EXHIBIT 1.1
XXXXXXXX HOSPITALITY TRUST, INC.
(a Virginia corporation)
1,000,000 Shares of Common Stock
($8.25 per share)
UNDERWRITING AGREEMENT
____________, 1996
Xxxxxxxx & Xxxxxxxxx, Incorporated
0000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned, Xxxxxxxx Hospitality Trust, Inc., a Virginia
corporation (the "Company") and Xxxxxxxx Hospitality Limited Partnership, a
Virginia limited partnership (the "Partnership"), hereby confirm their agreement
with you as follows:
1. Introduction. This Agreement sets forth the understandings and
agreements among the Company and you whereby, subject to the terms and
conditions herein contained, the Company will sell to you as provided in Section
3.(a), at a price of [$7.6828125] per share, 1,000,000 shares (the "Initial
Shares") of common stock, par value $0.01 (the "Common Stock"), to be issued by
the Company. In addition, as provided in Section 3.(b), the Company will give
you the option to purchase up to an additional 150,000 shares of Common Stock
(the "Option Shares", and together with the Initial Shares, the "Shares") at the
same price as the Initial Shares. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Prospectus prepared by the Company and dated ___________, 1996 (the
"Prospectus"). It is understand that you intend to make a public offering of the
Shares (the "Offering") as soon as you deem it advisable to do so after the
Registration Statement has become effective. The Shares are to be initially
offered to the public at the initial public offering price set forth in the
Prospectus. You may from time to time thereafter change the public offering
price and other selling terms.
The Company is a real estate investment trust under the
Internal Revenue Code of 1986, as amended. The Company currently holds a 78.91%
partnership interest in the
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Partnership and acts as its sole general partner. The remaining 21.09%
partnership interest is owned by Xxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx"), Xxxxxxxx
Associates, Inc. ("Xxxxxxxx Associates") and Farmville Lodging Associates,
L.L.C. (the "LLC") (Xx. Xxxxxxxx, Xxxxxxxx Associates and the LLC together,
"Xxxxxxxx"). The Partnership owns eight hotels (the "Partnership Hotels") and a
99% interest in Solomons Beacon Inn Limited Partnership (the "Subsidiary
Partnership"), which owns a ninth hotel (the "Solomons Hotel" and collectively
with the eight Partnership Hotels and the "New Hotel" (as defined below), the
"Hotels"). The Partnership is also developing a tenth hotel to be located in
Dover, Delaware (the "New Hotel"). The other 1% interest in the Subsidiary
Partnership is owned by the Company. The Partnership and the Subsidiary
Partnership lease the Hotels to Xxxxxxxx Hospitality Management, Inc. (the
"Lessee") pursuant to leases (the "Leases").
On the Initial Closing Date (as hereinafter defined), the
Company will contribute all of the net proceeds from the Offering to the
Partnership in exchange for 1,000,000 units (the "Units") (assuming no exercise
of the Option Shares) of limited partnership in the Partnership. The Partnership
will use the net proceeds as follows: (i) to repay approximately $660,000 of
outstanding indebtedness secured by six of the Hotels and the New Hotel, (ii) to
pay the remaining costs associated with the development of the New Hotel, and
(iii) to establish a fund for future acquisition and development. As used
herein, the term "Transactions" shall mean the occurrence of all events
described in this paragraph and the other transactions described in the section
of the Prospectus captioned "USE OF PROCEEDS."
2. Representations and Warranties of the Company and the Partnership.
The Company and the Partnership jointly and severally
represent and warrant to and agree with you that:
(a) Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (File No. 33-________) (as
defined below, the "Registration Statement") conforming to the requirements of
the Securities Act of 1933, as amended (the "1933 Act"), and the applicable
rules and regulations (the "Rules and Regulations") of the Commission. Such
amendments to such Registration Statement as may have been required prior to the
date hereof have been filed with the Commission, and such amendments have been
similarly prepared. Copies of the Registration Statement, any and all amendments
thereto prepared and filed with the Commission, and each related Preliminary
Prospectus, and the exhibits, financial statements and schedules, as finally
amended and revised, have been delivered to you for review.
The term "Registration Statement" as used in this Agreement
shall mean the Company's Registration Statement on Form S-11, including the
Prospectus, any documents
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incorporated by reference therein, and all financial schedules and exhibits
thereto, as amended on the date that the Registration Statement becomes
effective. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares in the form in which it was filed with the
Commission pursuant to Rule 424(b) of the 1933 Act or, if no filing pursuant to
Rule 424(b) of the 1993 Act is required, shall mean the form of the final
prospectus included in the Registration Statement when the Registration
Statement becomes effective. The term "Preliminary Prospectus" shall mean any
prospectus included in the Registration Statement before it becomes effective.
The terms "effective date" and "effective" refer to the date the Commission
declares the Registration Statement effective pursuant to Section 8 of the 1933
Act.
(b) Adequacy of Disclosure. Each Preliminary Prospectus, at
the time of filing thereof, conformed in all material respects to the
requirements of the 1933 Act and the Rules and Regulations, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by you expressly for use in the Registration
Statement. When the Registration Statement shall become effective, when the
Prospectus is first filed pursuant to Rule 424(b) of the Rules and Regulations,
when any amendment to the Registration Statement becomes effective, and when any
supplement to the Prospectus is filed with the Commission and on each Closing
Date (as hereinafter defined), (i) the Registration Statement, the Prospectus
and any amendments thereof and supplements thereto will conform in all material
respects with the applicable requirements of the 1933 Act and the Rules and
Regulations, and (ii) neither the Registration Statement, the Prospectus nor any
amendment or supplement thereto will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by you expressly for use in the Registration Statement.
(c) No Stop Order. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus with respect to
the Shares, and no proceedings for that purpose have been instituted or
threatened by the Commission or the state securities or blue sky authority of
any jurisdiction.
(d) Company: Organization and Qualification. The Company has
been duly incorporated and is validly existing in good standing as a corporation
under the laws of the Commonwealth of Virginia with all requisite corporate
power and authority to enter into this Agreement, to conduct its business as now
conducted and as proposed to be conducted, and to own, lease and operate its
properties, and the properties it proposes to own, lease and operate,
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as described in the Registration Statement and Prospectus, and is qualified to
do business and in good standing as a foreign corporation in each other
jurisdiction in which the failure so to qualify could have a material adverse
effect on the Company, the Partnership, the Subsidiary Partnership or any Hotel.
The Company is not in violation of any provision of its articles of
incorporation, bylaws or other governing documents and is not in default under
or in breach of, and does not know of the occurrence of any event that with the
giving of notice or the lapse of time or both would constitute a default under
or breach of, any term or condition of any material agreement or instrument to
which it is a party or by which any of its properties is bound, except as
disclosed in the Registration Statement and Prospectus. No consent, approval,
authorization, or order from any court, governmental agency or body is required
in connection with the execution and delivery of this Agreement by the Company,
the consummation by the Company of the transactions contemplated herein and in
the Registration Statement and Prospectus or the issuance and sale of the
Shares, except such as may be required by the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), or applicable state securities or blue
sky laws. Except for the Partnership and the Subsidiary Partnership, the Company
does not own or control, directly or indirectly, any corporation, association,
or other entity.
(e) Partnership: Organization and Qualification. The
Partnership has been duly formed and is validly existing as a limited
partnership under the laws of the Commonwealth of Virginia with all requisite
partnership power to conduct its business as now conducted and as proposed to be
conducted, and to own, lease and operate its properties and the properties it
proposes to own, lease and operate, as described in the Registration Statement
and Prospectus, and is qualified to do business and in good standing as a
foreign limited partnership in each other jurisdiction in which the failure so
to qualify could have a material adverse effect on the Company, the Partnership,
the Subsidiary Partnership or any Hotel. The Partnership is not in violation of
any provision of its partnership agreement or other governing documents and is
not in default under or in breach of, and does not know of the occurrence of any
event that with the giving of notice or the lapse of time or both would
constitute a default under or breach of, any term or condition of any material
agreement or instrument to which it is a party or by which any of its properties
is bound, except as disclosed in the Registration Statement and Prospectus. No
consent, approval, authorization or order from any court, governmental agency or
body is required in connection with the execution and delivery of this Agreement
by the Partnership, or the consummation by the Partnership of the transactions
contemplated herein and in the Registration Statement and Prospectus, except
such as may be required by the 1933 Act, the 1934 Act, or applicable state
securities or blue sky laws. The Company is and at each Closing Date will be the
sole general partner of the Partnership, and immediately subsequent to the
Initial Closing Date, will be the holder of ____________ Units, or approximately
84.24% of the Units in the Partnership.
(f) Subsidiary Partnership: Organization and Qualification.
The Subsidiary Partnership has been duly formed and is validly existing as a
limited partnership under the
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laws of the State of Maryland with all requisite partnership power to conduct
its business as now conducted and as proposed to be conducted, and to own, lease
and operate its properties, as described in the Registration Statement and
Prospectus. The Subsidiary Partnership is not in violation of any provision of
its partnership agreement or other governing documents and is not in default
under or in breach of, and does not know of the occurrence of any event that
with the giving of notice or the lapse of time or both would constitute a
default under or breach of, any term or condition of any material agreement or
instrument to which it is a party or by which any of its properties is bound,
except as disclosed in the Registration Statement and Prospectus. The Company is
the sole limited partner of the Subsidiary Partnership and the Partnership is
the sole general partner of the Subsidiary Partnership.
