EXHIBIT 1.1
UNDERWRITING AGREEMENT
Innkeepers USA Trust
2,600,000 Common Shares
($0.01 par value)
May 30, 2002
First Union Securities, Inc.
Banc of America Securities LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
c/o First Union Securities, Inc.,
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Innkeepers USA Trust, a self-administered Maryland real estate
investment trust (the "Company"), proposes to issue and sell to you (the
"Representatives") and the several Underwriters named in Schedule I hereto
(collectively, the "Underwriters") for whom you are acting as representative
2,600,000 common shares (the "Firm Shares") of beneficial interest of the
Company, $0.01 par value per share (the "Common Shares"), and also proposes to
issue and sell to the Underwriters, at the option of the Underwriters, up to
390,000 additional shares (the "Optional Shares") of its Common Shares as set
forth below. The Firm Shares and the Optional Shares are herein collectively
called the "Offered Shares".
The Company and the Partnership (as defined in Section 12 below),
hereby agree with the Underwriters as follows:
1. Representations and Warranties with Respect to Registration Under the
Act. The Company and the Partnership, jointly and severally, represent and
warrant to, and agree with, the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-20309) with
respect to the Offered Shares, including a base prospectus dated April 11, 1997
(the "Base Prospectus"), was prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "1933 Act Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, was filed with the
Commission and was declared effective on April 11, 1997. No stop order
suspending the effectiveness of such registration statement has been issued, and
no proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission. A final prospectus supplement (the
"Prospectus Supplement") setting forth the final terms of the offering, sale and
plan of distribution of the Offered Shares and additional information concerning
the Company and its business has been or will be prepared and will be filed
pursuant to Rule 424(b) of the 1933 Act Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may be
required by the 1933 Act Rules and Regulations). Copies of such registration
statement and the Prospectus Supplement, including all documents incorporated by
reference therein that were filed with the Commission on or prior to the date of
this Agreement (including one fully executed copy of the registration statement
and of each amendment thereto for each Representative and its counsel) shall
have been delivered or made available to First Union Securities, Inc., acting
under the trade name Wachovia Securities ("Wachovia"), and its counsel, or that
has been filed by the Company with the Commission using the Commission's
Electronic Data Gathering Analysis and Retrieval ("XXXXX") system shall be
deemed to have been made available to Wachovia and its counsel. The registration
statement, including the Base Prospectus, as amended at the time it became
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act and as it may have been subsequently amended, is referred to herein as
the "Registration Statement." The term "Prospectus" as used herein means the
Base Prospectus together with the Prospectus Supplement. Any reference herein to
the Registration Statement or the Prospectus or any amendment or supplement
thereto shall be deemed to refer to and include the Incorporated Documents, and
any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to refer
to and include the filing after the execution hereof of any Incorporated
Documents. As used herein, the term "Incorporated Documents" means the documents
which at the time are incorporated by reference in the Registration Statement,
the Prospectus or any amendment or supplement thereto filed prior to the date
hereof or during the period the Prospectus is required to be delivered in
connection with the sale of the Offered Shares by the Underwriters or any dealer
as required by paragraph (b) of Item 12 of Form S-3. For purposes of this
Agreement, all references to the Registration Statement, the Prospectus, or any
amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its XXXXX system, and such copy shall be identical in
content to any Prospectus delivered to the Underwriter for use in connection
with the offering of the Offered Shares.
(b) The Company and the transactions contemplated by this Agreement
meet the requirements and the conditions for use of a registration statement on
Form S-3 under the Act and the 1933 Act Rules and Regulations.
(c) The Registration Statement, when it became effective and on the
Closing Date (as defined in Section 3) or the Option Closing Date (as defined in
Section 3) (i) contained or will contain all information required to be set
forth therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the 1933 Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading. On the date of filing with the Commission pursuant to
Rule 424(b) and on the Closing Date or the Option Closing Date, the Prospectus,
as amended or supplemented at any such time (i) contained or will contain all
information required to be set forth therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act and the
1933 Act Rules and Regulations and (ii) did not or will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; except that the representations and warranties set forth
2
in this Section 1(c) do not apply to statements in the Prospectus based upon
written information concerning the Underwriters that was furnished to the
Company by any Underwriter through the Representatives specifically for use in
the preparation thereof, it being understood and agreed that the only such
information is that described as such in Section 7(b) hereof.
(d) The Incorporated Documents when they became or become effective
under the Act or were or are filed with the Commission under the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, conformed or will conform in all material respects with the requirements
of the Act, the 1933 Act Rules and Regulations, the Exchange Act and/or the
rules and regulations of the Commission under the Exchange Act (the "Exchange
Act Rules and Regulations"), as applicable, and did not or will not include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading.
(e) The consolidated financial statements, including the related
schedules and notes thereto, set forth or included or incorporated by reference
in the Registration Statement and Prospectus fairly present the financial
condition of the Company and its consolidated subsidiaries as of the dates
indicated and the results of operations, changes in financial position,
shareholders' equity and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved. The selected financial and statistical data
included or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the extent based
upon or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. No other financial
statements are required to be set forth or to be incorporated by reference in
the Registration Statement or the Prospectus under the Act or the 1933 Act Rules
and Regulations.
(f) The descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described present
fairly in all material respects the information required to be shown, and there
are no contracts, leases, or other documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or filed as
required; there are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company, the Partnership or any
entity controlled directly or indirectly by the Company (each, a "Subsidiary"
and collectively, the "Subsidiaries") is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described; there are no statutes or regulations applicable to the Company, the
Partnership or any Subsidiary or certificates, permits or other authorizations
from governmental regulatory officials or bodies required to be obtained or
maintained by the Company, the Partnership or any Subsidiary of a character
required to be disclosed and properly described therein which are not so
disclosed or described therein; all agreements between the Company, the
Partnership or any Subsidiary and third parties expressly referenced in the
Prospectus are legal, valid and binding obligations of the Company, the
Partnership or the Subsidiary, enforceable in accordance with their respective
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general applicability relating to or
affecting creditors' rights and by general equity principles.
