Exhibit 10.01

 

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PURCHASE AGREEMENT

 

among

 

Jameson Inns, Inc.

 

Jameson Inns Financing Trust I

 

and

 

Taberna Preferred Funding I, Ltd.

 

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Dated as of February 24, 2005

 

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PURCHASE AGREEMENT

($26,250,000 Trust Preferred Securities)

 

THIS PURCHASE AGREEMENT, dated as of February 24, 2005 (this “Purchase
Agreement”), is entered into among Jameson Inns, Inc., a Georgia corporation
(the “Company”), Jameson Inns Financing Trust I, a Delaware statutory trust (the
“Trust”, and together with the Company, the “Sellers”), and Taberna Preferred
Funding I, Ltd. or its assignee. (the “Purchaser”).

 

WITNESSETH:

 

WHEREAS, the Sellers propose to issue and sell 26,250 Floating Rate Preferred
Securities of the Trust, having a stated liquidation amount of $1,000 per
security, bearing a fixed rate of 8.46% per annum through March 30, 2010 and a
variable rate, reset quarterly, equal to LIBOR (as defined in the Indenture (as
defined below)) plus 4.20% thereafter (the “Preferred Securities”);

 

WHEREAS, the entire proceeds from the sale of the Preferred Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the “Common Securities”), and will be used by the Trust
to purchase Twenty Seven Million Sixty Two Thousand Dollars ($27,062,000) in
principal amount of the unsecured junior subordinated notes of the Company (the
“Junior Subordinated Notes”);

 

WHEREAS, the Preferred Securities and the Common Securities for the Trust will
be issued pursuant to the Amended and Restated Trust Agreement (the “Trust
Agreement”), dated as of the Closing Date, among the Company, as depositor,
JPMorgan Chase Bank, National Association, a national banking association, as
property trustee (in such capacity, the “Property Trustee”), Chase Bank USA,
National Association, a national banking association, as Delaware trustee (in
such capacity, the “Delaware Trustee”), the Administrative Trustees named
therein (in such capacities, the “Administrative Trustees”) and the holders from
time to time of undivided beneficial interests in the assets of the Trust; and

 

WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the “Indenture”), between
the Company and JPMorgan Chase Bank, National Association, a national banking
association, as indenture trustee (in such capacity, the “Indenture Trustee”).

 

NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions herein set forth, the parties hereto agree as follows:

 

1. Definitions. The Preferred Securities, the Common Securities and the Junior
Subordinated Notes are collectively referred to herein as the “Securities.” This
Purchase Agreement, the Indenture, the Trust Agreement and the Securities are
collectively referred to herein as the “Operative Documents.” All other
capitalized terms used but not defined in this Purchase Agreement shall have the
respective meanings ascribed thereto in the Indenture.

 

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2. Purchase and Sale of the Preferred Securities.

 

(a) The Sellers agree to sell to the Purchaser, and the Purchaser agrees to
purchase from the Sellers the Preferred Securities for an amount (the “Purchase
Price”) equal to Twenty Six Million Two Hundred Fifty Thousand Dollars
($26,250,000). The Purchaser shall be responsible for the rating agency costs
and expenses. The Sellers shall use the Purchase Price, together with the
proceeds from the sale of the Common Securities, to purchase the Junior
Subordinated Notes.

 

(b) Delivery or transfer of, and payment for, the Preferred Securities shall be
made at 11:00 A.M. Eastern Standard time (11:00 A.M. New York time), on March
15, 2005, (such date and time of delivery and payment for the Preferred
Securities being herein called the “Closing Date”). The Preferred Securities
shall be transferred and delivered to the Purchaser against the payment of the
Purchase Price to the Sellers made by wire transfer in immediately available
funds on the Closing Date to a U.S. account designated in writing by the Company
at least two business days prior to the Closing Date.

 

(c) Delivery of the Preferred Securities shall be made at such location, and in
such names and denominations, as the Purchaser shall designate at least two
business days in advance of the Closing Date. The Company and the Trust agree to
have the Preferred Securities available for inspection and checking by the
Purchaser not later than 2:00 P.M., Eastern Standard time, on the business day
prior to the Closing Date. The closing for the purchase and sale of the
Preferred Securities shall occur at the offices of Bracewell & Patterson,
L.L.P., 111 Congress Avenue, Suite 2300, Austin, Texas 78701, or such other
place as the parties hereto shall agree.

 

3. Conditions. The obligations of the parties under this Purchase Agreement are
subject to the following conditions:

 

(a) The representations and warranties contained herein shall be accurate as of
the date of delivery of the Preferred Securities.

 

(b) The Purchaser shall have sold securities issued by it in such an amount that
the net proceeds therefrom shall be available on the Closing Date and shall be
sufficient to purchase the Preferred Securities and all other preferred
securities contemplated in agreements similar to this Agreement.

 

(c) the Company shall have furnished to the Purchaser the opinion of the
Company’s Counsel in substantially the form set out in Annex A-I hereto and the
opinion of the Company Counsel or a certificate executed by an executive officer
of the company in substantially the form set forth in Annex A-II. In rendering
their opinion, the Company Counsel may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees of
the Company and the Trust and by government officials (provided, however, that
copies of any such certificates or documents are delivered to the Purchaser) and
by and upon such other documents as such counsel may, in their reasonable
opinion, deem

 

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appropriate as a basis for the Company Counsel’s opinion. The Company Counsel
may specify the jurisdictions in which they are admitted to practice and that
they are not admitted to practice in any other jurisdiction and are not experts
in the law of any other jurisdiction. If the Company Counsel is not admitted to
practice in the State of New York, the opinion of the Company Counsel may
assume, for purposes of the opinion, that the laws of the State of New York are
substantively identical, in all respects material to the opinion, to the
internal laws of the state in which such counsel is admitted to practice. Such
Company Counsel Opinion shall not state that they are to be governed or
qualified by, or that they are otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).

 

(d) The Purchaser shall have been furnished the opinion of Bracewell &
Patterson, L.L.P., special tax counsel for the Purchaser, dated the Closing
Date, addressed to the Purchaser and JPMorgan Chase Bank, National Association,
in substantially the form set out in Annex B hereto.

 

(e) The Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing Date,
addressed to the Purchaser, JPMorgan Chase Bank, National Association, the
Delaware Trustee and the Company, in substantially the form set out in Annex C
hereto.

 

(f) The Purchaser shall have received the opinion of Gardere Wynne Sewell LLP,
special counsel for the Property Trustee and the Indenture Trustee, dated the
Closing Date, addressed to the Purchaser, in substantially the form set out in
Annex D hereto.

 

(g) The Purchaser shall have received the opinion of Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, dated the Closing Date,
addressed to the Purchaser and JPMorgan Chase Bank, National Association, in
substantially the form set out in Annex E hereto.

 

(h) The Company shall have furnished to the Purchaser a certificate of the
Company, signed by the Chief Executive Officer, President or an Executive Vice
President, and Chief Financial Officer, Treasurer or Assistant Treasurer of the
Company, and the Trust shall have furnished to the Purchaser a certificate of
the Trust, signed by an Administrative Trustee of the Trust, in each case dated
the Closing Date, and, in the case of the Company, as to (i) and (ii) below and,
in the case of the Trust, as to (i) below.

