EXHIBIT 1.1
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12,000,000 SHARES
MERISTAR HOSPITALITY CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
September 24, 2003
XXXXXX BROTHERS INC.
As Representatives of the
several underwriters named in Schedule 1 hereto
c/x XXXXXX BROTHERS INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
MeriStar Hospitality Corporation, a Maryland corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell 12,000,000 shares (the "FIRM STOCK") of the Company's Common
Stock, par value $0.01 per share (the "COMMON STOCK"). In addition, the Company
proposes to grant to the Underwriters named in Schedule 1 hereto (the
"UNDERWRITERS") an option to purchase up to an additional 1,800,000 shares of
the Common Stock on the terms and for the purposes set forth in Section 2 (the
"OPTION STOCK"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "STOCK." This is to confirm the agreement
between the Company and the Underwriters concerning the offer, issue and sale of
the Stock by the Underwriters as of the date first written above.
SECTION 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 (File No. 333-85162) with
respect to the Stock has (i) been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "COMMISSION")
thereunder (collectively, the "SECURITIES ACT"), (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act, and the rules and regulations of the Commission thereunder.
Copies of such registration statement (and any amendments thereto) and all
exhibits thereto have been delivered by the Company to you as the
representatives (the "REPRESENTATIVES") of the Underwriters. As used in this
Agreement, (i) "REGISTRATION STATEMENT" means the Registration Statement on Form
S-3 (File No. 333-85162), when it became effective under the Act, and as from
time to time amended or supplemented thereafter (or if any post-effective
amendment to the Registration Statement has been filed with the Commission prior
to the execution and delivery of this Agreement, then the
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time that the most recent such amendment has been declared or became effective
by the Commission); (ii) "EFFECTIVE TIME" means the date and the time as of
which such Registration Statement was declared effective by the Commission;
(iii) "EFFECTIVE DATE" means the date of the Effective Time; (iv) "BASE
PROSPECTUS" means the prospectus (together with all documents incorporated
therein by reference), dated May 9, 2002, and included in the Registration
Statement; (v) "SUPPLEMENTAL PROSPECTUS" means the prospectus supplement
(together with all documents incorporated therein by reference), dated September
24, 2003, relating to the Stock; and (vi) "PROSPECTUS" means the Base Prospectus
and the Supplemental Prospectus relating to the Stock, as filed with the
Commission pursuant to paragraph (b) of Rule 424 of the rules and regulations of
the Commission under the Securities Act (the "RULES AND REGULATIONS"). Reference
made herein to the Registration Statement or to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of such
Registration Statement or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the Registration Statement or the Prospectus
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "EXCHANGE ACT") after the date of such
Prospectus and incorporated by reference in such Prospectus; and any reference
to any amendment to the Registration Statement shall be deemed to include any
annual report of the Company filed with the Commission pursuant to Section 13(a)
or 15(d) of the Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. The Commission has not issued any order
preventing or suspending the use of the Registration Statement or the
Prospectus.
(b) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(c) The Registration Statement, as of the Effective Date and on
the date that any post-effective amendment to the Registration Statement becomes
effective, conformed in all material respects with the requirements of the
Securities Act and Exchange Act 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 not misleading, and the Prospectus, as
of its date and as of the applicable Delivery Date, conformed and will conform
in all material respects with the requirements of the Securities Act and the
Exchange Act and did not and will not contain any untrue statement of a material
fact or did not and will not 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 that, the
Company makes no representation or warranty as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein.
(d) The documents incorporated by reference in the Prospectus (the
"INCORPORATED DOCUMENTS"), when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to the
requirements of the Securities Act and the Exchange Act, as applicable, and none
of such documents 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 any further documents so filed and
incorporated by
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reference in the Prospectus, when such documents are filed with the Commission
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
(e) Each of the Company and its Significant Subsidiaries (as
defined below) has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization is duly qualified to
do business and is in good standing in each jurisdiction in which its ownership
or lease of property or the conduct of its businesses requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"),
and has all power and authority necessary to own, lease or hold its properties
and to conduct the businesses in which it is engaged; and none of the
subsidiaries of the Company, other than MeriStar Hospitality Operating
Partnership, L.P. ("MHOP"), is a Significant Subsidiary. For purposes of this
Agreement, "Significant Subsidiary" has the meaning set forth in Rule 1-02 of
Regulation S-X.
(f) The Company has an authorized capitalization as set forth in
the Prospectus. All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus. All of the
issued shares of capital stock, partnership interests or limited liability
membership interests, as the case may be, of each Significant Subsidiary of the
Company have been duly and validly authorized and issued and (except for
partnership interests of general partners and except to the extent the limited
liability company agreements or partnership agreements governing the relevant
companies provide otherwise) are fully paid and non-assessable and (except for
partnership interests in MHOP owned by third parties) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims (collectively, "LIENS"), other than Liens under the Senior Secured
Credit Agreement, dated as of October 28, 2002, among MHOP, Societe Generale, as
Administrative Agent, XX Xxxxx Securities Corporation, as Lead Arranger and Book
Runner, Xxxxxx Brothers Inc., as Syndication Agent, Xxxxxxx Xxxxx Xxxxxx Inc.,
as Documentation Agent, and the lenders named therein (the "CREDIT AGREEMENT").
