,
including any amendments thereto, each related preliminary prospectus (meeting
the requirements of Rule 430, 430A or 430B of the Act) contained therein, and
the exhibits, financial statements and schedules thereto have heretofore been
made available by the Company to you. A final prospectus containing information
permitted to be omitted at the time of effectiveness by Rule 430A or 430B of the
Act will be filed promptly by the Company with the Commission in accordance with
Rule 424(b) of the Act. The term "Registration Statement" as used herein means
the registration statement on Form S-3 (File No. 333-117421) (including all
financial schedules and exhibits), as amended, at the time Post-Effective
Amendment No. 3 thereto became effective (or any part thereof is deemed
effective under Rule 430B(f)(2)) by the Commission under the Act (the "Effective
Date"), including financial statements, all exhibits and all documents
incorporated by reference therein and, if applicable, the information deemed to
be included by Rule 430A or 430B of the Act. The term "Prospectus" as used
herein means, together with the Base Prospectus, (i) the final prospectus
supplement as first filed with the Commission pursuant to Rule 424(b) of the Act
(the "Prospectus Supplement"), or (ii) if no such filing is required, the form
of final prospectus included in the Registration Statement at the Effective
Date, including, in each case, the documents incorporated by reference therein.
The term "Preliminary Prospectus" as used herein shall mean a preliminary
prospectus as contemplated by Rule 430, 430A or 430B of the Act included at any
time in the Registration Statement, including the Base Prospectus and any
preliminary prospectus supplement (the "Preliminary Prospectus Supplement"), and
including in each case the documents incorporated by reference therein. The term
"Free Writing Prospectus" as used herein shall have the meaning set forth in
Rule 405 of the Act. The term "Issuer Free Writing Prospectus" as used herein
shall have the meaning set forth in Rule 433 of the Act. The term "Disclosure
Package" as used herein shall mean the Preliminary Prospectus as most recently
amended or supplemented prior to the Initial Time of Sale (as defined below)
together with the Issuer Free Writing Prospectuses identified in Schedule D
hereto, if any, and any other Free Writing Prospectus that the parties hereto
shall hereafter expressly agree to treat as part of the Disclosure Package. The
Preliminary Prospectus, if any, any Issuer Free Writing Prospectus required to
be filed pursuant to Rule 433(d) of the Act and the Prospectus delivered to the
Placement Agent for use in connection with the offering of the Shares have been
and will be identical to the respective versions thereof transmitted to the
Commission for filing via the Electronic Data Gathering Analysis and Retrieval
System ("XXXXX"), except to the extent permitted by Regulation S-T. For purposes
of this Agreement, the words "amend," "amendment," "amended," "supplement" or
"supplemented" with respect to the Registration Statement, the Prospectus, any
Free Writing Prospectus or the Disclosure Package shall mean amendments or
supplements to the Registration Statement, the Prospectus, any Free Writing
Prospectus or the Disclosure Package, as the case may be, as well as documents
filed after the date of this Agreement and prior to the completion of the
distribution of the Shares and incorporated by reference therein as described
above. As used herein, the term "Incorporated Documents" means the documents
which are incorporated by reference in the Registration Statement, the
Prospectus, or any amendment or supplement
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thereto during the period the Prospectus is required to be delivered in
connection with the sale of the Shares by the Placement Agent or any dealer.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Placement Agent agrees to act as the Company's
exclusive placement agent to assist the Company, on a best efforts basis, in
connection with the proposed issuance and sale by the Company of the Shares to
the Investors. The Company expressly acknowledges and agrees that this Agreement
does not in any way constitute a commitment by the Placement Agent to purchase
any of the Shares and does not ensure successful placement of the Shares or any
portion thereof. The Company shall pay to the Placement Agent concurrently with
the Closing (as defined below) a fixed fee of $75,000.00 (the "Placement Fee").
The Company intends to offer the Shares to Investors at a price of $25.00 per
share, less a volume discount of $0.75 per share for any Investor who shall
acquire at least 200,000 Shares.
3. Intentionally Omitted
4. AGREEMENT TO ACT AS PLACEMENT AGENT; DELIVERY AND PAYMENT. Upon satisfaction
of the conditions set forth in Section 8 hereof, the closing of the sale and
issuance of the Shares (the "Closing") shall occur at the offices of Bass, Xxxxx
& Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, or at such
other place as may be agreed upon between you and the Company (the "Place of
Closing"), at 10:00 a.m., Memphis time, on February 15, 2006, or at such other
time and date not later than 5 full business days thereafter as you and the
Company may agree, such time and date of payment and delivery being herein
called the "Closing Date." The delivery of the Shares shall be made to the
respective accounts of the Investors against payment by the Investors of the
purchase price thereof (the "Requisite Funds") to the Placement Agent, as agent,
and not as principal, on behalf of the Company by Federal Funds wire transfer
payable in same day funds. The Placement Agent shall then immediately transfer
the Requisite Funds, less the Placement Fee and any expenses of the Placement
Agent for which the Company is obligated to reimburse pursuant to this
Agreement, to the Company by Federal Funds wire transfer payable in same day
funds.
The delivery of the Shares to the Investors shall be made, at the option of
the Placement Agent, either through the facilities of The Depository Trust
Company (the "DTC") or by certificated securities. If the Placement Agent elects
to deliver certificated securities, the Company will deliver definitive
certificates for the Shares at the office of X.X. Xxxxxxx & Sons, Inc., 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Xxxxxxx' Office"), or such other place as you and
the Company may mutually agree upon. The certificates for the Shares so to be
delivered will be made available to you for inspection at Xxxxxxx' Office (or
such other place as you and the Company may mutually agree upon) at least one
full business day prior to the Closing Date and will be registered in such names
and denominations as you may request at least forty-eight hours prior to the
Closing Date.
The Company acknowledges and agrees that the Placement Agent shall act as
an independent contractor, and not as a fiduciary, financial advisor or agent,
and any duties of the Placement Agent with respect to investment banking
services to the Company, including the offering of the Shares contemplated
hereby (including in connection with determining the terms
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of the offering), shall be contractual in nature, as expressly set forth herein,
and shall be owed solely to the Company. Each party disclaims any intention to
impose any fiduciary or similar duty on the other. Additionally, the Placement
Agent has not advised, nor is advising, the Company or any other person as to
any legal, tax, investment, accounting or regulatory matters in any jurisdiction
with respect to the transactions contemplated hereby. The Company shall consult
with its own advisors concerning such matters and shall be responsible for
making its own independent investigation and appraisal of the transactions
contemplated hereby, and the Placement Agent shall have no responsibility or
liability to the Company with respect thereto. Any review by the Placement Agent
of the Company, the transactions contemplated hereby or other matters relating
to such transactions has been and will be performed solely for the benefit of
the Placement Agent and has not been and shall not be on behalf of the Company
or any other person. It is understood that the offering price, including the
volume discount to Investors purchasing at least 200,000 Shares, was arrived at
through arms-length negotiations between the Company and the several Investors;
and that the Placement Agent has not and will not be rendering an opinion to the
Company as to the fairness of the terms of the offering. Notwithstanding
anything in this Placement Agent Agreement to the contrary, the Company
acknowledges that the Placement Agent may have financial interests in the
success of the offering contemplated hereby that are not limited to the
Placement Fee.
It is understood that the Company proposes to offer the Shares to the
Investors upon the terms and conditions set forth in the Registration Statement.
5. AGREEMENTS.
(a) The Company agrees with the Placement Agent as follows:
(i) If, at the time this Agreement is executed and delivered, it is
necessary for a post effective amendment to the Registration Statement
to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause such post effective
amendment to become effective as soon as possible and will advise the
Placement Agent promptly and, if requested by the Placement Agent,
will confirm such advice in writing, when such post effective
amendment has become effective.
(ii) The Company will advise the Placement Agent promptly and, if
requested by the Placement Agent, will confirm such advice in writing:
of any request by the Commission for amendment of or a supplement to
the Registration Statement, the Disclosure Package, the Prospectus or
for additional information; of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
(as amended or supplemented) or preventing or suspending the use of
any Preliminary Prospectus, Disclosure Package or the Prospectus or of
the suspension of qualification of the Shares for offering or sale in
any jurisdiction or the initiation of any proceeding for such purpose;
and within the period of time referred to in paragraph (v) below, of
any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the
happening of any event, which makes any statement of a material fact
made in the Registration Statement, the Disclosure Package or the
Prospectus (as then amended or supplemented) untrue or which requires
the making of any additions to or changes in the Registration
Statement, the Disclosure
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Package or the Prospectus (as then amended or supplemented) in order
to state a material fact required by the Act or the regulations
thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or
supplement the Disclosure Package or the Prospectus (as then amended
or supplemented) to comply with the Act or any other law. If at any
time within the time period referred to in paragraph (v) the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable
effort to obtain the withdrawal of such order at the earliest possible
time.
(iii) The Company will furnish to the Placement Agent, without charge
and upon the Placement Agent's request, (1) such number of conformed
copies of the Registration Statement as originally filed and of each
amendment thereto, but without exhibits, as the Placement Agent may
reasonably request, (2) such number of copies of the Incorporated
Documents, without exhibits, as the Placement Agent may reasonably
request, and (3) one copy of the exhibits to the Incorporated
Documents.
(iv) The Company will not file any amendment or supplement to the
Registration Statement or make any amendment or supplement to the
Disclosure Package or the Prospectus (or any other prospectus relating
to the Shares filed pursuant to Rule 424(b) of the Act that differs
from the Prospectus as filed pursuant to such Rule 424(b)) or, prior
to the end of the period of time referred to in the first sentence in
subsection (v) below, file any document which upon filing, becomes an
Incorporated Document, of which the Placement Agent shall not
previously have been advised or to which, after the Placement Agent
shall have received a copy of the document proposed to be filed, the
Placement Agent shall reasonably object.
