EXHIBIT 1
UP TO 2,000,000 SHARES
RFS HOTEL INVESTORS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
MAY 29, 2002
UNDERWRITING AGREEMENT
May 29, 2002
XXXXXX XXXXXX & COMPANY, INC.
00 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTION.
RFS Hotel Investors, Inc., a Tennessee corporation (the "Company"),
proposes to issue and sell to Xxxxxx Xxxxxx & Company, Inc. (the "Underwriter")
an aggregate of 1,000,000 shares (the "Firm Common Shares") of its Common Stock,
par value $.01 per share (the "Common Stock"). In addition, if, but only if,
prior to 8:30 a.m. Eastern time on the day immediately following the date of
this Agreement (the "Notice Deadline") the Underwriter shall provide written
notice to the Company (the "Additional Shares Notice") that it intends to
purchase from the Company up to 370,000 additional shares (the "Additional
Common Shares"), the Company has agreed to issue and sell to the Underwriter the
number of Additional Common Shares as are set forth in the Additional Shares
Notice. In addition, if the Underwriter shall provide the Additional Shares
Notice to the Company prior to the Notice Deadline in accordance with Section
2(b) hereof, the Company may give to the Underwriter written notice (the
"Company Notice") prior to 9:00 a.m. Eastern time on the day immediately
following the date of this Agreement that it desires to sell all or any portion
of the number of shares equal to the number set forth in the Additional Shares
Notice, specifying the number of shares that it desires to sell in addition to
the Firm Common Shares and the Additional Common Shares (the "Optional Common
Shares"). The Underwriter has agreed to purchase the Optional Common Shares from
the Company if, but only if, at or prior to the time of the Company Notice the
Underwriter shall have given the Company written notice that it has demand for
the Optional Common Shares sufficient to effect their immediate sale to the
public. Such notice may be contained in the Additional Shares Notice. Finally,
the Company has granted an option, exercisable for 30 days from and after the
date hereof, to the Underwriter to purchase up to an additional 150,000 shares
of Common Stock plus 15% of the combined number of Additional Common Shares and
Optional Common Shares (not to exceed an aggregate of 260,000 shares), as
provided in Section 2 (collectively, the "Overallotment Common Shares"). The
Firm Common Shares, the Additional Common Shares (if any), the Optional Common
Shares (if any) and, if and to the extent such option is exercised, the
Overallotment Common Shares are collectively called the "Common Shares."
The Company (i) has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-3307), which contains a form of prospectus to be used in connection with the
public offering and sale of the Common Shares, and (ii) has prepared, and will
file with the Commission prior to the First Closing Date (as defined below) in
accordance with Rule 424(b), a prospectus supplement supplementing such form of
prospectus (the "prospectus supplement"). Such registration statement, as
amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was
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declared effective by the Commission under the Securities Act of 1933 and the
rules and regulations promulgated thereunder (collectively, the "Securities
Act"), including all documents incorporated or deemed to be incorporated by
reference therein, and any information deemed to be a part thereof, at the time
of effectiveness pursuant to Rule 430A under the Securities Act or pursuant to
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act"), is called the "Registration
Statement". Such prospectus, as supplemented by the prospectus supplement,
together with the documents incorporated or deemed to be incorporated by
reference therein prior to the date hereof, is called the "Prospectus." All
references in this Agreement to the Registration Statement, the Prospectus or
any amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "disclosed," "included," "filed as
part of" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the Exchange Act which is or
is deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Company hereby confirms its agreements with the Underwriter as
follows:
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Underwriter as
follows:
(a) Compliance with Registration Requirements.
The Registration Statement has been declared effective by the
Commission under the Securities Act. The Company has complied with all requests
of the Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated or threatened by the Commission.
The Prospectus when filed, and as of the date of the prospectus
supplement, complied in all material respects with the Securities Act and, if
filed by electronic transmission pursuant to XXXXX (except as may be permitted
by Regulation S-T under the Securities Act), will be identical to the copy
thereof delivered to the Underwriter for use in connection with the offer and
sale of the Common Shares. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and any
amendment or supplement thereto, as of its date and as of the First Closing
Date, did not and will not contain
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any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to the Underwriter furnished to the Company in writing by the
Underwriter expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.
(b) Offering Materials Furnished to Underwriter.
The Company has delivered to the Underwriter one conformed copy of the
Registration Statement and the Prospectus in such quantities and at such places
as the Underwriter has reasonably requested.
(c) Distribution of Offering Material By the
Company.
The Company has not distributed and will not distribute, prior to the
completion of the Underwriter's distribution of the Common Shares, any offering
material in connection with the offering and sale of the Common Shares other
than the Prospectus or the Registration Statement.
(d) The Underwriting Agreement.