(g) Except as disclosed in the Prospectus, (i) there are no
outstanding securities convertible into or exchangeable for, or warrants,
options or rights issued by the Company to purchase, any shares of the capital
stock of the Company, (ii) there are no statutory, contractual, preemptive or
other rights to subscribe for or to purchase any Common Stock and (iii) there
are no restrictions upon transfer of the Common Stock pursuant to the Company's
charter or bylaws.
(h) The shares of the Stock to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with this Agreement,
will be duly and validly issued, fully paid and non-assessable; and the Stock
will conform in all material respects to the description thereof contained in
the Prospectus. Upon payment for and delivery of the Stock to be sold by the
Company pursuant to this Agreement, the Underwriters will acquire good and valid
title to such
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Stock, in each case free and clear of all liens, encumbrances, equities,
preemptive rights, subscription rights, other rights to purchase, voting or
transfer restrictions (except as described in the Prospectus) and other claims.
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(j) The execution, delivery and performance by the Company of this
Agreement, the issuance of the Stock, the compliance by the Company with all the
provisions hereof and the consummation of the transactions contemplated hereby
(the "TRANSACTIONS") will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which the Company or any of its Significant Subsidiaries is a
party or by which the Company or any of its Significant Subsidiaries is bound or
to which any of the property or assets of the Company or any of its Significant
Subsidiaries is subject, (ii) result in any violation of the provisions of the
charter or by-laws or any limited partnership agreement or other constituent
document of the Company or any of its Significant Subsidiaries or any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Significant Subsidiaries or any of
their properties or assets or (iii) result in the imposition or creation of (or
the obligation to create or impose) a Lien under any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective properties or assets is bound.
(k) Except (i) with respect to the registration of the Stock under
the Securities Act and the Exchange Act, (ii) as required by the state
securities or "blue sky" laws and (iii) for such consents, approvals,
authorizations, orders, filings or registrations which have been obtained or
made, no consent, approval, authorization or order of, or filing or registration
with, any court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the issuance and sale of the Stock,
or the consummation of the Transactions by the Company.
(l) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period preceding
the date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued pursuant to
employment contracts, benefit plans, qualified stock options plans or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, or in pursuant to a dividend reinvestment or
stock purchase plan, or pursuant to outstanding options, convertible securities,
rights or warrants.
(m) Neither the Company nor any of its Significant Subsidiaries
has sustained, since the date of the latest financial statements included or
incorporated by reference in the Prospectus, any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any change in the capital stock or
long-term debt of the Company or any of its Significant Subsidiaries or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
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consolidated financial position, stockholders' equity or results of operations
of the Company and its subsidiaries taken as a whole, otherwise than as set
forth or contemplated in the Prospectus.
(n) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
condition, the results of operations, cash flows and changes in the financial
position of the Company and its subsidiaries on the basis stated therein at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved; the supporting schedules, if any, included or incorporated by
reference in the Prospectus present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the Prospectus
(and any amendment or supplement thereto) are, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(o) KPMG LLP (the "ACCOUNTANTS"), who have certified the financial
statements of the Company, whose report is incorporated by reference in the
Prospectus and who have delivered the initial letter referred to in Section 7(e)
hereof, were independent public accountants as required by the Securities Act
and the Rules and Regulations during the periods covered by the financial
statements on which they reported.
(p) There are no legal or governmental proceedings pending to
which the Company or any of its Significant Subsidiaries is a party or of which
any property or assets of the Company or any of its Significant Subsidiaries is
subject which, could reasonably be expected to have a Material Adverse Effect;
and, to the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others that are
required to be disclosed in the Prospectus that are not so disclosed.
(q) No relationship, direct or indirect, exists between or among
the Company or MHOP on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or MHOP on the other hand, which is
required to be set forth in the Prospectus which is not so set forth.
(r) Except for existing agreements with holders of limited
partnership units in MHOP, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect
to any securities of the Company owned, directly or indirectly, or to be owned
by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(s) There are no contracts, agreements or other documents which
are required to be set forth in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act which have not been set forth in
the Prospectus or filed as exhibits to the Registration Statement.
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(t) Since the date as of which information is given in the
Prospectus and except as otherwise disclosed in the Prospectus, the Company has
not (i) issued or granted any securities, including any sales pursuant to Rule
144A, or Regulation D or S of, the Securities Act, other than in connection with
any employment contract, benefit plan, qualified stock options plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, or in connection with a dividend
reinvestment or stock purchase plan, or in connection with outstanding options,
rights, convertible securities or warrants, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv) declared or paid any
dividend on any of its capital stock.
(u) Neither the Company nor any of its Significant Subsidiaries is
or, as of the applicable Delivery Date after giving effect to the issuance of
the Stock and the application of the net proceeds therefrom as set forth in the
Prospectus, will be an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "INVESTMENT COMPANY
ACT").