(v) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time during the period, as in the
opinion of counsel for the Placement Agent, when a prospectus (or in
lieu thereof, the notice contemplated by Rule 173(a) of the Act)
relating to any of the Shares is required to be delivered under the
Act, the Company will expeditiously deliver to each Placement Agent
and each dealer, without charge, as many copies of the Prospectus (and
of any amendment or supplement thereto) as the Placement Agent may
reasonably request. Subject to the provisions of subsection (i) below,
the Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of
the Act and with the securities or Blue Sky laws or real estate
syndication laws of the jurisdictions in the United States in which
the Shares are offered by the Placement Agent and by all dealers to
whom Shares may be sold, both in connection with the offering and sale
of the Shares and for such period of time thereafter as the Prospectus
is required by the Act to be delivered in connection with sales by the
Placement Agent or any dealer.
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(vi) The Company will obtain the Placement Agent's consent before
taking, or failing to take, any action that would cause the Company to
make an offer of Shares that would constitute an Issuer Free Writing
Prospectus or to be required to file a Free Writing Prospectus
pursuant to Rule 433(d) of the Act, other than the Issuer Free Writing
Prospectuses, if any, listed on Schedule D hereto.
(vii) The Company will not take any action that would result in any
Placement Agent or the Company being required to file with the
Commission pursuant to Rule 433(d) of the Act a Free Writing
Prospectus prepared by or on behalf of the Placement Agent that the
Placement Agent otherwise would not have been required to file
thereunder.
(viii) If the Disclosure Package is being used to solicit offers to
buy the Shares at a time when the Prospectus is not yet available to
prospective purchasers and any event shall occur or condition exist as
a result of which it is necessary to amend or supplement the
Disclosure Package in writing in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading, or if, in the reasonable opinion of counsel for the
Placement Agent, it is necessary to amend or supplement the Disclosure
Package to comply with applicable law, the Company shall forthwith
prepare, file with the Commission and furnish, at its own expense, to
the Placement Agent and to any dealer upon request, either amendments
or supplements to the Disclosure Package so that statements in the
Disclosure Package as so amended or supplemented will not, in light of
the circumstances under which they were made, when delivered to a
prospective purchaser, be misleading or so that the Disclosure
Package, as amended or supplemented, will comply with law.
(ix) The Company will cooperate with the Placement Agent and with
counsel for the Placement Agent in connection with the registration or
qualification of the Shares for offering and sale by the Placement
Agent and by dealers under the securities or Blue Sky laws or real
estate syndication laws of such jurisdictions as the Placement Agent
may designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising
out of the offering or sale of the Shares, in any jurisdiction where
it is not now so subject.
(x) The Company will not file any amendment or supplement to the
Registration Statement, the Disclosure Package or the Prospectus (or
any other prospectus relating to the Shares filed pursuant to Rule
424(b) of the Act that differs from the Prospectus as filed pursuant
to such Rule 424(b)) and will not file any document under the Exchange
Act before the termination of the offering of the Shares by the
Placement Agent if the document would be deemed to be incorporated by
reference into the Registration Statement, the Disclosure Package or
the Prospectus, of which the Placement Agent shall not previously have
been
6
advised and furnished with a copy or to which the Placement Agent
shall have reasonably objected or which is not in compliance with the
Act; and the Company will promptly notify you after it shall have
received notice thereof of the time when any amendment to the
Registration Statement becomes effective or when any supplement to,
the Disclosure Package, the Prospectus has been filed.
(xi) If, during the period when a prospectus (or in lieu thereof, the
notice contemplated by Rule 173(a) of the Act) relating to any of the
Shares is required to be delivered under the Act by the Placement
Agent or any dealer, (1) any event relating to or affecting the
Company or of which the Company shall be advised in writing by the
Placement Agent shall occur as a result of which, in the opinion of
the Company or the Placement Agent, the Disclosure Package or the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (2) any
event shall occur as a result of which any Free Writing Prospectus
conflicted or would conflict with the information in the Registration
Statement, or (3) it shall be necessary to amend or supplement the
Registration Statement, the Disclosure Package or the Prospectus to
comply with the Act or the Exchange Act, the Company will forthwith at
its expense prepare and file with the Commission, and furnish to the
Placement Agent a reasonable number of copies of, such amendment or
supplement or other filing that will correct such statement or
omission or effect such compliance.
(xii) During the period when a prospectus (or in lieu thereof, the
notice contemplated by Rule 173(a) of the Act) relating to any of the
Shares is required to be delivered under the Act by the Placement
Agent or any dealer, the Company will furnish such proper information
as may be lawfully required and otherwise cooperate in qualifying the
Shares for offer and sale under the securities or blue sky laws of
such jurisdictions as the Placement Agent may reasonably designate and
will file and make in each year such statements or reports as are or
may be reasonably required by the laws of such jurisdictions;
provided, however, that the Company shall not be required to qualify
as a foreign corporation or shall be required to qualify as a dealer
in securities or to file a general consent to service of process under
the laws of any jurisdiction.
(xiii) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited,
which shall satisfy the provisions of Section 11(a) of the Act.
(xiv) The Company will furnish to its shareholders, as soon as
practicable after the end of each respective fiscal year, an annual
report (including financial statements audited by independent public
accountants).
(xv) If this Agreement shall terminate or shall be terminated after
execution by the Placement Agent because of any failure or refusal on
the part of the Company to comply with the terms or fulfill any of the
conditions of this Agreement to be
7
complied with or fulfilled by the Company, the Company agrees to
reimburse the Placement Agent for all reasonable out of pocket
expenses (including fees and expenses of counsel) incurred by the
Placement Agent in connection with this Agreement.
(xvi) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth
under the caption "Use of Proceeds" in the Prospectus and the
Disclosure Package.
(xvii) The Company will timely file the Prospectus pursuant to Rule
424(b) under the Act and will advise the Placement Agent or the
Placement Agent's counsel of the time and manner of such filing.
(xviii) Except as stated in this Agreement and in the Prospectus, the
Company has not taken, nor will it take, directly or indirectly, any
action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Preferred
Shares to facilitate the sale or resale of the Shares.
(xix) The Company will use its best efforts to list the Shares on the
NYSE.
(xx) Subject to the determination by the Board of Directors of the
Company to the contrary, the Company will use its best efforts to meet
the requirements to qualify as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code") and to
cause the Partnership to be treated as a partnership for federal
income tax purposes.
(xxi) Except as provided in this Agreement, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of any
Preferred Shares or any securities convertible into or exercisable or
exchangeable for Common Stock or grant any options or warrants to
purchase Common Stock for a period of 30 days after the date of the
Prospectus Supplement, without the prior written consent of X.X.
Xxxxxxx & Sons, Inc., except (1) for the issuance of Common Stock
pursuant to the redemption of units of limited partnership interest in
the Partnership ("Partnership Units") in accordance with the Third
Amended and Restated Agreement of Limited Partnership of the
Partnership, as amended and (2) for options or Common Stock issued
pursuant to stock option or stock purchase plans as described in the
Prospectus or the Incorporated Documents.
(b) The Placement Agent represents and agrees that, without the prior
written consent of the Company, it has not made and will not make any offer
relating to the Shares that would constitute a Free Writing Prospectus; the
Company and the Placement Agent each represent and agree that any such Free
Writing Prospectus the use of which has been consented to by the Company
and the Placement Agent is listed on Schedule D hereto.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE TRUST AND THE PARTNERSHIP.
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The Company, the Trust and the Partnership, jointly and severally,
represent and warrant to the Placement Agent that:
(a) The Company meets the requirements for use of Form S-3 under the Act.
Neither the Commission nor any state or other jurisdiction or other
regulatory body has issued, and neither is, to the knowledge of the
Company, threatening to issue, any stop order under the Act or other order
suspending the effectiveness of the Registration Statement (as amended or
supplemented) or preventing or suspending the use of any Preliminary
Prospectus, Issuer Free Writing Prospectus, the Disclosure Package or the
Prospectus or suspending the qualification or registration of the Shares
for offering or sale in any jurisdiction nor instituted or, to the
knowledge of the Company, threatened to institute proceedings for any such
purpose. The Disclosure Package at its date of issue and as of 4:00 p.m.
Eastern time on the date hereof (the "Initial Time of Sale"), the
Registration Statement at each effective date (or deemed effective date),
and the Prospectus and any amendments or supplements thereto when they are
filed with the Commission or become effective, as the case may be, contain
or will contain, as the case may be, all statements which are required to
be stated therein by, and in all material respects conform or will conform,
as the case may be, to the requirements of the Act. Neither the
Registration Statement nor any amendment thereto, as of the applicable
effective date, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein, not misleading. Neither the Prospectus nor any supplement thereto
contains or will contain, as the case may be, any untrue statement of a
material fact or omits or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Neither
the Disclosure Package nor any supplement thereto, at the Initial Time of
Sale, contains or will contain, as the case may be, any untrue statement of
a material fact or omits or will omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or
warranty as to information contained in or omitted from the Registration
Statement, the Disclosure Package or the Prospectus, or any such amendment
or supplement, in reliance upon, and in conformity with, written
information furnished to the Company relating to the Placement Agent by or
on behalf of the Placement Agent expressly for use in the preparation
thereof (as provided in Section 12 hereof). There is no contract,
agreement, understanding or arrangement, whether written or oral, or
document required to be described in the Registration Statement, Disclosure
Package or Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. The documents
incorporated by reference in the Disclosure Package or the Prospectus at
the time they were filed with the Commission, complied in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Commission thereunder
(collectively, the "Exchange Act"). During the period when a prospectus (or
in lieu thereof, the notice contemplated by Rule 173(a) of the Act)
relating to any of the Shares is required to be delivered under the Act by
the Placement Agent or any dealer, any future documents incorporated by
reference so filed, when they are filed, will comply in all material
respects with the requirements of the Exchange Act; no such incorporated
9
document contained or will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, in the light of the
circumstances under which they were made; and, when read together and with
the other information in each of the Disclosure Package and the Prospectus,
at the time the Registration Statement became effective or shall be deemed
effective, at the Initial Time of Sale and at the Closing Date, each such
incorporated document did not or will not, as the case may be, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in the light of the circumstances under which they were
made.