This Agreement has been duly authorized, executed and delivered by, and
is a valid and binding agreement of, each of the Company and RFS Partnership,
L.P. (the "Operating Partnership"), enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) Authorization of the Common Shares.
The Common Shares have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company against
payment therefor pursuant to this Agreement, will be validly issued, fully paid
and nonassessable.
(f) No Applicable Registration or Other Similar
Rights.
No persons possess registration or other similar rights to have any
equity or debt securities registered for sale under the Registration Statement
or included in the offering contemplated by this Agreement, except for such
rights as have been duly waived.
(g) No Material Adverse Change.
Except as otherwise disclosed in the Prospectus, subsequent to the
respective dates as of which information is given in the Prospectus: (i) there
has been no material adverse change, or any development that could reasonably be
expected to result in a material adverse change, in the
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condition, financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity (any
such change is called a "Material Adverse Change"); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material liability
or obligation, indirect, direct or contingent, not in the ordinary course of
business or entered into any material transaction or agreement not in the
ordinary course of business; and (iii) except for regular quarterly dividends on
the Common Stock in amounts per share consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries, any
of its subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.
(h) Independent Accountants.
PricewaterhouseCoopers LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act and the Exchange Act.
(i) Preparation of the Financial Statements.
The financial statements filed with the Commission and incorporated by
reference in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its subsidiaries as of and at
the dates indicated and the consolidated results of their operations and cash
flows for the periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement.
(j) Incorporation and Good Standing of the
Company and its Corporate Subsidiaries.
Each of the Company and its subsidiaries that is a corporation has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and, in the case of the Company, to
enter into and perform its obligations under this Agreement. Each of the Company
and each subsidiary that is a corporation is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such jurisdictions
where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse Change. All of
the issued and outstanding capital stock of each subsidiary that is a
corporation has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through subsidiaries,
free and clear of
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any security interest, mortgage, pledge, lien, encumbrance or claim. The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed on Schedule l(j) attached
hereto.
(k) Formation and Good Standing of Partnership
and Limited Liability Company Subsidiaries.
Each of the Company's subsidiaries that is organized as a limited
partnership or a limited liability company has been duly organized or formed, as
the case may be, and is validly existing as a limited partnership or limited
liability company, as the case may be, in good standing under the laws of the
jurisdiction of its organization or formation, as the case may be, and has
partnership or limited liability company power and authority, as the case may
be, to own, lease and operate its properties and to conduct its business as
described in the Prospectus and, in the case of the Operating Partnership, to
enter into and perform its obligations under this Agreement. Each of the
Company's subsidiaries that is organized as a limited partnership or a limited
liability company is duly qualified as a foreign partnership or limited
liability company, as the case may be, to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change. The Company directly or indirectly owns all outstanding general
partnership interests and limited partnership interests of each subsidiary that
is organized as a limited partnership and all membership interests of each
subsidiary that is organized as a limited liability company, except for an
approximately 9% limited partnership interest in the Operating Partnership and
except for a 25% interest in Wharf Associates. All such general partnership
interests, limited partnership interests and membership interests, as the case
may be, directly or indirectly owned by the Company have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim.
(l) Capitalization and Other Capital Stock
Matters.
The authorized capital stock of the Company is as set forth, and the
issued and outstanding capital stock of the Company is in all material respects
as set forth, in the Prospectus under the caption "Capitalization." The Common
Stock (including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any capital stock, partnership interests or membership interests of
any of its subsidiaries other than those described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to
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such plans, arrangements, options and rights. All of the issued and outstanding
limited partnership interests of the Operating Partnership have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws; the Company is the
sole general partner of and owns an approximately 91.0% limited partnership
interest in the Operating Partnership.
(m) Stock Exchange Listing.
The Common Shares have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance. The Company has not been
informed of any withdrawal, revocation, cancellation or conditioning of such
approval.
(n) Non-Contravention of Existing Instruments;
No Further Authorizations or Approvals Required.
Neither the Company nor any of its subsidiaries is in violation of its
charter, by-laws, partnership agreement, operating agreement or similar
organizational documents and nor is any of them in default (or, with the giving
of notice or lapse of time, none of them would be in default) ("Default") under
any indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or the
partnership agreement, operating agreement or similar organizational documents
of any subsidiary, (ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company's and the Operating
Partnership's execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the Prospectus,
except such as (i) have been obtained or made by the Company and are in full
force and effect under the Securities Act, and (ii) may be required by
applicable state securities or blue sky laws and from the National Association
of Securities Dealers, Inc. (the "NASD").
(o) No Material Actions or Proceedings.