(v) Neither the Company, nor to its knowledge, any of its
Affiliates (as defined in Rule 501(b) of Regulation D, an "AFFILIATE"), has
taken, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Stock to facilitate the sale
or resale of such securities as prohibited by Regulation M under the Securities
Act.
(w) The Company (including American General Hospitality
Corporation as predecessor to the Company for all periods through the date of
the merger of CapStar Hotel Company into American General Hospitality
Corporation but excluding CapStar Hotel Company for any periods on or prior to
the date of such merger (each, a "PREDECESSOR ENTITY")) was organized and
conducted its business and operations for each of its taxable years ended
December 31, 1996, December 31, 1997, December 31, 1998, December 31, 1999,
December 31, 2000, December 31, 2001, and December 31, 2002 in conformity with
the requirements for qualification as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (collectively, the "INTERNAL REVENUE
CODE"), and commencing with its taxable year ending December 31, 2003, the
Company is organized and has conducted its business and operations in conformity
with the requirements for qualification as a REIT under the Internal Revenue
Code and its proposed method of operation will enable it to continue to meet the
requirements for taxation as a REIT under the Internal Revenue Code.
(x) The Company, each of its subsidiaries and each Predecessor
Entity has filed all federal, state and local income and franchise tax returns
required to be filed through the date hereof and has paid all taxes due thereon,
and no tax deficiency has been determined adversely to the Company, any of its
subsidiaries or any Predecessor Entity for which the Company would be liable
which has had (nor does the Company have any knowledge of) any tax deficiency
which would reasonably be expected to have a Material Adverse Effect; the
amounts currently set up as provisions for taxes or otherwise by the Company and
its subsidiaries on their books and records are sufficient for the payment of
all their unpaid federal, foreign, state, county and local taxes
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accrued through the dates as of which they speak, and for which the Company and
its subsidiaries may be liable in their own right or as a transferee of the
assets of, or as successor to any other corporation, association, partnership,
joint venture or other entity.
(y) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, free and clear of all liens,
encumbrances and defects, except such as are set forth in the Prospectus or as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and all assets held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.
(z) Except as set forth in the Prospectus, the Company and each of
its subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties from insurers of
recognized financial responsibility and as is customary for companies engaged in
similar businesses in similar industries. Except as set forth in the Prospectus,
neither the Company nor any of its subsidiaries (i) has received notice from any
insurer or agent of such insurer that substantial capital improvements or other
material expenditures will have to be made in order to continue such insurance
or (ii) has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not reasonably be expected
to have a Material Adverse Effect.
(aa) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
environmental law, ordinance, rule, regulation, order, judgment, decree or
permit, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have any
such Authorization or to make any such filing or notice would not reasonably be
expected to have a Material Adverse Effect; each such Authorization is valid and
in full force and effect and each of the Company and its subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries, except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not
reasonably be expected to have a Material Adverse Effect.
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(bb) Except as set forth in the Prospectus, no labor disturbance by
the employees of the Company exists or, to the knowledge of the Company, is
imminent, which would be reasonably be expected to have a Material Adverse
Effect.
(cc) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(dd) Neither the Company nor any of its Significant Subsidiaries
(i) is in violation of its charter or by-laws or limited partnership agreement
or other constituent document, (ii) is in default in any material respect, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject,
except where it would not reasonably be expected to have a Material Adverse
Effect, or (iii) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its properties or
assets are subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its properties or assets or to the conduct of its business,
except where it would not reasonably be expected to have a Material Adverse
Effect.
(ee) Neither the Company nor any of its subsidiaries, nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its subsidiaries,
has used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ff) Except as set forth in the Prospectus, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to the knowledge of
the Company, any Predecessor Entity for which the Company would be liable) at,
upon or from any of the property now or previously owned or leased by the
Company or its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which would not
have, or could not reasonably be expected to have a Material Adverse Effect;
there has been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous
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substances due to or caused by the Company or any of its subsidiaries or with
respect to which the Company or any of its subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not reasonably be expected to have a
Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes",
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(gg) There are no contracts, agreements or understandings between
the Company and any person that would give rise to a valid claim against the
Company or any Underwriter for a brokerage commission, finder's fee or other
like payment in connection with the transactions contemplated hereby.
(hh) The statistical and market-related data included in the
Prospectus and the Registration Statement are based on or derived from sources
which the Company believes to be reliable and accurate.
(ii) The statements set forth in the Prospectus under the captions
"Description of Capital Stock" insofar as such statements purport to summarize
the provisions of the documents or agreements referred to therein, matters of
law or legal conclusions or federal statute, laws or regulations, in all
material respects, are accurate and fairly present the information required to
be shown.
(jj) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 under the Exchange Act),
which (i) are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company's
principal executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) have been evaluated for
effectiveness as of a date within 90 days prior to the filing of the Company's
most recent annual or quarterly report filed with the Commission; and (iii)
were, as of June 30, 2003, effective in all material respects to perform the
functions for which they were established.
(kk) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.