3
(g) PricewaterhouseCoopers LLP, whose reports are incorporated by
reference in the Registration Statement and Prospectus, are and, during the
periods covered by their reports, were independent public accountants within the
meaning of the Act and the applicable rules and regulations thereunder adopted
by the Commission and as required by the applicable rules and regulations of the
New York Stock Exchange, Inc.
2. Representations and Warranties of the Company and the Partnership. The
Company and the Partnership, jointly and severally, represent and warrant to,
and agree with, the several Underwriters that:
(a) The Company and each of its Subsidiaries, the Lessee (as defined in
Section 12 below), the Partnership and, to the Company's knowledge, the
Summerfield Lessee (as defined in Section 12 below) have been duly formed and
are validly existing as real estate investment trusts, partnerships or
corporations, as applicable, in good standing under the laws of their respective
jurisdictions of formation, are duly qualified to do business and are in good
standing as foreign real estate investment trusts, partnerships or corporations,
as applicable, in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except for jurisdictions in which the failure to so qualify would not have a
material adverse effect upon the Company, any Subsidiary, the Lessee, the
Summerfield Lessee or the Partnership, as the case may be, and no proceeding has
been instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
(b) Innkeepers Financial Corporation (the "First General Partner") is
and will on each Closing Date be the sole general partner of the Partnership,
and upon the consummation of the transactions contemplated hereby and the
application of the proceeds therefrom as described in the Prospectus, will be
the holder of partnership units in the Partnership (the "Units") (assuming no
Optional Shares are sold) representing an approximate 90% interest in the
Partnership. Upon the consummation of the transactions contemplated hereby, the
First General Partner will own the Units it holds free and clear of all liens,
encumbrances, equities, claims, security interests, voting trusts or charges.
(c) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization." Immediately prior to the Closing Date, 34,784,558 Common
Shares will be issued and outstanding and 4,630,000 Series A convertible
preferred shares of beneficial interest will be issued and outstanding. This
Agreement and the issuance and sale of the Offered Shares hereunder has been
duly authorized by all appropriate action of the Company, all outstanding shares
of beneficial interest of the Company are, and, when the Offered Shares have
been delivered and paid for in accordance with this Agreement on the Closing
Date and the Option Closing Date (as defined below), such Offered Shares will
be, validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; the issued and outstanding
units of partnership interest in the Partnership (the "Partnership Units") have
been duly authorized; all of the issued and outstanding shares of beneficial
interest of the Company and outstanding Partnership Units have been offered,
sold and issued by the Company or the Partnership in compliance with all
applicable laws, including without limitation, federal and state securities
laws; except as described in the Prospectus, there is no outstanding option,
4
warrant or other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of beneficial interest of the Company or equity
interests in the Partnership or any security convertible into or exchangeable
for shares of beneficial interest of the Company or equity interests in the
Partnership, and the shareholders of the Company have no preemptive or similar
rights with respect to any shares of beneficial interest of the Company.
(d) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or the Partnership and any
person that would give rise to a valid claim against the Company, the
Partnership or any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with the offering, issuance and sale of the Offered
Shares.
(e) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or the Partnership and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement.
(f) The Offered Shares have been approved for listing on the New York
Stock Exchange, subject to final notice of issuance.
(g) No consent, approval, license, authorization, certificate, permit
or order of, or filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by this Agreement
including the valid authorization, issuance, sale and delivery of the Offered
Shares, except such as may be required under state securities laws.
(h) The execution, delivery and performance of this Agreement and the
issuance and sale of the Offered Shares will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, the
Partnership or the Subsidiaries or any of their properties, or any agreement or
instrument to which the Company, the Partnership or Subsidiary is a party or by
which the Company, the Partnership or any Subsidiary is bound or to which any of
the Properties (as defined below) of the Company, the Partnership or any
Subsidiary is subject, or the charter, by-laws, partnership agreement,
certificate of limited partnership, operating agreement or other organizational
documents of the Company, the Partnership or any Subsidiary, and the Company,
has full power and authority to authorize, issue, sell and deliver the Offered
Shares as contemplated by this Agreement.
(i) This Agreement has been duly authorized, executed and delivered by
the Company and the Partnership and constitutes the legal, valid and binding
obligation of the Company and the Partnership enforceable against the Company
and the Partnership in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
5
(j) Except as described in the Prospectus, the Company, the Partnership
and the Subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them (each, a "Property" and
collectively, the "Properties"), in each case free from liens, encumbrances and
defects that would materially affect the value thereof or materially interfere
with the use made or to be made thereof by them; the Company, the Partnership or
the Subsidiary has obtained an owner's title insurance policy in an amount at
least equal to the cost of acquisition from a title insurance company with
respect to each of its real estate properties; except as disclosed in the
Prospectus, the Company, the Partnership and the Subsidiaries hold any leased
real or personal property under valid and enforceable leases, with no exceptions
that would materially interfere with the value thereof or materially interfere
with the use made or to be made thereof by them; no person has an option or
right of first refusal to purchase all or part of any Property or any proposed
acquisition or any interest therein; neither the Company, the Partnership nor
any Subsidiary has knowledge of any pending or threatened condemnation
proceeding, zoning change, or other proceeding or action that will have a
material effect on the size of, use of, improvements on, construction on or
access to any of the Properties.
(k) The Company, the Partnership, the Subsidiaries, the Lessee and, to
the knowledge of the Company, the Summerfield Lessee, possess adequate permits,
licenses, franchises, certificates, authorities, consents, orders or approvals
and are in compliance with all laws, rules and ordinances issued by appropriate
governmental agencies or bodies necessary to conduct the business now conducted
by them or contemplated by the Prospectus and have not received any notice of
proceedings relating to the revocation or modification of any such permits,
licenses, franchises, certificates, authorities, consents, orders, approvals, or
non-compliance with any such laws, rules or ordinances, that, if determined
adversely to the Company, the Partnership or any Subsidiary, would, individually
or in the aggregate, have a material adverse effect on the condition (financial
or otherwise), business, prospects, properties or results of operations of the
Company, the Partnership and the Subsidiaries, taken as a whole (a "Material
Adverse Effect").