There are no legal or governmental actions, suits or proceedings
pending or, to the Company's knowledge, threatened (i) against or affecting the
Company or any of its subsidiaries, (ii) which has as the subject thereof any
officer or director of, or property owned or leased by,
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the Company or any of its subsidiaries or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined adversely
to the Company or such subsidiary and (B) any such action, suit or proceeding,
if so determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement. No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the Company's knowledge, is
threatened or imminent which, if determined adversely to the Company could
reasonably be expected to result in a Material Adverse Change.
(p) Intellectual Property Rights.
The Company and its subsidiaries own or possess sufficient trademarks,
trade names, patent rights, copyrights, domain names, licenses, approvals, trade
secrets and other similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their businesses as described in the Prospectus;
and the expected expiration of any of such Intellectual Property Rights would
not result in a Material Adverse Change. Neither the Company nor any of its
subsidiaries has received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse Change.
To the Company's knowledge, none of the technology employed by the Company has
been obtained or is being used by the Company in violation of any contractual
obligation binding on the Company or any of its officers, directors or employees
or otherwise in violation of the rights of any persons.
(q) All Necessary Permits, etc.
The Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(r) Title to Properties.
Except as described in the Prospectus, the Company and its subsidiaries
have good and marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(i) above (or
elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
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(s) Tax Law Compliance.
The Company and each of its subsidiaries have accurately prepared and
timely filed all federal, state, foreign and other tax returns that are required
to be filed by it and have paid or made provision for the payment of all taxes,
assessments, governmental or other similar charges, including without
limitation, all sales and use taxes, fines, penalties, and all taxes which the
Company and each of its subsidiaries is obligated to withhold from amounts owing
to employees, creditors and third parties, with respect to the periods covered
by such tax returns (whether or not such amounts are shown as due on any tax
return), except, in all cases, for any such tax, assessment or similar charge
that the Company is contesting in good faith and except in any case in which the
failure to so file or pay would not in the aggregate result in a Material
Adverse Change. The Company has made adequate charges, accruals and reserves in
the applicable financial statements referred to in Section 1(i) above in respect
of all federal, state and foreign income and franchise taxes for all periods as
to which the tax liability of the Company or any of its subsidiaries has not
been finally determined, except where failure to make such charges, accruals and
reserves would not result in a Material Adverse Change. No deficiency assessment
with respect to a proposed adjustment of the Company's or any of its
subsidiaries' federal, state, or other taxes is pending or, to the best of the
Company's knowledge, threatened which could reasonably be expected in the
aggregate to result in a Material Adverse Change. There is no tax lien, whether
imposed by any federal, state, or other taxing authority, outstanding against
the assets, properties or business of the Company or any of its subsidiaries.
(t) Company Not an "Investment Company".
The Company has been advised of the rules and requirements under the
Investment Company Act of 1940, as amended (the "Investment Company Act"). The
Company is not, and after receipt of payment for the Common Shares will not be,
an "investment company" within the meaning of Investment Company Act and intends
to conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(u) Insurance.
Except as disclosed in the Prospectus, the Company and its subsidiaries
are insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
are generally deemed adequate and customary for their businesses including, but
not limited to, policies covering real and personal property owned or leased by
the Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and earthquakes. Except as disclosed in the Prospectus, the Company
has no reason to believe that it or any subsidiary will not be able (i) to renew
its existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change.
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(v) No Price Stabilization or Manipulation.
The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Common Shares.
(w) Related Party Transactions.
There are no business relationships or related-party transactions
involving the Company or any subsidiary or any other person required to be
described in the Prospectus which have not been described as required.
(x) Exchange Act Compliance.
The documents incorporated or deemed to be incorporated by reference in
the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act, and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the First Closing Date will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(y) No Unlawful Contributions or Other Payments.
Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character required to
be disclosed in the Prospectus.
(z) Company's Accounting System.
The Company maintains a system of accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(aa) Compliance with Environmental Laws.
Except as otherwise disclosed in the Prospectus or as would not
otherwise require disclosure under federal securities laws, (i) to the knowledge
of the Company, neither the Company nor any of its subsidiaries is in violation
of any federal, state, local or foreign law or regulation relating to pollution
or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
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wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received notice, and no notice by any
person or entity, alleging potential material liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys' fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Materials of Environmental Concern at any location or alleging a potential or
actual violation of Environmental Laws (collectively, "Environmental Claims"),
pending or, to the Company's knowledge, threatened against the Company or any of
its subsidiaries or any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the Company's knowledge,
there are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, that
reasonably could result in a material violation of any Environmental Law or form
the basis of a potential material Environmental Claim against the Company or any
of its subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law which would be reasonably
likely to result in a Material Adverse Change.
(bb) ERISA Compliance.