(g) Lessee: Organization and Qualification. The Lessee has
been duly incorporated and is validly existing in good standing as a corporation
under the laws of its state of incorporation with all requisite corporate power
and authority to enter into the Leases, and to conduct its business as now
conducted and as proposed to be conducted, and to own, lease and operate its
properties, as described in the Registration Statement and Prospectus, and is
qualified to do business and in good standing as a foreign corporation in each
other jurisdiction in which the failure so to qualify could have a material
adverse effect on the Lessee. The Lessee is not in violation of any provision of
its articles of incorporation, bylaws, or other governing documents, is not in
default or in breach of, or does not know of the occurrence of any event that
with the giving of notice or the lapse of time or both would constitute a
default under or breach of, any term or condition of any material agreement or
instrument to which it is a party or by which any of its properties is bound,
except as disclosed in the Registration Statement and Prospectus. No consent,
approval, authorization or order from any court, governmental agency or body is
required in connection with the consummation by the Lessee of the transactions
contemplated herein and in the Registration Statement and Prospectus, except
such as may be required by the 1933 Act, the 1934 Act, and applicable state
securities or blue sky laws.
(h) Validity of Shares. The Shares have been duly and validly
authorized by the Company, and upon issuance, will be validly issued, fully paid
and nonassessable, with no personal liability attaching to the ownership
thereof, and will conform to the description thereof contained in the
Prospectus. The preferences, rights and limitations of the Shares are set forth
in the Prospectus under the caption "Description of Capital Stock". There are no
preemptive rights with respect to any of the Shares. No person or entity holds a
right to require or participate in the registration under the 1933 Act of the
Shares pursuant to the Registration Statement; and, except as set forth in the
Prospectus, no person holds a right to require registration under the 1933 Act
of any Common Stock of the Company at any other time. No person or entity has a
right of participation or first refusal with respect to the sale of the Shares
by the Company. The form of certificates evidencing the Shares complies with all
applicable requirements of Virginia law.
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(i) Company Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Prospectus under
the caption "Description of Capital Stock". All of the issued and outstanding
shares of Common Stock of the Company have been duly authorized, validly issued,
fully paid and are non-assessable, and the holders of such shares have no
preemptive rights. Except as disclosed in the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital stock of
the Company.
(j) Validity of Units. The Units to be issued to the Company
in connection with the Transactions have been duly and validly authorized by the
Partnership, and upon issuance, will be validly issued. Immediately after the
Initial Closing Date, ________ Units will be issued and outstanding and held by
partners of the Partnership other than the Company. The Units have been and will
be issued, offered and sold at or prior to each Closing Date in compliance with
all applicable laws (including, without limitation, federal and state securities
laws).
(k) Full Power: Company. The Company has full legal right,
power, and authority to enter into this Agreement to issue and deliver the
Shares as provided herein and to consummate the transactions contemplated
herein.
(l) Disclosed Agreements. All agreements between or among the
Company, the Partnership, the Subsidiary Partnership and the Lessee,
respectively, and third parties expressly referenced in the Prospectus, are
legal, valid, and binding obligations of the Company, the Partnership, the
Subsidiary Partnership and the Lessee, respectively, enforceable in accordance
with their respective terms, except to the extent enforceability may be limited
by (i) bankruptcy, insolvency, moratorium, liquidation, reorganization, or
similar laws affecting creditors' rights generally, regardless of whether such
enforceability is considered in equity or at law, (ii) general equity principles
and (iii) limitations imposed by federal or state securities laws or the public
policy underlying such laws regarding the enforceability of indemnification or
contribution provisions.
(m) Consents. Each consent, approval, authorization, order,
license, certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale and delivery of the Shares, the execution, delivery and performance of this
Agreement and the consummation by the Company and the Partnership of the
transactions contemplated hereby has been made or obtained and is in full force
and effect.
(n) Litigation. There is not pending or, to the knowledge of
the Company or the Partnership, threatened or contemplated, any action, suit,
proceeding, inquiry, or investigation before or by any court or any federal,
state, or local governmental authority or
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agency to which the Company, the Partnership, the Subsidiary Partnership or the
Lessee or any of their respective officers or directors are or may be a party,
or to which any of the properties or rights of any such entity or person may be
subject, that is not described in the Registration Statement and Prospectus and
(i) that might result in any material adverse change in the condition (financial
or otherwise) or business of the Company, the Partnership or the Lessee; or (ii)
that might materially adversely affect any of the material properties of any
such entity; or (iii) that might adversely affect the consummation of the
transactions contemplated by this Agreement, or any of the Transactions, nor, to
the knowledge of the Company or the Partnership, is there any meritorious basis
therefor.
(o) Financial Statements. The financial statements of the
Company and the Combined Selling Partnerships-Initial Hotels together with
related schedules and notes included in the Registration Statement and the
Prospectus present fairly the financial position of the Company and the Combined
Selling Partnerships-Initial Hotels, respectively, as of the dates indicated and
the results of operations and cash flows for the periods specified. Such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods involved.
The financial statement schedules included in the Registration Statement and the
amounts in the Prospectus under the captions "Prospectus Summary-Summary
Financial Data" and "Selected Financial Information" fairly present the
information shown therein and have been compiled on a basis consistent with the
financial statements included in the Registration Statement and the Prospectus.
No other financial statements or schedules are required by Form S-11 or
otherwise to be included in the Registration Statement, the Prospectus or any
Preliminary Prospectus. The unaudited pro forma combined financial information
(including the related notes) included in the Prospectus or any Preliminary
Prospectus complies as to form in all material respects to the applicable
accounting requirements of the 1933 Act and the Rules and Regulations, and
management of the Company believes that the assumptions underlying the pro forma
adjustments are reasonable. Such pro forma adjustments have been properly
applied to the historical amounts in the compilation of the information and such
information fairly presents with respect to the Company and the Combined Selling
Partnerships-Initial Hotels the financial position, results of operations and
other information purported to be shown therein at the respective dates and for
the respective periods specified.
(p) Independent Accountants. Xxxxxxx Xxxxxx & Xxxxxxxxx, the
accountants that have expressed an opinion on the financial statements that are
included in the Registration Statement and Prospectus are, and were during the
period covered by their Reports included in the Registration Statements and
Prospectus, with respect to the Company, independent public accountants as
required by the 1933 Act and the Rules and Regulations.
(q) Disclosed Liabilities. None of the Company, the
Partnership, the Subsidiary Partnership or the Lessee has sustained, since
December 31, 1995 any material loss or interference with its business from fire,
explosion, flood, hurricane, accident, or other
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calamity, whether or not covered by insurance, or from any labor dispute or
arbitrators' or court or governmental action, order, or decree, otherwise than
as set forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement and
Prospectus, there has not been (i) any material change in the capital stock or
partnership interests or membership interests, as applicable, long-term debt,
obligations under capital leases, or short-term borrowings of the Company, the
Partnership, the Subsidiary Partnership or the Lessee, (ii) any material adverse
change, or any development that could be reasonably be seen as involving a
prospective material adverse change in or affecting the business, prospects,
properties, assets, results of operations or condition (financial or other) of
the Company, the Partnership, the Subsidiary Partnership or the Lessee, (iii)
any liability or obligation, direct or contingent, incurred or undertaken by the
Company, the Partnership, the Subsidiary Partnership or the Lessee that is
material to the business or condition (financial or other) of such entity,
except for liabilities or obligations incurred in the ordinary course of
business, (iv) any declaration or payment of any dividend or distribution of any
kind on or with respect to the capital stock of the Company or the Lessee, or
with respect to the partnership interests of the Partnership or the Subsidiary
Partnership, respectively or (v) any transaction that is material to the
Company, the Partnership, the Subsidiary Partnership or the Lessee, except
transactions in the ordinary course of business or as otherwise disclosed in the
Registration Statement and the Prospectus.
(r) Hotels. The Partnership and the Subsidiary Partnership
have good and marketable title in fee simple to all real property owned by them,
including the Hotels, free and clear of all liens, encumbrances, claims,
security interests, restrictions, and defects except such as are described in
the Prospectus and the policies of title insurance previously provided to you.
The Company does not own or lease any real property. Except as disclosed in the
Prospectus, no person other than the Company has an option or right of first
refusal to purchase all or part of any Hotel or any interest therein. Each of
the Hotels complies with all applicable codes, laws, and regulations (including,
without limitation, building and zoning codes, laws and regulations, and laws
relating to access to 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 impact on the condition (financial or
otherwise) or on the earnings, assets, business affairs, or business prospects
of such Hotel, the Partnership, the Subsidiary Partnership or the Company. None
of the Company, the Partnership or the Subsidiary Partnership 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 the Hotels, except such
proceedings or actions that would not have a material adverse effect on the
condition (financial or otherwise) or on the earnings, assets, business affairs,
or business prospects of or with respect to such Hotel, the Partnership, the
Subsidiary Partnership or the Company.