 

(i) the representations and warranties in this Purchase Agreement are true and
correct on and as of the Closing Date with the same effect as if made on the
Closing Date, and the Company and the Trust have complied with all the
agreements and satisfied all the conditions on either of their part to be
performed or satisfied at or prior to the Closing Date; and

 

(ii) since September 30, 2004 (the date of the latest Financial Statements),
there has been no material adverse change in the condition (financial or other),
earnings, business or assets of the Company and its subsidiaries, whether or not
arising from transactions occurring in the ordinary course of business (a
“Material Adverse Change”).

 

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(i) Subsequent to the execution of this Purchase Agreement, there shall not have
been any change, or any development involving a prospective change, in or
affecting the condition (financial or other), earnings, business or assets of
the Company and its subsidiaries, whether or not occurring in the ordinary
course of business, the effect of which is, in the Purchaser’s judgment, so
material and adverse as to make it impractical or inadvisable to proceed with
the purchase of the Preferred Securities.

 

(j) Prior to the Closing Date, the Company and the Trust shall have furnished to
the Purchaser and its counsel such further information, certificates and
documents as the Purchaser or its counsel may reasonably request.

 

If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser’s
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
and the Trust in writing or by telephone or facsimile confirmed in writing.

 

Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Purchaser or the Purchaser’s counsel in connection
with the Operative Documents and the transactions contemplated hereby and
thereby shall be deemed to be a representation and warranty of the Trust and/or
the Company, as the case may be, and not by such trustee or officer in any
individual capacity.

 

4. Representations and Warranties of the Company and the Trust. The Company and
the Trust jointly and severally represent and warrant to, and agree with the
Purchaser, as follows:

 

(a) Neither the Company nor the Trust, nor any of their “Affiliates” (as defined
in Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act (as
defined below)), nor any person acting on its or their behalf, has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of any of the
Securities under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b) Neither the Company nor the Trust, nor any of their Affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities.

 

(c) The Securities (i) are not and have not been listed on a national securities
exchange registered under section 6 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or quoted on a U.S. automated inter-dealer
quotation system and (ii) are not of

 

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an open-end investment company, unit investment trust or face-amount certificate
company that are, or are required to be, registered under section 8 of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), and
the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).

 

(d) Neither the Company nor the Trust, nor any of their Affiliates, nor any
person acting on its or their behalf, has engaged, or will engage, in any
“directed selling efforts” within the meaning of Regulation S under the
Securities Act with respect to the Securities.

 

(e) Neither the Company nor the Trust is, and, immediately following
consummation of the transactions contemplated hereby and the application of the
net proceeds therefrom, will not be, an “investment company” or an entity
“controlled” by an “investment company,” in each case within the meaning of
section 3(a) of the Investment Company Act.

 

(f) Neither the Company nor the Trust has paid or agreed to pay to any person
any compensation for soliciting another to purchase any of the Securities,
except for the Preferred Securities Commission and/or the sales commission in
the amount of $600,000, the Company has agreed to pay to Cohen Bros. & Company
pursuant to the letter agreement between the Company and Cohen Bros. & Company.

 

(g) The Trust has been duly created and is validly existing in good standing as
a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. §3801, et
seq. (the “Statutory Trust Act”)with all requisite power and authority to own
property and to conduct the business it transacts and proposes to transact and
to enter into and perform its obligations under the Operative Documents to which
it is a party. The Trust is duly qualified to transact business as a foreign
entity and is in good standing in each jurisdiction in which such qualification
is necessary, except where the failure to so qualify or be in good standing
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business or assets of the Trust, whether or not occurring
in the ordinary course of business. The Trust is not a party to or otherwise
bound by any agreement other than the Operative Documents. The Trust is and will
be, under current law, classified for federal income tax purposes as a grantor
trust and not as an association or publicly traded partnership taxable as a
corporation.

 

(h) The Trust Agreement has been duly authorized by the Company and, on the
Closing Date specified in Section 2(b), will have been duly executed and
delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity. Each
of the Administrative Trustees of the Trust is an employee of the Company and
has been duly authorized by the Company to execute and deliver the Trust
Agreement.

 

(i) The Indenture has been duly authorized by the Company and, on the Closing
Date, will have been duly executed and delivered by the Company, and, assuming
due

 

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authorization, execution and delivery by the Indenture Trustee, will be a legal,
valid and binding obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity.

 

(j) The Preferred Securities and the Common Securities have been duly authorized
by the Trust and, when issued and delivered against payment therefor on the
Closing Date in accordance with this Purchase Agreement, in the case of the
Preferred Securities, and in accordance with the Common Securities Subscription
Agreement, in the case of the Common Securities, will be validly issued, fully
paid and non-assessable and will represent undivided beneficial interests in the
assets of the Trust entitled to the benefits of the Trust Agreement, enforceable
against the Trust in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity. The issuance of the Securities is not
subject to any preemptive or other similar rights. On the Closing Date, all of
the issued and outstanding Common Securities will be directly owned by the
Company free and clear of any pledge, security interest, claim, lien or other
encumbrance of any kind (each, a “Lien”).

 

(k) The Junior Subordinated Notes have been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the Indenture and, when
authenticated in the manner provided for in the Indenture and delivered to the
Trust against payment therefor in accordance with the Junior Subordinated Note
Purchase Agreement, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principles of equity.

 

(l) This Purchase Agreement has been duly authorized, executed and delivered by
the Company and the Trust.

 

(m) Neither the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, nor the purchase of the Junior
Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, nor the
consummation of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the Trust Agreement or the
charter or bylaws of the Company or any subsidiary of the Company or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Trust or the Company or any of
its subsidiaries or their respective properties or assets (collectively, the
“Governmental Entities”), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any Lien upon any property or assets of the
Trust, the Company or any of the Company’s subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Trust, the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or (B) to which any of the

 

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property or assets of any of them is subject, or any judgment, order or decree
of any court, Governmental Entity or arbitrator, except, in the case of this
clause (ii), for such conflicts, breaches, violations, defaults, Repayment
Events (as defined below) or Liens which (X) would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents and (Y) would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), earnings,
business, liabilities and assets (taken as a whole) or business prospects of the
Company and its subsidiaries taken as a whole, whether or not occurring in the
ordinary course of business (a “Material Adverse Effect”) or (iii) require the
consent, approval, authorization or order of any court or Governmental Entity.
As used herein, a “Repayment Event” means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Trust or the
Company or any of its subsidiaries prior to its scheduled maturity.

 

(n) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Georgia, with all requisite
corporate power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.

 

(o) The Company has no subsidiaries that are material to its business, financial
condition or earnings other than those subsidiaries listed in Schedule 1
attached hereto (collectively, the “Significant Subsidiaries”). Each Significant
Subsidiary has been duly incorporated and is validly existing as a corporation,
partnership, or limited liability company, as applicable, in good standing under
the laws of the jurisdiction in which it is chartered or organized, with all
requisite power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact. No Significant
Subsidiary transacts business as a foreign corporation.

