EXHIBIT 1.1
[ ] Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
[ ], 2004
UNDERWRITING AGREEMENT
[ ], 2004
UBS Securities LLC
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
CNL Hospitality Properties, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "Underwriters"), for whom you are acting as representative(s), an
aggregate of ___________ shares (the "Firm Shares") of Common Stock, $0.01 par
value (the "Common Stock"), of the Company. In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to the Underwriters
the option to purchase from the Company up to an additional ____________ shares
of Common Stock (the "Additional Shares"). The Firm Shares and the Additional
Shares are hereinafter collectively sometimes referred to as the "Shares." The
Shares are described in the Prospectus which is referred to and defined below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Act"), with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (File No. 333-115079) including a prospectus,
relating to the Shares, which incorporates by reference documents which the
Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the "Exchange Act"). The Company has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses and the documents incorporated by reference therein (each such
preliminary prospectus, including the documents incorporated therein by
reference, being herein called a "Preliminary Prospectus") relating to the
Shares. Except where the context otherwise requires, the registration statement,
as amended when it became or becomes effective, including all documents filed as
a part thereof or incorporated by reference therein, and including any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430(A) under the Act and
also including any registration statement filed pursuant to Rule 462(b) under
the Act, is herein called the "Registration Statement," and the prospectus,
including all documents incorporated therein by reference, in the form filed by
the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the "Prospectus." As used herein, "business day"
shall mean a day on which the New York Stock Exchange is open for trading.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule A
attached hereto, subject to adjustment in accordance with Section 8 hereof, in
each case at a purchase price of $______ per Share. The Company is advised by
you that the Underwriters intend (i) to make a public offering of their
respective portions of the Firm Shares as soon after the effective date of the
Registration Statement as in your judgment is advisable and (ii) initially to
offer the Firm Shares upon the terms set forth in the Prospectus. You may from
time to time increase or decrease the public offering price after the initial
public offering to such extent as you may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by UBS Securities LLC ("UBS"),
Banc of America Securities, LLC ("BofA") and Xxxxxxx, Xxxxx & Co. ("Goldman,"
and together with UBS and BofA, the "Representatives") on behalf of the several
Underwriters at any time and from time to time on or before the thirtieth day
following the date of the Prospectus, by written notice to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised, and the date and time when the Additional Shares are
to be delivered (such date and time being herein referred to as the "additional
time of purchase"); provided, however, that the additional time of purchase
shall not be earlier than the time of purchase (as defined below) nor earlier
than the second business day after the date on which the option shall have been
exercised nor later than the tenth business day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares), subject to
adjustment in accordance with Section 8 hereof.
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company by Federal Funds wire transfer, against delivery of
the certificates for the Firm Shares to you through the facilities of The
Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on _______________, 2004 (unless another time shall be agreed to by
you and the Company or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery are to be made is
hereinafter sometimes called "the time of purchase." Electronic transfer of the
Firm Shares shall be made to you at the time of purchase in such names and in
such denominations as you shall specify.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Electronic transfer of the Additional Shares shall
be made to you at the additional time of purchase in such names and in such
denominations as you shall specify.
Deliveries of the documents described in Section 6 hereof with respect to
the purchase of the Shares shall be made at the offices of Xxxxxxxx Chance US
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 9:00 A.M., New York City
time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. Representations and Warranties of the Company and the Operating
Partnerships. The Company, CNL Hospitality Partners L.P. (the "CNL Operating
Partnership"), RFS Partnership, L.P. (the "RFS Operating Partnership") (the "RFS
Operating Partnership," together with the CNL Operating
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Partnership, the "Operating Partnerships") and CNL Hotel Investors, Inc.
represent and warrant to and agree with each of the Underwriters that:
(a) The Registration Statement has been declared effective under the
Act; no stop order of the Commission preventing or suspending the use of
any Preliminary Prospectus or the effectiveness of the Registration
Statement has been issued and no proceedings for such purpose have been
instituted or, to the Company's knowledge after due inquiry, are
contemplated by the Commission; each Preliminary Prospectus, at the time
of filing thereof, complied in all material respects to the requirements
of the Act and the last Preliminary Prospectus distributed in connection
with the offering of the Shares did not, as of its date, and does 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 light of the circumstances under which they were made, not
misleading; the Registration Statement complies and will comply when it
becomes effective and at the time of purchase and any additional time of
purchase, in all material respects with the requirements of the Act and
the Prospectus will comply, as of its date and at the time of purchase and
any additional times of purchase, in all material respects with the
requirements of the Act and any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
have been and will be so described or filed; the conditions to the use of
Form S-3 have been satisfied; the Registration Statement does not and will
not when it becomes effective and at time of purchase and any additional
time of purchase, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and the Prospectus will not, as
of its date and at the time of purchase and any additional time of
purchase, 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 light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
warranty or representation with respect to any statement contained in the
last Preliminary Prospectus, the Registration Statement or the Prospectus
in reliance upon and in conformity with information concerning an
Underwriter and furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in the last Preliminary
Prospectus, the Registration Statement or the Prospectus; the documents
incorporated by reference in the Preliminary Prospectus, the Registration
Statement and the Prospectus, at the time they became effective or were
filed with the Commission, complied in all material respects with the
requirements of the Exchange Act and did 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 light of the
circumstances under which they were made, not misleading; and the Company
has not distributed and will not distribute any offering material in
connection with the offering or sale of the Shares other than the
Registration Statement, the then most recent Preliminary Prospectus and
the Prospectus;
(b) as of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth in the section of the
Registration Statement and the Prospectus entitled "Capitalization" and,
as of the time of purchase and the additional time of purchase, as the
case may be, the Company shall have an authorized and outstanding
capitalization as set forth in the section of the Registration Statement
and the Prospectus entitled "Capitalization" (subject, in each case, to
the issuance of shares of Common Stock upon exercise of stock options and
warrants disclosed as outstanding in the Registration Statement and the
Prospectus and grant of options under existing stock option plans
described in the Registration Statement and the Prospectus); all of the
issued and outstanding shares of capital stock, including the Common
Stock, of the Company have been duly authorized and validly issued and are
fully paid and non-assessable, have been issued in compliance with all
federal and state securities laws and were not issued in
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violation of any preemptive right, resale right, right of first refusal or
similar right; the description of the Company's stock option bonus and
other 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 such plans, arrangements,
options and rights;
(c) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(d) the Company is duly qualified or registered to do business as a
foreign corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification or registration, except where the failure to
be so qualified or registered and in good standing would not, individually
or in the aggregate, have a material adverse effect on the business,
properties, financial condition, results of operation or prospects of the
Company, the Operating Partnerships and the Subsidiaries (as hereinafter
defined) taken as a whole (a "Material Adverse Effect");
(e) the CNL Operating Partnership has been duly organized and is
validly existing as a limited partnership in good standing under the laws
of the State of Delaware, with full partnership power and authority to