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(s) Required Licenses and Permits. Except as disclosed in the
Prospectus, the Company, the Partnership, the Subsidiary Partnership or the
Lessee owns, possesses, has obtained or has commitments to obtain, and has made
available for your review, all material permits, licenses, franchises
(including, with respect to the Lessee, the franchises relating to the Hotels),
certificates, consents, orders, approvals, and other authorizations of
governmental or regulatory authorities as are necessary to own or lease, as the
case may be, and to operate their respective properties and to carry on their
respective businesses as presently conducted, or as contemplated in the
Prospectus to be conducted (the "Permits"), and none of the Company, the
Partnership, the Subsidiary Partnership or the Lessee has received any notice of
proceedings relating to revocation or modification of any such Permits.
(t) Trademarks, etc. Each of the Company, the Partnership, the
Subsidiary Partnership and the Lessee owns or possesses adequate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle each of the Company, the Partnership, the
Subsidiary Partnership and the Lessee to conduct their respective businesses
now, and as proposed to be, conducted or operated as described in the
Prospectus, and none of the Company, the Partnership, the Subsidiary Partnership
and the Lessee has received notice of infringement or of conflict with (or knows
of such infringement of or conflict with) asserted rights of others with respect
to any intangible that could materially and adversely affect the business,
prospects, properties, assets, results of operation, or condition (financial or
otherwise) of the Company, the Partnership, the Subsidiary Partnership or the
Lessee.
(u) Internal Accounting Measures. To the knowledge of the
Company and the Partnership, the Company's, the Partnership's, the Subsidiary
Partnership's and the Lessee's system of internal accounting controls taken as a
whole is sufficient to meet the broad objectives of internal accounting control
insofar as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company's,
the Partnership's, the Subsidiary Partnership's or the Lessee's financial
statements; and, to the knowledge of the Company and the Partnership, none of
the Company, the Partnership, the Subsidiary Partnership or the Lessee, or any
employee or agent thereof, has made any payment of funds of the Company, the
Partnership, the Subsidiary Partnership or the Lessee, as the case may be, or
received or retained any funds and no funds of the Company, the Partnership, the
Subsidiary Partnership or the Lessee, as the case may be, have been set aside to
be used for any payment, in each case in violation of any law, rule, or
regulation.
(v) Taxes. Each of the Company, the Partnership (to the extent
not consolidated with the Company), the Subsidiary Partnership and the Lessee
has timely filed all required federal and state tax returns, has paid all taxes
that have become due and have no tax deficiency asserted against any such
entity, nor does any such entity know of any tax
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deficiency that is likely to be asserted against any such entity that if
determined adversely to any such entity, would, either individually or in the
aggregate, have a material adverse effect on the business, prospects,
properties, assets, results of operations, or condition (financial or otherwise)
of any such entity, respectively. All tax liabilities are adequately provided
for on the respective books of such entities.
(w) Compliance with Instruments. The execution, delivery and
performance of this Agreement, the compliance with the terms and provisions
hereof and the consummation of the transactions contemplated herein and in the
Registration Statement and Prospectus by the Company, the Partnership, the
Subsidiary Partnership or the Lessee do not and will not violate or constitute a
breach of, or default under (i) the articles of incorporation, charter, bylaws,
certificate of limited partnership, partnership agreement, articles of
organization or operating agreement, as the case may be, of the Company, the
Partnership, the Subsidiary Partnership or the Lessee; (ii) any of the terms,
provisions, or conditions of any material instrument, agreement, or indenture to
which the Company, the Partnership, the Subsidiary Partnership or the Lessee is
a party or by which they are bound or by which their respective businesses,
assets, investments, properties, or any Hotel may be affected; or (iii) any
order, statute, rule, or regulation applicable to the Company, the Partnership,
the Subsidiary Partnership or the Lessee, or any of their respective businesses,
investments, assets, properties, or Hotel, of any court or any federal, state or
local governmental authority or agency having jurisdiction over the Company, the
Partnership, the Subsidiary Partnership or the Lessee or any of their respective
businesses, investments, properties, assets, or Hotels; and do not and will not
result in the creation or imposition of any lien, charge, claim, or encumbrance
upon any property or asset of any of the foregoing.
(x) Insurance. The Company, the Partnership, the Subsidiary
Partnership and the Lessee maintain insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for their respective businesses and, to the knowledge of the Company
and the Partnership, consistent with insurance coverage maintained by similar
companies and similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company, the
Partnership, the Subsidiary Partnership and the Lessee against theft, damage,
destruction, acts of vandalism, and all other risks customarily insured against,
all of which insurance is in full force and effect.
(y) Work Force. To the knowledge of the Company and the
Partnership, no general labor problem exist or is imminent with the employees of
the Lessee.
(z) Stock Restriction. The Company has obtained the agreement
of the members of the Board of Directors of the Company that, for a period of
ninety (90) days from the date hereof, they will not, without your prior written
consent, directly or indirectly, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any shares of Common
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Stock or securities convertible into Common Stock held by such persons
(including, without limitation, shares of Common Stock deemed to be beneficially
owned by such person in accordance with the Rules and Regulations promulgated
under the 1934 Act).
(aa) Securities Matters. Each of the Company, the Partnership
and their officers, directors, or affiliates have not taken and will not take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in or constitute the stabilization or manipulation
of any security of the Company or to facilitate the sale or resale of the
Shares.
(bb) Stock Registration. The Common Stock is registered
pursuant to Section 12(g) of the 1934 Act and is quoted on the National Market
of the National Association of Securities Dealers Automated Quotation System
(the "Nasdaq National Market").
(cc) Environmental Status. Except as otherwise disclosed in
the Prospectus, none of the Company, the Partnership, the Subsidiary Partnership
or the Lessee has authorized or conducted or has knowledge of the generation,
transportation, storage, presence, use, treatment, disposal, release, or other
handling of any hazardous substance, hazardous waste, hazardous material,
hazardous constituent, toxic substance, pollutant, contaminant, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product or waste (including crude
oil or any fraction thereof), natural gas, liquified gas, synthetic gas, or
other material defined, regulated, controlled, or potentially subject to any
remediation requirement under any environmental law (collectively, "Hazardous
Materials"), on, in, under, or affecting any real property currently leased or
owned by any means controlled by the Company, the Partnership or the Subsidiary
Partnership, including the Hotels (the "Real Property") except as in material
compliance with applicable laws; to the knowledge of the Company, the
Partnership or the Subsidiary Partnership, the Real Property and the Company's,
the Partnership's, the Subsidiary Partnership's and the Lessee's operations with
respect to the Real Property are in compliance with all federal, state, and
local laws, ordinances, rules, regulations, and other governmental requirements
relating to pollution, control of chemicals, management of waste, discharges of
materials into the environment, health, safety, natural resources, and the
environment (collectively, "Environmental Laws"), and the Company, the
Partnership, the Subsidiary Partnership and the Lessee have, and are in
compliance with, all licenses, permits, registrations, and government
authorizations necessary to operate under all applicable Environmental Laws.
Except as otherwise disclosed in the Prospectus, none of the Company, the
Partnership, the Subsidiary Partnership and the Lessee has received any written
or oral notice from any governmental entity or any other person and there is no
pending or threatened claim, litigation, or any administrative agency proceeding
that: alleges a violation of any Environmental Laws by the Company, the
Partnership, the Subsidiary Partnership or the Lessee; alleges that the Company,
the Partnership, the Subsidiary Partnership or the Lessee is a liable party or a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601, et seq., or any state
superfund
11
law; has resulted in or could result in the attachment of an environmental lien
on any of the Real Property; or alleges that the Company, the Partnership, the
Subsidiary Partnership or the Lessee is liable for any contamination of the
environment, contamination of the Real Property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
(dd) Real Estate Investment Trust. The Company has been
organized in conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company's method of operation (as presently conducted and
proposed to be conducted immediately after Closing) enables it to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code. Each of the Partnership and the Subsidiary Partnership is and
immediately after Closing will be, treated as a partnership for federal income
tax purposes and not as a corporation or an association taxable as a
corporation.
(ee) Investment Company Act. None of the Company, the
Partnership, the Subsidiary Partnership or the Lessee will become as a result of
the consummation of the Transactions, or will conduct their respective
businesses in a manner in which any such entity would become, an "investment
company" or an entity that "controls" or is "controlled by" an "investment
company," as such terms are defined under the Investment Company Act of 1940, as
amended (the "1940 Act").
(ff) Receipt of Commissions and Fees. Except as stated in or
contemplated by the Prospectus, neither the Company nor any affiliate of the
Company has received or is entitled to receive, directly or indirectly, any
compensation or other benefit, including, but not limited to, any finder's fee,
acquisition fee, selection fee, nonrecurring management fee or other fee or
commission, relating to the investments of the Company.
(gg) Payment of Commissions and Fees. Except as stated in or
contemplated by the Prospectus, neither the Company nor any affiliate of the
Company has paid or awarded, nor will any such person pay or award, directly or
indirectly, any commission or other compensation to any person engaged to render
investment advice to a potential purchaser of Shares as an inducement to advise
the purchase of Shares.