 

(p) Each of the Trust, the Company and each of the Company’s subsidiaries hold
all necessary approvals, authorizations, orders, licenses, consents,
registrations, qualifications, certificates and permits (collectively, the
“Governmental Licenses”) of and from Governmental Entities necessary to conduct
their respective businesses as now being conducted, and neither the Trust, the
Company nor any of the Company’s subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Government
License, except where the failure to be so licensed or approved or the receipt
of an unfavorable decision, ruling or finding, would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except where the invalidity or the failure
of such Governmental Licenses to be in full force and effect, would not, singly
or in the aggregate, have a Material Adverse Effect; and the Company and its
subsidiaries are in compliance with all applicable laws, rules, regulations,
judgments, orders, decrees and consents, except where the failure to be in
compliance would not, singly or in the aggregate, have a Material Adverse
Effect.

 

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(q) All of the issued and outstanding shares of capital stock or other ownership
interests, as applicable, of the Company and each of its subsidiaries are
validly issued, fully paid and non-assessable; all of the issued and outstanding
ownership interest of each subsidiary of the Company is owned by the Company,
directly or through subsidiaries, free and clear of any Lien, claim or equitable
right; and none of the issued and outstanding ownership interest of the Company
or any subsidiary was issued in violation of any preemptive or similar rights
arising by operation of law, under the charter or by-laws of such entity or
under any agreement to which the Company or any of its subsidiaries is a party.

 

(r) Neither the Company nor any of its subsidiaries is (i) in violation of its
respective charter or by-laws or similar organizational documents or (ii) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any such
subsidiary is a party or by which it or any of them may be bound or to which any
of the property or assets of any of them is subject, except, in the case of
clause (ii), where such violation or default would not, singly or in the
aggregate, have a Material Adverse Effect.

 

(s) There is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to the knowledge of
the Company or the Trust after due inquiry, threatened against or affecting the
Trust or the Company or any of the Company’s subsidiaries, except for such
actions, suits or proceedings that, if adversely determined, would not, singly
or in the aggregate, adversely affect the consummation of the transactions
contemplated by the Operative Documents or have a Material Adverse Effect; and
the aggregate of all pending legal or governmental proceedings to which the
Trust or the Company or any of its subsidiaries is a party or of which any of
their respective properties or assets is subject, including ordinary routine
litigation incidental to the business, are not expected to result in a Material
Adverse Effect.

 

(t) The accountants of the Company who certified the Financial Statements (as
defined below) are independent public accountants of the Company and its
subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.

 

(u) The audited consolidated financial statements (including the notes thereto)
and schedules of the Company and its consolidated subsidiaries for the fiscal
year ended December 31, 2003 (the “Financial Statements”) and the interim
unaudited consolidated financial statements of the Company and its consolidated
subsidiaries for the quarter ended September 30, 2004 (the “Interim Financial
Statements”) provided to the Purchaser are the most recent available audited and
unaudited consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles, the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified, subject, in the case of Interim Financial Statements,
to year-end adjustments (which are expected to consist solely of normal
recurring adjustments). Such consolidated financial statements and schedules
have been prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”) consistently applied throughout the periods involved (except
as otherwise noted therein).

 

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(v) None of the Trust, the Company nor any of its subsidiaries has any material
liability, whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
taxes (and there is no past or present fact, situation, circumstance, condition
or other basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against the Company or its subsidiaries that
could give rise to any such liability), except for (i) liabilities set forth in
the Financial Statements or the Interim Financial Statements and (ii) normal
fluctuations in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Trust, the Company and all
of its subsidiaries since the date of the most recent balance sheet included in
such Financial Statements.

 

(w) Since the date of the Financial Statements and the Interim Financial
Statements, there has not been any Material Adverse Change

 

(x) Since the date of the Interim Financial Statements, there has not been any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock other than regular quarterly dividends on the
Company’s common stock.

 

(y) The documents of the Company filed with the Commission in accordance with
the Exchange Act, from and including the commencement of the fiscal year covered
by the Company’s most recent Annual Report on Forms 10-K and 10-K/A, at the time
they were or hereafter are filed by the Company with the Commission
(collectively, the “1934 Act Reports”), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder (the “1934 Act Regulations”), and, at the date of
this Purchase Agreement and on the Closing Date, do not and will not include 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, in the light of
the circumstances under which they were made, not misleading; and other than
such instruments, agreements, contracts and other documents as are filed as
exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q or Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of Regulation S-K
promulgated by the Commission to which the Company or any of its subsidiaries is
a party. The Company is in compliance with all currently applicable requirements
of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.

 

(z) No labor dispute with the employees of the Trust, the Company or any of its
subsidiaries exists or, to the knowledge of the executive officers of the Trust
or the Company, is imminent, except those which would not, singly or in the
aggregate, have a Material Adverse Effect.

 

(aa) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than
those that have been

 

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made or obtained, is necessary or required for the performance by the Trust or
the Company of their respective obligations under the Operative Documents, as
applicable, or the consummation by the Trust and the Company of the transactions
contemplated by the Operative Documents.

 

(bb) Each of the Trust, the Company and each subsidiary of the Company has good
and marketable title to all of its respective real and personal properties, in
each case free and clear of all Liens and defects, except for those that would
not, singly or in the aggregate, have a Material Adverse Effect and the
mortgages described in the 1934 Act Reports; and all of the leases and subleases
under which the Trust, the Company or any subsidiary of the Company holds
properties are in full force and effect, except where the failure of such leases
and subleases to be in full force and effect would not, singly or in the
aggregate, have a Material Adverse Effect, and none of the Trust, the Company or
any subsidiary of the Company has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Trust, the Company or any
subsidiary of the Company under any such leases or subleases, or affecting or
questioning the rights of such entity to the continued possession of the leased
or subleased premises under any such lease or sublease, except for such claims
that would not, singly or in the aggregate, have a Material Adverse Effect.

 

(cc) The Company and each of the Significant Subsidiaries have timely and duly
filed all Tax Returns required to be filed by them, and all such Tax Returns are
true, correct and complete in all material respects. The Company and each of the
Significant Subsidiaries have timely and duly paid in full all material Taxes
required to be paid by them (whether or not such amounts are shown as due on any
Tax Return). There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company or any of the
Significant Subsidiaries, and no such audits or assessments are threatened. As
used herein, the terms “Tax” or “Taxes” mean (i) all federal, state, local, and
foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto, imposed by any Governmental Entity, and (ii) all
liabilities in respect of such amounts arising as a result of being a member of
any affiliated, consolidated, combined, unitary or similar group, as a successor
to another person or by contract. As used herein, the term “Tax Returns” means
all federal, state, local, and foreign Tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto
filed or required to be filed with any Governmental Entity.

 

(dd) The Trust is not subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Notes, interest payable
by the Company on the Junior Subordinated Notes is deductible by the Company, in
whole or in part, for United States federal income tax purposes, and the Trust
is not, or will not be within ninety (90) days of the date hereof, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges. There are no rulemaking or similar proceedings before the United States
Internal Revenue Service or comparable federal, state, local or foreign
government bodies which involve or affect the Company or any subsidiary, which,
if the subject of an action unfavorable to the Company or any subsidiary, could
result in a material adverse effect on the Company and the Significant
Subsidiaries, taken as a whole.

 

11

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(ee) The books, records and accounts of the Company and its subsidiaries
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company
and its subsidiaries. The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

(ff) The Company and the Significant Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts in all material respects as are customary in the businesses in which
they are engaged or propose to engage after giving effect to the transactions
contemplated hereby including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against. All policies of insurance and fidelity
or surety bonds insuring the Company or any of the Significant Subsidiaries or
the Company’s or Significant Subsidiaries’ respective businesses, assets,
employees, officers and directors are in full force and effect. The Company and
each of the subsidiaries are in compliance with the terms of such policies and
instruments in all material respects. Neither the Company nor any Significant
Subsidiary has reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a material adverse effect on the Company and the
Significant Subsidiaries, taken as a whole. Within the past twelve months,
neither the Company nor any Significant Subsidiary has been denied any insurance
coverage which it has sought or for which it has applied.