(ll) Since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
SECTION 2. PURCHASE OF THE STOCK BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the
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Company agrees to sell the Firm Stock to the several Underwriters and each of
the Underwriters, severally and not jointly, agrees to purchase the number of
shares of the Firm Stock set forth opposite that Underwriter's name in Schedule
1 hereto. The respective purchase obligations of the Underwriters with respect
to the Firm Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase the Option Stock. Such option is granted for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 4 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set forth opposite the name of such Underwriters in Schedule 1 hereto. The
respective purchase obligations of each Underwriter with respect to the Option
Stock shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share increments.
The price to the Underwriters of both the Firm Stock and any Option
Stock shall be $6.91 per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment for
all the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. OFFERING OF STOCK BY THE UNDERWRITERS. Upon authorization by
the Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
SECTION 4. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment
for the Firm Stock shall be made at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx
LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York City
time, on the fourth full business day following the date of this Agreement or at
such other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "FIRST DELIVERY DATE." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Firm Stock shall be
registered in such names and in such denominations as the Representatives shall
request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
The option granted in Section 2 will expire at the close of business on
the 30th day after the date of this Agreement and may be exercised in whole or
in part from time to time by written notice being given to the Company by the
Representatives. Such notice shall set forth the
11
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as a "SECOND DELIVERY DATE" and the First Delivery Date and any
Second Delivery Date are sometimes each referred to as a "DELIVERY DATE".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice of exercise of the option. For the purpose of
expediting the checking and packaging of the certificates for the Option Stock,
the Company shall make the certificates representing the Option Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to such Second Delivery
Date.
SECTION 5. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and
agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement; prior to
making any amendment or supplement to the Registration Statement or to the
Prospectus other than by filing documents under the Exchange Act which are
incorporated by reference therein, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and not to effect any such
amendment or supplement to which the Representatives shall reasonably object by
notice to the Company after a reasonable period to review, which shall not in
any case be longer than three business days after receipt of such copy; prior to
the termination of the offering of the Stock as determined by the
Representatives, not to file any document that would be deemed to be
incorporated by reference in the final Prospectus pursuant to Item 12 of Form
S-3 without delivering to the Representatives a copy of the document proposed to
be so filed, such delivery to be made at least twenty-four hours prior to such
filing, and to consult with the Representatives as to any comments which the
Representatives make in a timely manner with respect to the document so
delivered; to advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
12
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Stock; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case, excluding exhibits), (ii)
the Prospectus and any amended or supplemented Prospectus and (iii) any
documents incorporated by reference in the Prospectus (excluding exhibits
thereto) and, if the delivery of a prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Stock or any other
securities relating thereto and if at such time any events shall have occurred
as a 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 other reason it shall be necessary to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act, to notify the Representatives and, upon their request, to file
such documents and to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as the Representatives may from time
to time reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the reasonable judgment
of the Representatives, be required by the Securities Act or is requested by the
Commission;
(e) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 of the Securities Act);
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(f) Promptly from time to time, to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; PROVIDED, HOWEVER, that the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(g) For a period of five years following the First Delivery Date,
to furnish to the Representatives copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act; PROVIDED, HOWEVER, that the Company shall not be required to provide the
Representatives with any such reports or similar forms that have been filed with
the Commission by electronic transmission pursuant to XXXXX;
(h) For a period of 90 days from the date hereof, not to, directly
or indirectly, (1) announce an offering of, or file any registration statement
with the Commission relating to, shares of Common Stock (other than the offering
contemplated by this Agreement), offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition or purchase by any person at any
time in the future of) any shares of Common Stock (other than the Stock), any
securities convertible into or exchangeable for Common Stock or substantially
similar securities (other than the Common Stock to be issued in the ordinary
course under the Company's employee benefit plans, qualified stock option plans
or other employee compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants or rights) or sell or grant options,
warrants or rights with respect to any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than the grant of
options or rights pursuant to option plans existing on the date hereof), (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written consent of Xxxxxx
Brothers Inc. on behalf of the Underwriters; and to cause each executive officer
and director of the Company to furnish to the Representatives, prior to the
First Delivery Date, a letter or letters, substantially in the form of Annex A
hereto, pursuant to which each such person shall agree not to, directly or
indirectly, (A) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or (B) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(A) or (B) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case for a period of 90 days from the
date of the Prospectus, without the prior written consent of Xxxxxx Brothers
Inc. on behalf of the Underwriters;
14
(i) To apply for the listing of the Stock on the New York Stock
Exchange, and to use its best efforts to effect that listing, subject only to
official notice of issuance, prior to the First Delivery Date;
(j) Not to take, directly or indirectly, any action which is
designed to stabilize or manipulate, or which constitutes or which might
reasonably be expected to cause or result in stabilization or manipulation, of
the price of any security of the Company in connection with the offering of the
Stock;
(k) To use its best efforts to cause the Stock to be accepted for
clearance and settlement through the facilities of DTC;
(l) To apply the net proceeds from the sale of the Stock as set
forth in the Prospectus;
(m) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment company" as
defined in the Investment Company Act of 1940, as amended and the rules and
regulations of the Commission thereunder; and
(n) Except as otherwise expressly permitted by its charter or
by-laws, to continue to conduct its operations in a manner that will meet the
requirements to qualify as a REIT under the Internal Revenue Code.