The Company and its subsidiaries and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
"ERISA")) established or maintained by the Company, its subsidiaries or their
"ERISA Affiliates" (as defined below) are in compliance in all material respects
with ERISA. "ERISA Affiliate" means, with respect to the Company or a
subsidiary, any member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the "Code") of which the
Company or such subsidiary is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates
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has incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee benefit
plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee
benefit plan" established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates that is intended to be qualified under Section 401(a)
of the Code is so qualified and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification.
(cc) Brokers.
Except as otherwise disclosed in the Prospectus, there is no broker,
finder or other party that is entitled to receive from the Company any brokerage
or finder's fee or other fee or commission as a result of any transactions
contemplated by this Agreement.
(dd) No Outstanding Loans or Other Indebtedness.
There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of any of them, except as
disclosed in the Prospectus.
(ee) Compliance with Laws.
The Company has not been advised, and has no reason to believe, that it
and each of its subsidiaries are not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, except where failure to be so in compliance would not
result, individually or in the aggregate, in a Material Adverse Change.
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(ff) Status as a Real Estate Investment Trust.
The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's method of operation will
enable it to meet the requirements for taxation as a real estate investment
trust under the Code. The Subsidiaries of the Company that are partnerships will
be treated as partnerships for federal income purposes and not as corporations
or associations taxable as corporations. The Company and any subsidiary that is
a "taxable REIT subsidiary" as defined in Section 856(l) of the Code have
properly elected that the subsidiary be treated as a taxable REIT subsidiary,
and such election is still in full force and effect. Such subsidiary meets the
definition of a taxable REIT subsidiary as set forth in said section of the
Code.
Any certificate signed by an officer of the Company and delivered to
the Underwriter or to counsel for the Underwriter shall be deemed to be a
representation and warranty by the Company to the Underwriter as to the matters
set forth therein.
The Company acknowledges that the Underwriter and, for purposes of the
opinions to be delivered pursuant to Section 5 hereof, counsel to the Company
and counsel to the Underwriter, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
Section 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) The Firm Common Shares.
The Company agrees to issue and sell to the Underwriter the Firm Common
Shares upon the terms herein set forth. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriter agrees to purchase from the
Company all of the Firm Common Shares. The purchase price per Firm Common Share
to be paid by the Underwriter to the Company shall be $12.35 per share.
(b) The Additional Common Shares.
Provided that prior to the Notice Deadline the Underwriter shall have
provided to the Company the Additional Shares Notice, the Company agrees to
issue and sell to the Underwriter at the price set forth in subsection (a) above
the number of Additional Common Shares set forth in the Additional Shares
Notice. On the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriter agrees to purchase from the Company the number of Additional
Common Shares as the Underwriter shall have set forth in the Additional Shares
Notice.
(c) The Optional Common Shares.
Provided that the Underwriter shall have delivered the Additional
Shares Notice to the Company prior to the Notice Deadline, and the Company shall
have delivered to the Underwriter the Company Notice prior to 9:00 a.m. Eastern
time on the day immediately following the date of this Agreement, the Company
agrees to issue and sell to the Underwriter at the price set forth
12
in subsection (a) above the number of Optional Common Shares set forth in the
Company Notice. On the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein set
forth, the Underwriter agrees to purchase from the Company the number of
Optional Common Shares as the Company shall have set forth in the Company
Notice; provided, however, that the Underwriter has agreed to purchase the
Optional Common Shares from the Company if, but only if, at or prior to the time
of the Company Notice the Underwriter shall have given the Company written
notice that it has demand for the Optional Common Shares sufficient to effect
their immediate sale to the public. Such notice may be contained in the
Additional Shares Notice.
(d) The First Closing Date.
Delivery of the Firm Common Shares and any Additional Common Shares and
Optional Common Shares to be purchased by the Underwriter and payment therefor
shall be made at 9:00 a.m., New York City time, on June 4, 2002 or such other
time and date as the Underwriter shall designate by notice to the Company (the
time and date of such delivery for the Firm Common Shares are called the "First
Closing Date"). The Company hereby acknowledges that circumstances under which
the Underwriter may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Underwriter to recirculate to the public copies of an amended
or supplemented Prospectus.
(e) The Second Closing Date.
In addition, on the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Company hereby grants an option to the Underwriter to
purchase from the Company at the purchase price per share to be paid by the
Underwriter for the Firm Common Shares the Overallotment Common Shares;
provided, however, that the maximum number of Overallotment Common Shares that
may be purchased by the Underwriter and issued by the Company pursuant to this
subsection (e) is 260,000 shares of Common Stock. The option granted hereunder
is for use by the Underwriter solely in covering any over-allotments in
connection with the sale and distribution of the Firm Common Shares, Additional
Common Shares and Optional Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the Underwriter to
the Company, which notice may be given at any time within 30 days from the date
of this Agreement. Such notice shall set forth (i) the aggregate number of
Overallotment Common Shares as to which the Underwriter is exercising the
option, (ii) the names and denominations in which the certificates for the
Overallotment Common Shares are to be registered and (iii) the time, date and
place at which such certificates will be delivered (which time and date may be
simultaneous with, but not earlier than, the First Closing Date; and in such
case the term "First Closing Date" shall refer to the time and date of delivery
of certificates for the Firm Common Shares and the Overallotment Common Shares).