 

(gg) The Company and its subsidiaries or any person acting on behalf of the
Company and its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries has not, directly
or indirectly, while acting on behalf of the Company and its subsidiaries (i)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any other unlawful payment.

 

(hh) The information provided by the Company and the Trust pursuant to this
Purchase Agreement and the transactions contemplated hereby does not, as of the
date hereof, and will not as of the Closing Date, contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

 

12

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(ii) Except as would not, individually or in the aggregate, result in a Material
Adverse Change, (i) the Company and its subsidiaries have been and are in
compliance with applicable Environmental Laws (as defined below), (ii) none of
the Company, any of its subsidiaries or, to the best of the Company’s knowledge,
any other owners of any of the Properties at any time or any other party, has at
any time released (as such term is defined in CERCLA (as defined below)) or
otherwise disposed of Hazardous Materials (as defined below) on, to, in, under
or from the Properties or any other real properties previously owned, leased or
operated by the Company or any of its subsidiaries, (iii) neither the Company
nor any of its subsidiaries intends to use the Properties or any subsequently
acquired properties, other than in compliance with applicable Environmental
Laws, (iv) neither the Company nor any of its subsidiaries has received any
notice of, or has any knowledge of any occurrence or circumstance which, with
notice or passage of time or both, would give rise to a claim under or pursuant
to any Environmental Law with respect to the Properties, any other real
properties previously owned, leased or operated by the Company or any of its
subsidiaries, or their respective assets or arising out of the conduct of the
Company or its subsidiaries, (v) none of the Properties are included or, to the
best of the Company’s knowledge, proposed for inclusion on the National
Priorities List issued pursuant to CERCLA by the United States Environmental
Protection Agency or, to the best of the Company’s knowledge, proposed for
inclusion on any similar list or inventory issued pursuant to any other
Environmental Law or issued by any other Governmental Entity, (vi) none of the
Company, any of its subsidiaries or agents or, to the best of the Company’s
knowledge, any other person or entity for whose conduct any of them is or may be
held responsible, has generated, manufactured, refined, transported, treated,
stored, handled, disposed, transferred, produced or processed any Hazardous
Material at any of the Properties, except in compliance with all applicable
Environmental Laws, and has not transported or arranged for the transport of any
Hazardous Material from the Properties or any other real properties previously
owned, leased or operated by the Company or any of its subsidiaries to another
property, except in compliance with all applicable Environmental Laws, (vii) no
lien has been imposed on the Properties by any Governmental Entity in connection
with the presence on or off such Property of any Hazardous Material, and (viii)
none of the Company, any of its subsidiaries or, to the best of the Company’s
knowledge, any other person or entity for whose conduct any of them is or may be
held responsible, has entered into or been subject to any consent decree,
compliance order, or administrative order with respect to the Properties or any
facilities or improvements or any operations or activities thereon.

 

As used herein, “Hazardous Material” shall include, without limitation, any
flammable materials, explosives, radioactive materials, hazardous materials,
hazardous substances, hazardous wastes, toxic substances or related materials,
asbestos, petroleum, petroleum products and any hazardous material as defined by
any federal, state or local environmental law, statute, ordinance, rule or
regulation, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§
9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42
U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§
2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§
136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe

 

13

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Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and
Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the
above may be amended from time to time and in the regulations promulgated
pursuant to each of the foregoing (including environmental statutes and laws not
specifically defined herein) (individually, an “Environmental Law” and
collectively, the “Environmental Laws”) or by any Governmental Entity.

 

(jj) In the ordinary course of its business, the Company periodically reviews
the effect of Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, and periodically identifies and evaluates
associated costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such reviews and the amount of its established
reserves, the Company has reasonably concluded that such associated costs and
liabilities would not, individually or in the aggregate, result in a Material
Adverse Change.

 

5. Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to, and agrees with, the Company and the Trust as follows:

 

(a) The Purchaser is aware that the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.

 

(b) The Purchaser is an “accredited investor,” as such term is defined in Rule
501(a) of Regulation D under the Securities Act.

 

(c) Neither the Purchaser, nor any of the Purchaser’s affiliates, nor any person
acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or
will engage, in any form of “general solicitation or general advertising”
(within the meaning of Regulation D under the Securities Act) in connection with
any offer or sale of the Preferred Securities.

 

(d) The Purchaser understands and acknowledges that (i) no public market exists
for any of the Securities and that it is unlikely that a public market will ever
exist for the Securities, (ii) the Purchaser is purchasing the Securities for
its own account, for investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act or
other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to
its ability to resell such Securities pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption therefrom or in a
transaction not subject thereto, and the Purchaser agrees to the legends and
transfer restrictions applicable to the Securities contained in the Indenture,
and (iii) the Purchaser has had the opportunity to ask questions of, and receive
answers and request additional information from, the Company and is aware that
it may be required to bear the economic risk of an investment in the Securities.

 

14

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(e) The Purchaser is a company with limited liability duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized with all requisite (i) power and authority to execute, deliver and
perform the Operative Documents to which it is a party, to make the
representations and warranties specified herein and therein and to consummate
the transactions contemplated herein and (ii) right and power to purchase the
Securities.

 

(f) This Purchase Agreement has been duly authorized, executed and delivered by
the Purchaser and no filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any governmental body, agency or
court having jurisdiction over the Purchaser, other than those that have been
made or obtained, is necessary or required for the performance by the Purchaser
of its obligations under this Purchase Agreement or to consummate the
transactions contemplated herein.

 

(g) The Purchaser will not, and will not permit any of its Affiliates or any
person acting on their behalf to, directly or indirectly, make offers or sales
of any security, or solicit offers to buy any security, under circumstances that
would require the registration of any of the Securities under the Securities
Act.

 

(h) The Purchaser is a “Qualified Purchaser” as such term is defined in Section
2(a)(51) of the Investment Company Act.

 

6. Covenants and Agreements of the Company and the Trust. The Company and the
Trust jointly and severally agree with the Purchaser as follows:

 

(a) During the period from the date of this Agreement to the Closing Date, the
Company and the Trust shall use their best efforts and take all action necessary
or appropriate to cause their representations and warranties contained in
Section 4 hereof to be true as of the Closing Date, after giving effect to the
transactions contemplated by this Purchase Agreement, as if made on and as of
the Closing Date.

 

(b) The Company and the Trust will arrange for the qualification of the
Preferred Securities for sale under the laws of such jurisdictions as the
Purchaser may designate and will maintain such qualifications in effect so long
as required for the sale of the Preferred Securities. The Company or the Trust,
as the case may be, will promptly advise the Purchaser of the receipt by the
Company or the Trust, as the case may be, of any notification with respect to
the suspension of the qualification of the Preferred Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.

 

(c) Neither the Company nor the Trust will, nor will either of them permit any
of its Affiliates to, nor will either of them permit any person acting on its or
their behalf (other than the Purchaser) to, resell any Preferred Securities that
have been acquired by any of them.