SECTION 6. EXPENSES. The Company agrees to pay the following expenses,
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated:
(a) the costs incident to the authorization, issuance, sale and
delivery of the Stock and any taxes payable in that connection;
(b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the Prospectus and any
amendments and exhibits thereto;
(c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereto (including, in each case, exhibits), the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement;
(d) the costs of distributing this Agreement, any supplemental
agreement among the Underwriters and any other related documents in connection
with the offering, purchase, sale and delivery of the stock by mail, telex or
other means of communication;
(e) the filing fees incident to securing the review by the NASD of
the terms of sale of the Stock;
(f) all expenses and fees in connection with the application for
inclusion of the Stock on the New York Stock Exchange;
15
(g) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 5(f) and of
preparing, printing and distributing a Blue Sky memorandum (including related
fees and expenses of counsel for the Underwriters);
(h) the fees and expenses (including fees and disbursements of
counsel, if applicable) of the Company, the Accountants and the costs and
charges of any registrar, transfer agent or paying agent; and
(i) all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement; provided that, except as
provided in this Section 6 and in Section 11 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
SECTION 7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters hereunder are subject to the accuracy, when made and on the
applicable Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations hereunder
and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) The Underwriters shall not have discovered and disclosed to
the Company prior to or on such Delivery Date that the Registration Statement,
the Prospectus or any amendment or supplement thereto, in the opinion of Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP, counsel to the Underwriters, contains an untrue
statement of any fact which is material or omits to state a fact which is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate, limited liability company and partnership
proceedings and other legal matters incident to the authorization, form and
validity of the Registration Statement, the Prospectus, this Agreement and the
Stock and all other legal matters relating to the offering, issuance and sale,
as applicable, of the Stock and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters; and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(d) Each of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP, counsel
to the Company, and Xxxxxxx LLP, Maryland counsel to the Company, shall have
furnished to the Representatives their written opinion, as counsel and Maryland
counsel, respectively, to the Company, addressed to the Representatives and
dated such Delivery Date, in form and substance
16
reasonably satisfactory to the Representatives, to the effect set forth in
Exhibit A and Exhibit B hereto, respectively, and to such further effect as the
Representatives may reasonably request.
(e) At the time of execution of this Agreement, the
Representatives shall have received from the Accountants a letter or letters, in
form and substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with registered
public offerings.
(f) With respect to the letter or letters of the Accountants
referred to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "INITIAL COMFORT
LETTER"), the Company shall have furnished to the Representatives a letter (the
"BRING-DOWN COMFORT LETTER") of such accountants, addressed to the Underwriters
and dated such Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letters and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letters.
(g) The Company shall have furnished to the Representatives a
certificate, dated the applicable Delivery Date, of its Chief Executive Officer
and its Chief Financial Officer, in form and substance reasonably satisfactory
to the Representatives, stating that:
(i) to the best of their knowledge and after
reasonable investigation, the representations and warranties
of the Company in Section 1 of this Agreement are true and
correct in all material respects as of such Delivery Date; and
the Company has complied in all material respects with all its
agreements and satisfied all conditions on its part to be
performed or satisfied pursuant to this Agreement prior to or
on such Delivery Date;
(ii) the Prospectus shall have been timely filed
with the Commission in accordance with Section 5(a) of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission as of the applicable
Delivery Date; and any request of the Commission for inclusion
of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with; and
17
(iii) they have carefully examined the Registration
Statement and the Prospectus and, in their opinion, (x)(A) the
Registration Statement, as of the Effective Date and on the
date that any post-effective amendment to the Registration
Statement becomes effective, conformed in all material
respects with the requirements of the Securities Act and the
Exchange Act 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 not
misleading, and (B) the Prospectus, as of its date and as of
the applicable Delivery Date, conformed and conforms in all
material respects with the requirements of the Securities Act
and the Exchange Act and did not and does not contain any
untrue statement of a material fact and did not and does not
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading and (y) since the date of the Prospectus,
no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(h) The Representatives shall have received from each executive
officer and director of the Company listed on Schedule 1 of Annex A an executed
letter contemplated by Section 5(h) hereof.
(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements incorporated
by reference in the Prospectus (A) any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus, or (B)
since such date, there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, prospects, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case set forth in clause (A) or (B), is, in the judgment of the Representatives,
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Stock being delivered on the
applicable Delivery Date on the terms and in the manner contemplated in the
Prospectus and this Agreement.
(j) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or the
NASDAQ or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited or the settlement of such trading generally
shall have been materially disrupted or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities of the United States, (iii) the United States shall have
become engaged in hostilities, there shall have been a significant escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general
18
domestic or international economic, political or financial conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, or any other calamity or crisis, or the effect of international
conditions on the financial markets in the United States shall be such as to
make it, in the case of clause (iii) or (iv), in the judgment of the
Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(k) The Representatives shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to such matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents and information as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(l) The New York Stock Exchange shall have approved the Stock for
listing, subject only to official notice of issuance.