3. Sales of Shares.
(a) Initial Shares. The Company hereby agrees to sell to you,
and on the basis of the representations and warranties herein contained but
subject to the terms and conditions herein set forth, you agree to purchase from
the Company, at a price per share of [$7.6828125], the Initial Shares. Until
______________, the Company will not sell or agree
12
to sell any shares of its capital stock otherwise than through you. Subject to
your commitment to purchase the Shares, nothing in this Agreement shall prevent
you from entering into an agency agreement, underwriting agreement, or other
similar agreement governing the offer and sale of securities with any other
issuer of securities, and nothing contained herein shall be construed in any way
as precluding or restricting your right to sell or offer for sale securities
issued by any other person, including securities similar to, or competing with,
the Shares.
(b) Option Shares. The Company hereby grants an option to you
to purchase the Option Shares at the price per share set forth in Section 3.(a).
The option granted hereby may be exercised in whole or in part at any time upon
written notice from you to the Company, given within thirty (30) days after the
effective date of the Registration Statement. Such notice will set forth the
number of Option Shares as to which you are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such Option Shares are to be delivered. The time and date at which
certificates for Option Shares are to be delivered shall be determined by you
but shall not be earlier than two nor later than ten full business days after
the exercise of the option, nor in any event prior to the Initial Closing Date
(as defined in Section 3.(d) below) (the "Option Closing Date). The option with
respect to the Option Shares granted hereunder may be exercised only to cover
over-allotments in the sale of the Shares by you. You may cancel such option at
any time prior to its expiration by giving written notices of such cancellation
to the Company.
(c) Obligation to Purchase Shares. Your obligation to purchase
any of the Shares is subject to receipt by you of written advice from the
Commission that the Registration Statement is effective, is subject to the
Shares being qualified for offering under applicable laws in the states as may
be reasonably designated by you, is subject to the absence of any prohibitory
action by any governmental body, agency, or official, and is subject to the
terms and conditions contained in this Agreement and in the Registration
Statement.
(d) Closing Date. As and when the closing of the purchase of
the Initial Shares is effected, on such date (the "Initial Closing Date" and
together with the Option Closing Date, each a "Closing Date") and at such time
and place as determined by you (which determination shall be subject to the
satisfaction on such date of the conditions contained herein), you shall pay to
the Company, by wire transfer of immediately available funds on the Initial
Closing Date, the purchase price for the Initial Shares. To the extent your
option to purchase the Option Shares is exercised as provided in Section 3.(b),
you shall pay to the Company on the Option Closing Date, by wire transfer of
immediately available funds, the purchase price for the Option Shares.
(e) Finder's Fees. Except as set forth in the Registration
Statement or Prospectus, neither you nor the Company, directly or indirectly,
shall pay or award any finder's fee, commission, or other compensation to any
person engaged by a potential
13
purchaser for investment advice as an inducement to such advisor to advise the
purchase of Shares or for any other purpose.
(f) Delivery of Share Certificates. Delivery of certificates
in definitive form representing the Initial Shares shall be made at the offices
of Newbridge Securities, Inc. or at such other place as shall be agreed upon by
the Company and you, on ____________, 1996 (the "Initial Date of Delivery"). The
certificates representing the Initial Shares shall be in such denominations and
registered in such names as you may request in writing at least three full
business days before the Initial Date of Delivery. The certificates representing
the Initial Shares will be made available for examination and packaging at the
offices of Newbridge Securities, Inc. or at such other place as shall be agreed
upon by the Company and you, not later than at least two (2) full business days
prior to the Initial Date of Delivery. The certificates representing the Option
Shares shall be delivered in the same manner as with respect to the Initial
Shares, and the date of delivery for the certificates shall be ______ full
business days prior to the Option Closing Date.
4. Covenants.
(a) Covenants of the Company and the Partnership. The Company
and the Partnership covenant with you as follows:
(i) Notices. The Company and the Partnership
immediately will notify you, and confirm such notice in writing, (A) of any fact
that would make inaccurate any representation or warranty by the Company and the
Partnership, and (B) of any change in facts on which your obligation to perform
under this Agreement is dependent.
(ii) Effectiveness of Registration Statement. The
Company will use its best efforts to cause the Registration Statement to become
effective (if not yet effective at the date and time this Agreement is executed
and delivered by the parties hereto). If the Company elects to rely upon Rule
430A of the Rules and Regulations or the filing of the Prospectus is otherwise
required under Rule 424(b) of the Rules and Regulations, and subject to the
provisions of Section 4.(a)(iii) of this Agreement, the Company will comply with
the requirements of Rule 430A and will file the Prospectus, properly completed,
pursuant to the applicable provisions of Rule 424(b) within the time prescribed.
The Company will notify you immediately, and confirm the notice in writing, (i)
when the Registration Statement, or any post-effective amendment to the
Registration Statement, shall have become effective, or any supplement to the
Prospectus, or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission to
amend the Registration Statement or amend or supplement the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the suspension
of the qualification of the Shares for offering or
14
sale in any jurisdiction, or of the institution or threatening of any proceeding
for any such purposes. The Company will use all reasonable efforts to prevent
the issuance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain the withdrawal thereof at
the earliest possible moment.
(iii) Amendments to Registration Statement and
Prospectus. The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) to the Prospectus, if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule 430A, to either the Prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus
filed in accordance with Rule 424(b), in either case if you shall not have
previously been advised and furnished a copy thereof a reasonable time prior to
the proposed filing, or if you or your counsel shall object to such amendment or
supplement.
(iv) Delivery of Registration Statement. The Company
has delivered to you or will deliver to you, without expense to you, at such
locations as you shall request, as soon as the Registration Statement or any
amended Registration Statement is available, such number of signed copies of the
Registration Statement as originally filed and of amended Registration
Statements, if any, copies of all exhibits and documents filed therewith, and
signed copies of all consents and certificates of experts, as you may reasonably
request.
(v) Delivery of Prospectus. The Company will deliver
to you at its expense, from time to time, as many copies of each Preliminary
Prospectus as you may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
deliver to you at its expense, as soon as the Registration Statement shall have
become effective and thereafter from time to time as requested during the period
when the Prospectus is required to be delivered under the 1933 Act, such number
of copies of the Prospectus (as supplemented or amended) as you may reasonably
request. The Company will comply to the best of its ability with the 1933 Act
and the Rules and Regulations so as to permit the completion of the distribution
of the Shares as contemplated in this Agreement and in the prospectus. If the
delivery of a prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the offering
or sale of the Shares and if at such time any events shall have occurred as
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made when such Prospectus is delivered not misleading or, if for
any reason it shall be necessary during the same period to amend or supplement
the Prospectus in order to comply with the 1933 Act, the Company will notify you
and upon your request prepare and furnish without charge to you and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus that will
correct such statement or omission or effect such compliance, and in case you
are required to
15
deliver a prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon your request
but at your expense, the Company will prepare and deliver to you as many copies
as you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the 1933 Act.
(vi) Blue Sky Qualification. The Company, in good
faith and in cooperation with you, will use its best efforts to qualify the
Shares for offering and sale under the applicable "blue sky" or securities laws
and real estate syndication laws of such jurisdictions as you from time to time
may reasonably designate and to maintain such qualifications in effect for as
long as may be necessary to complete the sale and distribution of the Shares;
provided, however, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified or to
make any undertakings in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above provided.
(vii) Financial and Other Information.
A. Earnings Statement. The Company will
make generally available to its securityholders, in the manner specified in Rule
158(b) under the 1933 Act and deliver to you as soon as practicable and in any
event not later than 45 days after the end of its fiscal quarter in which the
first anniversary date of the effective date of the Registration Statement
occurs, an earnings statement meeting the requirements of Rule 158(a) under the
1933 Act covering a period of at least twelve consecutive months beginning after
the effective date of the Registration Statement.
B. Annual and Quarterly Reports. The
Company will furnish to its securityholders, as soon as practicable after the
end of each respective period, annual reports (including financial statements
audited by independent public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year. For a period
through and including November 29, 1999, the Company will furnish to you: (i)
concurrently with the date on which the same shall be sent to the
securityholders of the Company, if applicable, and in any event not later than
sixty (60) days after the end of each fiscal quarter of the Company, statements
of operations of the Company for each of the first three quarters in the form
furnished to the Company's securityholders; (ii) concurrently with the date on
which the same shall be sent to the securityholders of the Company, if
applicable, and in any event not later than one hundred twenty (120) days after
the end of each fiscal year of the Company, a balance sheet of the Company as of
the end of such fiscal year, together with statements of operations, of cash
flows, and of securityholders' equity of the Company for such fiscal year,
accompanied by a copy of the certificate or report thereon of independent public
accountants; (iii) as soon as they are available, copies of all reports
(financial or otherwise) mailed to securityholders; and (iv) as soon as they are
available, copies of all
16
reports and financial statements furnished to or filed with the Commission, any
securities exchange, or the National Association of Securities Dealers, Inc.
("NASD"). During the period through and including November 29, 1999, the
foregoing financial statements shall be made on a consolidated basis to the
extent that the accounts of the Company are consolidated with any subsidiaries,
and shall be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
C. Press Releases. For a period through and
including November 29, 1999, the Company will furnish to you, concurrently with
the release thereof, two copies of every press release to be issued and every
material news item and article in respect of the Company or its affairs to be
released by the Company; and promptly, such additional documents and information
with respect to the Company and its affairs as you from time to time may
reasonably request.