 

(d) Neither the Company nor the Trust will, nor will either of them permit any
of their Affiliates or any person acting on their behalf to, engage in any
“directed selling efforts” within the meaning of Regulation S under the
Securities Act with respect to the Securities.

 

15

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(e) Neither the Company nor the Trust will, nor will either of them permit any
of their Affiliates or any person acting on their behalf to, directly or
indirectly, make offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration of any of the
Securities under the Securities Act.

 

(f) Neither the Company nor the Trust will, nor will either of them permit any
of its Affiliates or any person acting on their behalf to, engage in any form of
“general solicitation or general advertising” (within the meaning of Regulation
D) in connection with any offer or sale of the any of the Securities.

 

(g) So long as any of the Securities are outstanding, (i) the Securities shall
not be listed on a national securities exchange registered under section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and
(ii) neither the Company nor the Trust shall be an open-end investment company,
unit investment trust or face-amount certificate company that is, or is required
to be, registered under section 8 of the Investment Company Act, and, the
Securities shall otherwise satisfy the eligibility requirements of Rule
144A(d)(3).

 

(h) Each of the Company and the Trust shall furnish to (i) the holders, and
subsequent holders of the Preferred Securities, (ii) Cohen Bros. & Company (at
1818 Market Street, 28th Floor, Philadelphia, Pennsylvania 19013, or such other
address as designated by Cohen Bros. & Company) and (iii) any beneficial owner
of the Securities reasonably identified to the Company and the Trust (which
identification may be made by either such beneficial owner or by Cohen Bros.), a
duly completed and executed certificate in the form attached hereto as Annex F,
including the financial statements referenced in such Annex, which certificate
and financial statements shall be so furnished by the Company and the Trust not
later than forty five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company and not later than ninety (90) days
after the end of each fiscal year of the Company.

 

(i) Each of the Company and the Trust will, during any period in which it is not
subject to and in compliance with section 13 or 15(d) of the Exchange Act, or it
is not exempt from such reporting requirements pursuant to and in compliance
with Rule 12g3-2(b) under the Exchange Act, shall provide to each holder of the
Securities and to each prospective purchaser (as designated by such holder) of
the Securities, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities Act.
If the Company and the Trust are required to register under the Exchange Act,
such reports filed in compliance with Rule 12g3-2(b) shall be sufficient
information as required above. This covenant is intended to be for the benefit
of the Purchaser, the holders of the Securities, and the prospective purchasers
designated by the Purchaser and such holders, from time to time, of the
Securities.

 

(j) Neither the Company nor the Trust will, until one hundred eighty (180) days
following the Closing Date, without the Purchaser’s prior written consent,
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of, directly or indirectly, (i) any Preferred Securities or other securities
substantially similar to the Preferred Securities other than as contemplated by
this Purchase Agreement or (ii) any other securities convertible into, or
exercisable or exchangeable for, any Preferred Securities or other securities
substantially similar to the Preferred Securities.

 

16

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(k) The Company shall not identify the Purchaser or Cohen Bros. & Company in a
press release or any other public statement without the consent of Purchaser or
Cohen Bros. & Company, as applicable.

 

7. Payment of Expenses. The Company, as depositor of the Trust, agrees to pay
all costs and expenses incident to the performance of the obligations of the
Company and the Trust under this Purchase Agreement, whether or not the
transactions contemplated herein are consummated or this Purchase Agreement is
terminated, including all costs and expenses incident to (i) the authorization,
issuance, sale and delivery of the Preferred Securities and any taxes payable in
connection therewith; (ii) the fees and expenses of qualifying the Preferred
Securities under the securities laws of the several jurisdictions as provided in
Section 6(b); (iii) the fees and expenses of the counsel, the accountants and
any other experts or advisors retained by the Company or the Trust; (iv) the
fees and all reasonable expenses of the Property Trustee, the Delaware Trustee,
the Indenture Trustee and any other trustee or paying agent appointed under the
Operative Documents, including the fees and disbursements of counsel for such
trustees, which fees shall not exceed a $2,000 acceptance fee, $3,500 for the
fees and expenses of Richards, Layton & Finger, P.A., special Delaware counsel
retained by the Delaware Trustee in connection with the Closing, and $4,000 in
administrative fees annually; and (vi) $25,000 for the fees and expenses of
Bracewell & Patterson, L.L.P., special counsel retained by the Purchaser.

 

If the sale of the Preferred Securities provided for in this Purchase Agreement
is not consummated because any condition set forth in Section 3 hereof to be
satisfied by either the Company or the Trust is not satisfied, because this
Purchase Agreement is terminated pursuant to Section 9 or because of any
failure, refusal or inability on the part of the Company or the Trust to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder other than by reason of a default by the Purchaser, the
Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses (including the fees and expenses of each of the
Purchaser’s counsel specified in subparagraphs (v) and (vi) of the immediately
preceding paragraph) that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Preferred Securities. The
Company shall not in any event be liable to the Purchaser for the loss of
anticipated profits from the transactions contemplated by this Purchase
Agreement.

 

8. Indemnification. (a) The Sellers agree, jointly and severally, to indemnify
and hold harmless the Purchaser and Cohen Bros. & Company (collectively, the
“Indemnified Parties”) and the Indemnified Parties’ respective directors,
officers, employees and agents and each person, if any, who controls the
Indemnified Parties within the meaning of the Securities Act, or the U.S.
Securities Exchange Act of 1934, as amended (the “Exchange Act”) against any
losses, claims, damages or liabilities, joint or several, to which the
Indemnified Parties may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are connected with the execution and

 

17

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delivery by Sellers, and the consummation thereby of the transactions
contemplated by, this Purchase Agreement or any other Operative Document.
Sellers agree, jointly and severally, to reimburse the Indemnified Parties for
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such loss, claim, damage or
liability or action arising out of or being connected with the execution and
delivery by the Sellers, and the consummation by the Sellers of the transactions
contemplated by, this Purchase Agreement or the other Operative Documents. This
indemnity agreement will be in addition to any liability that any of the Sellers
may otherwise have.

 

(b) The Company agrees to indemnify the Trust against all loss, liability,
claim, damage and expense whatsoever due from the Trust under paragraph (a)
above.

 

(c) Promptly after receipt by an Indemnified Party under this Section 8 of
notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under paragraph (a) above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material 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.
Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
that counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. An indemnifying party will not, without
the prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.

 

9. Termination; Representations and Indemnities to Survive. This Purchase
Agreement shall be subject to termination in the absolute discretion of the
Purchaser, by notice given to the Company and the Trust prior to delivery of and
payment for the Preferred Securities, if prior to such time (i) a downgrading
shall have occurred in the rating accorded the Company’s debt securities or
preferred stock by any “nationally recognized statistical rating organization,”
as that term is used by the Commission in Rule 15c3-1(c)(2)(vi)(F) under the
Exchange Act, or such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
the Company’s debt securities or preferred stock, (ii) the Trust shall be unable
to sell and deliver to the Purchaser at least $26,250,000 stated liquidation
value of Preferred Securities, (iii) a suspension or material limitation in
trading in securities generally shall have occurred on the New York Stock

 

18

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Exchange, (iv) a suspension or material limitation in trading in any of the
Company’s securities shall have occurred on the exchange or quotation system
upon which the Company’ securities are traded, if any, or (v) there shall have
occurred any outbreak or escalation of hostilities, or declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the Purchaser’s judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred Securities. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the Trust or their
respective officers or trustees and of the Purchaser set forth in or made
pursuant to this Purchase Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Purchaser, the
Company or the Trust or any of the their respective officers, directors,
trustees or controlling persons, and will survive delivery of and payment for
the Preferred Securities. The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Purchase Agreement.