(m) The Company shall have furnished to the Underwriters such
further information, certificates and documents as the Underwriters may
reasonably request to evidence compliance with the conditions set forth in this
Section 7.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel to the Underwriters. Each certificate signed by any
officer of the Company and delivered to the Representatives or counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the matters covered thereby.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Underwriter, its directors, officers and employees and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to which that
Underwriter, director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in the Registration
Statement or the Prospectus, or in any amendment or supplement thereto any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Stock or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or
19
omitted to be taken by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse each Underwriter and each such director,
officer, employee or controlling person promptly upon demand for any legal or
other expenses reasonably incurred by that Underwriter, director, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section 8(e);
provided, however, that the Company shall not be liable to any Underwriter under
the indemnity agreement in this Section 8 to the extent, but only to the extent,
that (X) the Company sustains the burden of proving that such Underwriter sold
Stock to the person alleging such loss, claim, liability, expense or damage
without sending or giving, at or prior to written confirmation of such sale, a
copy of the Prospectus and (Y) the Company had previously furnished sufficient
quantities of the Prospectus to such Underwriter within a reasonable amount of
time prior to such sale or such confirmation, and (Z) such Underwriter failed to
deliver the Prospectus, if required by law to have so delivered it, and such
delivery would have been a complete defense against the person asserting such
loss, claim, liability, expense or damage. The foregoing indemnity agreement is
in addition to any liability which the Company may otherwise have to any
Underwriter or to any director, officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or (ii) the omission
or alleged omission to state in the Registration Statement or the Prospectus, or
in any amendment or supplement thereto, any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically for
inclusion therein, which information is limited to the information set forth in
Section 8(e), and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
19
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Underwriters shall have the right to employ counsel to represent jointly the
Underwriters and their respective directors, officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Underwriters against the Company under this
Section 8 if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters, directors, officers, employees and controlling persons to
be jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company. It is understood
that the indemnifying party shall not be liable for the fees and expenses of
more than one separate firm (in addition to local counsel in each jurisdiction)
for all indemnified parties in connection with any proceeding or related
proceedings. No indemnifying party shall (i) without the prior written consent
of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the written consent of the indemnifying party or
if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect
20
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company, on the one hand, and the total underwriting discounts
and commissions received by the Underwriters with respect to the Stock purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the shares of the Stock under this Agreement, 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 whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the shares of Stock underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise paid or becomes liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm, and the Company
acknowledges, that the statements in the fourth paragraph under the caption
"Underwriting" in the Prospectus are correct and constitute the only information
concerning the Underwriters furnished in writing to the Company by the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
SECTION 9. DEFAULTING UNDERWRITERS.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters
22
in Schedule 1 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 6
and 11. As used in this Agreement, the term "UNDERWRITER" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. TERMINATION. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(i) or 7(j), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
SECTION 11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by reason
of the default of one or more Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
23
SECTION 12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Syndicate Desk (Fax: (000) 000-0000), with a
copy, in the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
with a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: D. Xxxxx Xxxxxxx, Esq. (Fax: (212)
000-0000; Telephone (000) 000-0000);
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Chief Financial Officer (Fax: (000) 000-0000;
Telephone: (000) 000-0000);
with a copy to Xxxx Xxxxx, Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Attention:
Xxxxxxx X. Xxxxxxxx, Esq. (Fax: (000) 000-0000; Telephone: (000) 000-0000);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission
to such Underwriter at its address set forth in its acceptance telex to Xxxxxx
Brothers Inc., which address will be supplied to any other party hereto by
Xxxxxx Brothers Inc. upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
SECTION 13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the directors,
officers and employees of the Underwriters and the person or persons, if any,
who control any Underwriter within the meaning of Section 15 of the Securities
Act and (B) the indemnity agreement of the Underwriters contained in Section
8(b) of this Agreement shall be deemed to be for the benefit of directors of the
Company, officers and employees of the Company and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
SECTION 14. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any of them or
any person controlling any of them.
24
SECTION 15. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
SECTION 19. CONSENT TO JURISDICTION; FORUM SELECTION; APPOINTMENT OF
AGENT FOR SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
(a) The Underwriters and the Company hereby submit to the
jurisdiction of the courts of the State of New York and the courts of
the United States of America located in the State of New York over any
suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby.
(b) Any suit, action or proceeding with respect to this
Agreement or the transactions contemplated hereby may be brought only
in the courts of the State of New York or the courts of the United
States of America located in the State of New York, located in the
Borough of Manhattan, City of New York, State of New York. Each of the
parties hereto waives any objection that it may have to the venue of
such suit, action or proceeding in any such court or that such suit,
action or proceeding in such court was brought in an inconvenient court
and agrees not to plead or claim the same.