own, lease and operate its properties and conduct its business as
described in the Registration Statement and the Prospectus, to execute and
deliver this Agreement and to perform its obligations as contemplated
herein;
(f) the CNL Operating Partnership is duly qualified or registered to
do business as a foreign partnership and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification or registration,
except where the failure to be so qualified or registered and in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect
(g) the RFS Operating Partnership has been duly organized and is
validly existing as a limited partnership in good standing under the laws
of the State of Tennessee, with full partnership power and authority to
own, lease and operate its properties and conduct its business as
described in the Registration Statement and the Prospectus, to execute and
deliver this Agreement and to perform its obligations as contemplated
herein;
(h) the RFS Operating Partnership is duly qualified or registered to
do business as a foreign partnership and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification or registration,
except where the failure to be so qualified or registered and in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect
(i) the Company owns, directly or indirectly, 100% of the general
and limited partnership interests in the Operating Partnerships;
(j) the Company and the Operating Partnerships have no subsidiaries
(as defined in the Act) other than the subsidiaries listed on Schedule H-1
hereto (collectively, the "Subsidiaries"); the Company and the Operating
Partnerships own all of the issued and outstanding capital stock or other
ownership interests of each of the Subsidiaries; other than the capital
stock of the Subsidiaries or as set forth on Schedule H-2, the Company and
the Operating
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Partnerships do not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or have
any equity interest in any firm, partnership, joint venture, association
or other entity; complete and correct copies of the charter, limited
partnership agreement, by-laws or other organizational documents, as
applicable, of the Company, the Operating Partnerships and the
Subsidiaries and all amendments thereto have been delivered to you, and
except as set forth in the exhibits to the Registration Statement no
changes therein will be made subsequent to the date hereof and prior to
the time of purchase or, if later, the additional time of purchase; each
Subsidiary has been duly organized and is validly existing as a
corporation, limited partnership, limited liability company or other legal
entity, as the case may be, in good standing under the laws of the
jurisdiction of its organization, with the requisite power and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; each
Subsidiary is duly qualified to do business as a foreign corporation,
limited partnership, limited liability company or other legal entity, as
the case may be, and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect; all of the outstanding shares of capital stock or
other ownership interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and are
owned by the Company or Operating Partnerships and, other than described
in the Prospectus, are subject to no security interest, other encumbrance
or adverse claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding;
(k) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and free of
statutory and contractual preemptive rights, resale rights, rights of
first refusal and similar rights;
(l) the Shares have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance;
(m) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and the Prospectus and the certificates for the
Shares are in due and proper form and the holders of the Shares will not
be subject to personal liability by reason of being such holders;
(n) this Agreement has been duly authorized, executed and delivered
by the Company and the Operating Partnerships;
(o) (1) neither the Company, the Operating Partnerships nor any of
the Subsidiaries is in breach or violation of or in default under (nor has
any event occurred which with notice, lapse of time or both would result
in any breach or violation of, constitute a default under or give the
holder of any indebtedness (or a person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
part of such indebtedness under) (i) its respective charter, limited
partnership agreement or by-laws, (ii) any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or
(iii) any license, lease, contract or other agreement or instrument to
which the Company, the Operating Partnerships or any of the Subsidiaries
is a party or by which any of them or any of their properties may be bound
or affected; except for such breaches, violations or defaults under
subclauses (ii) and (iii) above that would, individually or in the
aggregate, have a Material Adverse Effect, and (2) the
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execution, delivery and performance of this Agreement, the issuance and
sale of the Shares and the consummation of the transactions contemplated
hereby, the advisor acquisition (as described in the Prospectus) (the
"Advisor Acquisition") or the refinancing transactions (as described in
the Prospectus (the "Refinancing Transactions," together with the Advisor
Acquisition, the "Transactions") will not conflict with, result in any
breach or violation of or constitute a default under (nor constitute any
event which with notice, lapse of time or both would result in any breach
or violation of or constitute a default under) (i) the charter, limited
partnership agreement or by-laws of the Company, the Operating
Partnerships or any of the Subsidiaries, (ii) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, (iii) any license, lease, contract or other agreement or
instrument to which the Company, the Operating Partnerships or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or affected, or (iv) any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order
applicable to the Company, the Operating Partnerships or any of the
Subsidiaries; except for such breaches, violations or defaults under
subclauses (ii) or (iii) above that would, individually or in the
aggregate, have a Material Adverse Effect;
(p) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company or the Operating Partnerships of the transactions contemplated
hereby, including the Transactions, other than registration of the Shares
under the Act, which has been or will be effected, and any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters or
under the rules and regulations of the NASD;
(q) (i) no person has the right, contractual or otherwise, to cause
(a) the Company to issue or sell to it any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, or (b) the Operating Partnerships to issue or sell to it any
units or other equity interests of the Operating Partnerships, (ii) no
person has any preemptive rights, resale rights, rights of first refusal
or other rights to purchase any shares of Common Stock or shares of any
other capital stock or other equity interests of the Company, and (iii) no
person has the right to act as an underwriter or as a financial advisor to
the Company in connection with the offer and sale of the Shares, in the
case of each of the foregoing clauses (i), (ii) and (iii), whether as a
result of the filing or effectiveness of the Registration Statement or the
sale of the Shares as contemplated thereby or otherwise; no person has the
right, contractual or otherwise, to cause the Company to register under
the Act any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, or to include any such shares or
interests in the Registration Statement or the offering contemplated
thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby
or otherwise;
(r) each of the Company, the Operating Partnerships and the
Subsidiaries has all necessary licenses, authorizations, consents and
approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has obtained all
necessary authorizations, consents and approvals from other persons, in
order to conduct its respective business; neither the Company, the
Operating Partnerships nor any of the Subsidiaries is in violation of, or
in default under, or has received notice of any proceedings relating to
revocation or modification of, any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or rule
or any decree, order or judgment applicable to the Company, the Operating
Partnerships or any of the Subsidiaries, except where such violation,
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default, revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect;
(s) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(t) there are no actions, suits, claims, audits, investigations or
proceedings pending or threatened or, to the Company's knowledge after due
inquiry, contemplated to which the Company, the Operating Partnerships or
any of the Subsidiaries or any of their respective directors or officers
is or would be a party or of which any of their respective properties is
or would be subject at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body,
authority or agency, except any such action, suit, claim, audit,
investigation or proceeding which would not result in a judgment, decree
or order having, individually or in the aggregate, a Material Adverse
Effect or preventing consummation of the transactions contemplated hereby;
(u) During the period of at least the last 24 calendar months prior
to the date of this Agreement, the Company has timely filed with the
Commission all documents and other material required to be filed pursuant
to Sections 13, 14 and 15(d) under the Exchange Act. During the period of
at least the last 36 calendar months preceding the filing of the
Registration Statement, the Company has filed all reports required to be
filed pursuant to Sections 13, 14 and 15(d) under the Exchange Act. As of
the date of this Agreement, the aggregate market value of the Company's
voting stock held by nonaffiliates of the Company was equal to or greater
than $150 million.