 

10. Amendments. This Purchase Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.

 

11. Notices.

 

(a) Any communication shall be given by letter or facsimile, in the case of
notices to the Issuer, to it at:

 

Jameson Inns Financing Trust I

c/o Jameson Inns, Inc.

8 Perimeter Center East, Suite 8050

Atlanta, Georgia 30346

Facsimile:(770)396-0103

Attention: Craig Kitchin

 

with a copy to:

 

Lynnwood R. Moore, Jr.

Conners & Winters, LLP

3700 First Place Tower

15 east Fifth Street

Tulsa, Oklahoma 74103

Phone: (918) 586-5691

Fax: (918) 586-8691

 

19

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in the case of notices to the Company, to it at:

 

Jameson Inns, Inc.

8 Perimeter Center East, Suite 8050

Atlanta, Georgia 30346

Facsimile: (770)396-0103

Attention: Craig Kitchin

 

with a copy to:

 

Lynnwood R. Moore, Jr.

Conners & Winters, LLP

3700 First Place Tower

15 east Fifth Street

Tulsa, Oklahoma 74103

Phone: (918) 586-5691

Fax: (918) 586-8691

 

and in the case of notices to the Purchaser, to it at:

 

Taberna Preferred Funding I, Ltd.

c/o Cohen Bros. & Company

1818 Market Street

Philadelphia, Pennsylvania 19103

Facsimile: (215) 861-7898

Attention: Asset Backed Securities

 

with a copy to:

 

Bracewell & Patterson, L.L.P.

111 Congress Avenue, Suite 2300

Austin, TX 78701-4043

Facsimile: (512) 472-9123

Attention: David B. Jones

 

(b) Any such communication shall take effect, in the case of a letter, at the
time of delivery and in the case of facsimile, at the time of dispatch.

 

(c) Any communication not by facsimile shall be confirmed by letter but failure
to send or receive the letter of confirmation shall not invalidate the original
communication.

 

12. Successors and Assigns. This Purchase Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted

 

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assigns. Nothing expressed or mentioned in this Purchase Agreement is intended
or shall be construed to give any person other than the parties hereto and the
affiliates, directors, officers, employees, agents and controlling persons
referred to in Section 8 hereof and their successors, assigns, heirs and legal
representatives, any right or obligation hereunder. None of the rights or
obligations of the Company or the Trust under this Purchase Agreement may be
assigned, whether by operation of law or otherwise, without the Purchaser’s
prior written consent. The rights and obligations of the Purchaser under this
Purchase Agreement may be assigned by the Purchaser without the Company’s or the
Trust’s consent; provided that the assignee assumes the obligations of the
Purchaser under this Purchase Agreement.

 

13. Applicable Law. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW).

 

14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY
PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE
BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING
OUT OF OR IN CONNECTION WITH THIS PURCHASE AGREEMENT.

 

15. Counterparts and Facsimile. This Purchase Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument. This Purchase Agreement may be executed
by any one or more of the parties hereto by facsimile.

 

21

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IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the date
first written above.

 

JAMESON INNS, INC.

By:

 

/s/ Craig R. Kitchin

--------------------------------------------------------------------------------

Name:

 

Craig R. Kitchin

Title:

 

President

JAMESON INNS FINANCING TRUST I

By:

 

Jameson Inns, Inc., as Depositor

   

By:

 

/s/ Craig R. Kitchin

--------------------------------------------------------------------------------

   

Name:

 

Craig R. Kitchin

   

Title:

 

President

Taberna Preferred Funding I, Ltd.

By:

 

/s/ Paul Forrester

--------------------------------------------------------------------------------

Name:

 

Paul Forrester

Title:

 

Attorney in Fact

 

22

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SCHEDULE 1

List of Significant Subsidiaries

 

23

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ANNEX A-I

 

Pursuant to Section 3(c)(i) of the Purchase Agreement, [                    ],
[                    ] counsel for the Company, shall deliver an opinion to the
effect that:

 

(i) the Company and each Significant Subsidiary is validly existing as a
corporation in good standing under the laws of the jurisdiction in which it is
chartered or organized; each of the Company and the Significant Subsidiaries has
full corporate power and authority to own or lease its properties and to conduct
its business as such business is currently conducted in all material respects;
all outstanding shares of capital stock of the Significant Subsidiaries have
been duly authorized and validly issued, and are fully paid and nonassessable
and owned of record and beneficially, directly or indirectly by the Company; the
Company has corporate power and authority to (i) execute and deliver, and to
perform its obligations under, the Operative Documents to which it is a party
and (iii) issue and perform its obligations under the Notes;

 

(ii) neither the issue and sale of the Common Securities, the Preferred
Securities or the Junior Subordinated Notes, nor the purchase by the Trust of
the Junior Subordinated Notes, nor the execution and delivery of and compliance
with the Operative Documents by the Company or the Trust nor the consummation of
the transactions contemplated thereby will constitute a breach or violation of
the Trust Agreement or the charter or by-laws of the Company;

 

(iii) the Trust Agreement has been duly authorized, executed and delivered by
the Company and duly executed and delivered by the Administrative Trustees;

 

(iv) the Indenture has been duly authorized, executed and delivered by the
Company and, assuming it has been duly authorized, executed and delivered by the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity;

 

(v) the Junior Subordinated Notes have been duly authorized and executed by the
Company and delivered to the Indenture Trustee for authentication in accordance
with the Indenture and, when authenticated in accordance with the provisions of
the Indenture and delivered to the Trust against payment therefor, will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity;

 

(vi) the Trust is not, and, following the issuance of the Preferred Securities
and the consummation of the transactions contemplated by the Operative Documents
and the application of the proceeds therefrom, the Trust will not be, an
“investment company” or an entity “controlled” by an “investment company,” in
each case within the meaning of Section 3(a) of the Investment Company Act;

 

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(vii) assuming the truth and accuracy of the representations and warranties of
the Purchaser in the Purchase Agreement, it is not necessary in connection with
the offer, sale and delivery of the Common Securities, the Preferred Securities
and the Junior Subordinated Notes to register the same under the Securities Act
of 1933, as amended, under the circumstances contemplated in the Purchase
Agreement and the Trust Agreement, or to require qualification of the Indenture
under the Trust Indenture Act of 1939, as amended;

 

(viii) the Purchase Agreement has been duly authorized, executed and delivered
by each of the Company and the Trust and constitutes a legal, valid and binding
obligation of the Company and the Trust enforceable against the Company and the
Trust in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors’ rights generally and to general principles
of equity;

 