(c) The Company hereby irrevocably appoints CT
Corporation, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, as its authorized
agent in the State of New York upon which process may be served in any
suit action, suit or proceeding, and agrees that service of process
upon such agent, and written notice of said service to CT Corporation
by the person serving the same to the address provided in Section 12
shall be deemed in every respect effective service of process upon the
Company in any such action, suit or proceeding. The Company further
agrees to take any and all action as may be necessary to maintain such
designation and appointment of such agent in full force and effect for
a period of 7 years from the date of this Agreement.
(d) Any right to trial by jury with respect to any
lawsuit, claim, action or other proceeding arising out of or relating
to this Agreement or the services to be rendered by the Underwriters
hereunder is expressly and irrevocably waived.
25
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
MERISTAR HOSPITALITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
Accepted:
XXXXXX BROTHERS INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: XXXXXX BROTHERS INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Authorized Representative
SCHEDULE 1
UNDERWRITER NUMBER OF FIRM SHARES TO BE PURCHASED
----------- -------------------------------------
Xxxxxx Brothers Inc. 11,400,000
Citigroup Global Markets Inc. 600,000
ANNEX A
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
As Representatives of the several
Underwriters named in Schedule 1
to the Underwriting Agreement,
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of 12,000,000
shares (the "Shares") of Common Stock, par value $.01 per share (the "Common
Stock"), of MeriStar Hospitality Corporation, a Maryland corporation (the
"Company"), and that the Underwriters propose to reoffer the Shares to the
public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than the Shares and shares issued in the ordinary course pursuant to employee
benefit plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights) owned by the undersigned on the date of execution of this
Lock-Up Letter Agreement or on the date of the completion of the Offering, or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 90 days after the date of the
final Prospectus relating to the Offering PROVIDED that, the restrictions set
forth above shall not apply to transfers by the undersigned for bona fide
charitable contributions, gifts and estate planning, so long as the recipient or
donee is subject to a similar restricted transfer period.
1
In furtherance of the foregoing, the Company and its transfer agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By: _______________________________
Name:
Title:
Dated: _____________________________
2
Schedule 1
Executive Officers and Directors
EXECUTIVE OFFICERS NON-OFFICER DIRECTORS
------------------ ---------------------
Xxxx X. Xxxxxxxx Xxxxxx X. Xxxxx
Xxxxx X. Xxxxx X. Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx X. Xxxxx Lodge III
D. Xxxxx Xxxxxx
Xxxxx X. Worms
EXHIBIT A
1. The Registration Statement was declared effective under the Securities
Act as of [specify the date and time], the Prospectus was filed with the
Commission pursuant to [specify the subparagraph of Rule 424(b)] of the
Securities Act on [specify the date]; and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to our
knowledge, no proceeding for that purpose is pending or threatened by the
Commission.
2. All of the issued partnership interests of MHOP have been duly and
validly authorized and issued and (except for partnership interests of MHOP
owned by third parties) are owned directly or indirectly by the Company, to our
knowledge, free and clear of all liens, encumbrances, equities or claims, other
than liens under the Credit Agreement.
3. Except as set forth in the Prospectus, there are no preemptive or other
rights to subscribe for or to purchase, nor any restriction upon voting or
transfer of, any shares of Stock pursuant to any agreement or other instrument
known to such counsel to which the Company is a party.
4. To our knowledge, based solely on a review of our internal litigation
dockets, and other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which could reasonably be expected to have a
material adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"); and, to our
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
5. The Registration Statement and the Prospectus as of their respective
effective or issue times, appear on their face to be appropriately responsive in
all material respects to the requirements of the Act and the rules and
regulations of the Commission under the Act (the "Rules and Regulations"),
except for the financial statements, financial statement schedules and other
financial data included or incorporated by reference in or omitted from either
of them, as to which such counsel need not express any opinion; and each
document filed under the Exchange Act, and incorporated by reference in the
Registration Statement and Prospectus, except for financial statements,
financial statement schedules and other financial data included in either of
them, as to which such counsel need not express any opinion, appear on their
face to be appropriately responsive in all material respects when so filed to
the requirements of the Exchange Act and the rules and regulations under the
Exchange Act. It is understood that such counsel is expressing no opinion in
this paragraph 5 with respect to any anti-fraud
A-1
requirements under the Act, the Exchange Act or the Rules and Regulations.
6. To our knowledge, there are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act which have not been so described or
filed as exhibits to the Registration Statement.
7. The Underwriting Agreement has been duly executed and delivered by the
Company.
8. The execution, delivery and performance by the Company of this
Agreement, the issue and sale of the Stock, the compliance by the Company with
all the provisions hereof and the consummation of the transactions contemplated
hereby will not (A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
known to such counsel to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject,
which breach is likely to have a Material Adverse Effect or (B) result in any
violation of the provisions of the charter or by-laws or any limited partnership
agreement or other constituent document of the Company or any of its Significant
Subsidiaries that are organized in the State of Delaware or any statute or any
order, rule or regulation known to such counsel of any court or governmental
agency or body of the United States, the State of New York or established
pursuant to the Delaware Revised Uniform Limited Partnership Act, the Delaware
General Corporation Law or the Delaware Limited Liability Company Act having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets. It is understood that such counsel is expressing no
opinion in this paragraph 8 with respect to any anti-fraud requirements under
the Act, the Exchange Act or the Rules and Regulations or with respect to
violation of any state securities laws.