(l) No labor disturbance by the employees of the Company, the
Partnership or the Lessee exists or, to the knowledge of the Company, is
imminent and, to the Company's knowledge, no labor disturbance by the employees
of the Summerfield Lessee exists or is imminent which, in any case, might be
expected to have a Material Adverse Effect.
(m) The Company, the Partnership, the Subsidiaries, the Lessee and, to
the Company's knowledge, the Summerfield Lessee own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "intellectual property rights") necessary
to conduct the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with asserted rights
of others with respect to any intellectual property rights that, if determined
adversely to the Company, the Partnership, any of the Subsidiaries, the Lessee
or the Summerfield Lessee would individually or in the aggregate have a Material
Adverse Effect.
(n) Except as otherwise described in the Prospectus, neither the
Company, the Partnership, the Lessee, nor any Subsidiary nor, to the Company's
knowledge, the Summerfield Lessee has authorized or conducted or has knowledge
of the generation, transportation, storage, presence, use, treatment, disposal,
release, or other handling of any hazardous substance, hazardous waste,
6
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction hereof, natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any environmental law
(collectively, "Hazardous Materials")), on, in, under or affecting any Property,
except in material compliance with applicable laws; except as disclosed in the
Prospectus, to the knowledge of the trustees and officers of the Company, the
Properties are in compliance with all federal, state and local laws, ordinances,
rules, regulations and other governmental requirements relating to pollution,
control of chemicals, management of waste, (collectively, "Environmental Laws"),
and the Company, the Partnership, the Subsidiaries, the Lessee and the
Summerfield Lessee are in compliance with all licenses, permits, registrations
and government authorizations necessary to operate under all applicable
Environmental Laws in all material respects; except as otherwise described in
the Prospectus, neither the Company, the Partnership, any Subsidiary, the Lessee
or, to the Company's knowledge, the Summerfield Lessee, has received any written
or oral notice from any governmental entity or any other person and there is no
pending, or, to the knowledge of the trustees and officers of the Company,
threatened claim, litigation or any administrative agency proceeding that:
alleges a violation of any Environmental Laws by the Company, the Partnership,
any Subsidiary, the Lessee or the Summerfield Lessee; or that the Company, the
Partnership, any Subsidiary, the Lessee or the Summerfield Lessee is a liable
party or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et. seq., or any
state superfund law; has resulted in or could result in the attachment of an
environmental lien on any of the properties; or alleges that the Company, the
Partnership, any Subsidiary, the Lessee or the Summerfield Lessee is liable for
any contamination of the environment, contamination of the Property, damage to
natural resources, property damage, or personal injury based on their activities
or the activities of their predecessors or third parties (whether at the
properties or elsewhere) involving Hazardous Materials, whether arising under
the Environmental Laws common law principles, or other legal standards. In the
ordinary course of its business, the Company, the Partnership and the
Subsidiaries conduct Phase I environmental assessments on each of the Properties
at the time such Property is acquired and periodic reviews of the effect of
Environmental Laws on the business, operations and properties of the Company,
the Partnership and the Subsidiaries.
(o) Except as described in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, the Partnership,
any Subsidiary or any of their respective Properties, the Lessee or, to the
Company's knowledge, the Summerfield Lessee, that, if determined adversely to
such entity or Properties, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the ability of
the Company or the Partnership to perform their obligations under this
Agreement, or which are otherwise material in the context of the offering,
issuance, sale and delivery of the Offered Shares; and no such actions, suits or
proceedings are, to the Company's knowledge, threatened.
(p) Except as described in the Prospectus, since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus there has been no material adverse change, nor any development or
event involving a prospective material adverse change in the condition
(financial or other), business, properties or results of operations of the
Company, the Partnership, the Subsidiaries, the Lessee and, to the Company's
knowledge, the Summerfield Lessee taken as a whole, that would constitute a
7
Material Adverse Effect, and, except as disclosed in or the Prospectus, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its shares of beneficial interest.
(q) The system of internal accounting controls of the Company, the
Partnership and the Subsidiaries, taken as a whole, and those of the Lessee, are
sufficient to meet the broad objectives of internal accounting controls insofar
as those that would be material in relation to the Company's and the Lessee's
financial statements; and, to the Company's knowledge, neither the Company, the
Partnership, any Subsidiary, nor the Lessee nor any employee or agent thereof,
has made any payment of funds of the Company, the Partnership, any of the
Subsidiaries, or the Lessee, as the case may be, or received or retained any
funds, and no funds of the Company, the Partnership, any of the Subsidiaries, or
the Lessee, as the case may be, have been set aside to be used for any payment,
in each case in violation of any law, rule or regulation.
(r) Neither the Company, the Partnership, any Subsidiary or the Lessee
or, to the Company's knowledge, the Summerfield Lessee, is and, after giving
effect to the offering and sale of the Offered Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (the "1940 Act").
(s) The Agreement of Limited Partnership of the Partnership, including
any amendments thereto (the "Partnership Agreement"), has been duly and validly
authorized, executed and delivered by all partners of the Partnership and
constitutes a valid and binding agreement, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or by general
principles of equity.
(t) Neither the Company, the Partnership, any Subsidiary, the Lessee,
nor, to the Company's knowledge, the Summerfield Lessee is in breach of, or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), its respective declaration
of trust, charter, by-laws, certificate of limited partnership, partnership
agreement or operating agreement, as the case may be, or, except for such
breaches, defaults, nonperformance or nonobservance, as the case may be, that
would not, individually or in the aggregate, have a Material Adverse Effect, in
the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust, loan or
credit agreement, franchise agreement or other agreement or instrument to which
the Company, the Partnership, such Subsidiary, the Lessee or the Summerfield
Lessee is a party or by which any of them or their respective properties is
bound.
(u) Each of the Company, the Partnership, the Subsidiaries, the Lessee
and, to the Company's knowledge, the Summerfield Lessee has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns, if any such returns were required to be filed, through the date hereof
and have paid all taxes shown as due thereon; and no tax deficiency has been
asserted against the Company, the Partnership, any Subsidiary, the Lessee or the
Summerfield Lessee nor does the Company know of any tax deficiency which is
likely to be asserted against any such parties; all tax liabilities, if any, are
adequately provided for on the respective books of the Company, the Partnership,
the Subsidiaries and the Lessee.