Such time and date of delivery, if subsequent to the First Closing Date, is
called the "Second Closing Date" and shall be determined by the Underwriter and
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. The Underwriter may cancel the option at
any time prior to its expiration by giving written notice of such cancellation
to the Company.
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(f) Public Offering of the Common Shares.
The Underwriter hereby advises the Company that the Underwriter intends
to offer for sale to the public, as described in the Prospectus, the Common
Shares as soon after this Agreement has been executed as the Underwriter, in its
sole judgment, has determined is advisable and practicable.
(g) Payment for the Common Shares.
Payment for the Common Shares shall be made at the First Closing Date
(and, if applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company.
(h) Delivery of the Common Shares.
The Company shall deliver, or cause to be delivered, to the
Underwriter, through the facilities of the Depository Trust Company ("DTC"), for
the account of the Underwriter, the Firm Common Shares and any Additional Common
Shares and Optional Common Shares at the First Closing Date, against receipt of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company shall also deliver, or cause to be delivered, to the
Underwriter, through the facilities of DTC, for the account of the Underwriter,
any Overallotment Common Shares the Underwriter has agreed to purchase at the
First Closing Date or the Second Closing Date, as the case may be, against
receipt of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Common Shares shall be in
definitive form and registered in such names and denominations as the
Underwriter shall have requested at least two full business days prior to the
First Closing Date (or Second Closing Date, as the case may be) and shall be
made available for inspection on the business day preceding the First Closing
Date (or Second Closing Date, as the case may be) at the office of DTC or its
designated custodian or at such other location in New York City as the
Underwriter may designate (the "Designated Office"). The documents to be
delivered on the First Closing Date (or Second Closing Date, as the case may be)
on behalf of the parties hereto pursuant to this Agreement shall be delivered at
the offices of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxx 00000 (or at such other location as the Underwriter may designate) and
the Common Shares shall be delivered at the Designated Office, all on the First
Closing Date (or Second Closing Date, as the case may be). Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriter.
(i) Delivery of Prospectus to the Underwriter.
Not later than 12:00 p.m. on the second business day following the date
the Common Shares are first released by the Underwriter for sale to the public,
the Company shall deliver or cause to be delivered, copies of the Prospectus in
such quantities and at such places as the Underwriter shall reasonably request.
Section 3. ADDITIONAL COVENANTS OF THE COMPANY.
The Company further covenants and agrees with the Underwriter as
follows:
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(a) Underwriter's Review of Proposed Amendments
and Supplements.
During such period beginning on the date hereof and ending on the later
of the First Closing Date (or the Second Closing Date, as the case may be) or
such date, as in the opinion of counsel for the Underwriter, the Prospectus is
no longer required by law to be delivered in connection with sales by the
Underwriter or dealer (the "Prospectus Delivery Period"), prior to amending or
supplementing the Registration Statement (including any registration statement
filed under Rule 462(b) under the Securities Act) or the Prospectus (including
any amendment or supplement through incorporation by reference of any report
filed under the Exchange Act), the Company shall furnish to the Underwriter for
review a copy of each such proposed amendment or supplement and shall permit the
Underwriter a reasonable opportunity to comment thereon, and shall consider in
good faith any comments made by, or changes requested by, or objections to the
filing of any such amendment or supplement communicated within three business
days to the Company by, the Underwriter or its attorneys or advisors.
(b) Securities Act Compliance.
During the Prospectus Delivery Period, the Company shall promptly
advise the Underwriter in writing (i) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission, (ii)
of the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to the Prospectus, (iii)
of the time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending the
use of the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for quotation, or of
the threatening or initiation of any proceedings for any of such purposes. If
the Commission shall enter any such stop order at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b) and 430A, as applicable, under the Securities Act and
will use its reasonable efforts to confirm that any filings made by the Company
under Rule 424(b) were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus
and Other Securities Act Matters.
If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Underwriter or counsel for the Underwriter it is
otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3(a) hereof), file
with the Commission and furnish at its own expense to the Underwriter and to
dealers, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
15
(d) Copies of any Amendments and Supplements to
the Prospectus.
The Company agrees to furnish the Underwriter, without charge, during
the Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Underwriter may reasonably request and
as many copies of the documents incorporated or deemed incorporated by reference
therein as the Underwriter may reasonably request.
(e) Blue Sky Compliance.