(b) The Company is eligible to use Issuer Free Writing Prospectuses in
connection with the offering of the Shares pursuant to Rules 164 and 433 of
the Act. Any Issuer Free Writing Prospectus that the Company is required to
file pursuant to Rule 433(d) of the Act has been, or will be, timely filed
with the Commission in accordance with the requirements of the Act. Each
Issuer Free Writing Prospectus that the Company has filed, or is required
to file, pursuant to Rule 433(d) of the Act or that was prepared by or on
behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Act, including but not limited to
legending requirements. Except for the Issuer Free Writing Prospectuses, if
any, identified in Schedule D hereto, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or
refer to any Free Writing Prospectus. Each Issuer Free Writing Prospectus,
as of its issue date and at all times through the completion of the
offering and sale of the Shares, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement. The Company filed the
Registration Statement with the Commission before using any Free Writing
Prospectus.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Tennessee with
all requisite corporate power and authority to own and lease its properties
and to conduct its business as now conducted. The Company has been duly
qualified to do business and is in good standing as a foreign corporation
in each other jurisdiction in which the ownership or leasing of its
properties or the nature or conduct of its business as now conducted
requires such qualification, except where the failure to do so would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole. Except as set forth on Schedule A, the Company does not own or
control, directly or indirectly, any corporation, limited partnership,
limited liability company, association or other entity.
(d) The Trust has been duly organized and is validly existing as a real
estate investment trust in good standing under the laws of the State of
Maryland with all requisite power and authority to own and lease its
properties and to conduct its business as now conducted. The Trust has been
duly qualified to do business and is in good standing in each other
jurisdiction in which the ownership or leasing of its properties or the
nature or conduct of its business as now conducted requires such
qualification, except where the failure to do so would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole. The
Trust is wholly owned by the Company.
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(e) The Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the Tennessee Revised Uniform
Limited Partnership Act (the "Tennessee Act") with all requisite
partnership power and authority to own and lease its properties and to
conduct its business as now conducted. The Partnership has been duly
qualified or registered to do business and is in good standing as a foreign
partnership in each other jurisdiction in which the ownership or leasing of
its properties or the nature or conduct of its business as now conducted
requires such qualification, except where the failure to do so would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole. The Trust is the sole general partner of the Partnership and
holds approximately 97.3% of the outstanding Partnership Units. At the
Closing Date, following the contribution of the net proceeds of the
Offering to the Partnership and the issuance by the Partnership of up to
2,400,000 8% Series C Preferred Units (the "Series C Preferred Units") to
the Trust, the Trust will be the sole general partner of the Partnership
and will be the holder of approximately 97.4% of the Partnership Units, the
holder of all of the outstanding Series B Preferred Units and the holder of
all of the outstanding Series C Preferred Units.
(f) Each subsidiary of the Company other than the Partnership and the Trust
has been duly incorporated or organized, as appropriate, and is validly
existing as a corporation, limited partnership or limited liability
company, as appropriate, in good standing under the laws of the
jurisdiction of its incorporation or organization with all requisite
corporate, limited partnership or limited liability company power and
authority to own and lease its properties and to conduct its business as
now conducted. Each such subsidiary 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 and its subsidiaries, taken as a whole. The Company's
ownership percentage of each subsidiary of the Company is set forth on
Schedule A.
(g) The Company has full corporate right, power and authority to enter into
this Agreement, to issue, sell and deliver the Shares as provided herein
and to consummate the transactions contemplated herein. This Agreement has
been duly authorized, executed and delivered by the Company and constitutes
a valid and binding agreement of the Company, enforceable in accordance
with its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity principles and except to the extent the indemnification and
contribution provisions set forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
(h) The Trust has full legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed and delivered by the Trust and
constitutes a valid and binding agreement of the Trust, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity
11
principles and except to the extent the indemnification and contribution
provisions set forth in Section 7 of this Agreement may be limited by
federal or state securities laws or the public policy underlying such laws.
(i) The Partnership has full partnership right, power and authority to
enter into this Agreement to issue, sell and deliver the Partnership Units
to the Trust upon contribution of the net proceeds of the offering and to
consummate the transactions contemplated herein. This Agreement has been
duly authorized, executed and delivered on behalf of the Partnership by the
Trust, as the sole general partner of the Partnership, and constitutes a
valid and binding agreement of the Partnership enforceable in accordance
with its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general
applicability relating to or affecting creditors' rights, or by general
equity principles and except to the extent the indemnification and
contribution provisions set forth in Section 7 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
(j) Each of the Third Amended and Restated Agreement of Limited Partnership
of the Partnership, as amended by Amendment No. 1 dated June 25, 1998 and
Amendment No. 2 to the Partnership Agreement dated August 11, 2003
("Amendment No. 2") (the "Partnership Agreement"), the Consolidated Lease
Agreements by and between certain subsidiaries of Equity Inns TRS Holdings,
Inc. (each, a "Lessee") and the Partnership pursuant to which the Lessees
lease the Hotels from the Partnership (the "Percentage Leases") and the
management agreements with respect to each of the Hotels (the "Management
Agreements") have been duly authorized, executed and delivered by the
parties thereto and constitute valid and binding agreements, enforceable in
accordance with their respective terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting creditors' rights or by
general equity principles.
(k) Each material consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Shares, the execution, delivery and
performance of this Agreement, and the consummation by the Company, the
Trust and the Partnership of the transactions contemplated hereby has been
made or obtained and is in full force and effect except such as may be
required under the Blue Sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Placement Agent.
(l) Neither the issuance, sale and delivery by the Company of the Shares,
nor the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby by the Company, the
Trust or the Partnership, as applicable, will conflict with or result in a
breach or violation of any of the terms and provisions of, or (with or
without the giving of notice or the passage of time or both) constitute a
default under the charter, by-laws, Declaration of Trust, certificate of
limited partnership, partnership agreement, limited liability company
certificate of formation or operating agreement, as the case may be, of the
Company or any of its subsidiaries; any material indenture, mortgage, deed
of trust, loan agreement, note, lease or other
12
agreement or instrument to which the Company or any of its subsidiaries is
a party or to which they, any of them, any of their respective properties
or other assets or any Hotel is subject; or, to the Company's knowledge,
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 issuance of the Shares to be issued and sold to the Placement Agent
hereunder has been validly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, the
Shares will be duly and validly issued, fully paid and nonassessable. No
statutory or other preemptive rights of shareholders exist with respect to
any of the Shares. No person or entity holds a right to require or
participate in the registration under the Act of the Shares pursuant to the
Registration Statement. No person or entity has a right of participation or
first refusal with respect to the sale of the Shares by the Company. The
form of certificates evidencing the Shares complies with all applicable
requirements of Tennessee law.
(n) The Company's authorized, issued and outstanding capital stock is as
disclosed in the Disclosure Package and the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and are
validly issued, fully paid and nonassessable. None of the issued shares of
capital stock of the Company has been issued or is owned or held in
violation of any statutory or other preemptive rights of shareholders.
Except as disclosed in the Disclosure Package and 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 Act or exempt
from the registration requirements of the Act by reason of Sections 3(b),
4(2) or 4(6) thereof and were duly registered or were issued pursuant to an
available exemption from the registration requirements under the applicable
state securities or Blue Sky laws.
(p) All of the issued shares of beneficial interest of the Trust have been
duly authorized and validly issued, are fully paid and nonassessable and
are held by the Company. None of the issued shares of beneficial interest
of the Trust has been issued or is owned or held in violation of any
preemptive right. There is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to
issue, any shares of beneficial interest of the Trust or any security
convertible into or exchangeable for shares of beneficial interest of the
Trust. All of the outstanding shares of beneficial interest of the Trust
have been issued, offered and sold in compliance with all applicable laws
(including, without limitation, federal and state securities laws).
(q) All of the issued Partnership Units of the Partnership have been duly
and validly authorized and issued and are fully paid and nonassessable.
None of the issued
13
Partnership Units has been issued or is owned or held in violation of any
preemptive right. All of the outstanding Partnership Units have been
issued, offered and sold in compliance with all applicable laws (including,
without limitation, federal and state securities laws). The issuance of the
Partnership Units to be issued to the Trust at the Closing Date has been
duly and validly authorized by the Partnership. When issued and delivered
against payment therefore as provided in the Partnership Agreement, such
Partnership Units will be duly and validly issued and fully paid.
(r) The financial statements of the Company incorporated by reference in
the Registration Statement, the Disclosure Package and the Prospectus
present fairly the financial position of the Company as of the dates
indicated and the results of operations and cash flows for the Company for
the periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statement schedules
included in the Registration Statement fairly present the information shown
therein and have been compiled on a basis consistent with the financial
statements incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus. No other financial statements or
schedules are required by Form S-3 or otherwise to be included in the
Registration Statement, the Disclosure Package or the Prospectus. There are
no audit adjustments with respect to the Company's financial statements for
the year ended December 31, 2005 that have been proposed by
PricewaterhouseCoopers LLP prior to the date hereof and not recorded by the
Company.
(s) PricewaterhouseCoopers LLP, who have examined and are reporting upon
the audited financial statements and schedules of the Company incorporated
by reference in the Registration Statement, are, and were during the
periods covered by their report incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus, an
independent registered public accounting firm within the meaning of the
Act, the Exchange Act and the respective rules and regulations of the
Commission thereunder.