D. Other Information. For a period through
and including November 29, 1999, the Company will furnish to you any additional
information of a public nature concerning the Company or its business that you
may reasonably request in writing.
(viii) Application of Net Proceeds. The Company and
the Partnership will apply the net proceeds received from the sale of the Shares
in all material respects as set forth in the Prospectus under the caption "Use
of Proceeds."
(ix) Solicitation of Purchasers.
A. Except as hereinafter specified, the
Company will not, and will not permit the Partnership or any of its other
affiliates or agents to, furnish the names of such purchasers or of other
potential investors obtained through you to any person other than as may be
required in connection with the normal and usual conduct by the Company of its
business or required by court order or law.
B. The Company agrees and understands that a
violation of the provisions of Section 4(a)(ix)(A) of this Agreement will cause
you irreparable harm and injury and that any money damages you receive will not
compensate you for any breach thereof. Accordingly, the Company agrees that, in
addition to monetary damages, you will be entitled to all such equitable relief
including, without limitation, injunctive relief, as a court of equity or proper
jurisdiction shall deem appropriate in the circumstances. Such relief shall not
be exclusive of any rights you may have at law or in equity. All of the rights
and remedies you have hereunder shall be cumulative and not alternative. The
provisions of this Section shall not limit your remedies upon the breach by the
Company of any other Section of this Agreement.
17
(x) Cooperation with Your Due Diligence. At all
times prior to each Closing Date, the Company will cooperate with you in such
investigation as you may make or cause to be made of all the business and
operations (including all Hotels) of the Company, the Partnership, the
Subsidiary Partnership and the Lessee in connection with the sale of the Shares,
and will make available to you in connection therewith such information in its
possession as you may reasonably request.
(xi) Transfer Agent. The Company will maintain a
transfer agent and, if necessary under applicable jurisdictions, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(xii) Nasdaq. The Company will use its best efforts
to maintain the quotation of its shares of Common Stock on the Nasdaq National
Market.
(xiii) Compliance with Investment Company Act. The
Company and the Partnership are familiar with the Investment Company Act of
1940, as amended, as the rules and regulations thereunder, and have in the past
conducted their affairs, and will in the future conduct their affairs, in such a
manner so as to ensure that the Company and the Partnership were not and will
not be an "investment company" or an entity "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(xiv) Actions of Company, Officers, Directors, and
Affiliates. The Company will not and will use its best efforts to cause its
officers, directors, and affiliates not to (i) take, directly or indirectly,
prior to termination of the offering contemplated by this Agreement, any action
designed to stabilize or manipulate the price of any security of the Company, or
that may cause or result in, or that might in the future reasonably be expected
to cause or result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Shares,
(ii) other than under this Agreement, sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company.
(xv) Obligations Under this Agreement. Subject to
the terms hereof, the Company and the Partnership will do and perform their
respective obligations under this Agreement to the extent required to consummate
the transactions contemplated hereby.
(xvi) Additional Issuances. For a period of ninety
(90) days from the Initial Closing Date, the Company will not, without your
prior written consent, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any shares of Common Stock or
securities convertible into Common Stock, other than pursuant to
18
this agreement and other than partnership interests or other securities
convertible into Common Stock issued in connection with the acquisition of a
hotel property.
(xvii) Additional Hotels. The Company will use the
net proceeds of the Offering to acquire or develop hotels only to the extent
that the Company would expect to receive rental income with respect to each such
hotel, net of insurance paid by the Company, reserves for furniture, fixtures
and capital expenditures and real estate taxes, in an amount greater than or
equal to twelve percent (12%) of the purchase price or development costs paid by
the Company for such hotel.
(b) Your Covenants. You covenant with the Company that you
have not provided and will not provide to the purchasers of Shares any written
or oral information regarding the business of the Company, including any
representations regarding the Company's financial condition or financial
prospects, other than such information as is contained in the Prospectus. You
further covenant that you will use your best efforts to comply in the offering
of the Shares with such purchaser suitability requirements as may be imposed by
state securities or blue sky requirements.
5. Payment of Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, and subject to
the provisions of Section 9 of this Agreement, the Company hereby agrees that it
will pay all fees and expenses incident to the performance of its obligations
under this Agreement (excluding fees and expenses of counsel for you, except as
specifically set forth below), including (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the Preliminary Prospectuses and
the Prospectus and any amendments or supplements thereto, and the cost of
furnishing copies thereof to you, (b) the preparation, printing, and
distribution of this Agreement, any Selected Dealer Agreement, the certificates
representing the Shares, the Blue Sky Memoranda, and any instruments relating to
any of the foregoing, (c) the issuance and delivery of the Shares, including any
transfer taxes payable thereon, (d) the fees and disbursements of the Company's
counsel and accountants, (e) the qualification of the Shares under applicable
securities and real estate syndication laws in accordance with Section 4.(a) of
this Agreement and any filing fee paid in connection with the review of the
offering by the NASD, including filing fees and fees and disbursements made in
connection therewith and in connection with the Blue Sky Memoranda supplied to
you by counsel for the Company, (f) all costs, fees, and expenses in connection
with the application for qualifying the Shares for quotation on the Nasdaq
National Market, (g) the transfer agent's and registrar's fees and all
miscellaneous expenses referred to in Item 30 of the Registration Statement, (h)
costs related to travel and lodging incurred by the Company and its
representatives relating to meetings with and presentations to prospective
purchasers of the Shares reasonably determined by you to be necessary or
desirable to effect the sale of the Shares to the public, (i) other expenses
incurred for required title insurance and environmental assessments, and (j) all
other costs and expenses incident to the performance of
19
the Company's obligations hereunder that are not otherwise specifically provided
for in this Section.
6. Conditions of Your Obligations. Your obligations hereunder shall be
subject to, in your discretion, the following terms and conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:30 p.m. on the date of
this Agreement or, at such later time or on such later date as you may agree to
in writing; and as of each Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the satisfaction of
your counsel.
(b) Closing Date Matters. On each Closing Date, (i) the
Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the Rules and Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the Rules and
Regulations; the Company shall have complied in all material respects with Rule
430A (if it shall have elected to rely thereon) and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
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, (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company, the Partnership, the
Subsidiary Partnership or the Lessee, whether or not arising in the ordinary
course of business, (iii) no action, suit or proceeding at law or in equity
shall be pending or, to the Company's knowledge, threatened against the Company,
the Partnership or the Subsidiary Partnership that would be required to be set
forth in the Prospectus other than as set forth therein and no proceedings shall
be pending or, to the knowledge of the Company, threatened against the Company,
the Partnership or the Subsidiary Partnership before or by any federal, state or
other commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could materially adversely affect the business,
prospects, assets, results of operations or condition (financial or otherwise)
of the Company, the Partnership or the Subsidiary Partnership other than as set
forth in the Prospectus, (iv) the Company and the Partnership shall have
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied on or prior to each Closing Date, and (v) the
representations and warranties of the Company and the Partnership set forth in
Section 2 of this Agreement shall be accurate as though expressly made at and as
of each Closing Date. On each Closing Date, you shall have received a
certificate executed by the President of the Company and the general partner of
the Partnership, dated as
20
of each Closing Date, to such effect and with respect to the following
additional matters: (A) the Registration Statement has become effective under
the 1933 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 1933 Act; and (B) they have reviewed the
Registration Statement and the Prospectus and, when the Registration Statement
became effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included therein or necessary to make the statements therein not misleading and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus that has not been so set forth.
(c) Opinions of Hunton & Xxxxxxxx. At each Closing Date, you
shall receive the opinions of Hunton & Xxxxxxxx, counsel for the Company and the
Partnership, in form and substance satisfactory to you and your counsel, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Virginia, with the corporate power
and authority to execute, deliver and perform this Agreement
and to conduct its business as described in the Prospectus,
and is qualified to do business or registered to transact
business as a foreign corporation and is in good standing as a
foreign corporation in Maryland, West Virginia and Tennessee.
No consent, approval, authorization or order from any court,
governmental agency or body is required in connection with the
execution and delivery by the Company of this Agreement, or
the consummation by the Company of the transactions
contemplated hereby, except such as has been obtained or as
may be required by applicable state securities, blue sky or
real estate syndication laws or required by the NASD, as to
which such counsel need express no opinion. Such counsel also
need not express an opinion on local laws relating to the
leasing or operation of real estate.
(ii) The Partnership was duly formed and is validly
existing as a limited partnership under the Virginia Revised
Uniform Limited Partnership Act with the partnership power and
authority to execute, deliver and perform this Agreement and
to conduct its business as described in the Prospectus, and is
qualified to do business or is registered to transact business
as a foreign limited partnership and is in good standing as a
foreign limited partnership in Maryland, West Virginia and
Tennessee. No consent, approval, authorization
21
or order from any court, governmental agency or body is
required in connection with the execution and delivery by the
Partnership of this Agreement, or the consummation by the
Partnership of the transactions contemplated hereby, except
such as has been obtained or as may be required by applicable
state securities, blue sky or real estate syndication laws or
required by the NASD, as to which such counsel need express no
opinion. Such counsel also need not express an opinion on
local laws relating to the leasing or operation of real
estate. The Company is the sole general partner of the
Partnership.