8
(v) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's proposed method of operation
will enable it to meet the requirements for taxation as a real estate investment
trust under the Code; the Partnership will be treated as a partnership for
federal income tax purposes and not as a corporation or association taxable as a
corporation.
(w) Each of the Company, the Partnership, the Subsidiaries, the Lessee
or the Summerfield Lessee maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for their respective businesses and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company, the Partnership, the Subsidiaries, the Lessee or the Summerfield Lessee
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(x) Except as otherwise described in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company, the Partnership, any Subsidiary or the Lessee to or for the benefit
of any of the officers or trustees of the Company or any of their family
members.
(y) In connection with the offering of the Offered Shares, the Company
has not offered and will not offer its Common Shares or any other securities
convertible into or exchangeable or exercisable for Common Shares in a manner in
violation of the Act or the 1933 Act Rules and Regulations; the Company has not
distributed and will not distribute any Prospectus or other offering material in
connection with the offer and sale of the Offered Shares, except as contemplated
herein.
(z) None of the entities which prepared appraisals of the Properties
or Phase I environmental assessment reports with respect to such Properties was
employed for such purpose on a contingent basis or has any substantial interest
in the Company, the Partnership, any Subsidiary, the Lessee or, to the Company's
knowledge, the Summerfield Lessee and none of their directors, officers or
employees is connected with the Company, the Partnership, any Subsidiary, the
Lessee or, to the Company's knowledge, the Summerfield Lessee as a promoter,
selling agent, voting trustee, officer or employee.
(aa) The issuance of Units by the Partnership in exchange for the
Company's contribution to the Partnership through the General Partner of the net
proceeds from the sale of the Offered Shares to the Underwriters hereunder has
been duly authorized and, when issued in the manner set forth in the Prospectus,
such Units will be validly issued. The Units will be issued in compliance with
all federal and state securities laws, are not, or will not be, issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities and conform in all material respects to the
description thereof contained in the Prospectus.
9
3. Purchase, Sale and Delivery of Offered Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $9.63 per share, the respective numbers
of Firm Shares set forth opposite the names of the Underwriters in Schedule I
hereto.
The Company will deliver the Firm Shares to the Representatives for the
accounts of the Underwriters against payment of the purchase price in Federal
(same day) funds by wire transfer to an account at a bank acceptable to the
Company drawn to the order of the Company, at the office of Xxxxxx & Bird LLP,
at 10:00 A.M., New York time, on June 5, 2002, or at such other time not later
than seven full business days thereafter as the Representatives and the Company
determine, such time being herein referred to as the "First Closing Date". The
Firm Shares will be delivered in book-entry form using the facilities of the
Depository Trust Company ("DTC") in such denominations and registered in such
names as the Representatives request.
In addition, upon written notice from the Representatives given to the
Company from time to time not more than 30 days subsequent to the date of the
Prospectus (the "Option Period"), the Underwriters may purchase all or less than
all of the Optional Shares at the purchase price per Optional Share to be paid
for the Firm Shares less an amount per share equal to any dividends or
distributions per common share payable on the Firm Shares during the Option
Period (to the extent such dividends and distributions were not payable on the
Optional Shares). The Company agrees to sell to the Underwriters the number of
shares of Optional Shares specified in such notice, and the Underwriters agree,
severally and not jointly, to purchase such Optional Shares. Such Optional
Shares shall be purchased for the account of each Underwriter in the same
proportion as the number of Firm Shares set forth opposite such Underwriter's
name in Schedule I hereto bears to the total number of Firm Shares (subject to
adjustment by the Representatives to eliminate fractions) and may be purchased
by the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Shares. No Optional Shares shall be sold or
delivered unless the Firm Shares previously have been, or simultaneously are,
sold and delivered. The right to purchase the Optional Shares or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by the
Representatives to the Company.
Each time for the delivery of and payment for the Optional Shares,
being herein referred to as an "Option Closing Date", which may be the First
Closing Date (the First Closing Date and each Option Closing Date, if any, being
sometimes referred to as a "Closing Date"), shall be determined by the
Representatives but shall be not later than five full business days after
written notice of election to purchase Optional Shares is given. The Company
will deliver the Optional Shares being purchased on each Option Closing Date to
the Representatives for the accounts of the several Underwriters against payment
of the purchase price therefor in Federal (same day) funds by wire transfer to
an account at a bank acceptable to the Company drawn to the order of the
Company, at the offices of Xxxxxx & Bird LLP. The Optional Shares being
purchased on each Option Closing Date will be delivered in book-entry form using
the facilities of the DTC in such denominations and registered in such names as
Wachovia requests upon reasonable notice prior to such Option Closing Date.
10
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Shares for sale to the public as set
forth in the Prospectus.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Firm Shares and the Optional Shares, as the case
may be, shall be subject to the accuracy of the representations and warranties
on the part of the Company and the Partnership contained herein as of the time
of execution hereof, the Closing Date and any Option Closing Date, to the
accuracy of the statements of the Company and the Partnership made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and the Partnership of their obligations hereunder and to the following
additional conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Offered Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 PM New
York City time on the date hereof.
(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(c) No order preventing or suspending the use of the Prospectus shall
be in effect, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Commission
and the Representatives.
(d) The Company shall have furnished to the Representatives on the
Closing Date, a certificate, dated such Closing Date, signed by the President
and the chief financial officer or chief accounting officer of the Company to
the effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus and this Agreement and that (i) the
representations and warranties of the Company and the Partnership in this
Agreement are true and correct in all material respects on and as of such
Closing Date with the same effect as if made on such Closing Date (except that,
to the extent any representations or warranties are qualified by terms such as
"material," "materially," "material adverse change" or "Material Adverse
Effect," such representations and warranties will be true in all respects) and
the Company and the Partnership have performed in all material respects all
covenants and agreements and satisfied in all material respects all conditions
to be performed or satisfied by them at or prior to such Closing Date; (ii) no
stop order suspending the effectiveness of the Registration Statement has been
issued and, to the best of their knowledge, no proceedings for that purpose have
been instituted or are pending under the Act; and (iii) since the date of the
most recent financial statements included or incorporated by reference in the
Prospectus (exclusive of any supplement thereto), there has been no event,
occurrence, circumstance, action, claim, condition or development that could
reasonably be expected to have a Material Adverse Effect.