(t) None of the Company or any of its subsidiaries has sustained, since
December 31, 2004, 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, the
Disclosure Package and the Prospectus, and except as otherwise stated in
the Registration Statement, the Disclosure Package and Prospectus, there
has not been (i) any material change in the capital stock, shares of
beneficial interests or partnership interests, as applicable, long term
debt, obligations under capital leases or short term borrowings of the
Company or any of its subsidiaries, (ii) any material adverse change, or
any development which could reasonably be seen as involving a prospective
material adverse change, in or affecting the business, prospects,
properties, assets, results of operations or condition (financial or other)
of the Company and its subsidiaries, taken as a whole, (iii) any liability
or obligation, direct or contingent, incurred or undertaken by the Company
or any of its subsidiaries which is material to the business or condition
(financial or other) of the Company and its subsidiaries, taken as a whole,
except for liabilities or obligations incurred in the ordinary course of
business, (iv) any declaration or payment of any
14
dividend or distribution of any kind on or with respect to the capital
stock, shares of beneficial interest or partnership interests, as
applicable, of the Company or any of its subsidiaries except as set forth
in the Registration Statement, or (v) any transaction that is material to
the Company and its subsidiaries, taken as a whole, except transactions in
the ordinary course of business or as otherwise disclosed in the
Registration Statement, the Disclosure Package or the Prospectus.
(u) The Partnership or its subsidiaries has good and marketable title in
fee simple to all real property and the improvements located thereon owned
by it, including the Hotels, free and clear of all liens, encumbrances,
claims, security interests, restrictions and defects except such as (i) are
described in the Disclosure Package and the Prospectus, (ii) which do not
materially and adversely interfere with the Company's use of the Hotels,
(iii) were entered into in connection with the financings described in the
Company's financial statements incorporated by reference in the
Registration Statement, the Disclosure Package and Prospectus (the
"Financings"), or (iv) are reflected in the title insurance policies
relating to such properties. The leases under which the Partnership leases
real property as lessee (the "Leases") are valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made, and proposed to be made, of such property, by
the Partnership. The Leases conform in all material respects to the
description thereof, if any, set forth in the Registration Statement; and
no notice has been given or material claim asserted by anyone adverse to
the rights of the Partnership under any of the Leases or affecting the
right to the continued possession of the leased property. Except with
respect to liens relating to the Financings, the Company and its
subsidiaries have good title to all personal property owned by them, free
and clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and defects, except such as are disclosed in the Disclosure
Package and the Prospectus or do not materially and adversely affect the
value of such property and do not interfere with the use made or proposed
to be made of such property by the Company and its subsidiaries. Except as
disclosed in the Registration Statement, no person has an option or right
of first refusal to purchase all or part of any Hotel or any interest
therein. 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) and except for
such failures to comply that would not individually or in the aggregate
have a material adverse effect on the condition, financial or otherwise, or
on the earnings, assets, business affairs or business prospects of the
Company and its subsidiaries, taken as a whole. Neither the Company, the
Trust nor the Partnership has knowledge of any pending or threatened
condemnation proceedings, zoning change, or other proceeding or action that
will in any manner affect the size of, use of, improvements on,
construction on or access to the 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 the Company and its subsidiaries, taken as a whole.
(v) Neither the Company nor any of its subsidiaries is in violation of its
respective charter, bylaws, declaration of trust, certificate of limited
partnership or partnership agreement, as the case may be, and with respect
to the Company and each of its subsidiaries and, to the Company's
knowledge, with respect to each other party thereto,
15
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 the Company or any of its
subsidiaries is a party or to which any such entity or any of its
properties is subject, except as may be properly described in the
Disclosure Package and the Prospectus or such as in the aggregate do not
now have or will not in the future have a material adverse effect on the
financial position, results of operations or business of the Company and
its subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries 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 Disclosure Package and 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 the Company and its subsidiaries, taken as a whole.
(w) There is not pending or, to the knowledge of the Company, the Trust, or
the Partnership, threatened, any action, suit, proceeding, inquiry or
investigation against the Company or any of its subsidiaries 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 would have a
material adverse effect on the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the Company
and its subsidiaries, taken as a whole, or which could adversely affect the
consummation of the transactions contemplated by this Agreement.
(x) The descriptions in the Registration Statement, the Disclosure Package
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, the Disclosure Package or
the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required. To the best knowledge of the
Company, the Trust and the Partnership, there are no statutes or
regulations applicable to the Company or any of its subsidiaries or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement, the Disclosure Package or the Prospectus which have
not been so disclosed and properly described therein. All agreements, if
any, between the Company or any of its subsidiaries and third parties
expressly referenced in the Disclosure Package and the Prospectus are
legal, valid and binding obligations of the Company or such subsidiary,
respectively, enforceable in accordance with their respective terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or
affecting creditors' rights and by general equitable principles.
(y) The Company and its subsidiaries own, possess or have obtained all
material permits, licenses, franchises (including, with respect to the
Partnership, the franchises
16
relating to the Hotels), certificates, consents, orders, approvals and
other authorizations of governmental or regulatory authorities or other
entities as are necessary to own or lease, as the case may be, its
respective properties and to carry on its business as presently conducted,
or as contemplated in the Disclosure Package and the Prospectus to be
conducted, except where the failure to so obtain governmental licenses,
franchises, certificates, consents, orders, approvals or other
authorizations would not have a material adverse effect on the business,
prospects, properties, assets, results of operations or conditions
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole, and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to revocation or modification of any such
licenses, permits, franchises, certificates, consents, orders, approvals or
authorizations.
(z) Each of the Company and its subsidiaries owns or possesses adequate
license or other rights to use all trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know how (collectively
"Intangibles") necessary to entitle the Company and its subsidiaries to
conduct their business now, and as proposed to be conducted or operated as
described in the Disclosure Package and the Prospectus, and neither the
Company nor any of its subsidiaries 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 have
a material adverse effect on the business, prospects, properties, assets,
results of operation or condition (financial or otherwise) of the Company
and its subsidiaries, taken as a whole.
(aa) To the best of the Company's, the Trust's and the Partnership's
knowledge, the Company's and its subsidiaries' 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 financial
statements; and, to the best of the Company's, the Trust's, and the
Partnership's knowledge, none of the Company or any of its subsidiary or
any employee or agent thereof, has made any payment of funds of the Company
or any of its subsidiary, as the case may be, or received or retained any
funds and no funds of the Company or any of its subsidiaries, 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.
(bb) Each of the Company, the Trust (to the extent not consolidated with
the Company) and the Partnership (to the extent not consolidated with the
Company) has filed on a timely basis all material 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 where the
Company or such subsidiary is contesting such taxes in good faith and has
made adequate reserves therefor; and no tax deficiency has been asserted
against any such entity, nor does any such entity know of any tax
deficiency which is likely to be asserted against any such entity which if
determined adversely to any such entity, could have a material adverse
effect on the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the
17
Company and its subsidiaries, taken as a whole. All tax liabilities are
adequately provided for on the respective books of such entities.
(cc) Each of the Company, the Trust, the Partnership, and their officers,
directors or affiliates has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in or constitute the stabilization or manipulation of
any security of the Company or to facilitate the sale or resale of the
Shares.
(dd) The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and an application for listing the Shares on the NYSE has been
filed.
(ee) 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.
(ff) Except as otherwise disclosed in the Disclosure Package and the
Prospectus, neither the Company nor any of its subsidiaries 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 by any means controlled by the Company or any
of its subsidiaries, including the Hotels (the "Real Property") except as
in material compliance with applicable laws; except as otherwise disclosed
in the Disclosure Package and the Prospectus, to the knowledge of the
Company, the Trust and the Partnership, the Real Property and the Company's
and its subsidiaries' operations with respect to the Real Property are in
compliance in all material respects 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 its
subsidiaries have, and are in compliance with, all material licenses,
permits, registrations and government authorizations necessary to operate
under all applicable Environmental Laws. Except as otherwise disclosed in
the Disclosure Package and the Prospectus, neither the Company nor any of
its subsidiaries has received any written or oral notice from any
governmental entity or any other person and there is no pending or
threatened claim, litigation or any administrative agency proceeding that:
(i) alleges a violation of any Environmental Laws by the Company or any of
its subsidiaries; (ii) alleges that the Company or any of its subsidiaries
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; (iii) has
resulted in or could result in the attachment of an environmental lien on
any of the Real Property; or (iv) alleges that the Company or any
18
of its subsidiaries 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.
(gg) The Company has not distributed and, prior to the later to occur of
(A) the Closing Date and (B) the period when a prospectus (or in lieu
thereof, the notice contemplated by Rule 173(a) of the Act) relating to any
of the Shares is required to be delivered under the Act by the Placement
Agent or any dealer, will not distribute any offering material in
connection with the offering and sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, any Issuer Free Writing
Prospectus identified in Schedule D hereto, or the Prospectus.
(hh) The Company was organized and has operated in conformity with the
requirements for qualification as a real estate investment trust under the
Code for each of its taxable years ended December 31, 2002 through December
31, 2005, 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 Trust or the Partnership is, or will become
as a result of the transactions contemplated hereby, "an investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(jj) The Partnership is not currently prohibited, directly or indirectly,
from making distributions to the Trust, from repaying to the Trust any
loans or advances to the Partnership or from transferring any of the
Partnership's property or assets to the Trust, except as disclosed in the
Disclosure Package and the Prospectus and under the agreements relating to
the Financings and except as pursuant to applicable law regarding
insolvency.
(kk) The Trust is not currently prohibited, directly or indirectly, from
making distributions to the Company, from repaying to the Company any loans
or advances to the Trust or from transferring any of the Trust's property
or assets to the Company, except as disclosed in the Disclosure Package and
the Prospectus and under agreements relating to the Financings and except
as pursuant to applicable law regarding insolvency.