9. No consent, approval, authorization or order of, or filing or
registration with, any Governmental Authority is required for the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except for (A) the registration of the Stock
under the Securities Act, (B) such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters and (C) such consents, approvals,
authorizations, orders, filings or registrations as have been obtained or made.
For purposes of this opinion, the term "Governmental Authority" means any
legislative judicial, administrative or regulatory body of the State of New York
or the United States of America.
10. Neither the Company nor any of its subsidiaries is required to be
registered as an "investment company" as such term is defined in the Investment
Company Act.
A-2
11. The statements made in the Prospectus under the captions "Description
of Common Stock," the statements made under the caption "Certain Relationships
and Related Transactions" in the Company's latest proxy statement and the
statements made under the caption "Business-Property-Management Agreements with
MeriStar Hotels and Resorts" in the Company's annual report on Form 10-K for the
year ended December 31, 2002, insofar as they purport to constitute summaries of
the Common Stock and legal matters, documents or proceedings referred to
therein, are accurate in all material respects.
12. The statements made in the Prospectus under the caption "Certain United
States Federal Income Tax Considerations," insofar as they purport to constitute
summaries of matters of United States federal tax law and regulations or legal
conclusions with respect thereto, constitute accurate summaries of the matters
described therein in all material respects.
In rendering such opinion, such counsel may state that their opinion is limited
to matters governed by the federal laws of the United States of America, the
laws of the State of New York and the General Corporation Law of the State of
Delaware. Such opinion shall also be to the effect that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
and has participated in conferences with certain officers of the Company, the
independent public accountants of the Company and other representatives of the
Company, at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and are familiar with the documents
incorporated by reference therein and, although the limitations inherent in the
independent verification of factual matters and in the role of outside counsel
are such that such counsel does not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in either of them (other
than as explicitly stated in paragraphs 11 and 12 above), based upon such
participation, no facts have come to such counsel's attention that led such
counsel to believe that (a) the Registration Statement or any amendment (except
for the financial statements, financial statement schedules and other financial
data included or incorporated by reference in or omitted from those documents,
as to which such counsel expresses no such belief), at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or (b) the Prospectus or any amendment or
supplement (except for the financial statements, financial statement schedules
and other financial data included or incorporated by reference in or omitted
from those documents, as to which such counsel expresses no such belief), at the
time the Prospectus was issued or on the date of this letter, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
A-3
EXHIBIT B
1. The Company has been duly organized and is validly existing under
the laws of the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland. The Company has all
corporate power to own, lease and operate its current properties and to conduct
its business substantially as described in the 10-K under the captions "The
Company" and "Business" and as described in the Prospectus.
2. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of stock of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable and conform
to the description thereof contained in the Prospectus.
3. The Underwriting Agreement has been duly authorized, executed and,
so far as is known to us, delivered by the Company.
4. The Stock has been duly authorized by all necessary corporate
action on the part of the Company and, when issued and delivered against payment
therefor will be validly issued, fully paid and non-assessable, and will be free
of preemptive or other rights to subscribe for or to purchase, nor any
restriction upon voting or transfer of (except as described in the Prospectus),
any Stock pursuant to the Company's charter or bylaws.
5. The statements made in the Prospectus under the caption "Risk
Factors--Potential anti-takeover effect of provisions of Maryland law and our
charter and bylaws", insofar as they purport to constitute summaries of matters
of Maryland law and regulations or legal conclusions with respect thereto,
constitute accurate summaries of the matters described therein in all material
respects.
6. Neither the execution, delivery and performance of this
Underwriting Agreement nor the issuance of the Stock, nor the compliance by the
Company with all of the provisions of this Underwriting Agreement nor the
consummation of the transactions contemplated thereby will result in any
violation of (i) the provisions of the Charter or the Bylaws or any Maryland
statute which in our experience is normally applicable both to general business
corporations which are not involved in regulated activities and to transactions
of the type contemplated by the Underwriting Agreement or (ii) so far as is
known to such counsel, any order, rule or regulation of any court, governmental
agency or body established pursuant to the Maryland General Corporation Law
having jurisdiction over the Company or any of its properties or assets. No
consent approval, authorization or order of, or filing or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of the Underwriting Agreement by the Company and the
consummation of the transactions contemplated thereby.
In rendering such opinion, such counsel may state that the
foregoing opinion is limited to the substantive laws of the State of Maryland
and that such counsel does not express any opinion herein concerning any other
law. Such counsel expresses no opinion as to compliance with federal or state
securities laws, including the securities laws of the State of Maryland, or the
real estate syndication laws of the State of Maryland or as to federal or state
B-1
laws regarding fraudulent transfers. To the extent that any matter as to which
such counsel's opinion is expressed herein would be governed by any other
jurisdiction (other than the State of Maryland), such counsel does not express
any opinion on such matter. The opinion expressed herein is subject to the
effect of judicial decisions which may permit the introduction of parol evidence
to modify the terms or the interpretation of agreements.
B-2