(v) PricewaterhouseCoopers, LLP, whose report on the consolidated
financial statements of the Company, the Operating Partnerships and the
Subsidiaries is filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act;
(w) the audited financial statements included in the Registration
Statement and the Prospectus, together with the related notes and
schedules, present fairly the consolidated financial position of the
Company, the Operating Partnerships and the Subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the
Company, the Operating Partnerships and the Subsidiaries for the periods
specified and have been prepared in compliance with the requirements of
the Act and in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved; any pro forma
financial statements or data included in the Registration Statement and
the Prospectus comply with the requirements of Regulation S-X of the Act
and the assumptions used in the preparation of such pro forma financial
statements and data are reasonable, the pro forma adjustments used therein
are appropriate to give effect to the transactions or circumstances
described therein and the pro forma adjustments have been properly applied
to the historical amounts in the compilation of those statements and data;
the other financial and statistical data set forth in the Registration
Statement and the Prospectus are accurately presented and prepared on a
basis consistent with the financial statements and books and records of
the Company and the Operating Partnerships; there are no financial
statements (historical or pro forma) that are required to be included in
the Registration Statement and the Prospectus that are not included as
required; and the Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration
Statement and the Prospectus; the
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financial data set forth in the Prospectus under the captions "Prospectus
Summary -- Summary Consolidated Financial and Other Data", "Selected
Consolidated Financial and Pro Forma Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent
with that of the audited financial statements contained in the
Registration Statement, subject to the qualifications set forth in such
sections;
(x) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the Company,
the Operating Partnerships and the Subsidiaries taken as a whole, (ii) any
transaction which is material to the Company and the Subsidiaries taken as
a whole, (iii) any obligation, direct or contingent (including any
off-balance sheet obligations), incurred by the Company, the Operating
Partnerships or the Subsidiaries, which is material to the Company, the
Operating Partnerships and the Subsidiaries taken as a whole, (iv) any
change in the capital stock or outstanding indebtedness of the Company,
the Operating Partnerships or the Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of
the Company;
(y) the Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), in the form set forth as Exhibit A
hereto, of each of its directors and officers [and each stockholder named
in Exhibit V hereto];
(z) the Company and the Operating Partnerships are not and, after
giving effect to the offering and sale of the Shares, will not be an
"investment company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act") or a "passive foreign investment
company" or a "controlled foreign corporation" as such terms are defined
in the Internal Revenue Code of 1980, as amended (the "Code");
(aa) the Company, the Operating Partnerships and each of the
Subsidiaries has good and marketable title to all property (real and
personal) described the Registration Statement and in the Prospectus as
being owned by each of them, free and clear of all liens, claims, security
interests or other encumbrances (other than mortgages on the Company's
real property as described in the Prospectus); all the property described
in the Registration Statement and the Prospectus as being held under lease
by the Company, the Operating Partnerships or a Subsidiary is held thereby
under valid, subsisting and enforceable leases; except as disclosed in the
Prospectus, no person other than the Company and the Operating
Partnerships has an option or right of first refusal to purchase all or
part of any hotel owned by the Company, the Operating Partnerships or the
Subsidiaries (the "Hotels") or any interest therein; each Hotel complies
with all applicable codes, laws, and regulations (including, without
limitation, building and zoning codes, laws and regulations, and laws
relating to access to hotels), except if and to the extent disclosed in
the Prospectus and except for such failures to comply that would not
individually or in the aggregate have a Material Adverse Effect; neither
the Company nor the Operating Partnerships has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner effect the size of, use of, improvements
on, construction on, or access to any of the Hotels, except such
proceedings or actions that would not have a Material Adverse Effect;
(bb) the Company, the Operating Partnerships and the Subsidiaries
own, or have obtained valid and enforceable licenses for, or other rights
to use, the inventions, patent applications, patents, trademarks (both
registered and unregistered), tradenames, copyrights, trade
8
secrets and other proprietary information described in the Registration
Statement and the Prospectus as being owned or licensed by them or which
are necessary for the conduct of their respective businesses, except where
the failure to own, license or have such rights would not, individually or
in the aggregate, have a Material Adverse Effect (collectively,
"Intellectual Property"); (i) there are no third parties who have or, to
the Company's or the Operating Partnerships' knowledge after due inquiry,
will be able to establish rights to any Intellectual Property, except for
the ownership rights of the owners of the Intellectual Property which is
licensed to the Company or the Operating Partnerships; (ii) there is no
infringement by third parties of any Intellectual Property; (iii) there is
no pending, or to the Company's or the Operating Partnerships' knowledge
after due inquiry, threatened action, suit, proceeding or claim by others
challenging the Company's or the Operating Partnerships' rights in or to
any Intellectual Property, and the Company and the Operating Partnerships
are unaware of any facts which could form a reasonable basis for any such
claim; (iv) there is no pending, or to the Company's or the Operating
Partnerships' knowledge after due inquiry, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
Intellectual Property, and the Company and the Operating Partnerships are
unaware of any facts which could form a reasonable basis for any such
claim; (v) there is no pending, or to the Company's or the Operating
Partnerships' knowledge after due inquiry, threatened action, suit,
proceeding or claim by others that the Company or the Operating
Partnerships infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company and the Operating Partnerships are unaware of any facts which
could form a reasonable basis for any such claim; (vi) there is no patent
or patent application that contains claims that interfere with the issued
or pending claims of any of the Intellectual Property; and (vii) there is
no prior art that may render any patent application owned by the Company
or the Operating Partnerships of the Intellectual Property unpatentable
that has not been disclosed to the U.S. Patent and Trademark Office;
(cc) neither the Company, the Operating Partnerships nor any of the
Subsidiaries is engaged in any unfair labor practice; except for matters
which would not, individually or in the aggregate, have a Material Adverse
Effect, (i) there is (A) no unfair labor practice complaint pending or, to
the Company's or the Operating Partnerships' knowledge after due inquiry,
threatened against the Company, the Operating Partnerships or any of the
Subsidiaries before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or threatened, (B) no strike, labor dispute,
slowdown or stoppage pending or, to the Company's or the Operating
Partnerships' knowledge after due inquiry, threatened against the Company,
the Operating Partnerships or any of the Subsidiaries and (C) no union
representation dispute currently existing concerning the employees of the
Company, the Operating Partnerships or any of the Subsidiaries, and (ii)
to the Company's or the Operating Partnerships' knowledge after due
inquiry, (A) no union organizing activities are currently taking place
concerning the employees of the Company, the Operating Partnerships or any
of the Subsidiaries and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring,
promotion or pay of employees, any applicable wage or hour laws;
(dd) except as otherwise disclosed in the Prospectus, the Company,
the Operating Partnerships and the 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, the Operating Partnerships, the 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, the
Operating Partnerships 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,
9
as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company, the Operating Partnerships or any
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, the Operating
Partnerships, the Subsidiaries or any of their ERISA Affiliates. No
"employee benefit plan" established or maintained by the Company, the
Operating Partnerships, the 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, the Operating Partnerships, the Subsidiaries nor any of their
ERISA Affiliates 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, the Operating Partnerships, the 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;
(ee) the statements, (including the assumptions described therein)
included in the Registration Statement and the Prospectus under the
headings ["Industry Overview"] and [others] (i) are within the coverage of
Rule 175(b) under the Act to the extent such data constitute forward
looking statements as defined in Rule 175(c) and (ii) were made by the
Company with a reasonable basis and reflect the Company's good faith
estimate of the matters described therein;
(ff) the Company has not received from any U.S. federal, state,
local or foreign governmental or regulatory commission, board, body,
authority or agency having or claiming jurisdiction over the Company or
the real properties any written notice of any condemnation of or zoning
change affecting the real property or any part thereof, and the Company
does not know of any such condemnation or zoning change which is
threatened and which if consummated could have a Material Adverse Effect;