(e) The Company shall have requested and caused PricewaterhouseCoopers
LLP to have furnished to the Representatives, on the date hereof and at the
First Closing Date and the Option Closing Date, if any, letters, dated,
respectively, as of the date hereof, as of the First Closing Date and as of the
Option Closing Date, if any, in form and substance satisfactory to the
11
Representatives, confirming that they are independent accountants within the
meaning of the Act and the applicable rules and regulations adopted by the
Commission thereunder and that they have performed a review of the unaudited
interim financial information of the Company for the three-month period ended
March 31, 2002, and as at March 31, 2002, in accordance with Statement on
Auditing Standards No. 71, and stating in effect that:
(i) In their opinion the audited financial statements included or
incorporated by reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and the
related rules and regulations adopted by the Commission;
(ii) On the basis of a reading of the latest unaudited financial
statements made available by the Company and its Subsidiaries; their review, in
accordance with standards established under Statement on Auditing Standards No.
71, of the unaudited interim financial information for the three-month period
ended March 31, 2002, and as at March 31, 2002, incorporated by reference in the
Registration Statement and the Prospectus; carrying out certain specified
procedures (but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of the minutes
of the meetings of the shareholders, trustees and audit and compensation
committees of the Company; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company and its
Subsidiaries as to transactions and events subsequent to December 31, 2001,
nothing came to their attention which caused them to believe that:
(A) Any unaudited financial statements included or
incorporated by reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with applicable accounting
requirements of the Act and with the related rules and regulations adopted by
the Commission with respect to financial statements included or incorporated by
reference in quarterly reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with generally accepted
accounting principles;
(B) With respect to the period subsequent to March 31, 2002,
there were any increases, at a specified date not more than five days prior to
the date of the letter, in the long-term debt of the Company and its
Subsidiaries or changes in capital shares of the Company or decreases in the
shareholders' equity of the Company as compared with the amounts shown on the
March 31, 2002, consolidated balance sheet included or incorporated by reference
in the Registration Statement and the Prospectus, or for the period from April
1, 2002, to such specified date there were any decreases, as compared with the
corresponding period in the prior year, in revenues or income before income
taxes or in total or per share amounts of net income of the Company and its
Subsidiaries, except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation is not deemed
necessary by the Representatives; and
(C) The information included or incorporated by reference in
the Registration Statement and Prospectus in response to Regulation S-K, Item
301 (Selected Financial Data) is not in conformity with the applicable
disclosure requirements of Regulation S-K.
12
(iii) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of the
Company and its Subsidiaries) set forth in the Registration Statement and the
Prospectus, the information included or incorporated by reference in Items 1, 2,
6, 7 and 11 of the Company's Annual Report on Form 10-K, which is incorporated
by reference in the Registration Statement and the Prospectus, the information
included in the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q, which is incorporated by reference in the
Registration Statement and the Prospectus, and the information included in the
Company's Current Reports on Form 8-K, which is incorporated by reference in the
Registration Statement and the Prospectus agrees with the accounting records of
the Company and its Subsidiaries, excluding any questions of legal
interpretation, except as described in such letter; and
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date of
the letter.
(f) The Representatives shall have received on the Closing Date from
Hunton & Xxxxxxxx, counsel for the Company, the Partnership and the Lessee, an
opinion, addressed to the Representatives and dated such Closing Date and
stating in effect that:
(i) Each of the Company, the Partnership and the Subsidiaries
listed on Schedule II hereto has been duly incorporated, organized or formed and
is validly existing as a corporation, trust, partnership or limited liability
company, as the case may be, in good standing under the laws of the jurisdiction
in which it is incorporated, organized or formed. Each of the Company, the
Partnership and the Subsidiaries listed on Schedule II hereto is duly qualified
and in good standing as a foreign entity in the jurisdictions shown on Schedule
II hereto;
(ii) Each of the Company, the Partnership and the Subsidiaries
listed on Schedule II hereto has all requisite corporate, trust, partnership or
limited liability company, as the case may be, power and authority to own, lease
and operate its assets and properties and conduct its business as now being
conducted and as described in the Prospectus and, with respect to the Company
and the Partnership, to enter into, deliver and perform this Agreement and, with
respect to the Company, to issue and sell the Offered Shares.