(ix) to our knowledge, neither the Company, the Trust, nor any Significant
Subsidiaries of the Company is in breach or violation of, or default under, with
or without notice or lapse of time or both, its articles of incorporation or
charter, by-laws or other governing documents (including without limitation, the
Trust Agreement); the execution, delivery and performance of the Operative
Documents and the consummation of the transactions contemplated by the Purchase
Agreement and the Operative Documents do not and will not (A) result in the
creation or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Company or the Significant
Subsidiaries, or (B) conflict with, constitute a material breach or violation
of, or constitute a material default under, with or without notice or lapse of
time or both, any of the terms, provisions or conditions of (x) the Articles of
Incorporation or Charter, By-Laws or other governing documents of the Company or
its Significant Subsidiaries, or (y) to the best of our knowledge, any material
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease, franchise, license or any other agreement or instrument to which the
Company or its Significant Subsidiaries is a party or by which any of them or
any of their respective properties may be bound or (z) any order, decree,
judgment, franchise, license, permit, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality, domestic or
foreign, known to us having jurisdiction over the Company or its Significant
Subsidiaries or any of their respective properties which, in the case of each of
(A) or (B) above, is material to the Company and the Significant Subsidiaries on
a consolidated basis;

 

(x) except for filings, registrations or qualifications that may be required by
applicable securities laws, no authorization, approval, consent or order of, or
filing, registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required under the
laws of the State of Georgia in connection with the transactions contemplated by
the Operative Documents in connection with the offer and sale of the Common
Securities as contemplated by the Operative Documents;

 

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(xi) (A) no action, suit or proceeding at law or in equity is pending or to our
knowledge, threatened to which the Company, the Trust or the Significant
Subsidiaries are or may be a party, and (B) to our knowledge, no action, suit or
proceeding is pending or threatened against or affecting the Company, the Trust
or the Significant Subsidiaries or any of their properties, before or by any
court or governmental official, commission, board or other administrative
agency, authority or body, or any arbitrator, wherein an unfavorable decision,
ruling or finding could reasonably be expected to have a material adverse effect
on the consummation of the transactions contemplated by the Operative Documents
or the issuance and sale of the Common Securities, or the Preferred Securities
as contemplated therein or the condition (financial or otherwise), earnings,
affairs, business, or results of operations of the Company, the Trust and the
Significant Subsidiaries on a consolidated basis; and

 

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ANNEX A-II

 

Pursuant to Section 3(c) of the Purchase Agreement, General Counsel for the
Company shall deliver an opinion, or the Company shall provide an Officers’
Certificate, to the effect that:

 

(i) all of the issued and outstanding shares of capital stock and other
ownership interests of each Significant Subsidiary are owned of record by the
Company, and the issuance of the Preferred Securities and the Common Securities
is not subject to any contractual preemptive rights known to such
[counsel/officer];

 

(ii) no consent, approval, authorization or order of any court or Governmental
Entity is required for the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, the purchase by the Trust
of the Junior Subordinated Notes, the execution and delivery of and compliance
with the Operative Documents by the Company or the Trust or the consummation of
the transactions contemplated in the Operative Documents, except such approvals
(specified in such [opinion/certificate]) as have been obtained;

 

(iii) to the knowledge of such [counsel/officer], there is no action, suit or
proceeding before or by any government, governmental instrumentality, arbitrator
or court, domestic or foreign, now pending or threatened against or affecting
the Trust or the Company or any Significant Subsidiary that could adversely
affect the consummation of the transactions contemplated by the Operative
Documents or could have a Material Adverse Effect.

 

(iv) The execution, delivery and performance of the Operative Documents, as
applicable, by the Company and the Trust and the consummation by the Company and
the Trust of the transactions contemplated by the Operative Documents, as
applicable, (i) will not result in any violation of the charter or bylaws of the
Company, the charter or bylaws of the Company’s subsidiaries, the Trust
Agreement or the Certificate of Trust of the Trust, and (ii) will not conflict
with, or result in a breach of any of the terms or provisions of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge and encumbrance upon any assets or properties of the Company or any
Significant Subsidiary under, (a) any agreement, indenture, mortgage or
instrument that the Company or any Significant Subsidiary of the Company is a
party to or by which it may be bound or to which any of its assets or properties
may be subject, or (b) any existing applicable law, rule or administrative
regulation of any court or governmental agency or authority having jurisdiction
over the Company or any Significant Subsidiary of the Company or any of their
respective assets or properties, except in case of (ii), where any such
violation, conflict, breach, default, lien, charge or encumbrance, would not
have a material adverse effect on the assets, properties, business, results of
operations or financial condition of the Company and its subsidiaries, taken as
whole.

 

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(v) neither the Company nor any of its “Affiliates” (as defined in Rule 501(b)
of Regulation D under the Securities Act (“Regulation D”) has directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of any of the
Notes, the Preferred Securities or the Common Securities being issued pursuant
to this transaction under the Securities Act, engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities, or engaged, nor will
engage, in any “directed selling efforts” within the meaning of Regulation S
under the Securities Act with respect to the Securities;

 

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ANNEX B

 

Pursuant to Section 3(d) of the Purchase Agreement, Bracewell & Patterson,
L.L.P., special tax counsel for the Purchaser, shall deliver an opinion to the
effect that:

 

(i) the Trust will be classified for United States federal income tax purposes
as a grantor trust and not as an association or a publicly traded partnership
taxable as a corporation; and

 

(ii) for United States federal income tax purposes, the Junior Subordinated
Notes will constitute indebtedness of the Company.

 

In rendering such opinions, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.

 

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ANNEX C

 

Pursuant to Section 3(e) of the Purchase Agreement, Richards, Layton & Finger,
P.A., special Delaware counsel for the Delaware Trustee, shall deliver an
opinion to the effect that:

 

(i) the Trust has been duly created and is validly existing in good standing as
a statutory trust under the Delaware Statutory Trust Act, and all filings
required under the laws of the State of Delaware with respect to the creation
and valid existence of the Trust as a statutory trust have been made;

 

(ii) under the Delaware Statutory Trust Act and the Trust Agreement, the Trust
has the trust power and authority (A) to own property and conduct its business,
all as described in the Trust Agreement, (B) to execute and deliver, and to
perform its obligations under, each of the Purchase Agreement, the Common
Securities Subscription Agreement, the Junior Subordinated Note Purchase
Agreement and the Preferred Securities and the Common Securities and (C) to
purchase and hold the Junior Subordinated Notes;

 

(iii) under the Delaware Statutory Trust Act, the certificate attached to the
Trust Agreement as Exhibit C is an appropriate form of certificate to evidence
ownership of the Preferred Securities; the Preferred Securities have been duly
authorized by the Trust Agreement and, when issued and delivered against payment
of the consideration as set forth in the Purchase Agreement, the Preferred
Securities will be validly issued and (subject to the qualifications set forth
in this paragraph) fully paid and nonassessable and will represent undivided
beneficial interests in the assets of the Trust; the holders of the Preferred
Securities will be entitled to the benefits of the Trust Agreement and, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware; and such
counsel may note that the holders of the Preferred Securities may be obligated,
pursuant to the Trust Agreement, to (A) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers or
exchanges of Preferred Securities certificates and the issuance of replacement
Preferred Securities certificates and (B) provide security or indemnity in
connection with requests of or directions to the Property Trustee to exercise
its rights and remedies under the Trust Agreement;

 

(iv) the Common Securities have been duly authorized by the Trust Agreement and,
when issued and delivered by the Trust to the Company against payment therefor
as described in the Trust Agreement and the Common Securities Subscription
Agreement, will be validly issued and fully paid and will represent undivided
beneficial interests in the assets of the Trust entitled to the benefits of the
Trust Agreement;