(gg) the Company, the Operating Partnerships and the Subsidiaries
and their properties, assets and operations are in compliance with, and
hold all permits, authorizations and approvals required under,
Environmental Laws (as defined below), except to the extent that failure
to so comply or to hold such permits, authorizations or approvals would
not, individually or in the aggregate, have a Material Adverse Effect;
there are no past, present or, to the Company's and the Operating
Partnerships' knowledge after due inquiry, reasonably anticipated future
events, conditions, circumstances, activities, practices, actions,
omissions or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company, the Operating Partnerships
or the Subsidiaries under, or to interfere with or prevent compliance by
the Company, the Operating Partnerships or the Subsidiaries with,
Environmental Laws; except as would not, individually or in the aggregate,
have a Material Adverse Effect, neither the Company, the Operating
Partnerships nor any of the Subsidiaries (i) is the subject of any
investigation, (ii) has received any notice or claim, (iii) is a party to
or affected by any pending or threatened action, suit or proceeding, (iv)
is bound by any judgment, decree or order or (v) has entered into any
agreement, in each case relating to any alleged violation of any
Environmental Law or any actual or alleged release or threatened release
or cleanup at any location of any Hazardous Materials (as defined below)
(as used herein, "Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, order, decree,
judgment, injunction, permit, license, authorization or other binding
requirement, or common law, relating to health, safety or the protection,
cleanup or restoration of the environment or natural resources, including
those relating to the distribution, processing, generation, treatment,
storage, disposal, transportation, other handling or release or threatened
release of Hazardous Materials, and
10
"Hazardous Materials" means any material (including, without limitation,
pollutants, contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental Law);
(hh) in the ordinary course of its business, the Company, the
Operating Partnerships and each of the Subsidiaries conducts a periodic
review of the effect of the Environmental Laws on its business, operations
and properties, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for cleanup, closure of
properties or compliance with the Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties);
(ii) all tax returns required to be filed by the Company, the
Operating Partnerships, CNL Hotel Investors, Inc. and each of the
Subsidiaries have been filed, and all taxes and other assessments of a
similar nature (whether imposed directly or through withholding) including
any interest, additions to tax or penalties applicable thereto due or
claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided;
(jj) the Company, the Operating Partnerships and each of the
Subsidiaries maintains, or causes its tenants or leases to maintain,
insurance covering its properties, operations, personnel and businesses as
the Company and the Operating Partnerships deem adequate; such insurance
insures against such losses and risks to an extent which is adequate in
accordance with customary industry practice to protect the Company, the
Operating Partnerships and the Subsidiaries and their businesses; all such
insurance is fully in force on the date hereof and will be fully in force
at the time of purchase and any additional time of purchase; the Company,
the Operating Partnerships and each of the Subsidiaries has no reason to
believe that they will not be able (i) to renew their 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 their businesses as now conducted and at a cost that would not
result in a Material Adverse Change;
(kk) neither the Company, the Operating Partnerships nor any of the
Subsidiaries has sustained since the date of the last audited financial
statements included in the Registration Statement and the Prospectus any
loss or interference with its respective business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree;
(ll) the Company and the Operating Partnerships have not sent or
received any communication regarding termination of, or intent not to
renew, any of the contracts or agreements referred to or described in, or
filed as an exhibit to, the Registration Statement, and no such
termination or non-renewal has been threatened by the Company and the
Operating Partnerships or, to the Company's or the Operating Partnerships'
knowledge after due inquiry, any other party to any such contract or
agreement;
(mm) the Company, the Operating Partnerships and each of the
Subsidiaries maintains a system of internal accounting controls sufficient
to provide reasonable assurance 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
11
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;
(nn) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company's Chief Executive
Officer and its Chief Financial Officer by others within those entities,
and such disclosure controls and procedures are effective to perform the
functions for which they were established; the Company's auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record, process,
summarize, and report financial data; and (ii) any fraud, whether or not
material, that involves management or other employees who have a role in
the Company's internal controls; any material weaknesses in internal
controls have been identified for the Company's auditors; and since the
date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or
in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies
and material weaknesses;
(oo) the Company has provided you true, correct, and complete copies
of all documentation pertaining to any extension of credit in the form of
a personal loan made, directly or indirectly, by the Company to any
director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company; and since
July 30, 2002, the Company has not, directly or indirectly, including
through any subsidiary: (i) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company;
or (ii) made any material modification, including any renewal thereof, to
any term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002;
(pp) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company and the Operating Partnerships believe to be
reliable and accurate, and the Company and the Operating Partnerships have
obtained the written consent to the use of such data from such sources to
the extent required;
(qq) neither the Company, the Operating Partnerships nor any of the
Subsidiaries nor, to the Company's and the Operating Partnerships'
knowledge after due inquiry, any employee or agent of the Company, the
Operating Partnerships or the Subsidiaries has made any payment of funds
of the Company, the Operating Partnerships or the Subsidiaries or received
or retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Registration Statement or the Prospectus;
(rr) neither the Company, the Operating Partnerships nor any of the
Subsidiaries nor any of their respective directors, officers, affiliates
or controlling persons has taken, directly or indirectly, any action
designed, or which has constituted or might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares; and
(ss) to the Company's knowledge after due inquiry, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or
12
5% or greater securityholders, except as set forth in the Registration
Statement and the Prospectus.
(tt) commencing with the Company's taxable year ended December 31,
1997, the Company has been organized and operated in conformity with the
requirements for qualification and taxation as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the "Code"), and its proposed method of operations
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code; commencing with its taxable year ended
December 31, 1999, CNL Hotel Investors, Inc. has been organized and
operated in conformity with requirements for qualification and taxation as
a REIT under Sections 856 through 860 of the Code, and its proposed method
of operations will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code; each of the Operating
Partnerships is treated as a partnership for U.S. federal income tax
purposes and not as a corporation or association taxable as a corporation;
the Company intends to qualify as a REIT under the Code for all subsequent
years, and the Company does not know of any event that could reasonably be
expected to cause the Company to fail to qualify as a REIT under the Code
at any time. All statements in the Prospectus regarding the Company's
qualification as a REIT are true, complete and correct in all material
respects;
(uu) the Prospectus delivered to the Underwriters for use in
connection with this offering will be identical to the respective version
of the Prospectus created to be transmitted to the Commission for filing
via the Electronic Data Gathering Analysis and Retrieval System ("XXXXX"),
except to the extent permitted by Regulation S-T;
(vv) neither the Company, the Operating Partnerships nor any of its
affiliates (i) is required to register as a "broker" or "dealer" in
accordance with the provisions of the Exchange Act, or the rules and
regulations thereunder (the "Exchange Act Regulations"), or (ii) directly,
or indirectly through one or more intermediaries, controls or has any
other association with (within the meaning of Article I of the By-laws of
the NASD) any member firm of the NASD; and
(ww) neither the Company, the Operating Partnerships nor any of the
Subsidiaries nor any officer or director purporting to act on behalf of
the Company, the Operating Partnerships or any of the Subsidiaries has at
any time (i) made any contributions to any candidate for political office,
or failed to disclose fully any such contributions, in violation of law,
(ii) made any payment to any U.S. federal, state, local or foreign
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed by
applicable law and the Company's Code of Ethics, or (iii) engaged in any
transactions, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the Company, the
Operating Partnerships and the Subsidiaries.
In addition, any certificate signed by any officer of the Company, the
Operating Partnerships or any of the Subsidiaries and delivered to the
Underwriters or counsel for the Underwriters in connection with the offering of
the Shares shall be deemed to be a representation and warranty by the Company,
the Operating Partnerships or Subsidiary, as the case may be, as to matters
covered thereby, to each Underwriter.