(iii) The Company has the corporate power and
authority to execute, deliver and perform this Agreement, to
issue, sell and deliver the Shares as provided herein and to
consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed, and delivered by
the Company and the Agreement constitutes a valid and binding
agreement of the Company, enforceable in accordance with its
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium, liquidation,
reorganization, or similar laws affecting creditors' rights
generally, (b) general equity principles, regardless of
whether such enforceability is considered in equity or at law,
and (c) limitations imposed by federal or state securities
laws or the public policy underlying such laws regarding the
enforceability of indemnification provisions.
(iv) The Partnership has the partnership power and
authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed, and delivered by
the Partnership and the Agreement constitutes a valid and
binding agreement of the Partnership, enforceable in
accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, moratorium,
liquidation, reorganization, or similar laws affecting
creditors' rights generally, (b) general equity principles,
regardless of whether such enforceability is considered in
equity or at law, and (c) limitations imposed by federal or
state securities laws or the public policy underlying such
laws regarding the enforceability of indemnification
provisions.
(v) The statements set forth in the Prospectus under
the caption "Description of Capital Stock," insofar as they
purport to constitute a summary of the terms of the Common
Stock and laws related thereto, fairly summarize such terms
and applicable law, and present the information called for by
the 1933 Act and the Rules and Regulations. The Common Stock
conforms in all material respects as to legal matters to the
description thereof contained in the Registration Statement
and the Prospectus.
22
(vi) The Shares have been duly and validly authorized
by the Company, and, when issued and delivered against payment
as provided in this Agreement, will be validly issued, fully
paid, and nonassessable. No person or entity holds preemptive
rights with respect to any of the Shares. The form of the
certificates evidencing the Shares comply with all applicable
requirements of Virginia law.
(vii) The Units to be issued to the Company in
connection with the Transactions have been duly and validly
authorized by the Partnership. The offer and sale of the Units
by the Partnership will constitute an exempted transaction
pursuant to Section 4(2) of the 1933 Act and will not require
registration of the Units under Section 5 of the 1933 Act.
(viii) The execution, delivery, and performance of
this Agreement, the compliance with the terms and provisions
hereof and the consummation of the transactions contemplated
herein and in the Registration Statement and Prospectus, by
the Company and/or the Partnership do not and will not:
A. violate the articles of
incorporation, bylaws, certificate of limited
partnership or partnership agreement, as the case may
be, of the Company or the Partnership;
B. result in a breach of, or constitute
a default under, any contract that was filed, or the
form of which was filed, as an exhibit to the
Registration Statement;
C. to such counsel's knowledge, violate
any applicable statute, rule or regulation, order of
any court or any federal, state, or local
governmental authority or agency binding on the
Company or the Partnership, or any of their
respective businesses, investments, properties,
assets or Hotels;
D. to such counsel's knowledge, result
in the creation or imposition of any lien, charge,
claim, or encumbrance upon any property or asset of
any of the foregoing.
(ix) The Common Stock, including the Shares, has
been approved for quotation on the Nasdaq National Market.
(x) The Company is organized in conformity with the
requirements for qualification as a real estate investment
trust under the Code, and the Company's method of operation
(as presently conducted and proposed to be
23
conducted immediately after Closing) enables it to meet the
requirements for qualification and taxation as a real estate
investment trust under the Code. The descriptions of the law
and the legal conclusions contained in the Prospectus under
the caption "Federal Income Tax Consequences" are correct in
all material respects, and the discussion thereunder fairly
summarizes the federal tax considerations that are material to
a holder of the Common Stock.
(xi) The Registration Statement has become effective
under the 1933 Act and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
has been instituted or is pending or contemplated under the
1933 Act. Other than financial statements and other financial
and operating data and schedules contained therein, as to
which counsel need express no opinion, the Registration
Statement, when it became effective, the Prospectus, as of its
date and as of the date hereof, comply as to form in all
material respects with the requirements of the 1933 Act and
the Rules and Regulations.
(xii) Nothing has come to such counsel's attention
that leads it to believe that the Registration Statement, or
any further amendment thereto made prior to the Closing Date,
on its effective date, contained or contains any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus or any amendment or supplement thereto made prior
to the Closing Date, as of its date and as of the Closing
Date, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading
(provided that such counsel need express no belief regarding
the financial statements and related schedules and other
financial data contained in the Registration Statement, any
amendment thereto, or the Prospectus, or any amendment or
supplement thereto).
(xiii) Neither the Company nor the Partnership is, or
solely as a result of the consummation of the Transactions
will become, an "investment company," or an entity that
controls or is "controlled by" an "investment company," as
such terms are defined under the 1940 Act.
(xiv) The information in the Prospectus under the
captions "Certain Provisions of Virginia Law and of the
Company's Articles of Incorporation and Bylaws," "Shares
Available for Future Sale," and "Federal Income Tax
Considerations," to the extent that it constitutes matters of
law or legal conclusions, has been reviewed by such counsel,
is correct, and presents fairly
24
the information required to be disclosed therein under the
1933 Act and the Rules and Regulations.
(xv) To such counsel's knowledge, except as described
in the Prospectus, there is not pending or threatened, any
action, suit, proceeding, inquiry or investigation before or
by any court or any federal, state or local governmental
authority or agency to which the Company, the Partnership or
any of their respective officers or directors are or may be a
party, or to which any of the properties, assets or rights of
any such entity or person may be subject, which, if determined
adversely to either the Company or the Partnership would
individually or in the aggregate (A) have a material adverse
effect on the financial position, results of operations,
business or material assets of any of the Company or the
Partnership, or (B) that might adversely affect the
consummation of the transactions contemplated by this
Agreement.
In rendering the opinions set forth above, Hunton & Xxxxxxxx, with your
consent as to matters of form and substance, may adopt forms of opinion that are
consistent with the Legal Opinion Accord of the ABA Section of Business Law
(1991) (the "Accord").
(d) Other Legal Opinion. At each Closing Date, you shall have
received a favorable opinion of Xxxxxxxxx, Xxxxxxx & Xxxxx, counsel for the
Lessee and the Subsidiary Partnership, dated as of that Closing Date, in form
and substance satisfactory to your counsel to the effect that:
(i) The Lessee has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Maryland with all requisite corporate
power and authority to conduct its business as described in
the Prospectus, and is qualified to do business and in good
standing as a foreign corporation in Virginia, Tennessee and
West Virginia. The Lessee is in violation of any provision of
its articles of incorporation, bylaws or other governing
documents. To the knowledge of such counsel, the Lessee is not
in default under or in breach of, or subject to any event that
with the giving of notice or the lapse of time or both would
constitute a default under or breach of, any term or condition
of any material agreement or instrument of which such counsel
has knowledge to which the Lessee is a party or by which any
of its properties is bound, except as disclosed in the
Prospectus. No consent, approval, authorization or order from
any court, governmental agency or body is required in
connection with the consummation by the Lessee of the
transactions contemplated in this Agreement and in the
Prospectus, except such as may be required by applicable state
securities, blue sky or real estate syndication laws or
required by the NASD, as to which such counsel need express no
opinion.
25
(ii) The Subsidiary Partnership has been duly formed
and is validly existing as a limited partnership under the
laws of the State of Maryland, with all requisite partnership
power and authority to conduct its business and to own its
properties, as described in the Prospectus.
(iii) The Subsidiary Partnership is not in violation
of any provisions of its partnership agreement or other
governing documents. To the knowledge of such counsel, the
Subsidiary Partnership is not in default under or in breach
of, or subject to any event that with the giving of notice or
the lapse of time or both would constitute a default under or
breach of, any term or condition of any material agreement or
instrument to which it is a party or by which any of its
properties is bound, except as disclosed in the Prospectus.
The Company is the sole limited partner of the Subsidiary
Partnership and the Partnership will be the sole general
partner of the Subsidiary Partnership.
(iv) The Lessee owns, possesses or has obtained such
Permits as are necessary to own or lease its properties and to
carry on its businesses in the manner described in the
Prospectus; to such counsel's knowledge, the Lessee has
fulfilled and performed all of its obligations with respect to
all such Permits, and no event has occurred that allows, or
after notice or lapse of time or both would allow, revocation
or modification thereof or would result in any other
impairment of the rights of the holder of any such Permit.
(v) To the knowledge of such counsel, neither the
Lessee nor the Subsidiary Partnership is in violation of, or
in default with respect to, any statute, rule, regulations,
order, judgment, or decree, except as may be properly
described in the Prospectus or such as in the aggregate do not
now have and will not in the future have a materially adverse
effect on the financial position, results of operations, or
business or each of such entity, respectively.
(vi) To such counsel's knowledge, except as described
in the Prospectus, there is not pending, threatened or
contemplated, any action, suit, proceeding, inquiry or
investigation before or by any court or any federal, state or
local governmental authority or agency to which the Lessee or
the Subsidiary Partnership or any of their respective officers
or directors are or may be a party, or to which any of the
properties, investments, assets or rights of any such entity
or person may be subject, (A) that might result in any
material adverse change in the condition (financial or
otherwise) or business of the Lessee or the Subsidiary
Partnership or (B) that might materially adversely affect any
of the material properties, investments or assets of any such
entity, or (C) that might adversely affect the consummation of
the transactions contemplated by this Agreement or any of the
other Transactions.