13
(iii) The Company's authorized equity capitalization is as set
forth in the Prospectus; the outstanding Common Shares have been duly and
validly authorized and issued and are fully paid and nonassessable; the issuance
and sale of the Offered Shares have been duly and validly authorized by the
Company, and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the Offered
Shares are duly listed, and admitted and authorized for trading, subject to
official notice of issuance, on the New York Stock Exchange; the certificates
for the Offered Shares are in valid and sufficient form; the holders of
outstanding shares of capital stock of the Company are not entitled to any
statutory or, to the knowledge of counsel, contractual preemptive or other
rights to subscribe for the Offered Shares; except as set forth in the
Prospectus, to the knowledge of counsel, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding; and, to the knowledge of
counsel, no person or entity has a right to participate in the registration
under the Act of the Offered Shares pursuant to the Registration Statement;
(iv) Except as otherwise set forth in the Prospectus, all
outstanding equity interests of the Subsidiaries are owned by the Company either
directly or through Subsidiaries free and clear of all possessory (and, to the
knowledge of such counsel, other) liens, pledges, security interests, claims, or
encumbrances;
(v) This Agreement has been duly and validly authorized, executed
and delivered by the Company and the Partnership and constitutes the legal,
valid and binding obligation of the Company and the Partnership enforceable
against the Company and the Partnership in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general principles of equity
and except as to those provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion need be expressed;
(vi) Neither the issuance, sale and delivery of the Offered
Shares, nor the execution, delivery, and performance of this Agreement nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof by the Company or the Partnership will conflict
with or, result in a breach or violation of (A) the charter, by-laws,
declaration of trust, partnership agreement, operating agreement or certificate
of limited partnership of the Company, the Partnership or any Subsidiary listed
on Schedule II hereto; (B) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument filed as an Exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 2001; or
(C) to the knowledge of such counsel, any statute, law, rule, regulation,
judgment, order or decree applicable to the Company, the Partnership or the
Subsidiaries listed on Schedule II hereto of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, the Partnership or the Subsidiaries listed on
Schedule II hereto or any of its or their properties;
(vii) No consent, approval, authorization, order or other action
of, or notice to or registration, qualification or filing with, any court,
regulatory body, administrative agency, governmental body or, to the knowledge
of such counsel, any third party is required for the execution, delivery and
performance of this Agreement by the Company and the Partnership or the
consummation of the transactions contemplated hereby, except such as have been
obtained under the Act, such as may be required by the NASD Regulation, Inc. and
such as may be required under state or foreign blue sky laws in connection with
the purchase and distribution of the Offered Shares by the several Underwriters
in the manner contemplated in this Agreement and in the Prospectus;
14
(viii) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company, the
Partnership, the Subsidiaries listed on Schedule II hereto or the Lessee or its
or their property which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, or affect the consummation of this
Agreement or which are required to be disclosed in the Registration Statement or
the Prospectus that are not so disclosed, and to such counsel's knowledge, there
is no contract, lease or other document, or statute, rule or regulation, of a
character required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, which is not described or filed as
required; and such counsel has reviewed the information in the Registration
Statement and the Prospectus in the sections entitled "Federal Income Tax
Consequences of our Status as a REIT" and "Description of Shares of Beneficial
Interest," and insofar as such information constitutes matters of law or legal
conclusions, such statements are correct in all material respects;
(ix) The Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened and the
Registration Statement and the Prospectus (other than the financial statements
and supporting schedules and other financial information contained therein, as
to which such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the Exchange Act and
the respective rules thereunder; and the Incorporated Documents (other than the
financial statements and other financial information contained therein, as to
which such counsel need express no opinion) at the time they became effective or
were filed complied as to form in all material respects with the Exchange Act
and the Exchange Act Rules and Regulations;
(x) The Offered Shares have been listed and admitted and authorized
for trading on the New York Stock Exchange;
(xi) Neither the Company, the Partnership, nor any Subsidiary
listed on Schedule II hereto is, and after giving effect to the offering and
sale of the Offered Shares and the application of the proceeds thereof as
described in the Prospectus, will be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940;
(xii) Commencing with its taxable year ended December 31, 1994, the
Company has been organized and has operated in conformity with the requirements
for qualification as a real estate investment trust pursuant to Sections 856
through 860 of the Code, and the Company's current and proposed method of
operation will enable it to continue to meet the requirements for qualification
and taxation as a real estate investment trust under the Code.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the Maryland
15
General Corporation Law, the Maryland REIT Law, the laws of New York, Virginia,
Delaware or the Federal laws of the United States; provided that such other
counsel shall state in their opinion that the Underwriters and they are
justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters. Such other opinions shall also permit counsel for the Underwriters
to rely thereon.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective and on the
Closing Date (except with respect to the financial statements and notes and
schedules thereto and other financial and statistical data, as to which such
counsel need express no belief and after giving effect to any changes
incorporated pursuant to Section 430A under the Act) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial and
statistical data, as to which such counsel need make no statement) on the date
thereof and on the Closing Date contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) All proceedings taken in connection with the sale of the Offered
Shares as herein contemplated shall be reasonably satisfactory in form and
substance to the Representatives and their counsel and the Underwriters shall
have received on the Closing Date from Xxxxxx & Bird LLP a favorable opinion,
addressed to the Representatives, with respect to the Offered Shares, the
Registration Statement and the Prospectus, and such other related matters, as
the Representatives may reasonably request, and the Company shall have furnished
to Xxxxxx & Bird LLP such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Company shall have
furnished to the Representatives a letter substantially in the form of Exhibit A
hereto executed by each executive officer and trustee of the Company addressed
to the Representatives.
(i) The Offered Shares shall have been approved for listing, and
admitted and authorized for trading, on the New York Stock Exchange, subject to
notice of issuance.
(j) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the Representatives
shall reasonably request.
16
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or trading in any securities of the
Company on the New York Stock Exchange, shall have been halted or suspended,
(ii) a banking moratorium shall have been declared by Federal or Florida
authorities, (iii) the United States shall have become engaged in hostilities,
there shall have been an escalation in hostilities involving the United States
or there shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such), the effect of which in the case of (i), (ii), (iii) or (iv) above, to
make it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the public offering or purchase of the Offered
Shares as contemplated hereby.