13
4. Certain Covenants of the Company and the Operating Partnerships. The
Company and the Operating Partnerships hereby agree:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states or other jurisdictions as you
may designate and to maintain such qualifications in effect so long as you
may request for the distribution of the Shares; provided that the Company
shall not be required to qualify as a foreign corporation or to consent to
the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares);
and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or supplemented
if the Company shall have made any amendments or supplements thereto after
the effective date of the Registration Statement) as the Underwriters may
request for the purposes contemplated by the Act; in case any Underwriter
is required to deliver a prospectus after the nine-month period referred
to in Section 10(a)(3) of the Act in connection with the sale of the
Shares, the Company will prepare, at its expense, promptly upon request
such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Act;
(c) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or any post-effective amendment
thereto to be declared effective before the Shares maybe sold, the Company
will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and the Company will
advise you promptly and, if requested by you, will confirm such advice in
writing, (i) when the Registration Statement and any such post-effective
amendment thereto has become effective, and (ii) if Rule 430A under the
Act is used, when the Prospectus is filed with the Commission pursuant to
Rule 424(b) under the Act (which the Company agrees to file in a timely
manner under such Rule);
(d) to advise you promptly, confirming such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for, or
the entry of a stop order, suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, or of any
proceedings to remove, suspend or terminate from listing of the Shares
from any securities exchange upon which it is listed for trading, or of
the threatening or initiation of any proceedings for any of such purposes,
to use its best efforts to obtain the lifting or removal of such order as
soon as possible; to advise you promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus, including by
filing any documents that would be incorporated therein by reference, and
to provide you and Underwriters' counsel copies of any such documents for
review and comment a reasonable amount of time prior to any proposed
filing and to file no such amendment or supplement to which you shall
object in writing;
(e) subject to Section 4(d) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long
14
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; and to provide you with a copy of such
reports and statements and other documents to be filed by the Company
pursuant to Section 13, 14 or 15(d) of the Exchange Act during such period
a reasonable amount of time prior to any proposed filing, and to promptly
notify you of such filing;
(f) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(g) to advise the Underwriters promptly of the happening of any
event within the time during which a prospectus relating to the Shares is
required to be delivered under the Act which could require the making of
any change in the Prospectus then being used so that the Prospectus would
not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading, and, during
such time, subject to Section 4(d) hereof, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change;
(h) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will satisfy
the provisions of Section 11(a) of the Act) covering a period of twelve
months beginning after the effective date of the Registration Statement
(as defined in Rule 158(c) under the Act) as soon as is reasonably
practicable after the termination of such twelve-month period but not
later than , 200__;
(i) to furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (including a consolidated balance
sheet and statements of income, shareholders' equity and cash flow of the
Company, the Operating Partnerships and the Subsidiaries for such fiscal
year, accompanied by a copy of the certificate or report thereon of
nationally recognized independent certified public accountants);
(j) to furnish to you four copies of the Registration Statement, as
initially filed with the Commission, and of all amendments thereto
(including all exhibits thereto and documents incorporated by reference
therein) and sufficient copies of the foregoing (other than exhibits) for
distribution of a copy to each of the other Underwriters;
(k) to furnish to you promptly and, upon request, to each of the
other Underwriters for a period of five years from the date of this
Agreement (i) copies of any reports, proxy statements, or other
communications which the Company shall send to its stockholders or shall
from time to time publish or publicly disseminate, (ii) copies of all
annual, quarterly and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K or such other similar forms as may be designated by the
Commission, (iii) copies of documents or reports filed with any national
securities exchange on which any class of securities of the Company is
listed, and (iv) such other information as you may reasonably request
regarding the Company, the Operating Partnerships or the Subsidiaries;
(l) to furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim and monthly consolidated financial statements, if any,
of the Company, the Operating Partnerships and the Subsidiaries which have
been read by the Company's independent certified public accountants, as
stated in their letter to be furnished pursuant to Section 6(b) hereof;
15
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment),
(ii) the registration, issue, sale and delivery of the Shares including
any stock or transfer taxes and stamp or similar duties payable upon the
sale, issuance or delivery of the Shares to the Underwriters, (iii) all
fees and expenses incurred by the Company's counsel, independent public or
certified public accountants and other advisors (iv) the producing, word
processing and/or printing of this Agreement, any Agreement Among
Underwriters, any dealer agreements, any powers of attorney and any
closing documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to the
Underwriters and (except closing documents) to dealers (including costs of
mailing and shipment), (v) the qualification of the Shares for offering
and sale under state or foreign laws and the determination of their
eligibility for investment under state or foreign law as aforesaid
(including the reasonable legal fees and filing fees and other
disbursements of counsel for the Underwriters associated with such
qualification) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers,
(vi) any listing of the Shares on any securities exchange or qualification
of the Shares for quotation on NYSE and any registration thereof under the
Exchange Act, (vii) any filing for review of the public offering of the
Shares by the NASD, including the reasonable legal fees and filing fees
and other disbursements of counsel to the Underwriters in connection with
such efforts, (viii) the fees and disbursements of any transfer agent or
registrar for the Shares, (ix) the costs and expenses of the Company
relating to presentations or meetings undertaken in connection with the
marketing of the offering and sale of the Shares to prospective investors
and the Underwriters' sales forces, including, without limitation,
reasonable expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with
the road show presentations (it being understood that any such
expenditures exceeding $5,000 on an individual basis or $______ in the
aggregate have been approved in advance), travel, lodging and other
expenses incurred by the officers of the Company and any such consultants,
and the cost of any aircraft chartered (with the consent of the Company)
in connection with the road show, (ix) the performance of the Company's
and the Operating Partnerships' other obligations hereunder and (xi) all
other fees and expenses referred to in Item 14 of Part II of the
Registration Statement;
(o) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of
or agree to dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock,
or file or cause to be declared effective a registration statement under
the Act relating to the offer and sale of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common
Stock or other rights to purchase Common Stock or any other securities of
the Company that are substantially similar to Common Stock for a period of
180 days after the date hereof (the "Lock-Up Period"), without the prior
written consent of the Representatives, except for (i) the registration of
the Shares and the sales to the Underwriters pursuant to this Agreement,
(ii) issuances of Common Stock upon the exercise of options or warrants
disclosed as outstanding in the Registration Statement and the Prospectus,
and (iii) the issuance of employee stock options not exercisable during
the Lock-Up Period pursuant to stock option plans described in the
Registration Statement and the Prospectus; notwithstanding the foregoing,
if (x) during the last 17 days of the 180-day restricted period the
16
Company issues an earnings release or material news or a material event
relating to the Company occurs, or (y) prior to the expiration of the
180-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
180-day period, the restrictions imposed in this clause shall continue to
apply until the expiration of the 18-day period beginning on the issuance
of the earnings release or the occurrence of the material news or material
event;
(p) to use its best efforts to cause the Common Stock to be listed
on the New York Stock Exchange;
(q) 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;
(r) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common
Stock; and
(s) The Company and the Operating Partnerships will continue to use
their best efforts to meet the requirements to qualify as a REIT and a
partnership, respectively.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the fifth paragraph of Section 8 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company and
the Operating Partnerships, jointly and severally, shall, in addition to paying
the amounts described in Section 4(n) hereof, reimburse the Underwriters for all
of their out-of-pocket expenses, including but not limited to the fees and
disbursements of their counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
6. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company and the Operating Partnerships on the date
hereof, at the time of purchase and, if applicable, at the additional time of
purchase, the performance by the Company and the Operating Partnerships of its
obligations hereunder and to the following additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Xxxxxxxxx
Taurig LLP, counsel for the Company, and an opinion of Xxxxxxx LLP, as
Maryland counsel, addressed to the Underwriters, and dated the time of
purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form and
substance satisfactory to Xxxxxxxx Chance US LLP, counsel for the
Underwriters, stating the items set forth on Exhibit C.
(b) You shall have received from PricewaterhouseCoopers LLP letters
dated, respectively, the date of this Agreement, the time of purchase and,
if applicable, the additional time of purchase, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by UBS.
(c) You shall have received from KPMG LLP and Deloitte & Touche LLP
letters dated, respectively, the date of this Agreement, the time of
purchase and, if applicable, the additional time of purchase, and
addressed to the Underwriters (with reproduced copies for each of the
Underwriters) in the forms heretofore approved by UBS.
17
(d) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of
Xxxxxxxx Chance US LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, as to the
matters referred to in subparagraphs (vii), (ix), (xiv) (with respect to
the Shares only), (xv)(A), (xvi) and the last paragraph of Exhibit C.
(e) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus, including documents deemed to be incorporated
by reference therein, shall have been filed to which you object in
writing.
(f) The Registration Statement shall become effective not later than
5:30 p.m. New York City time, on the date of this Agreement and, if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M.,
New York City time, on the second full business day after the date of this
Agreement and any registration statement pursuant to Rule 462(b) under the
Act required in connection with the offering and sale of the Shares shall
have been filed and become effective no later than 10:00 p.m., New York
City time, on the date of this Agreement.
(g) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto shall 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 not misleading; and (iii) the Prospectus and all amendments or
supplements thereto shall 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 are made, not misleading.
(h) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, no
material adverse change or any development involving a prospective
material adverse change in the business, properties, management, financial
condition, results of operations or prospects of the Company, the
Operating Partnerships and the Subsidiaries taken as a whole shall occur
or become known.
(i) The Company and the Operating Partnerships will, at the time of
purchase and, if applicable, at the additional time of purchase, deliver
to you a certificate of its Chief Executive Officer and its Chief
Financial Officer in the form attached as Exhibit B hereto.
(j) You shall have received signed Lock-up Agreements referred to in
Section 3(z) hereof.
(k) The Company and the Operating Partnerships shall have furnished
to you such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement and the
Prospectus as of the time of purchase and, if applicable, the additional
time of purchase, as you may reasonably request.
(l) The Shares shall have been approved for listing on the New York
Stock Exchange, subject only to notice of issuance at or prior to the time
of purchase or the additional time of purchase, as the case may be.