26
In rendering the opinion set forth above, Xxxxxxxxx, Xxxxxxx & Xxxxx
may, with your consent as to matters of form and substance, adopt a form of
opinion that is consistent with the Legal Opinion Accord of the ABA Section of
Business Law (1991) (the "Accord").
(e) Opinion of Your Counsel. At each Closing Date, you shall
receive the favorable opinion of Xxxxxxx & Savage, P.C., your counsel, with
respect to such matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass on such matters.
(f) Independent Public Accountants. At the time that this
Agreement is executed by the Company, you shall have received from Xxxxxxx
Xxxxxx & Xxxxxxxxx a letter, dated the date hereof, in form and substance
satisfactory to you, confirming that they are independent public accountants
with respect to the Company within the meanings of the 1933 Act and the Rules
and Regulations, and stating in effect that:
(i) in their opinion, the financial statements and
any supplementary financial information and schedule included
in the Registration Statement and covered by their opinion
therein comply as to form and in all material respects with
the applicable accounting requirements of the 1933 Act and the
Rules and Regulations;
(ii) on the basis of limited procedures (set forth in
detail in such letter and made in accordance with such
procedures as may be specified by you) not constituting an
audit in accordance with generally accepted auditing
standards, consisting of (but not limited to) a reading of the
latest available internal unaudited financial statements of
the Company, a reading of the minute books of the Company,
inquiries of officials of the Company responsible for
financial and accounting matters, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention to cause them to believe that:
A. the unaudited financial statements and
supporting schedule and other unaudited financial
data of the Company included in the Registration
Statement do not comply as to form in all material
respects with the applicable accounting requirements
of the 1933 Act and the Rules and Regulations or are
not presented in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Registration
Statement;
27
B. any other unaudited income statement data
and balance sheet items included in the Prospectus do
not agree with the corresponding items in the
unaudited financial statements from which such data
and items were derived, and any such unaudited data
and items were not determined on a basis
substantially consistent with the basis for the
corresponding amounts in the audited financial
statements included in the Prospectus;
C. any unaudited pro forma financial
information included in the Prospectus does not
comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act
and the Rules and Regulations or the pro forma
adjustments have not been properly applied to
historical amounts in the compilation of that
information;
D. at a specified date not more than five
(5) days prior to the date of such letter, there was
any change in the capital stock or long-term debt or
obligations of the Company or there were any
decreases in net current assets or net assets,
shareholders' equity, or other items specified by you
from that set forth in the Company's balance sheet at
September 30, 1996, except as described in such
letter; and
E. for the period from September 30, 1996 to
a specified date not more than five (5) days prior to
the date of delivery of such letter, there were any
decreases in room revenues, food revenues, beverage
revenues, or operating income before interest,
depreciation and amortization for the Company, in
each case as compared with the corresponding period
of the preceding year, except in each case for
decreases that the Prospectus discloses have occurred
or may occur or that are described in such letter;
and
(iii) in addition to the procedures referred to in
clause (ii) above and the examination referred to in their
Reports including in the Registration Statement, they have
carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages, and
financial information specified by you that are derived from
the general accounting records of the Company, that appear in
the Registration Statement or the exhibits or schedules
thereto and are specified by you, and have compared such
amounts, percentages, and financial information with the
accounting records of the Company and with material derived
from such records and have found them to be in agreement.
28
(g) Updated Comfort Letter. At each Closing Date, you shall
have received from Xxxxxxx Xxxxxx & Xxxxxxxxx a letter, in form and substance
satisfactory to you and dated as of that Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to Section 6.(f)
above, except that the specified date referred to shall be a date not more than
five (5) days prior to that Closing Date.
(h) Post-Financial Developments. In the event that either of
the letters to be delivered pursuant to Sections 6.(f) and 6.(g) above sets
forth any changes, decreases or increases, it shall be a further condition to
your obligations that you shall have reasonably determined, after discussions
with officers of the Company responsible for financial and accounting matters
and with Xxxxxxx Xxxxxx & Xxxxxxxxx, that such changes, decreases or increases
as are set forth in such letter do not reflect a material adverse change in the
capital stock, long-term debt, obligations under capital leases, total assets,
net current assets, or shareholders' equity of the Company as compared with the
amounts shown in the latest consolidated pro forma balance sheet of the Company,
or a material adverse change in the room revenues, food revenues, beverage
revenues, or operating income before interest, depreciation and amortization for
the Hotels in each case as compared with the corresponding period of the prior
year.
(i) Additional Information. On each Closing Date, your counsel
shall have been furnished with all such documents, certificates and opinions as
they may request for the purpose of enabling them to pass upon the issuance and
sale of the Shares as contemplated in this Agreement and the matters referred to
in Section 6.(b) and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company or the
Partnership, the performance of any of the covenants of the Company or the
Partnership, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company at or prior to that Closing Date in
connection with the authorization, issuance and sale of the Shares as
contemplated in this Agreement, shall be satisfactory in form and substance to
you and to your counsel. The Company and the Partnership will furnish you with
such number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request. Any certificate signed by any
officer, partner, or other official of the Company or the Partnership and
delivered to you or your counsel shall be deemed a representation and warranty
by the Company and the Partnership to you as to the statements made therein.
(j) Adverse Events. Subsequent to the date hereof, there shall
not have occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange or American
Stock Exchange or the Nasdaq National Market, (ii) a general moratorium on
commercial banking activities in Virginia or New York declared by either federal
or state authorities, as the case may be, (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war if the effect of any such event specified in this
clause (iii) in your
29
reasonable 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 Prospectus, or (iv) such a material adverse change in
general economic, political, financial or international conditions affecting
financial markets in the United States having a material adverse impact on
trading prices of securities in general, as, in your reasonable judgment, makes
it impracticable or inadvisable to proceed with the public offering of the
Shares or the delivery of the Shares on the terms and in the manner contemplated
in the Prospectus.
(k) Stock Restrictions. As described in Section 2.(z) hereof,
Xxxxxxxx shall have agreed in writing as to the matters set forth in such
section.
(l) NASD Review. The NASD, upon review of the terms of the
public offering of the Shares, shall not have objected to such offering, the
terms of the offering or your participation in the offering.
(m) Nasdaq Quotation. The Shares are quoted on the Nasdaq
National Market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Initial Closing Date, and such termination shall be without
liability of any party to any other party, except as provided in Sections 5 and
9. Notwithstanding any such termination, the provisions of Section 7 shall
remain in effect.
7. Indemnification and Contribution.
(a) Indemnification by the Company and Partnership. The
Company and the Partnership, jointly and severally, will indemnify and hold you
harmless against any losses, claims, damages, or liabilities, joint or several,
to which you may become subject under the 1933 Act, the 1934 Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any breach of any warranty or covenant
of the Company or the Partnership herein contained or any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arise out of or are
based upon the Transactions, and will reimburse you for any legal or other
expenses reasonably incurred by you in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the Company or the Partnership shall not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon an untrue statement or alleged
30
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any such amendment
or supplement, in reliance upon and in conformity with written information
furnished to the Company by you expressly for use therein; provided further,
that the indemnity agreement contained in Section 7.(a) with respect to any
Preliminary Prospectus shall not inure to your benefit if you failed to send or
give a copy of the Prospectus to such person at or prior to the written
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the 1933 Act or the Rules and Regulations and if the
Prospectus would have cured any untrue statement or alleged untrue statement or
omission or alleged omission giving rise to such loss, claim, damage, or
liability. In addition to its other obligations under this Section 7.(a), the
Company and the Partnership agree that, as an interim measure during the
pendency of any such claim, action, investigation, inquiry, or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 7.(a), they will reimburse you on a
monthly basis for all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry,
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's and the Partnership's
obligation to reimburse you for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to you
within thirty (30) days of a request for reimbursement shall bear interest at
the prime rate (or reference rate or other commercial lending rate for borrowers
of the highest credit standing) published from time to time by The Wall Street
Journal (the "Prime Rate") from the date of such request. This indemnity
agreement shall be in addition to any liabilities that the Company and the
Partnership may otherwise have. For purposes of this Section 7, the information
set forth in the last paragraph on the front cover page (insofar as such
information relates to you) and under "Selling Arrangements" in any Preliminary
Prospectus and in the Prospectus constitutes the only information furnished by
you to the Company for inclusion in any Preliminary Prospectus, the Prospectus,
or the Registration Statement. Neither the Company nor the Partnership will,
without your prior written consent, settle or compromise or consent to the entry
of any judgment in any pending or threatened action or claim or related cause of
action or portion of such cause of action in respect of which indemnification
may be sought hereunder (whether or not you are a party to such action or
claim), unless such settlement, compromise, or consent includes an unconditional
release of you from all liability arising out of such action or claim (or
related cause of action or portion thereof).