The Company shall cooperate with the Underwriter and counsel for the
Underwriter to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the state securities or blue sky laws or
Canadian provincial securities laws of those jurisdictions designated by the
Underwriter, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution
of the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company will advise
the Underwriter promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best efforts
to obtain the withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds.
The Company shall apply the net proceeds from the sale of the Common
Shares sold by it in the manner described under the caption "Use of Proceeds" in
the Prospectus.
(g) Transfer Agent.
The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
(h) Earnings Statement.
As soon as practicable, the Company will make generally available to
its security holders an earnings statement (which need not be audited) that
satisfies the provisions of the last paragraph of Section 11(a) of the
Securities Act.
(i) Periodic Reporting Obligations.
During the Prospectus Delivery Period the Company shall file, on a
timely basis, with the Commission and the New York Stock Exchange all reports
and documents required to be filed under the Exchange Act.
(j) Company to Provide Interim Financial
Statements.
16
Prior to each of the First Closing Date and the Second Closing Date,
the Company will furnish the Underwriter, as soon as they have been prepared by
or are available to the Company, a copy of any unaudited interim financial
statements of the Company for any period subsequent to the period covered by the
most recent financial statements appearing in the Registration Statement and the
Prospectus.
(k) New York Stock Exchange Listing.
The Company will use its best efforts to maintain the listing of the
Common Shares on the New York Stock Exchange.
(l) Exchange Act Compliance.
During the Prospectus Delivery Period, the Company will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act in the manner and within the time periods required by the
Exchange Act.
(m) Agreement Not to Offer or Sell Additional
Securities.
During the period commencing on the date hereof and ending on the 30th
day following the date of the Prospectus, the Company will not, without the
prior written consent of the Underwriter (which consent may be withheld at the
sole discretion of the Underwriter), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Common
Shares); provided, however, that the Company may issue shares of its Common
Stock or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, upon redemption of units of the
Operating Partnership or pursuant to any other agreement obligating the Company
to issue common stock in effect on the date hereof, subject to the terms of any
"lock up" agreements to which holders of such shares, options or Common Stock
may be bound.
(n) Investment Limitation.
The Company shall not invest, or otherwise use the proceeds received by
the Company from its sale of the Common Shares in such a manner as would require
the Company or any of its subsidiaries to register as an investment company
under the Investment Company Act.
(o) No Manipulation of Price.
The Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be expected
to constitute, the stabilization or manipulation of the price of any securities
of the Company.
17
(p) Additional Documents.
On or before each of the First Closing Date and the Second Closing
Date, as the case may be, the Company will provide to the Underwriter and
counsel for the Underwriter such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Common Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
(q) Press Releases During the Prospectus
Delivery Period.
The Company shall furnish to the Underwriter for review a copy of any
press release that the Company, the Operating Partnership or any of their
affiliates proposes to issue with respect to or that otherwise references the
offering of the Common Shares, and shall not issue any such press release or
make any public statement with respect to or otherwise referring to the offering
of the Common Shares without the approval of the Underwriter.
The Underwriter may, in its sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
Section 4. PAYMENT OF EXPENSES.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriter, (iv) all fees and expenses of the Company's counsel,
independent public or certified public accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriter in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Underwriter, preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriter of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the Underwriter
in connection with, the NASD's review and approval of the Underwriter's
participation in the offering and distribution of the Common Shares, (viii) the
fees and expenses associated with listing the Common Shares on the New York
Stock Exchange, and (ix) all other fees, costs and expenses referred to in Item
14 of Part II of the Registration Statement. Except as provided in this Section
4, Section 6, Section 8 and Section 9 hereof, the Underwriter shall pay its own
expenses, including the fees and disbursements of its counsel.
18
Section 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER.
The obligations of the Underwriter to purchase and pay for the Common
Shares as provided herein on the First Closing Date and the Second Closing Date,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth in Section 1 hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Second Closing Date, as of the Second Closing Date as though then
made, to the timely performance by the Company of its covenants and other
obligations hereunder and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date
hereof, the Underwriter shall have received from PricewaterhouseCoopers LLP,
independent public or certified public accountants for the Company, a letter
dated the date hereof addressed to the Underwriter, in form and substance
satisfactory to the Underwriter, containing statements and information of the
type ordinarily included in accountant's "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any successor
bulletin), with respect to the audited and unaudited financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(b) Compliance with Registration Requirements;
No Stop Order; No Objection from NASD. For the period from and after
effectiveness of this Agreement and prior to the First Closing Date and the
Second Closing Date, as the case may be:
(i) the Company shall have filed the
Prospectus with the Commission (including the information required by Rule 430A
under the Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective;
(ii) no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment to
the Registration Statement shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
(c) No Material Adverse Change or Ratings Agency
Change. For the period from and after the date of this Agreement and prior to
the First Closing Date and the Second Closing Date, as the case may be:
(i) in the reasonable judgment of the
Underwriter there shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded
19
any securities of the Company or any of its subsidiaries by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On the
First Closing Date and the Second Closing Date, as the case may be, the
Underwriter shall have received the favorable opinion of Hunton & Xxxxxxxx,
counsel for the Company, dated the First Closing Date and, with respect to the
Second Closing Date, dated the Second Closing Date, in each case with respect to
the substantive matters set forth on Exhibit A-1 attached hereto, in a form to
be negotiated in good faith prior to the First Closing Date.