18
7. Effective Date of Agreement; Termination. This Agreement shall become
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of the Representatives, if (x) since the
time of execution of this Agreement or the earlier respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
been any material adverse change or any development involving a prospective
material adverse change in the business, properties, management, financial
condition, results of operations or prospects of the Company, the Operating
Partnerships and the Subsidiaries taken as a whole, which would, in the
Representatives' judgment, make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (y) since
execution of this Agreement, there shall have occurred: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) an outbreak or escalation of hostilities or acts of terrorism
involving the United States or a declaration by the United States of a national
emergency or war; (v) any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, or (vi) a
loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the Representatives' judgment, may interfere materially with the
conduct of the business and operations of the Company or Operating Partnerships
regardless or whether or not such loss shall have been insured, if the effect of
any such event specified in clause (iv), (v) or (vi) in the Representatives'
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (z) since the
time of execution of this Agreement, there shall have occurred any downgrading,
or any notice or announcement shall have been given or made of (i) any intended
or potential downgrading or (ii) any watch, review or possible change that does
not indicate an affirmation or improvement in the rating accorded any securities
of or guaranteed by the Company, the Operating Partnerships or any Subsidiary by
any "nationally recognized statistical rating organization," as that term is
defined in Rule 436(g)(2) under the Act.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and each other Underwriter shall be notified
promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(n), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for a
failure of a condition set forth in Section 6 hereof or a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7
hereof) and if the number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to take up and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall take up and
pay
19
for (in addition to the aggregate number of Firm Shares they are obligated to
purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriters in
such amount or amounts as you may designate with the consent of each Underwriter
so designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the Underwriters
or by the Company for a defaulting Underwriter or Underwriters in accordance
with the foregoing provision, the Company or you shall have the right to
postpone the time of purchase for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with like effect as if such
substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Firm Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Firm Shares
which all Underwriters agreed to purchase hereunder, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five business day period stated above for the purchase of all the Firm Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall terminate without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
9. Indemnity and Contribution.
(a) The Company and the Operating Partnerships each agree jointly
and severally to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or any such person may incur under the
Act, the Exchange Act, or other federal or state statutory law or
regulation, the common law or otherwise (including in settlement of any
litigation), insofar as such loss, damage, expense, liability or claim
arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or in a Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented
by the Company), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or such Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss,
damage,
20
expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and
in conformity with information concerning such Underwriter furnished in
writing by or on behalf of such Underwriter through you to the Company
expressly for use in such Registration Statement or such Prospectus or
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in
such Registration Statement or such Prospectus or necessary to make such
information not misleading, (ii) any untrue statement or alleged untrue
statement made by the Company or the Operating Partnerships in Section 3
hereof or the failure by the Company or the Operating Partnerships to
perform when and as required any agreement or covenant contained herein,
(iii) in whole or in part upon any failure of the Company or the Operating
Partnerships to perform their obligations hereunder or under law; or (iv)
any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares
or the offering contemplated hereby, provided that the Company and the
Operating Partnerships shall not be liable under this clause (iv) to the
extent that a court of competent jurisdiction shall have determined by a
final judgement that such loss, claim, damage liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its bad faith or willful misconduct, (v)
any untrue statement or alleged untrue statement of any material fact
contained in any audio or visual materials provided by the Company or
based upon written information furnished by or on behalf of the Company
including, without limitation, slides, videos, films or tape recordings
used in connection with the marketing of the Shares. The indemnity
agreement set forth in this Section 9(a) shall be in addition to any
liabilities that the Company and the Operating Partnerships may have.
If any action, suit or proceeding (each, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity
may be sought against each indemnifying party pursuant to the foregoing
paragraph, such Underwriter or such person shall promptly notify each
indemnifying party in writing of the institution of such Proceeding and an
indemnifying party, jointly with other indemnifying parties receiving such
notice, shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party
and payment of all fees and expenses; provided, however, that the omission
to so notify an indemnifying party shall not relieve such indemnifying
party from any liability which such indemnifying party may have to any
Underwriter or any such person under this Section 9(a) or otherwise. Such
Underwriter or such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by such
indemnifying party in connection with the defense of such Proceeding or
such indemnifying party shall not have, within a reasonable period of time
in light of the circumstances, employed counsel to have charge of the
defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them
which are different from, additional to or in conflict with those
available to such indemnifying party (in which case the indemnifying party
shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties), in any of which events such
fees and expenses shall be borne by such indemnifying party and paid as
incurred (it being understood, however, that such indemnifying party shall
not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties
who are parties to such Proceeding). The indemnifying party shall not be
liable for any settlement of any Proceeding effected without its written
consent but if settled with the written consent of the indemnifying party,
the indemnifying party agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall
21
have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall be liable
for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60/30 business days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have fully reimbursed the indemnified party
in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company and the Operating Partnerships, their directors and
officers, and any person who controls the Company or the Operating
Partnerships within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or
severally, the Company, the Operating Partnerships or any such person may
incur under the Act, the Exchange Act, or other federal or state statutory
law or regulation, the common law or otherwise (including in settlement of
any litigation), insofar as such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with
information concerning such Underwriter furnished in writing by or on
behalf of such Underwriter through you to the Company expressly for use in
the Registration Statement (or in the Registration Statement as amended by
any post-effective amendment thereof by the Company) or in a Prospectus,
or arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such information required to be
stated in such Registration Statement or such Prospectus or necessary to
make such information not misleading. The indemnity agreement set forth in
this Section 9(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
If any Proceeding is brought against the Company, the Operating
Partnerships or any such person in respect of which indemnity may be
sought against any Underwriter pursuant to the foregoing paragraph, the
Company, the Operating Partnerships or such person shall promptly notify
such Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party
and payment of all fees and expenses; provided, however, that the omission
to so notify such Underwriter shall not relieve such Underwriter from any
liability which such Underwriter may have to the Company, the Operating
Partnerships or any such person under this Section 9(b) or otherwise. The
Company, the Operating Partnerships or such person shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Company, the Operating Partnerships
or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense
of such Proceeding or such Underwriter shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to defend
such Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to or in conflict with those available to
such Underwriter (in which case such Underwriter shall not have
22
the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ counsel and
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which
events such fees and expenses shall be borne by such Underwriter and paid
as incurred (it being understood, however, that such Underwriter shall not
be liable for the expenses of more than one separate counsel (in addition
to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties
who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent
of such Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless the
Company, the Operating Partnerships and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall be liable
for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 or insufficient to hold an indemnified party harmless in respect
of any losses, damages, expenses, liabilities or claims referred to
therein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company
and the Operating Partnerships, on the one hand, and the Underwriters on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Operating Partnerships on the one hand, and of the Underwriters on
the other, in connection with the statements or omissions which resulted
in such losses, damages, expenses, liabilities or claims, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Operating Partnerships, on the one hand, and the
Underwriters on the other, shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the
Shares. The relative fault of the Company and the Operating Partnerships,
on the one hand, and of the Underwriters on the other, shall be determined
by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Company or the Operating
Partnerships or by the Underwriters 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, damages, expenses, liabilities and claims referred
to in this subsection shall be deemed to include any legal or other
23
fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any Proceeding. For
purposes of this Section 9, each officer and employee of an Underwriter
and each person, if any, who controls an Underwriter within the meaning of
the Securities Act and Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company or the Operating Partnerships who signed the
Registration Statement, and each person, if any who controls the Company
or the Operating Partnerships within the meaning of the Securities Act and
the Exchange Act shall have the same rights to contribution as the Company
and the Operating Partnerships.
(d) The Company, the Operating Partnerships and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by such Underwriter and distributed to the
public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged
omission. 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.
The Underwriters' obligations to contribute pursuant to this Section 9 are
several in proportion to their respective underwriting commitments and not
joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
and the Operating Partnerships contained in this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf
of any Underwriter, its partners, directors or officers or any person
(including each partner, officer or director of such person) who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, or by or on behalf of the Company or the Operating
Partnerships, their directors or officers or any person who controls the
Company or the Operating Partnerships within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the Shares.