Any certificate signed by any officer of the Company on behalf of the
Company, or by an officer of the Trust on behalf of the Trust or the
Partnership and delivered to the Placement Agent or to counsel for the
Placement Agent shall be deemed a representation and warranty by such
entity to the Placement Agent as to the matters covered thereby.
19
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company, the Trust and the Partnership, jointly and severally,
agree to indemnify and hold harmless the Placement Agent and each other
person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Disclosure Package, the Prospectus, or any
amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating
to an Placement Agent furnished in writing to the Company by or on behalf
of any Placement Agent expressly for use in connection therewith. The
foregoing indemnity agreement shall be in addition to any liability which
the Company, the Trust or the Partnership may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Placement Agent or any person controlling the Placement Agent in respect of
which indemnity may be sought against the Company, the Trust or the
Partnership, such Placement Agent or such controlling person shall promptly
notify the Company, the Trust or the Partnership, but the failure so to
notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a)
above. The Company, the Trust or the Partnership shall assume the defense
thereof, including the employment of counsel and payment of all reasonable
fees and expenses. The Placement Agent or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Placement Agent or
such controlling person unless the Company, the Trust or the Partnership
have agreed in writing to pay such fees and expenses, the Company, the
Trust or the Partnership have failed to assume the defense and employ
counsel, or the named parties to any such action, suit or proceeding
(including any impleaded parties) include both the Placement Agent or such
controlling person and the Company, the Trust or the Partnership and the
Placement Agent or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Company, the
Trust or the Partnership by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company, the
Trust or the Partnership shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Placement Agent or such
controlling person). It is understood, however, that the Company, the Trust
or the Partnership shall,
20
in connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel), at any time for all such
Placement Agent and all controlling persons not having actual or potential
differing interests with the Placement Agent or among themselves, which
firm shall be designated in writing by X.X. Xxxxxxx & Sons, Inc., and that
all such fees and expenses shall be reimbursed as they are incurred. The
Company, the Trust or the Partnership shall not be liable for any
settlement of any such action, suit or proceeding effected without its
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding,
the Company, the Trust or the Partnership agree to indemnify and hold
harmless any Placement Agent, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or
judgment.
(c) The Placement Agent agrees to indemnify and hold harmless the Company,
the Trust, the Partnership, their respective directors and officers who
sign the Registration Statement, and any person who controls the Company,
the Trust or the Partnership within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company, the Trust and the Partnership to the Placement
Agent, but only with respect to information furnished in writing by or on
behalf of the Placement Agent expressly for use in the Registration
Statement, the Disclosure Package or the Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought
against the Company, the Trust, the Partnership or any of their respective
directors, any such officer, or any such controlling person based on the
Registration Statement, the Disclosure Package or the Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be
sought against the Placement Agent pursuant to this paragraph (c), the
Placement Agent shall have the rights and duties given to the Company, the
Trust and the Partnership by paragraph (b) above (except that if the
Company, the Trust and the Partnership shall have assumed the defense
thereof the Placement Agent shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the Placement Agent's
expense), and the Company, the Trust, the Partnership or their respective
directors, any such officer, and any such controlling person shall have the
rights and duties given to the Placement Agent by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which
the Placement Agent may otherwise have.
(d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then
an indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by
the Company, the Trust and the Partnership on the one hand and the
Placement Agent on the other hand from the offering of the Shares, or if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect
21
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Trust and the Partnership on the one
hand and the Placement Agent on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Trust and the Partnership on
the one hand and the Placement Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
Placement Agent Fee and received by the Placement Agent bear to the price
to public of the Shares, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company, the Trust
and the Partnership on the one hand and the Placement Agent on the other
hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company, the Trust or the Partnership on the one hand or by the
Placement Agent on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company, the Trust, the Partnership and the Placement Agent agree
that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by a pro rata allocation (even if the Placement
Agent were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 7, no Placement Agent shall
be required to contribute any amount in excess of the underwriting discount
or commission applicable to the Shares purchased by such Placement Agent
hereunder. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company, the Trust, the Partnership
and any Placement Agent set forth in this Agreement shall remain
22
operative and in full force and effect, regardless of any investigation
made by or on behalf of any Placement Agent or any person controlling any
Placement Agent, the Company, the Trust, the Partnership, their respective
directors or officers, or any person controlling the Company or the Trust
or the Partnership, acceptance of any Shares and payment therefor
hereunder, and any termination of this Agreement. A successor to any
Placement Agent or any person controlling any Placement Agent, or to the
Company, the Trust or the Partnership, their respective directors or
officers, or any person controlling the Company or the Trust or the
Partnership, shall be entitled to the benefits of the indemnity,
contribution, and reimbursement agreements contained in this Section 7.
8. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS. The obligation of the Placement
Agent to purchase the Shares hereunder is subject to the following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, such
post effective amendment shall have become effective not later than 5:30
P.M., New York City time, on the date hereof, or at such later date and
time as shall be consented to in writing by the Placement Agent, and all
filings, if any, required by Rule 424 under the Act shall have been timely
made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall
have been instituted or, to the knowledge of the Company or any Placement
Agent, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement, the
Disclosure Package, the Prospectus or otherwise) shall have been complied
with to the Placement Agent's satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company and its
subsidiaries taken as a whole not contemplated by the Disclosure Package or
the Prospectus, which in the Placement Agent's reasonable opinion would
materially, adversely affect the market for the Shares, or any event or
development relating to or involving the Company or any of its subsidiaries
or any officer or director of the Company which makes any material
statement made in the Disclosure Package and the Prospectus untrue or
which, in the reasonable opinion of the Company and its counsel or the
Placement Agent and their counsel, requires the making of any addition to
or change in the Disclosure Package or the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if
amending or supplementing the Disclosure Package and the Prospectus to
reflect such event or development would, in the Placement Agent's
reasonable opinion materially adversely affect the market for the Shares.
(c) The Placement Agent shall have received on the Closing Date, the
opinions and the disclosure letter from Hunton & Xxxxxxxx LLP, counsel for
the Company, the Trust and the Partnership, dated the Closing Date and
addressed to the Placement Agent substantially to the effect as set forth
in Schedule C-1, C-2 and C-3 hereto.
23
(d) The Placement Agent shall have received on the Closing Date an opinion
of Bass, Xxxxx & Xxxx PLC, counsel for the Placement Agent, dated the
Closing Date and addressed to the Placement Agent with respect to such
matters as the Placement Agent may reasonably require; and the Company and
the Partnership shall have furnished to such counsel such documents as they
reasonably request for the purposes of enabling them to review or pass on
the matters referred to in this Section and in order to evidence the
accuracy, completeness and satisfaction of the representations, warranties
and conditions herein contained.
(e) The Placement Agent shall have received letters addressed to the
Placement Agent and dated the date hereof and the Closing Date from
PricewaterhouseCoopers LLP, the independent registered public accounting
firm, substantially in the forms heretofore approved by the Placement
Agent.
(f) The Company shall have furnished to the Placement Agent a certificate,
signed by the Chief Executive Officer of the Company, dated the date
hereof, to the effect that such officer has reviewed the financial and
related information in the Disclosure Package and the Prospectus and that
the 2005 year end summary financial information included in the Disclosure
Package and the Prospectus is, to his knowledge, accurately stated in all
material respects.
(g) The Company and the Partnership shall have furnished to the Placement
Agent a certificate, signed by the Chief Executive Officer and the Chief
Financial Officer of the Company (and appropriate officer of the
Partnership), dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement, the
Disclosure Package, the Prospectus, and any supplements thereto and this
Agreement and that:
(i) since the Effective Date, there has occurred no event required to
be set forth in an amendment or supplement to the Registration
Statement, the Disclosure Package or the Prospectus which has not been
so set forth; there has been no Issuer Free Writing Prospectus
required to be filed under Rule 433(d) of the Act that has not been so
filed; and there has been no document required to be filed under the
Exchange Act that upon such filing would be deemed to be incorporated
by reference into the Disclosure Package or the Prospectus that has
not been so filed;
(ii) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
has been taken or, to the knowledge of the Company, threatened by the
Commission at or prior to the Closing Date; and
(iii) all representations and warranties made herein by the Company,
the Trust, and the Partnership are true and correct at such Closing
Date, with the same effect as if made on and as of such Closing Date,
and all agreements herein to be performed or complied with by the
Company on or prior to such Closing Date have been duly performed and
complied with by the Company;
24
(iv) neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in each of the Disclosure Package and the
Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree;
(v) except as disclosed in each of the Disclosure Package and the
Prospectus, subsequent to the respective dates as of which information
is given in the Registration Statement, each of the Disclosure Package
and the Prospectus, neither the Company nor any of its subsidiaries
has incurred any liabilities or obligations, direct or contingent,
other than in the ordinary course of business, or entered into any
transactions not in the ordinary course of business, which in either
case are material to the Company and its subsidiaries, taken as a
whole; and there has not been any change in the capital stock or
material increase in the short-term debt or long term debt of the
Company and its subsidiaries taken as a whole, or any material adverse
change in the condition (financial or otherwise), results of
operations or cash flow of the Company and its subsidiaries taken as a
whole; and there has been no dividend or distribution of any kind,
paid or made by the Company on any class of its capital stock.
(h) The Company shall not have failed at or prior to the Closing Date to
have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to
the Closing Date.
(i) The Shares shall have been listed or approved for listing upon notice
of issuance on the NYSE.
(j) The Company shall have furnished or caused to be furnished to the
Placement Agent such further certificates and documents as the Placement
Agent shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to the Placement Agent and the Placement Agent's counsel in the
Placement Agent's reasonable discretion. Any certificate or document signed by
any officer of the Company, the Trust or the general partner of the Partnership
and delivered to the Placement Agent or to counsel for the Placement Agent,
shall be deemed a representation and warranty by the Company, the Trust or the
Partnership, as applicable, to the Placement Agent as to the statements made
therein.