The indemnity agreement in this Section 7.(a) shall
extend upon the same terms and conditions to, and shall inure to the benefit of,
each person, if any, who controls you within the meaning of the 1933 Act or the
1934 Act to the same extent as such agreement applies to you.
(b) Indemnification by You. You will indemnify and hold
harmless the Company and the Partnership against any losses, claims, damages, or
liabilities to which the
31
Company or the Partnership may become subject, under the 1933 Act, the 1934 Act,
or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any breach of any
warranty or covenant by you herein contained or any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement, or the Prospectus or any such amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company or the Partnership by you expressly for use therein; and will reimburse
the Company or the Partnership for any legal or other expenses reasonably
incurred by the Company or the Partnership in connection with investigating or
defending any such loss, claim, damage, liability, or action. In addition to its
other obligations under this Section 7.(b), you agree that, as an interim
measure during the pendency of any such claim, action, investigation, inquiry,
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 7.(b), they will
reimburse the Company or the Partnership on a monthly basis for all reasonable
legal and other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry, or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of their obligation to reimburse the Company or the Partnership
for such expenses and the possibility that such payments might later been held
to have been improper by a court of competent jurisdiction. Any such interim
reimbursement payments that are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement shall be in addition to any
liabilities that you may otherwise have.
The indemnity agreement in this Section 7.(b) shall
extend upon the same terms and conditions to, and shall inure to the benefit of,
each officer and director of the Company and the Partnership and each person, if
any, who controls the Company or the Partnership within the meaning of the 1933
Act or the 1934 Act to the same extent as such agreement applies to the Company
or the Partnership.
(c) Notices of Claims; Employment of Counsel. Any party that
proposes to assert the right to be indemnified under this Section 7 promptly
shall notify in writing each party against which a claim is to be made under
this Section 7 of the institution of such action but the omission so to notify
such indemnifying party of any such action shall not relieve it from any
liability it may have to any indemnified party except (i) to the extent that the
omission to notify shall have caused or increased the indemnifying party's
liability, and (ii) that the indemnifying party shall be relieved of its
indemnity obligation for expenses of the indemnified party incurred before the
indemnifying party is notified. Such indemnifying party
32
or parties shall assume the defense of such action, including the employment of
counsel (satisfactory to the indemnified party) and payment of fees and
expenses. An indemnified party 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 such indemnified party unless the employment of such counsel shall have been
authorized in writing by the indemnifying party or parties in connection with
the defense of such action or the indemnifying party or parties shall not have
employed counsel to have charge of the defense of such action or such
indemnified party or parties reasonably shall have concluded that there may be
defenses available to it or them that are different from or additional to those
available to such indemnifying party or parties (in which case such indemnifying
party or parties shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by such indemnifying party or parties. Anything in
this paragraph to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any such claim or action effected without its
written consent.
(d) Arbitration. It is agreed that any controversy arising out
of the operation of the interim reimbursement arrangements set forth in Sections
7.(a) and 7.(b) hereof, including the amounts of any requested reimbursement
payments, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the NASD.
Any such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate, therein electing the
arbitration tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 7.(a) and 7.(b) hereof and will not resolve the
ultimate propriety or enforceability of the obligation to indemnify for expenses
that is created by the provisions of Sections 7.(a) and 7.(b).
(e) Contribution. If the indemnification provided for in
Section 7.(a) or 7.(b) is unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, or liabilities (or
actions in respect thereof) referred to therein, then the Company and the
Partnership on the one hand and you on the other shall contribute to the amount
paid or payable as a result of such losses, claims, damages, or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Partnership on the one hand
and you on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then the Company and the Partnership and you shall contribute to
such amount paid or payable in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company and the
Partnership on the one hand and you on the other in connection with the
statements or omissions that resulted in such
33
losses, claims, damages, or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Partnership on the one hand and you on the other shall be
deemed to be in the same proportion as the total net proceeds from the Offering
(before deducting expenses) received by the Company and the Partnership bear to
the total selling commissions received by you in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or allegedly
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Partnership on the one hand or to information with respect to you and furnished
by you respectively, in writing specifically for inclusion in the Prospectus on
the other and the parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission. The Company
and the Partnership and you agree that it would not be just and equitable if
contribution pursuant to this Section 7.(e) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 7.(e). The amount
paid or payable as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this Section 7.(e) shall be
deemed to include any legal or other expenses reasonably incurred by any such
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) with respect to the transactions giving rise to the
right of contribution provided in this Section 7.(e) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations in this Section 7.(e) for you to contribute
are several in proportion to your respective underwriting obligations and not
joint. For purposes of this Section 7.(e), each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as you, and each director of the Company or the Partnership who
signed the Registration Statement, and each person, if any, who controls the
Company or the Partnership within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the Company or the Partnership.
8. Representations and Agreements to Survive. Except as the context
otherwise requires, all representations, warranties, covenants and agreements
contained in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by you, or on your behalf, or by any
controlling person, or by or on behalf of the Company or the Partnership, and
shall survive until the fifth anniversary of the date of this Agreement.
9. Termination of Agreement.
(a) Termination of Agreement. You shall have the right to
terminate this Agreement at any time prior to the Initial Closing Date (i) if
any representation or warranty of the Company or the Partnership hereunder shall
be found to have been incorrect or misleading
34
when made or the Company or the Partnership shall fail, refuse, or be unable to
perform any of their respective agreements hereunder or to fulfill any condition
of your obligations hereunder, (ii) if there shall have been since the
respective dates as of which information is given in the Registration Statement,
a material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, prospects, management, properties,
assets, results of operations, or condition (financial or otherwise) of the
Company, the Partnership, or any Hotel, whether or not arising in the ordinary
course of business, (iii) if trading on any national securities exchange shall
have been suspended (other than for reasons unrelated to the securities
markets), or minimum or maximum prices for trading generally shall have been
fixed or maximum ranges for prices for all securities shall have been required
on any such exchange by such exchange or by order of the Commission or any other
governmental authority having jurisdiction, (iv) if there has occurred or
accelerated any outbreak of hostilities or other national or international
calamity or crisis or change in economic or political conditions the effect of
which on the financial markets of the United States is such as to make it, in
your sole judgment, impracticable to market the Shares or enforce contracts for
the sale of the Shares, (v) if a banking moratorium has been declared by
Virginia, New York or federal authorities, (vi) any federal or state statute,
regulation, rule, or order of any court or other governmental authority has been
enacted, published, decreed, or otherwise promulgated that in your sole judgment
materially adversely affects or will materially adversely affect the business or
operations of the Company, the Partnership, or (vii) any action has been taken
by any federal, state, or local government or agency in respect of its monetary
or fiscal affairs that in your reasonable opinion has a material adverse effect
on the securities markets in the United States. You shall have no liability to
the Company or the Partnership pursuant to this Agreement or otherwise as a
result of any such termination.
(b) Result of Termination.
(i) If the sale of the Shares provided for
herein is not consummated (A) because of any termination of this Agreement
pursuant to Section 9.(a)(i), (B) because of any refusal, inability or failure
on the part of the Company or the Partnership to perform any agreement herein or
comply with any provision hereof other than by reason of your default, (C) by
March 15, 1997 due to reasons within the control of the Company, the Partnership
or any of their affiliates, or (D) because the Company abandons this Offering
and obtains financing from other sources and you are not retained as a senior
investment banker in connection with such financing, then in addition to its
obligations with respect to expenses as set forth in Section 5, the Company will
reimburse you on demand for all your reasonable out-of-pocket expenses
(including the fees and expenses of your counsel), including disbursements
reasonably incurred by you in reviewing the Registration Statement and the
Prospectus, and in investigating and making preparations for the marketing of
the Shares.
(ii) If the sale of the Shares provided for
herein is not consummated for any other reason, the Company and the Partnership
shall pay expenses as required by
35
Section 5, and the Company and the Partnership shall have no additional
liability to you except for such liabilities, if any, as may exist or thereafter
arise under Section 7.
10. Notices.
(a) Method and Location of Notices. All communications
hereunder, except as herein otherwise specifically provided, shall be in writing
and shall be sent by overnight courier, hand-delivered or telecopied and
confirmed as follows:
To the Company:
Xxxxxxxx Hospitality Trust, Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
To You:
Xxxxxxxx & Strudwick, Incorporated
0000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. X. XxXxxxxx Xxxxx, III
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Savage, P.C.
0000 XxxxxxxXxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
36
(b) Time of Notices. Notice shall be deemed to be given by you
to the Company or the Partnership or by the Company or the Partnership to you
when it is sent by overnight courier, hand-delivered or telecopied as provided
in Section 10.(a).
11. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon you, the Company, and the Partnership and the controlling
persons referred to in Section 7, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have a legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
12. Governing Law, Construction, and Time. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia. Specified time of day refers to United States Eastern Time. Time
shall be of the essence of this Agreement.
13. Description Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart, the executed
counterparts shall together constitute a single instrument.
If the foregoing correctly sets forth the understanding between you,
the Company, and the Partnership, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
XXXXXXXX HOSPITALITY TRUST, INC.
By:
Xxxxx X. Xxxxxxxx, Xx.
President
37
XXXXXXXX HOSPITALITY LIMITED
PARTNERSHIP
By Xxxxxxxx Hospitality Trust, Inc.,
General Partner
By:
Xxxxx X. Xxxxxxxx, Xx.
President
Confirmed and accepted as of the date first above written:
XXXXXXXX & STRUDWICK, INCORPORATED
By:
X. XxXxxxxx Xxxxx, III
Senior Vice President
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