The Company, the Operating Partnerships and each Underwriter agree
promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company or the Operating Partnerships,
against any of the Company or the Operating Partnerships' officers or
directors in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or the Prospectus.
10. Information Furnished by the Underwriters. The statements set forth in
the [last paragraph on the cover page of the Prospectus, the selling concession
set forth under the sub-headings "Over-Allotment Option," "Discount and
Commissions" under the caption "Underwriting" and the statements set forth under
"Stabilization" under the caption "Underwriting"] in the Prospectus constitute
the only information furnished by or on behalf of the Underwriters as such
information is referred to in Sections 3 and 9 hereof.
11. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000, Attention:
Syndicate Department and, if to the Company, shall be sufficient in all respects
if delivered or sent to the Company at the offices of the Company at CNL Center
at City Commons, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxxx III, Chief Executive Officer.
24
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company and the
Operating Partnerships consent to the jurisdiction of such courts and personal
service with respect thereto. The Company and the Operating Partnerships hereby
consent to personal jurisdiction, service and venue in any court in which any
Claim arising out of or in any way relating to this Agreement is brought by any
third party against UBS or any indemnified party. Each of UBS and the Company
and the Operating Partnerships (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company and the Operating Partnerships agree that a final
judgment in any such action, proceeding or counterclaim brought in any such
court shall be conclusive and binding upon the Company and the Operating
Partnerships and may be enforced in any other courts to the jurisdiction of
which the Company or the Operating Partnerships are or may be subject, by suit
upon such judgment.
14. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and the Operating
Partnerships and to the extent provided in Section 9 hereof the controlling
persons, partners, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
15. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Company, the Operating Partnerships and their successors and
assigns and any successor or assign of any substantial portion of the respective
businesses and/or assets of the Company, the Operating Partnerships or any of
the Underwriters.
17. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is
not a bank and is separate from any affiliated bank, including any U.S. branch
or agency of UBS AG. Because UBS is a separately incorporated entity, it is
solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by UBS are not deposits, are not insured
by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or
agency, and are not otherwise an obligation or responsibility of a branch or
agency.
25
If the foregoing correctly sets forth the understanding between the
Company, the Operating Partnerships and the several Underwriters, please so
indicate in the space provided below for that purpose, whereupon this agreement
and your acceptance shall constitute a binding agreement between the Company,
the Operating Partnerships and the Underwriters, severally.
Very truly yours,
CNL HOSPITALITY PROPERTIES, INC.
By:
------------------------------------
Name:
Title:
CNL HOSPITALITY PARTNERS, L.P.
By:
------------------------------------
Name:
Title:
RFS PARTNERSHIP, L.P.
By:
------------------------------------
Name:
Title:
CNL HOTEL INVESTORS, INC.
By:
------------------------------------
Name:
Title:
26
Accepted and agreed to as of the
date first above written, on
behalf of themselves
and the other several Underwriters
named in Schedule A
UBS SECURITIES LLC
XXXXXXX, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
By: UBS SECURITIES LLC
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
---------------------------------
(Xxxxxxx, Xxxxx & Co.)
BANC OF AMERICA SECURITIES LLC
By:
---------------------------------
Name:
Title:
27
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
BANC OF AMERICA SECURITIES LLC....................................
XXXXXXX, SACHS & CO. .............................................
UBS SECURITIES LLC ...............................................
-----------
Total........................................................
===========
Sch. A-1
EXHIBIT A
CNL HOSPITALITY PROPERTIES, INC.
Common Stock
($___ Par Value)
___________, 2004
UBS Securities LLC
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
As Representatives of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in connection with
the proposed Underwriting Agreement (the "Underwriting Agreement") to be entered
into by CNL Hospitality Properties, Inc. (the "Company"), CNL Hospitality
Partners, L.P. (the "CNL Operating Partnerhsip"), RFS Partnership, L.P. (the
"RFS Operating Partnership"), and you, as Representatives of the several
Underwriters named therein, with respect to the public offering (the "Offering")
of Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
In order to induce you to enter into the Underwriting Agreement, the
undersigned agrees that for a period of 180 days after the date of the final
prospectus relating to the Offering the undersigned will not, without the prior
written consent of the Representatives, (i) sell, offer to sell, contract or
agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or file (or
participate in the filing of) a registration statement with the Securities and
Exchange Commission (the "Commission") in respect of, or establish or increase a
put equivalent position or 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 Commission promulgated thereunder
with respect to, any Common Stock of the Company or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock, (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, or warrants or other rights to purchase Common
Stock, whether any such transaction is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise, or (iii) publicly announce an
intention to effect any transaction specified in clause (i) or (ii). The
foregoing sentence shall not apply to (a) the registration of or sale to the
Underwriters of any Common Stock pursuant to the Offering and the Underwriting
Agreement, (b) bona fide gifts, provided the recipient thereof agrees in writing
with the Underwriters to be bound by the terms of this Lock-Up Letter Agreement
or (c) dispositions to any trust for the direct or indirect benefit of the
undersigned and/or the immediate family of the undersigned, provided that such
trust agrees in writing with the Underwriters to be bound by the terms of this
Lock-Up Letter Agreement. If (i) the Company issues an
Exh. A-1
earnings release or material news, or a material event relating to the Company
occurs, during the last 17 days of the lock-up period, or (ii) prior to the
expiration of the lock-up period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
lock-up period, the restrictions imposed by this agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event [;
provided however, that this sentence shall not apply if any research published
or distributed by any Underwriter on the Company would be compliant under Rule
139 of the Securities Act and the Company's securities are actively traded as
defined in Rule 101(c)(1) of Regulation M of the Exchange Act].
In addition, the undersigned hereby waives any rights the undersigned may
have to require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned further agrees
that, for a period of 180 days after the date of the final prospectus relating
to the Offering, the undersigned will not, without the prior written consent of
the Representatives, make any demand for, or exercise any right with respect to,
the registration of Common Stock of the Company or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock.
If (i) the Company notifies you in writing that it does not intend to
proceed with the Offering, (ii) the registration statement filed with the
Securities and Exchange Commission with respect to the Offering is withdrawn or
(iii) for any reason the Underwriting Agreement shall be terminated prior to the
time of purchase (as defined in the Underwriting Agreement), this Lock-Up Letter
Agreement shall be terminated and the undersigned shall be released from its
obligations hereunder.
Yours very truly,
-------------------------------------
Name:
Exh. A-2
EXHIBIT B
Officers' Certificate
1. I have reviewed the Registration Statement and the Prospectus.
2. The representations and warranties of the Company and the Operating
Partnerships as set forth in this Agreement are true and correct as of the
time of purchase and, if applicable, the additional time of purchase.
3. The Company and the Operating Partnerships performed all of their
obligations under this Agreement as are to be performed at or before the
time of purchase and at or before the additional time of purchase, as the
case may be.
4. The conditions set forth in paragraphs (g) and (h) of Section 6 of this
Agreement have been met.
5. The financial statements and other financial information included in the
Registration Statement and the Prospectus fairly present in all material
respects the financial condition, results of operations, and cash flows of
the Company and the Operating Partnerships as of, and for, the periods
presented in the Registration Statement.
6. The Registration Statement has become effective under the Act and no stop
order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are pending or, to
their knowledge, threatened under the Act.