9. EXPENSES. The Company agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by it of its obligations
hereunder: the preparation, printing or reproduction, and filing with the
Commission of the Registration Statement (including financial statements and
exhibits thereto), the Prospectus, and each
25
amendment or supplement to any of them; the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Prospectus, and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp taxes
in connection with the original issuance and sale of the Shares; the listing of
the Shares on the NYSE; the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws or real estate syndication
laws of the several states as provided in Section 5(g) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Placement Agent
relating to the preparation, reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); the
filing fees and the fees and expenses of counsel for the Placement Agent in
connection with any filings required to be made with the NASD; the
transportation and other expenses incurred by or on behalf of the Company's
representatives in connection with presentations to prospective purchasers of
the Shares; the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective: upon the
execution and delivery hereof by the parties hereto; or if, at the time this
Agreement is executed and delivered, it is necessary for a post effective
amendment to the Registration Statement to be declared effective before the
offering of the Shares may commence, when notification of the effectiveness of
or such post effective amendment has been released by the Commission. Until such
time as this Agreement shall have become effective, it may be terminated by the
Company, by notifying the Placement Agent, or by the Placement Agent by
notifying the Company. Any notice under this Section 10 may be given by e-mail,
facsimile or telephone but shall be subsequently confirmed within 24 hours by
letter.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to termination in
the Placement Agent's absolute discretion, without liability on the part of any
Placement Agent to the Company, by notice to the Company, if prior to the
Closing Date, trading in the Company's Common Stock shall have been suspended by
the Commission or the NYSE or trading in securities generally on the NYSE shall
have been suspended or limited or minimum prices shall have been established on
such Exchange, a banking moratorium shall have been declared either by Federal
or New York State authorities or there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on the
financial markets is such as to make it, in the Placement Agent's reasonable
judgment, impracticable or inadvisable to proceed with the offering or delivery
of the Shares as contemplated by the Disclosure Package and the Prospectus
(exclusive of any supplement thereto). Notice of such termination may be given
to the Company by e-mail, facsimile or telephone and shall be subsequently
confirmed within 24 hours by letter.
12. INFORMATION FURNISHED BY THE PLACEMENT AGENT. The statements set forth in
the fifth paragraph under the caption "Plan of Distribution" in the Disclosure
Package and the Prospectus and in the last paragraph on the cover page of the
Prospectus, constitute the only information furnished by or on behalf of the
Placement Agent as such information is referred to in Sections 6(b) and 7
hereof.
26
13. NO FIDUCIARY OBLIGATION. The Company acknowledges and agrees that the
Placement Agent has acted, and is acting, solely in the capacity of an
arm's-length contractual counterparty to the Company with respect to the
offering of the Shares contemplated hereby (including in connection with
determining the terms of the offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any other person. Additionally, the
Placement Agent has not advised, and is not advising, the Company or any other
person as to any legal, tax, investment, accounting or regulatory matter in any
jurisdiction with respect to the transactions contemplated hereby. The Company
shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Placement Agent shall have no
responsibility or liability to the Company with respect thereto. Any review by
the Placement Agent of the Company, the transactions contemplated hereby or
other matters relating to such transactions has been and will be performed
solely for the benefit of the Placement Agent and has not been and shall not be
on behalf of the Company or any other person. It is understood that the offering
price was arrived at through arm's-length negotiations between the Placement
Agent and the Company, and that such price was not set or otherwise determined
as a result of expert advice rendered to the Company by the Placement Agent. The
Company acknowledges and agrees that the Placement Agent is acting as an
independent contractor, and any duties of the Placement Agent arising out of
this Agreement and the transactions completed hereby shall be contractual in
nature and expressly set forth herein. Notwithstanding anything in this
Underwriting Agreement to the contrary, the Company acknowledges that the
Placement Agent may have financial interests in the success of the offering
contemplated hereby that are not limited to the difference between the price to
the public and the purchase price paid to the Company by the Investors for the
Shares.
14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10 and 11 hereof,
notice given pursuant to any provision of this Agreement shall be in writing and
shall be delivered if to the Company, the Trust or the Partnership, at the
office of the Company at Equity Inns, Inc., 0000 Xxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxx X. Silver or if to the Placement
Agent at X.X. Xxxxxxx & Sons, Inc., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000, Attention: Director, Corporate Finance.
This Agreement has been and is made solely for the benefit of the several
Placement Agent, the Company, the Trust and the Partnership, their respective
directors and officers, and the other controlling persons referred to in Section
7 hereof and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any Placement
Agent of any of the Shares in his status as such purchaser.
27
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
28
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Partnership, the Trust and the Placement Agent.
Very truly yours,
EQUITY INNS, INC.
By: /s/ J. Xxxxxxxx Xxxxxxx
------------------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
EQUITY INNS TRUST
By: /s/ J. Xxxxxxxx Xxxxxxx
------------------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
EQUITY INNS PARTNERSHIP, L.P.
By: EQUITY INNS TRUST
General Partner
By: /s/ J. Xxxxxxxx Xxxxxxx
------------------------------------
Name: J. Xxxxxxxx Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer,
Secretary, and Treasurer
Confirmed as of the date first above mentioned.
X.X. XXXXXXX & SONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Managing Director
29
SCHEDULE A
DIRECT AND INDIRECT SUBSIDIARIES OF EQUITY INNS, INC.
JURISDICTION OF
INCORPORATION OR
NAME ORGANIZATION OWNERSHIP PERCENTAGE
---- ---------------- --------------------
Equity Inns Trust (the "Trust") Maryland 100% owned by Equity Inns, Inc. (the "REIT")
Equity Inns Partnership, L.P. (the "Partnership") Tennessee Approximately 97.3% owned by the Trust; approximately
2.7% owned by various limited partners
ENN Services Corporation Tennessee 100% owned by the REIT
Equity Inns Services, L.L.C. (f/k/a Equity Inns, Inc.) Tennessee 99.5% owned by the REIT; 0.5% owned by ENN Services
("Services") Corporation
Equity Inns TRS Holdings, Inc. ("TRS Holdings") Tennessee 100% owned by the Partnership
Equity Inns Partnership II, L.P. Tennessee 1% GP interest held by the Trust; 99% LP interest held
by the Partnership
Equity Inns/West Virginia Partnership, L.P. Tennessee 1% GP interest held by Services; 99% LP interest held
by the Partnership
EQI Financing Corporation Tennessee 100% owned by the Trust
EQI Financing Partnership I, L.P. Tennessee Approximately 1% GP interest held by EQI Financing
Corporation; approximately 99% LP interest held by the
Partnership
EQI Financing Corporation II Tennessee 100% owned by the Trust
EQI Financing Partnership II, L.P. Tennessee 1% GP interest held by EQI Financing Corporation II;
99% LP interest held by the Partnership
EQI/WV Financing Partnership, L.P. Tennessee 1% GP interest held by EQI Financing Corporation II;
99% LP interest held by the Partnership
EQI Financing Corporation III Tennessee 100% owned by the Trust
EQI Financing Partnership III, L.P. Tennessee 1% GP interest held by EQI Financing Corporation III;
99% LP interest held by the Partnership
EQI Financing Corporation IV Tennessee 100% owned by the Trust
EQI Financing Partnership IV, L.P. Tennessee 1% GP interest held by EQI Financing Corporation IV;
99% LP interest held by the Partnership
EQI Financing Corporation V Tennessee 100% owned by the Trust
EQI Financing Partnership V, L.P. Tennessee 1% GP interest held by EQI Financing Corporation V; 99%
LP interest held by the Partnership
EQI Financing Corporation VI Tennessee 100% owned by the Trust
EQI Jacksonville Partnership I, L.P. Tennessee 1% GP interest held by EQI Financing Corporation VI;
99% LP interest held by the Partnership
EQI Asheville Partnership I, L.P. Tennessee 1% GP interest held by EQI Financing Corporation VI;
99% LP interest held by the Partnership
EQI Louisville Partnership I, L.P. Tennessee 1% GP interest held by EQI Financing Corporation VI;
99% LP interest held by the Partnership
EQI Xxxxxx Partnership, L.P. Tennessee 1% GP interest held by EQI Financing Corporation VI;
99% LP interest held by the Partnership
EQI/WV Financing Corporation Tennessee 100% owned by the Trust
EQI/WV Financing Partnership II, L.P. Tennessee 1% GP interest held by EQI/WV Financing Corporation;
99% LP interest held by the Partnership
E. Inns Orlando, Inc. Tennessee 100% owned by Services
E.I.P. Orlando, L.P. Tennessee 1% GP interest held by E. Inns Orlando, Inc.; 99% LP
interest held by the Partnership
ENN Leasing Company, Inc. Tennessee 100% owned by TRS Holdings
Equity Inns Statutory Trust I Delaware Partnership owns 100% common securities (100% preferred
securities held by Third Party Trust Preferred
Securities Holders)
ENN Leasing Company I, L.L.C. Delaware 100% owned by TRS Holdings
ENN Leasing Company II, L.L.C. Delaware 100% owned by TRS Holdings
ENN Leasing Company III, L.L.C. Delaware 100% owned by TRS Holdings
ENN Leasing Company IV, L.L.C. Delaware 100% owned by TRS Holdings
ENN Leasing Company V, L.L.C. Delaware 100% owned by TRS Holdings
ENN KS, Inc. Kansas 100% owned by TRS Holdings
ENN TRS, Inc. Tennessee 100% owned by TRS Holdings
ENN TN, L.L.C. Tennessee 99% owned by TRS Holdings; 1% owned by ENN TRS, Inc.
ENN TN I, L.L.C. Delaware 99% owned by TRS Holdings; 1% owned by ENN TRS, Inc.