6. Certain Agreements of the Company.
(a) The Company agrees with the several Underwriters that:
(i) If, at the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Offered Shares may commence, the
Company will endeavor to cause such post-effective amendment to become effective
as soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when such post-effective amendment has become
effective. Prior to the termination of the offering of the Shares, the Company
will not file any amendment of the Registration Statement or supplement to the
Prospectus or any Rule 462(b) Registration Statement unless the Company has
furnished you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, the Company will cause the Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to the Representatives of such timely filing;
(ii) The Company will promptly advise the Representatives (1) when
the final prospectus shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (2) when, prior to termination of the offering of the
Shares, any amendment to the Registration Statement shall have been filed or
become effective, (3) of any request by the Commission or its staff for any
amendment of the Registration Statement or for any supplement to the Prospectus
or for any additional information, (4) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (5) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Offered Shares for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company will
use its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof;
(iii) If, at any time when a prospectus relating to the Offered
Shares is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
17
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Act, the Exchange Act or the respective rules
thereunder, the Company promptly shall (A) notify the Representatives of such
event, (B) prepare and file with the Commission, subject to the second sentence
of paragraph (i) of this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance and (C) supply any supplemented Prospectus to you in such quantities
as you may reasonably request;
(iv) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives (to the extent
unavailable on open-access public filing retrieval systems) an earnings
statement or statements of the Company and its Subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the Act;
(v) Upon your request, the Company shall furnish to the
Representatives and counsel for the Underwriters, without charge, signed copies
of the Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, as many
copies of the Prospectus, and any amendments thereof and supplements thereto, as
the Representatives may reasonably request. The Company shall pay the expenses
of printing or other production of all documents relating to the offering of the
Offered Shares;
(vi) The Company will arrange, if necessary, for the
qualification of the Offered Shares for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of the Offered
Shares and will pay any fee of the National Association of Securities Dealers,
Inc., in connection with its review of the offering; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the offering or
sale of the Offered Shares, in any jurisdiction where it is not now so subject;
(vii) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the New York
Stock Exchange (including any required registration under the Exchange Act); and
(viii) The Company and the Partnership will apply the net proceeds
from the offering of the Offered Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) For a period of 45 days after the date of the Prospectus Supplement
(the "Lock-Up Period"), the Company will not directly or indirectly, (1) offer,
pledge, sell, or contract to sell any Common Shares, (2) sell any option or
contract to sell any Common Shares, (3) purchase any option or contract to sell
any Common Shares, (4) grant any option, right or warrant to purchase any Common
Shares, (5) enter into any swap or other agreement that transfers, in whole or
in part, the economic consequence of ownership of any Common Shares whether any
such swap or transaction is to be settled by delivery of shares or other
securities, in cash or otherwise, (6) take any of the foregoing actions with
respect to any securities convertible into or exchangeable or exercisable for or
18
repayable with Common Shares, (7) file with the Commission a registration
statement under the Act relating to any additional Common Shares or securities
convertible into or exchangeable or exercisable for its Common Shares, or (8)
publicly disclose the intention to take any of the foregoing actions, without
the prior written consent of the Representatives; provided, however, that the
Company shall not be restricted from issuing Common Shares or options, warrants,
partnership units or other securities convertible into Common Shares (A) in
connection with any acquisitions, joint ventures or similar arrangements; (B)
upon the exercise of outstanding employee share options, and options pursuant to
employee benefit plans, (C) pursuant to non-employee trustee share plans, (D)
pursuant to the Company's dividend reinvestment plan, (E) pursuant to employee
option plans in the ordinary course of business, or (F) upon conversion of any
currently outstanding convertible securities.
(c) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Offered Shares.
(d) If the sale of the Offered Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 5 hereof is not satisfied, or because of any refusal, inability
or failure on the part of the Company to perform any agreement herein, satisfy
any condition herein or comply with any provision hereof other than by reason of
a default by any of the Underwriters, the Company will reimburse the
Underwriters severally through Wachovia on demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Offered Shares.
19
7. Indemnification.
(a) The Company and the Partnership, jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several (including,
without limitation, any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Act, the Exchange Act or other Federal or state 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 based (i)
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, or upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) in whole or in part upon any breach of
the representations and warranties set forth in Sections 1 and 2 hereof; or
(iii) in whole or in part upon any failure of the Company to perform any of its
obligations hereunder or under law, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Partnership and each person, if any, who
controls the Company and the Partnership within the meaning of either the Act or
the Exchange Act, each trustee of the Company, and each officer of the Company
who signs the Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as such losses,
claims, damages or liabilities arise out of or are based upon written
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter through the Representatives specifically for
inclusion in the Prospectus; provided, however, that the obligation of each
Underwriter to indemnify the Company (including any controlling person, trustee
or officer thereof) shall be limited to the net proceeds received by the Company
from such Underwriter. The Company acknowledges that, under the heading
"Underwriting" in the Prospectus, (i) the list of Underwriters and their
respective participation in the sale of the Offering Shares, (ii) the sentences
related to concessions and reallowances and (iii) the sentences related to
stabilization and related activities constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in the
final prospectus. This indemnity agreement will be in addition to any liability
that the Underwriters may otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section (or contribution under Section 8, as further provided in the last
sentence to this Section 7(c)) will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. The failure so to
notify the indemnifying party will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the indemnifying party of
20
substantial rights and defenses and 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) or (b) above. In case any
such action, suit or proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, suit or proceeding, the
indemnified party shall have the right to employ separate counsel (including
local counsel) in any such action, and the fees and expenses of such counsel
shall be at the expense of the indemnifying party if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party; (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action; or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified parties, effect any
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action, claim or proceeding in respect of
which any indemnified party is or could have been a party and indemnity or
contribution may have been sought hereunder by such indemnified party, unless
such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims arising out of such action, claim
or proceeding and does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party. If an
indemnifying party has agreed to assume the defense of any claim against an
indemnified party, the indemnified party shall provide the indemnifying party
with prior written notice of any proposed settlement and shall not complete any
settlement without the prior written consent of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent, which consent shall
not be unreasonably withheld or delayed. Proceedings with respect to
contribution obligations under Section 9 shall be subject to the same conditions
as provided in this Section 7(c).
8. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 7(a) or
7(b) is due in accordance with its terms but for any reason is held to be
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b), the Company and the Partnership, jointly and severally,
and the Underwriters, severally, agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
21
"Losses") to which the Company and the Partnership and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Partnership on the one hand
and the Underwriters on the other from the offering of the Offered Shares or, if
such allocation is unavailable for any reason, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the Company, and
benefits received by the Underwriters shall be deemed to be equal to the total
underwriting discounts received by the Underwriters, in each case as set forth
on the cover page of the Prospectus. The relative fault of the Company and the
Partnership or the Underwriters shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact related to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Partnership and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter (except as may be provided in an Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Offered Shares purchased by such
Underwriter hereunder; and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of the Act
or the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company and the Partnership within the
meaning of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each trustee of the Company
shall have the same rights to contribution as the Company and the Partnership,
subject in each case to clauses (i) and (ii) in the immediately preceding
sentence of this Section 8.
9. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Offered Shares agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Offered Shares
set forth opposite their names in Schedule I hereto bears to the aggregate
amount of Offered Shares set forth opposite the names of all the remaining
Underwriters) the Offered Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate amount of Offered Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Offered Shares set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
22
obligation to purchase any, of the Offered Shares, and if such nondefaulting
Underwriters do not purchase all the Offered Shares, this Agreement will
terminate without liability to any nondefaulting Underwriter or the Company. In
the event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination by the
Representatives by written notice given to the Company prior to delivery of and
payment for the Offered Shares, if at any time prior to such time (i) trading in
the Company's Common Shares shall have been suspended by the Commission or the
New York Stock Exchange or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on such Exchange; (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities; or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war, or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Offered Shares as contemplated by the Prospectus (exclusive of
any supplement thereto).
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that, pursuant to Section 9,
no Underwriter who shall have failed or refused to purchase the Offered Shares
agreed to be purchased by it under this Agreement, without any contractual right
hereunder to justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company or to the other
Underwriters for damages occasioned by its failure or refusal.
11. Miscellaneous.
(a) The respective agreements, representations, warranties, indemnities
and other statements of the Company and the Partnership or their officers and of
the Underwriters set forth in or made pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Sections 7 and 8 hereof, and shall survive delivery of
and payment for the Shares. The provisions of Sections 7, 8 and 9 shall survive
the termination or cancellation of this Agreement.
(b) This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors,
employees, agents and controlling persons referred to in the last sentence of
Section 8 hereof, and no other person will have right or obligation hereunder.
23
(c) All notices and communications hereunder shall be in writing and
mailed or delivered by hand or by overnight courier services or communicated by
telephone or facsimile if subsequently confirmed in writing,
(i) if to the Representatives:
c/o First Union Securities, Inc.,
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Director
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx & Bird LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
(ii) if to the Company:
Innkeepers USA Trust
000 Xxxxx Xxxxxxxxx Xxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed within the State of New York.
(e) This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(f) The section headings used herein are for convenience only and shall
not affect the construction hereof.
24
12. Definition of the Terms "business day", "knowledge," "Partnership",
"General Partner", "Lessee", "Percentage Lease" and "Summerfield Lessee". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading, (b) "Partnership" means
Innkeepers USA Limited Partnership, a Virginia limited partnership, (c) "General
Partner" means the First General Partner, (d) "Lessee" means Innkeepers
Hospitality, Inc., a Virginia corporation, and those corporations or other
entities controlled by Mr. Xxxxxxx Xxxxxx which lease hotels from the
Partnership or any subsidiary partnership, (e) "Percentage Lease" means any
lease entered into by and between the Partnership and (i) the Lessee or (ii) the
Summerfield Lessee, (f) Summerfield Lessee means those affiliates of Wyndham
International, Inc. that lease hotels from the Partnership or any subsidiary
partnership under Percentage Leases; and (g) "knowledge" means the actual
knowledge of the executive officers of the applicable entity, after reasonable
inquiry or investigation; provided, that, where "knowledge" qualifies a
representation or warranty of the Company or the Partnership with respect to the
Summerfield Lessee, "knowledge" means the actual knowledge of the executive
officers of the Company without further inquiry or investigation.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Innkeepers USA Trust
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Counsel & Secretary
Innkeepers USA Limited Partnership
By: Innkeepers Financial Corporation, general partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date specified in Schedule I hereto.
First Union Securities, Inc.
By: /s/ J. Xxxx Xxxxxxxx
---------------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: Managing Director, Equity Syndicate
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement
SCHEDULE I
Number of
Underwriters Offered Shares to be Purchased
------------ ------------------------------
First Union Securities, Inc. 866,668
Banc of America Securities LLC 866,666
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 866,666
------------
Total 2,600,000
SCHEDULE II
Bold text indicates state of formation.
Entity States
------ ------
1. Innkeepers USA Trust MD, FL
2. Innkeepers Financial Corporation VA, FL
3. Innkeepers USA Limited Partnership VA, FL
4. Innkeepers Financial Corporation II VA, CA
5. Innkeepers Residence Sili I, L.P. VA, CA
6. Innkeepers Summerfield General, L.P. VA, CA
7. Innkeepers Residence Sili II, L.P. VA, CA
8. Innkeepers Residence San Mateo, L.P. VA, CA
9. Innkeepers RI General, L.P. VA, CA(1)
10. Innkeepers Hospitality, Inc. VA
11. Innkeepers Hospitality II, Inc. VA
12. Innkeepers Hospitality III, Inc. VA
13. Innkeepers Hospitality IV, Inc. VA
14. Innkeepers Hospitality V, Inc. VA
15. Innkeepers Hospitality VI, Inc. VA
16. Innkeepers Hospitality VII, Inc. VA
----------------
(1) CA qualification in process.
EXHIBIT A
Form of Lock-Up Agreement
Public Offering of Common Shares
of Innkeepers USA Trust
May 30, 2002
First Union Securities, Inc.
Banc of America Securities LLC
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
c/o First Union Securities, Inc.,
0 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), among Innkeepers USA
Trust, a Maryland real estate investment trust (the "Company") and Innkeepers
USA Limited Partnership, a Virginia limited partnership, and each of you as
representatives of a group of Underwriters named therein, relating to a public
offering of Common Shares, $0.01 par value, of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Wachovia Securities, Inc., directly or indirectly, for a period of 45
days after the date of this agreement (the "Lock-Up Period"),
(1) offer, sell, contract to sell, pledge or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company), including the filing (or participation in the filing)
of a registration statement with the Securities and Exchange Commission in
respect of, or
(2) establish or increase a put equivalent position or establish,
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for such capital stock, nor will
the undersigned publicly announce an intention to effect any of the foregoing.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated. The foregoing restrictions shall
not apply to securities disposed of privately through bona fide gifts to family
members or otherwise transferred for estate planning purposes, so long as the
transferee agrees to be bound by this Lock-Up Agreement with respect to such
transferred shares, common shares issued pursuant to the exercise of share
options previously awarded in the ordinary course of business under the
Company's incentive share option plan, common shares issued under the Company's
dividend reinvestment plan, common shares that have been pledged as of the date
hereof for purposes of securing a loan or loans, or otherwise approved by First
Union Securities, Inc., so long as the recipients agree to be bound by the same
restrictions set forth herein during the Lock-Up Period.
Yours very truly,
[Signature of officer, director or major stockholder]
[Name and address of officer, director or major
stockholder]