(e) Opinion of Tax Counsel for the Company. On
the First Closing Date and the Second Closing Date, as the case may be, the
Underwriter shall have received the favorable opinion of Hunton & Xxxxxxxx, tax
counsel for the Company, dated the First Closing Date and, with respect to the
Second Closing Date, dated the Second Closing Date, in each case with respect to
the substantive matters set forth on Exhibit A-2 attached hereto, in a form to
be negotiated in good faith prior to the First Closing Date.
(f) Opinion of Counsel for the Underwriter. On
the First Closing Date and the Second Closing Date, as the case may be, the
Underwriter shall have received from Bass, Xxxxx & Xxxx, PLC, counsel for the
Underwriter, such opinion or opinions, dated the First Closing Date and, with
respect to the Second Closing Date, dated the Second Closing Date, with respect
to such matters as the Underwriter may reasonably require.
(g) Officers' Certificate. On the First Closing
Date and the Second Closing Date, as the case may be, the Underwriter shall have
received a written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial Officer or
Chief Accounting Officer of the Company, dated the First Closing Date and, with
respect to the Second Closing Date, dated the Second Closing Date, to the effect
set forth in subsections (b)(ii) and (c)(ii) of this Section 5, and further to
the effect that:
(i) for the period from and after the
date of this Agreement and prior to the First Closing Date and the Second
Closing Date, as the case may be, there has not occurred any Material Adverse
Change;
(ii) the representations and warranties
of the Company set forth in Section 1 of this Agreement that are qualified as to
materiality or Material Adverse Change are true and correct (and those not so
qualified are true and correct in all material respects), in each case, with the
same force and effect as though expressly made on and as of the First Closing
Date and, with respect to the Second Closing Date, as though expressly made on
and as of the Second Closing Date;
(iii) the Company has complied in all
material respects with all the agreements and covenants on its part to be
performed hereunder and has satisfied all the conditions on its part to be
satisfied hereunder at or prior to the First Closing Date and, with respect to
the Second Closing Date, at or prior to the Second Closing Date; and
20
(iv) they have examined the Registration
Statement and the Prospectus (including all documents incorporated or deemed to
be incorporated by reference therein), and nothing has come to their attention
that would lead them to believe that (A) either the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or any documents
incorporated by reference therein, as of their respective effective, issue or
filing dates, as the case may be, or (B) the Prospectus, as amended or
supplemented, and when read together with the documents incorporated by
reference therein, as of the First Closing Date or the Second Closing Date, as
the case may be, contained or contains, as of such date, any untrue statement of
a material fact, or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(h) Bring-down Comfort Letter. On First Closing
Date and the Second Closing Date, as the case may be, the Underwriter shall have
received from PricewaterhouseCoopers LLP, independent public or certified public
accountants for the Company, a letter dated such date, in form and substance
satisfactory to the Underwriter, to the effect that they reaffirm the statements
made in the letter furnished by them pursuant to subsection (a) of this Section
5, except that the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the First Closing
Date and, with respect to the Second Closing Date, no more than three business
days prior to the Second Closing Date.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Underwriter
by notice to the Company at any time on or prior to the First Closing Date or
the Second Closing Date, as the case may be, which termination shall be without
liability on the part of any party to any other party, except that Section 4,
Section 6, Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
Section 6. REIMBURSEMENT OF UNDERWRITER'S EXPENSES.
If this Agreement is terminated by the Underwriter pursuant to Section
5 or if the sale to the Underwriter of the Common Shares on the First Closing
Date (or the Second Closing Date, as the case may be) is not consummated because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Underwriter upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Underwriter in connection with the proposed
purchase and the offering and sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
Section 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall become effective upon the execution and delivery
of this Agreement by the parties hereto.
Section 8. INDEMNIFICATION.
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(a) Indemnification of the Underwriter. The
Company and the Operating Partnership, jointly and severally, agree to indemnify
and hold harmless the Underwriter, its officers and employees, and each person,
if any, who controls the Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and to reimburse the Underwriter and each such controlling person
for any and all reasonable expenses (including reasonable legal fees and
disbursements of counsel) as such expenses are reasonably incurred by the
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use in the Registration Statement or
the Prospectus (or any amendment or supplement thereto). The indemnity agreement
set forth in this Section 8(a) shall be in addition to any liabilities that the
Company and the Operating Partnership may otherwise have.