ENN TN II, L.L.C. Delaware 99% owned by TRS Holdings; 1% owned by ENN TRS, Inc.
ENN TN IV, L.L.C. Delaware 99% owned by TRS Holdings; 1% owned by ENN TRS, Inc.
ENN TN V, L.L.C. Delaware 99% owned by TRS Holdings; 1% owned by ENN TRS, Inc.
EQI FL Corporation ("EQI FL") Tennessee 100% owned by the Trust
EQI Tallahassee, L.P. Tennessee 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
EQI Kentucky Corporation ("EQI Ky") Tennessee 100% owned by the Trust
EQI Jacksonville Corporation ("EQI Jax") Tennessee 100% owned by the Trust
EQI Carlsbad Corporation ("EQI Carlsbad") Tennessee 100% owned by the Trust
EQI Orlando Corporation ("EQI" Orlando") Tennessee 100% owned by the Trust
EQI Athens, L.P. Tennessee 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
EQI Gainesville, L.P. Tennessee 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
ENN Gainesville, L.L.C. Delaware 100% owned by TRS Holdings
ENN Tampa, L.L.C. Delaware 100% owned by TRS Holdings
ENN Tallahassee, L.L.C. Delaware 100% owned by TRS Holdings
ENN Asheville, L.L.C. Delaware 100% owned by TRS Holdings
ENN Savannah, L.L.C. Delaware 100% owned by TRS Holdings
ENN Athens, L.L.C. Delaware 100% owned by TRS Holdings
ENN Mobile, L.L.C. Delaware 100% owned by TRS Holdings
ENN Macon, L.L.C. Delaware 100% owned by TRS Holdings
ENN Jacksonville, L.L.C. Delaware 100% owned by TRS Holdings
ENN Sarasota, L.L.C. Delaware 100% owned by TRS Holdings
ENN Sarasota 2, L.L.C. Delaware 100% owned by TRS Holdings
ENN Ft. Xxxxx, L.L.C. Delaware 100% owned by TRS Holdings
ENN Carlsbad, L.L.C. Delaware 100% owned by TRS Holdings
ENN Orlando, L.L.C. Delaware 100% owned by TRS Holdings
XxXxxxxx Hotel Group of Gainesville, Florida, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Xxxxxxxxxxx, Xxxxxxx #0, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Sabal Park, Florida, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Tallahassee, Florida, L.P. Georgia 1% GP interest held by EQI FL; 99% LP
31
interest held by the Partnership
XxXxxxxx Hotel Group of Asheville, North Carolina, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Xxxxxxxxx, Xxxxxxxxx #0, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Savannah, Georgia, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
the Partnership
XxXxxxxx Hotel Group of Chattanooga, Tennessee, L.P. Georgia 1% GP interest held by EQI FL; 99% LP interest held by
Partnership
XxXxxxxx Hotel Group of Sarasota, Florida #3, L.P. Georgia 1% EQI FL; 99% Partnership
XxXxxxxx Hotel Group of Savannah, Georgia #2, L.P. Georgia 1% EQI FL; 99% Partnership
EQI San Antonio, L.P. Tennessee 1% EQI FL; 99% Partnership
EQI Sarasota, L.P. Tennessee 1% EQI FL; 99% Partnership
EQI Sarasota #2, L.P. Tennessee 1% EQI FL; 99% Partnership
EQI Ft. Xxxxx, X.X. Tennessee 1% EQI FL; 99% Partnership
EQI Xxxxxxxx, X.X. Tennessee 1% EQI FL; 99% Partnership
EQI Bowling Green Partnership, L.P. Tennessee 1% EQI Ky; 99% Partnership
EQI Jacksonville Partnership Tennessee 1% EQI Jax; 99% Partnership
EQI Carlsbad Partnership Tennessee 1% EQI Carlsbad; 99% Partnership
EQI Orlando Partnership, L.P. Tennessee 1% EQI Orlando; 99% Partnership
EQI Macon, L.P. Tennessee 1% GP interest held by EQI FL; 99% LP interest held by
Partnership
EQI Mobile, L.P. Tennessee 1% GP interest held by EQI FL; 99% LP interest held by
Partnership
ENN Knoxville, L.L.C. Delaware 99% interest held by TRS Holdings; 1% interest held by
ENN TRS, Inc.
ENN Chattanooga, L.L.C. Delaware 99% interest held by TRS Holdings; 1% interest held by
ENN TRS, Inc.
ENN Knoxville 2, L.L.C. Delaware 99% interest held by TRS Holdings; 1% interest held by
ENN TRS, Inc.
32
SCHEDULE B
Intentionally Omitted
SCHEDULE C-1
Corporate Opinion
Based upon the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion that:
1. The Company is a Tennessee corporation, duly incorporated and existing
under the laws of the State of Tennessee.
2. The Operating Partnership is a Tennessee limited partnership, duly formed
and validly existing under the Tennessee Revised Uniform Limited
Partnership Act.
3. The Trust has been duly formed and is validly existing and in good standing
with the SDAT.
4. Each subsidiary of the Company set forth on Schedule A has been duly formed
and is validly existing under the laws of the jurisdiction of its
organization with the limited partnership power and authority to own and
lease its properties and to conduct its business as described in the
Placement Shares Prospectus and the Underwritten Shares Prospectus.
5. Each subsidiary of the Company set forth on Schedule A has been qualified
to transact business as a foreign limited partnership in each jurisdiction
other than its jurisdiction of organization set forth on Schedule A.
6. The Company has the corporate power, the Trust has the trust power and the
Operating Partnership has the limited partnership power to own, lease and
operate its properties and conduct its business in all material respects as
described in (a) the Company's Underwritten Shares Prospectus Supplement
under the caption "Our Company," (b) the Company's Placement Shares
Prospectus Supplement under the caption "Our Company" and (c) the Company's
Form 10-K under the captions "Item 1. Business" and "Item 2. Properties,"
and to execute and perform its obligations under the Agreements.
7. The execution and delivery of the Agreements has been duly authorized by
all necessary corporate action on the part of the Company, and the
Agreements have been duly executed and, so far as is known to us, delivered
by the Company.
8. The execution and delivery of the Agreements has been duly authorized by
all necessary action on the part of the Trust, and the Agreements have been
duly executed and, so far as is known to us, delivered by the Trust.
9. The execution and delivery of the Agreements has been duly authorized by
all necessary limited partnership action on the part of the Operating
Partnership and the Agreements have been duly executed and, so far as is
known to us, delivered by the Operating Partnership.
10. The issuance of the Placement Shares pursuant to the Placement Agreement
has been duly authorized by all necessary corporate action on the part of
the Company and, when issued in accordance with the Placement Agreement and
upon payment therefor in the manner contemplated by the Placement
Agreement, the Placement Shares will be validly issued, fully paid and
nonassessable.
11. The issuance of the Underwritten Shares pursuant to the Underwriting
Agreement has been duly authorized by all necessary corporate action on the
part of the Company and, when issued in accordance with the Underwriting
Agreement and upon payment therefor in the manner contemplated by the
Underwriting Agreement, the Underwritten Shares will be validly issued,
fully paid and nonassessable.
12. The form of share certificate evidencing the Shares complies with the
applicable requirements of the laws of the State of Tennessee, the Charter
and Bylaws, and the New York Stock Exchange, Inc.
13. The execution and delivery of the Agreements and the issuance and delivery
of the Shares will not violate (A) the Charter or the Bylaws, (B) the
Certificate of Limited Partnership or the Limited Partnership Agreement,
(C) the Declaration of Trust or the Trust Bylaws or (C) any material
contract or agreement filed as an exhibit to the Company's Annual Report on
Form 10-K, as amended, for the year ended December 31, 2004; provided
however, that we express no opinion (a) as to whether the execution,
delivery or performance of any contract, instrument or agreements will
constitute a violation of, or a default under, any covenant, restriction or
provision with respect to financial ratios or tests or any aspect of the
financial condition or results of operations of any person or entity or (b)
with respect to any matter which requires mathematical calculation or any
financial or accounting determination.
14. The Company is not, and after giving effect to the issuance of the Shares
and the application of the proceeds thereof as described under the caption
"Use of Proceeds" in each of the Underwritten Shares Prospectus and the
Placement Shares Prospectus, will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
15. The Company has authorized capital stock as set forth under the caption
"Capitalization" in each of the Underwritten Shares Prospectus and the
Placement Shares Prospectus. The statements in each of the Underwritten
Shares Prospectus and the Placement Shares Prospectus under the caption
"Description of Capital Stock - Preferred Stock" and "Description of Series
C Preferred Stock" insofar as such statements purport to summarize legal
matters or legal documents, have been reviewed by us and are correct in all
material respects as of the date of the Placement Shares Prospectus and the
Underwritten Shares Prospectus.
16. To our knowledge, no authorization, approval or consent of any court or
United States federal or state governmental agency or body is required to
be made in connection with the sale of the Shares pursuant to the
Agreements, except such as may be required under the Securities Act,
applicable state securities or real estate syndication laws or as may be
required by the National Association of Securities Dealers, Inc., as to
which we express no opinion.
35
SCHEDULE C-2
Tax Opinion
Based on the documents and assumptions set forth above, the representations
set forth in the Officer's Certificate, and the discussions in the Prospectus
under the caption "Federal Income Tax Consequences of Our Status as a REIT" and
the Prospectus Supplements under the captions "Additional Federal Income Tax
Considerations" (which are incorporated herein by reference), we are of the
opinion that:
(a) the Company qualified to be taxed as a REIT pursuant to sections
856 through 860 of the Code for its taxable years ended December 31, 2002
through December 31, 2005, 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, 2006, and in the future;
(b) each Partnership is and has been properly treated as a partnership
for federal income tax purposes and not as a corporation or as an
association or publicly traded partnership taxable as a corporation,
throughout the period from its formation through the date hereof; and
(c) the descriptions of the law and the legal conclusions contained in
the Prospectus under the caption "Federal Income Tax Consequences of Our
Status as a REIT" and in the Prospectus Supplements under the captions
"Additional 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
Series C Preferred Stock.