Exh. B-1
EXHIBIT C
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(ii) the CNL Operating Partnership has been duly organized and is
validly existing as a limited partnership in good standing under the laws
of the State of Delaware, with full partnership power and authority to
own, lease and operate its properties and conduct its business as
described in the Prospectus, to execute and deliver this Agreement and to
perform its obligations as contemplated herein;
(iii) the RFS Operating Partnership is validly existing as a limited
partnership in good standing under the laws of the State of Tennessee,
with full partnership power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus, to
execute and deliver this Agreement and to perform its obligations as
contemplated herein;
(iv) each of the Subsidiaries is validly existing as a corporation,
limited partnership or other legal entity in good standing under the laws
of its jurisdiction of organization, with full requisite power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus;
(v) the Company, the Operating Partnerships and the Subsidiaries are
duly qualified to do business as a foreign corporation and are in good
standing in each jurisdiction where the ownership or leasing of their
properties or the conduct of their business requires such qualification,
except where the failure to be so qualified and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect;
(vi) this Agreement has been duly authorized, executed and delivered
by the Company and the Operating Partnerships;
(vii) the Shares have been approved for listing on the New York
Stock Exchange;
(viii) the Shares have been duly authorized and validly issued and
are fully paid and non-assessable;
(ix) the form or certificate used to evidence the Shares is in due
and proper form and complies with all applicable requirements of the
charter and by-laws of the Company and the General Corporation Law of the
State of Maryland;
(x) the Company has qualified as a REIT under the Code for its
taxable years ended December 31, 1997 through December 31, 2003, the
Company is organized in conformity with the requirements for qualification
and taxation as a REIT, and the Company's proposed method of operation
will enable it to continue meet the requirements for qualification and
taxation as a REIT under the Code;
Exh. C-1
(xi) CNL Hotel Investors, Inc. has qualified as a REIT under the
Code for its taxable years ended December 31, 1999 through December 31,
2003, CNL Hotel Investors, Inc. is organized in conformity with
requirements for qualification and taxation as a REIT, and CNL Hotel
Investors, Inc.'s proposed method of operation will enable it continue to
meet the requirements for qualification and taxation as a REIT under the
Code;
(xii) the Company has an authorized and, to the knowledge of such
counsel, outstanding capitalization as set forth in the Registration
Statement and the Prospectus; all of the issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and are free of statutory preemptive
rights and, to such counsel's knowledge, contractual preemptive rights,
resale rights, rights of first refusal and similar rights; the Shares are
free of statutory preemptive rights and, to such counsel's knowledge,
contractual preemptive rights, resale rights, rights of first refusal and
similar rights; the certificates for the Shares are in due and proper form
and the holders of the Shares will not be subject to personal liability by
reason of being such holders;
(xiii) the Subsidiaries and, except as otherwise stated in the
Registration Statement and the Prospectus, are owned directly or
indirectly by the Company, in each case subject to no security interest,
other encumbrance or adverse claim; and to such counsel's knowledge, no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into shares
of capital stock or ownership interests in the Subsidiaries are
outstanding;
(xiv) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration
Statement and 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 and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights;
(xv) (A) the Registration Statement and the Prospectus (except as to
the financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act; (B) the
conditions to the use of Form S-3 have been satisfied; and (C) the
documents incorporated by reference in the Registration Statement and the
Prospectus, at the time they became effective or were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act (except as to the financial statements
and schedules and other financial data contained therein, as to which such
counsel need express no opinion);
(xvi) the Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order proceedings with respect
thereto are pending or threatened under the Act and any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424 under the
Act has been made in the manner and within the time period required by
such Rule 424;
(xvii) no approval, authorization, consent or order of or filing
with any federal, state or local governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the
Exh. C-2
Company, the Operating Partnerships or any of the Subsidiaries of the
transactions contemplated hereby other than registration of the Shares
under the Act (except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters);
(xviii) the execution, delivery and performance of this Agreement by
the Company and the Operating Partnerships, the issuance and sale of the
Shares by the Company and the consummation by the Company, the Operating
Partnerships or any of the Subsidiaries of the transactions contemplated
hereby do not and will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach or violation
of or constitute a default under) (i) the charter, by-laws, partnership
agreement or other organizational document of the Company, the Operating
Partnerships or any of the Subsidiaries, (ii) any indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company, the Operating Partnerships or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or affected or (iii) any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order
applicable to the Company, the Operating Partnerships or any of the
Subsidiaries; except for such breaches, violations or defaults under
subclauses (ii) and (iii) above that would, individually or in the
aggregate, have a Material Adverse Effect;
(xix) to such counsel's knowledge, there are no indentures,
mortgages, deeds of trust, bank loans or credit arrangements or other
evidences of indebtedness or any licenses, leases, contracts or other
agreements or instruments to which the Company, the Operating Partnerships
or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or affected, or any federal,
state, local or foreign law, regulation or rule or decree, judgment or
order applicable to the Company, the Operating Partnerships or any of the
Subsidiaries to such counsel's knowledge, there are no indentures,
mortgages, deeds of trust, bank loans or credit agreements or other
evidences of indebtedness or instruments to which the Company, the
Operating Partnerships or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or
affected, or any federal, state, local or foreign law, regulation or rule
or decree, judgment or order applicable to the Company, the Operating
Partnerships or any of the Subsidiaries required to be described or
referred to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; and the descriptions
thereof and references thereto are correct in all material respects;
(xx) to such counsel's knowledge, neither the Company, the Operating
Partnerships nor any of the Subsidiaries is in breach or violation of or
in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach or violation of, or constitute a
default under or give the holder of any indebtedness (or a person acting
on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (i) its
respective charter, by-laws, partnership agreement or other organizational
documents, (ii) any indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, (iii) any license,
lease, contract or other agreement or instrument to which the Company, the
Operating Partnerships or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or affected
or (iv) any
Exh. C-3
federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company, the Operating Partnerships or
any of the Subsidiaries; except for such breaches, violations or defaults
under subclauses (ii) and (iii) above that would, individually or in the
aggregate, have a Material Adverse Effect;
(xxi) to such counsel's knowledge, there are no affiliate
transactions, off-balance sheet transactions, contracts, licenses,
agreements, leases or documents of a character which are required to be
described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which have not been so
described or filed;
(xxii) to such counsel's knowledge, there are no actions, suits,
claims, investigations or proceedings pending, threatened or contemplated
to which the Company, the Operating Partnerships or any of the
Subsidiaries or any of their respective directors or officers is or would
be a party or to which any of their respective properties is or would be
subject at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority or
agency which are required to be described in the Registration Statement or
the Prospectus but are not so described;
(xxiii) the Company and the Operating Partnerships are not and,
after giving effect to the offering and sale of the Shares, will not be an
"investment company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act;
(xxiv) the information in the Registration Statement and the
Prospectus under the headings "Business and Properties -- Legal
Proceedings," "Description of Capital Stock," "Certain Provisions of
Maryland Law and of Our Declaration of Trust and Bylaws," "Operating
Partnership Agreement," and "[ ]", insofar as such statements
constitute a summary of documents or matters of law, and those statements
in the Registration Statement and the Prospectus that are descriptions of
contracts, agreements or other legal documents or of legal proceedings, or
refer to statements of law or legal conclusions, are accurate in all
material respects and present fairly the information required to be shown;
(xxv) the discussions of matters of law and legal conclusions under
the heading "Federal Income Tax Considerations," "Risk Factors - Risks
Related to Our REIT Status," and "U.S. Federal Income Tax Considerations"
in the Registration Statement is accurate in all material respects, and
such discussions fairly summarize the federal income tax considerations
that are likely to be material to a holder of shares of the Company; and
(xxvi) no person has the right, pursuant to the terms of any
contract, agreement or other instrument described in or filed as an
exhibit to the Registration Statement or otherwise known to such counsel,
to cause the Company to register under the Act any shares of Common Stock
or shares of any other capital stock or other equity interest of the
Company, or to include any such shares or interest in the Registration
Statement or the offering contemplated thereby, whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the
Shares as contemplated thereby or otherwise.
Exh. C-4
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and the Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus (except as and to the extent stated in subparagraphs (x), (xii) and
(xxii) above), on the basis of the foregoing nothing has come to the attention
of such counsel that causes them to believe that the Registration Statement or
any amendment thereto at the time such Registration Statement or amendment
became effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any supplement
thereto at the date of such Prospectus or such supplement, or at the time of
purchase or the additional time of purchase, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial data included in the
Registration Statement or the Prospectus).
Exh. C-5