(b) Indemnification of the Company, its
Directors and Officers and the Operating Partnership. The Underwriter agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Operating Partnership and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act or the Operating Partnership against any
loss, claim, damage, liability or expense, as incurred, to which the Company, or
any such director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based (i)
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
22
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Underwriter expressly for
use therein; and to reimburse the Company, or any such director, officer or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company hereby acknowledges that the
only information that the Underwriter has furnished to the Company expressly for
use in the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) are the statements set forth (A) in the
sixth paragraph on the cover page of the prospectus supplement and (B) in the
third, eighth and ninth paragraphs under the caption "Underwriting" in the
prospectus supplement; and the Underwriter confirms that such statements are
correct. The indemnity agreement set forth in this Section 8(b) shall be in
addition to any liabilities that the Underwriter may otherwise have.
(c) Notifications and Other Indemnification
Procedures. 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 an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it shall elect, jointly with all other indemnifying parties similarly notified,
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
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, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party, representing the indemnified
parties who are parties to such
23
action) or (ii) 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 commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under
this Section 8 shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could 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
that are the subject matter of such action, suit or proceeding.
Section 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the offering of the Common Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the statements or omissions herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriter, on the other hand, in connection with the
offering of the Common Shares pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Common Shares pursuant to this Agreement (before deducting expenses)
received by the Company, and the total underwriting discount received by the
Underwriter, bear to the aggregate initial public offering price of the Common
Shares. The relative fault of the Company, on the one hand, and the Underwriter,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriter, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in
24
connection with investigating or defending any action or claim. The provisions
set forth in Section 8(c) with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this Section 9;
provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company, the Operating Partnership and the Underwriter agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 9.
Notwithstanding the provisions of this Section 9, the Underwriter shall
not be required to contribute any amount in excess of the underwriting
commissions received by the Underwriter in connection with the Common Shares
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each officer and
employee of the Underwriter and each person, if any, who controls the
Underwriter within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
Section 10. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date, this Agreement may be terminated by
the Underwriter by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the New York Stock Exchange, or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited, or minimum or maximum prices shall
have been generally established on any of such stock exchanges by the Commission
or the NASD or any other governmental authority, or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States; (ii) a general banking moratorium shall have been declared by
any of federal, New York or Tennessee authorities; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States' or international political,
financial or economic conditions, as in the reasonable judgment of the
Underwriter is material and adverse and makes it impracticable or inadvisable to
market the Common Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities; (iv) in the
reasonable judgment of the Underwriter there shall have occurred any Material
Adverse Change; or (v) the Company or the Operating Partnership shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character that in the judgment of the Underwriter could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Change.
Any termination pursuant to this Section 11 shall be without liability on the
part of (a) the Company or the Operating Partnership to the Underwriter, (b) the
Underwriter to the Company or the Operating Partnership, or (c) of
25
any party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
Section 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of the Operating Partnership, of their
respective officers and of the Underwriter set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation, or statement as to the results thereof, made by or on behalf
of the Underwriter; the officers or employees of the Underwriter; any person
controlling the Underwriter; any person controlling the Company or the Operating
Partnership; or the respective officers and employees of the Company, of the
Operating Partnership or of any person controlling the Company or the Operating
Partnership, (ii) acceptance of the Common Shares and payment for them hereunder
and (iii) termination of this Agreement.
Section 12. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Underwriter:
Xxxxxx Xxxxxx & Company, Inc.
00 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Minor Perkins
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Good, Esq.
If to the Company or to the Operating Partnership:
RFS Hotel Investors, Inc
000 Xxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, President
26
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
Section 13. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and personal representatives, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from the Underwriter merely
by reason of such purchase.
Section 14. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
Section 15. GOVERNING LAW PROVISIONS.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Tennessee applicable to agreements made and to
be performed in such state.
Section 16. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
27
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement and the Prospectus (and
any amendments and supplements thereto), as required by the Securities Act and
the Exchange Act.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Operating
Partnership, the Underwriter, the Underwriter's officers and employees, any
controlling persons referred to herein, the Company's directors and the
Company's and the Operating Partnership's respective officers and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
RFS HOTEL INVESTORS, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President and Chief Operating Officer
RFS PARTNERSHIP, L.P.
By: RFS Hotel Investors, Inc.,
its General Partner
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President and Chief Operating Officer
28
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Underwriter in Memphis, Tennessee as of the date first above written.
XXXXXX XXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxx Xxxxxxx
Managing Director
29