SCHEDULE C-3
Disclosure Letter
X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Equity Inns, Inc.
__________shares of ___% Series C Cumulative Preferred Stock
Ladies and Gentlemen:
We have acted as special counsel to Equity Inns, Inc., a Tennessee
corporation (the "Company"), in connection with the issuance and sale by the
Company in a public offering of (i) __________ shares (the "Placement Shares")
of 8% Series C Cumulative Preferred Stock ("Series C Preferred Stock"), $.01 par
value per share, of the Company pursuant to a Placement Agreement (the
"Placement Agreement"), dated as of February __, 2006, by and among the Company,
Equity Inns Partnership, L.P., a Tennessee limited partnership (the "Operating
Partnership"), Equity Inns Trust, a Maryland real estate investment trust (the
"Trust"), and you, as placement agent, and (ii) _________ shares (the
"Underwritten Shares" and, together with the Placement Shares, the "Shares") of
Series C Preferred Stock pursuant to an Underwriting Agreement (the
"Underwriting Agreement" and, together with the Placement Agreement, the
"Agreements"), dated as of February __, 2006, by and among the Company, the
Operating Partnership and you, as underwriter.
This letter is furnished to you at the request of the Company pursuant to
Section __ of the Placement Agreement and Section __ of the Underwriting
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned in the Underwriting Agreement.
We have been orally advised by the staff of the Securities and Exchange
Commission (the "Commission") that the Company's Registration Statement (the
"Registration Statement") on Form S-3 (Registration No. 333-117421), as filed
with the Commission on July 16, 2004, under the Securities Act of 1933, as
amended (the "Securities Act"), as amended by Pre-Effective Amendment No. 1
thereto filed by the Company with the Commission on August 30, 2004, as amended
by Post-Effective Amendment Nos. 1, 2 and 3 thereto filed by the Company with
the Commission on September 23, 2004, October 8, 2004 and October 15, 2004,
respectively (as amended at the time Post-Effective Amendment No. 3 thereto
became effective, the "Registration Statement"), has been declared effective by
the Commission under the Securities Act and that no stop order suspending the
effectiveness of the Registration Statement has been issued and, to our
knowledge, no proceeding for that purpose has been commenced or threatened under
the Securities Act.
We have participated in various conferences with officers of the Company,
representatives of the independent registered public accounting firm for the
Company and with your representatives and your counsel at which the contents of
(i) the Registration Statement, (ii) the preliminary prospectus with respect to
the Placement Shares dated February ___, 2006 as filed with the Commission on
February ___, 2006 pursuant to Rule 424(b) under the Securities
Act taken together as a whole with the Issuer Free Writing Prospectus identified
in Schedule D to the Placement Agreement (collectively, the "Placement Shares
Disclosure Package"), (iii) the preliminary prospectus with respect to the
Underwritten Shares dated February __, 2006 as filed with the Commission on
February __, 2006 pursuant to Rule 424(b) under the Securities Act taken
together as a whole with the Issuer Free Writing Prospectus identified in
Schedule D to the Underwriting Agreement (collectively, the "Underwritten Shares
Disclosure Package"), (iv) the final prospectus with respect to the Placement
Shares dated February ___, 2006 as filed with the Commission on February ___,
2006 pursuant to Rule 424(b) under the Securities Act (the "Placement Shares
Prospectus") and (v) the final prospectus with respect to the Underwritten
Shares dated February ___, 2006 as filed with the Commission on February ___,
2006 pursuant to Rule 424(b) under the Securities Act (the "Underwritten Shares
Prospectus") and related matters were discussed and reviewed. Because of the
inherent limitations in the independent verification of factual matters, and the
character of the determinations involved in the preparation of registration
statements under the Securities Act, we are not passing upon and do not assume
any responsibility for, and make no representation that we have independently
verified, the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement, the Placement Shares
Disclosure Package, the Underwritten Shares Disclosure Package, the Placement
Shares Prospectus or the Underwritten Shares Prospectus. However, subject to and
on the basis of the foregoing, we advise you that:
(a) the Registration Statement, when Post-Effective Amendment No. 3 thereto
became effective, and the Placement Shares Prospectus and the Underwritten
Shares Prospectus, each as of its date, appeared to us on their face to address
the requirements of the form on which the registration statement was filed
relevant to the offering of the Shares, as well as the applicable requirements
of Regulation C under the Securities Act; and
(b) nothing has come to our attention that leads us to believe that (i) the
Registration Statement, when it became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) as of
the Initial Time of Sale (as defined in the Placement Agreement), the Placement
Shares Disclosure Package contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (iii) as of the Initial Time of Sale (as defined in the Underwriting
Agreement), the Underwritten Shares Disclosure Package contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, (iv) the Placement Shares Prospectus, as
of its date and as of the date hereof, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (v) the Underwritten Shares Prospectus,
as of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that in each of
clauses (i) through (v) we do not express any view with respect to (A) the
financial statements and the related notes and schedules or as to any other
financial or statistical data or accounting information or (B) any information
furnished by you to the Company relating to you as underwriter or placement
agent included or incorporated by reference in, or required to be included or
incorporated by reference in, the Registration Statement, the Placement Shares
38
Disclosure Package, the Underwritten Shares Disclosure Package, the Placement
Shares Prospectus or the Underwritten Shares Prospectus.
Whenever a statement herein is qualified by "to our knowledge," "known to
us" or a similar phrase, it refers to the actual knowledge of the attorneys of
this firm involved in the representation of the Company in connection with the
transactions described in the Agreements without independent investigation.
This letter is rendered to you solely in connection with the Agreements and
may not be used or relied upon by any other person or for any other purpose, nor
may this letter or any copies thereof be furnished to a third party, filed with
a government agency, quoted, cited or otherwise referred to without our prior
written consent. This letter is given as of the date hereof, and we do not
undertake to advise you of any changes in the statements expressed herein from
matters that might hereafter arise or be brought to our attention.
CIRCULAR 230 DISCLOSURE
TO ENSURE COMPLIANCE BY THIS LAW FIRM WITH REQUIREMENTS IMPOSED BY THE INTERNAL
REVENUE SERVICE, WE INFORM YOU THAT (A) THIS ADVICE WAS NOT INTENDED OR WRITTEN
TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING UNITED STATES
FEDERAL TAX PENALTIES, (B) THIS ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR
MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN, AND (C) ANY PERSON TO
WHOM SUCH TRANSACTIONS OR MATTERS ARE BEING PROMOTED, MARKETED OR RECOMMENDED
SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.
Very truly yours,
39
SCHEDULE D
FREE WRITING PROSPECTUS
EQUITY INNS, INC.
SERIES C CUMULATIVE PREFERRED STOCK
PRELIMINARY TERM SHEET DATED FEBRUARY 8, 2006
ISSUER: Equity Inns, Inc.
SECURITY: 8% Series C Cumulative Preferred Stock
(Liquidate Preference $25.00 per share)
CUSIP: 294703 40 0
SIZE: Up to 2,400,000 shares (No Over-allotment
Option); Substantially contemporaneous with
this offering, the Company is conducting an
offering of up to 600,000 shares of Series C
Preferred Stock on an underwritten basis
primarily to retail investors. The Public
Offering Price in such offering is proposed
to be $25.00 per share and the underwriting
discount is proposed to be 3.15%, for a net
price to the Company of $24.2125 per share.
TYPE OF SECURITY: SEC Registered - Registration Statement No.
333-117421
PUBLIC OFFERING PRICE: $25.00 per share
VOLUME DISCOUNT: Any purchaser who purchases at least 200,000
shares shall receive a volume discount of
$0.75 per share, paying a net price to the
Company of $24.25 per share
NET PRICE TO INVESTORS: $24.25 to purchasers of at least 200,000
shares; $25.00 to all other purchasers
PLACEMENT FEE: $75,000, payable to X.X. Xxxxxxx & Sons, Inc.
as sole placement agent. In addition, the
Company will pay the expenses of the
placement agent's counsel.
EXPECTED NET PROCEEDS TO COMPANY
AFTER PLACEMENT FEE AND EXPENSES
OF OFFERING Up to $58,025,000
SOLE PLACEMENT AGENT: X.X. Xxxxxxx & Sons, Inc.
DIVIDEND RATE: 8% of the liquidation preference per annum;
$2.00 per annum per share, cumulative from
February 15, 2006 (subject to dividend rate
step-up to 9% following a change of control
and de-listing of the Series C Preferred
Stock as described in the prospectus
supplement)
REDEMPTION: On or after February 15, 2011 (subject to
special optional redemption right following a
change of control and de-listing of the
Series C Preferred Stock as described in the
prospectus supplement)
SETTLEMENT AND DELIVERY DATE: February 15, 2006, by agreement of Placement
Agent and purchasers in the offering
THE ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) WITH THE
SEC FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES. BEFORE YOU INVEST, YOU
SHOULD READ THE PROSPECTUS IN THAT REGISTRATION STATEMENT AND OTHER DOCUMENTS
THE ISSUER HAS FILED WITH THE SEC FOR MORE COMPLETE INFORMATION ABOUT THE ISSUER
AND THIS OFFERING. YOU MAY GET THESE DOCUMENTS FOR FREE BY VISITING XXXXX OF THE
SEC WEB SITE AT XXX.XXX.XXX. ALTERNATIVELY, THE ISSUER OR THE PLACEMENT AGENT
WILL ARRANGE TO SEND YOU THE PROSPECTUS IF YOU REQUEST IT BY CALLING TOLL-FREE
0-000-000-0000.
..