 

(v) under the Delaware Statutory Trust Act and the Trust Agreement, the issuance
of the Preferred Securities and the Common Securities is not subject to
preemptive or other similar rights;

 

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(vi) under the Delaware Statutory Trust Act and the Trust Agreement, the
execution and delivery by the Trust of the Purchase Agreement, the Common
Securities Subscription Agreement and the Junior Subordinated Note Purchase
Agreement, and the performance by the Trust of its obligations thereunder, have
been duly authorized by all necessary trust action on the part of the Trust;

 

(vii) the Trust Agreement constitutes a legal, valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company and the
Trustees, in accordance with its terms subject, as to enforcement, to the effect
upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or transfer and
other similar laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a proceeding
in equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution;

 

(viii) the issuance and sale by the Trust of the Preferred Securities and the
Common Securities, the purchase by the Trust of the Junior Subordinated Notes,
the execution, delivery and performance by the Trust of the Purchase Agreement,
the Common Securities Subscription Agreement and the Junior Subordinated Note
Purchase Agreement, the consummation by the Trust of the transactions
contemplated by the Purchase Agreement and compliance by the Trust with its
obligations thereunder do not violate (i) any of the provisions of the
Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any
applicable Delaware law, rule or regulation;

 

(ix) no filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Delaware court or Delaware
Governmental Entity or Delaware agency is necessary or required solely in
connection with the issuance and sale by the Trust of the Common Securities or
the Preferred Securities, the purchase by the Trust of the Junior Subordinated
Notes, the execution, delivery and performance by the Trust of the Purchase
Agreement, the Common Securities Subscription Agreement and the Junior
Subordinated Note Purchase Agreement, the consummation by the Trust of the
transactions contemplated by the Purchase Agreement and compliance by the Trust
with its obligations thereunder; and

 

(x) the holders of the Preferred Securities (other than those holders who reside
or are domiciled in the State of Delaware) will have no liability for income
taxes imposed by the State of Delaware solely as a result of their participation
in the Trust and the Trust will not be liable for any income tax imposed by the
State of Delaware.

 

In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware, (B) rely as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of the Company
and public officials and (C) take customary assumptions and exceptions as to
enforceability and other matters.

 

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ANNEX D

 

Pursuant to Section 3(f) of the Purchase Agreement, Gardere Wynne Sewell LLP,
special counsel for the Property Trustee and the Indenture Trustee, shall
deliver an opinion to the effect that:

 

(i) JPMorgan Chase Bank, National Association (the “Bank”) is a national banking
association with trust powers, duly and validly existing under the laws of the
United States of America, with corporate power and authority to execute, deliver
and perform its obligations under the Indenture and to authenticate and deliver
the Securities, and is duly eligible and qualified to act as Trustee under the
Indenture pursuant to Section 6.1 thereof and as Property Trustee under the
Trust Agreement pursuant to Section 8.2 thereof.

 

(ii) Each Agreement has been duly authorized, executed and delivered by the Bank
and constitutes the valid and binding obligation of the Bank, enforceable
against it in accordance with its terms except (A) as may be limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally, and by general
equitable principles, regardless of whether considered in a proceeding in equity
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.

 

(iii) Neither the execution or delivery by the Bank of the Agreements, the
authentication and delivery of the Securities by the Trustee pursuant to the
terms of the Agreements, nor the performance by the Bank of its obligation under
the Agreements (A) requires the consent or approval of, the giving of notice to
or the registration or filing with, any governmental authority or agency under
any existing law of the United States of America governing the banking or trust
powers of the Bank or (B) violates or conflicts with the Articles of Association
or By-laws of the Bank or any law or regulation or the State of New York or the
United States of America governing the banking or trust powers of the Bank.

 

(iv) The Securities have been authenticated and delivered by a duly authorized
officer of the Bank.

 

In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the laws of the United States
of America, (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of JPMorgan Chase Bank, National
Association, the Company and public officials, and (C) make customary
assumptions and exceptions as to enforceability and other matters.

 

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ANNEX E

 

Pursuant to Section 3(g) of the Purchase Agreement, Richards, Layton & Finger,
P.A., counsel for the Delaware Trustee, shall deliver an opinion to the effect
that:

 

(i) Chase Bank USA, National Association is duly formed and validly existing as
a national banking association under the federal laws of the United States of
America with trust powers and with its principal place of business in the State
of Delaware;

 

(ii) Chase Bank USA, National Association has the corporate power and authority
to execute, deliver and perform its obligations under, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of, the Trust Agreement and to consummate the transactions contemplated thereby;

 

(iii) The Trust Agreement has been duly authorized, executed and delivered by
Chase Bank USA, National Association and constitutes a legal, valid and binding
obligation of Chase Bank USA, National Association, and is enforceable against
Chase Bank USA, National Association, in accordance with its terms subject as to
enforcement, to the effect upon the Trust Agreement of (i) applicable
bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent
conveyance or transfer and similar laws relating to or affecting the rights and
remedies of creditors generally, (ii) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution;

 

(iv) The execution, delivery and performance by Chase Bank USA, National
Association of the Trust Agreement do not conflict with or result in a violation
of (A) articles of association or by-laws of Chase Bank USA, National
Association or (B) any law or regulation of the State of Delaware or the United
States of America governing the trust powers of Chase Bank USA, National
Association or, to our knowledge, without independent investigation, of any
indenture, mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which Chase Bank
USA, National Association is a party or by which it is bound or, to our
knowledge, without independent investigation, of any judgment or order
applicable to Chase Bank USA, National Association; and

 

(v) No approval, authorization or other action by, or filing with, any
Governmental Entity of the State of Delaware or the United States of America
governing the trust powers of Chase Bank USA, National Association is required
in connection with the execution and delivery by Chase Bank USA, National
Association of the Trust Agreement or the performance by Chase Bank USA,

 

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National Association of its obligations thereunder, except for the filing of the
Certificate of Trust with the Secretary of State of the State of Delaware, which
Certificate of Trust has been filed with the Secretary of State of the State of
Delaware.

 

In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the United
States governing the trust powers of Chase Bank USA, National Association, (B)
rely as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials and (C) take customary
assumptions and exceptions.

 

E-2

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ANNEX F

 

Officer’s Financial Certificate

 

The undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/
Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby
certifies, pursuant to Section 6(h) of the Purchase Agreement, dated as of
                    , 2005, 2005, among Jameson Inns, Inc. (the “Company”),
Jameson Inns Financing Trust I (the “Trust”) and

 

Taberna Preferred Funding I, Ltd., that, as of [date], [20    ], the Company, if
applicable, and its Subsidiary had the following ratios and balances:

 

As of [Quarterly/Annual Financial Date], 20    

 

Senior secured indebtedness for borrowed money (“Debt”)

   $               

Senior unsecured Debt

   $               

Subordinated Debt

   $               

Total Debt

   $               

Ratio of (x) senior secured and unsecured Debt to (y) total Debt

                  %

 

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended [date], 20    .

 

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [date], 20    .]

 

The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles (“GAAP”), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the
[         quarter interim] [annual] period ended [date], 20    , and such
financial statements have been prepared in accordance with GAAP consistently
applied throughout the period involved (expect as otherwise noted therein).

 

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ANNEX F

 

IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this      day of             , 20    .

 

By:

 

 

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Name:

 

 

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